The debut of National In-bond, the next major phase of U.S. Customs' Automated Commercial System, could be delayed for a second time because of objections raised by Sea-Land Service Inc. and a carriers' group that includes American President Lines Ltd.
The carriers say that under the system set to go on line Oct. 4, they can be held liable for steep Customs penalties on cargo they long since have relinquished to customs brokers acting on behalf of importers."I'd recommend that we don't implement this until the problems are worked out," said Adi Abel, inbound manager of customs regulations at Sea-Land.
When cargo is moved in-bond, that means it travels to an inland Customs jurisdiction, generally near an importer's facilities, where it then is cleared into the United States.
It is estimated that 40 percent to 50 percent of all U.S. imports are cleared by Customs at a point other then where they arrive in the country.
To allow uncleared cargo to move beyond its port of entry, Customs demands that a broker or carrier guarantee, through a bond, that Customs will be paid for any penalties that later may be assessed on the cargo.
Penalties are assessed, for example, if cargo is released without Customs' authorization or if the documentation's description of the cargo doesn't match what is inside.
While cargo has moved in-bond for years under the existing system of paper documentation, carriers say that when in-bond movements are initiated electronically - as they will be under the new system - a carriers' bond can be activated by an unauthorized customs broker without its knowledge or consent.
A broker with ACS capability, for example, can signal Customs that a shipment will move to an interior Customs district under the carrier's existing bond without the carrier ever knowing.
"The first concern is that Customs needs to be able to verify that the broker has power of attorney" to initiate an in-bond movement, said Kay Miller, a spokeswoman for the Pacific Merchant Shipping Association in Oakland, Calif., a carrier group.
"Because if you are not going to have an actual signature, there has to be a previous agreement between the broker and the carrier that will allow the broker to execute the in-bond document. There is no way of checking it in the new system," she said.
National In-Bond originally was scheduled to go into effect on July 19, but was postponed to October because carriers said they weren't prepared, according to Customs.
ACS allows carriers electronically to file ship manifests under the Automated Manifest System, and allows brokers similarly to submit import entries under the Automated Broker Interface. Both ACS systems are credited with greatly speeding up the process of clearing merchandise shipments into the United States.
"Customs needs to be able to verify that the broker has the right to obligate the ocean carrier's bond. They don't have the ability to verify that now," said Bob Crowley, a consultant and former steamship executive who is co-chairman of the Customs Automated Systems Advisory Committee.
Customs officials disputed the carriers' contention that under the electronic system they would not be aware if their bond were activated.
"The automated system has a transfer of liability provision," said Ernest Cunningham, program manager with Customs' Office of Inspection and Control. ''We can identify by the bond number the entity that becomes responsible."
He said that the existing procedures, under which brokers submit Customs form 7512 to carriers to alert them that cargo they carried will be moving in- bond, will remain in place.
"The paperwork copy that the broker has to generate still has to be submitted to a carrier for their signature," Mr. Cunningham said. "The only difference is that the document doesn't have to be submited to Customs. What I'm telling you some of (the carriers) might not be aware of."
As to whether Customs might consider a second delay of National In-bond, Mr. Cunningham said "We would be willing to entertain anything to facilitate a smooth transition."