Tarek Morsi can almost set his calendar by the notices he gets from Customs when the agency selects a couple of his export containers for what it calls random inspections of their contents. It is, after all, nearly a monthly occurrence.
Morsi, president of Houston based ocean and air forwarder HTS Services, doesn’t object to the inspections because containers handled by his fellow forwarders in Houston get picked just as often, and he supports the need for enforcement of export regulations. “Nobody is opposed to that,” he said.
What he does object to, however, is the cost. “I don’t care if they pick it for inspection, but don’t come to me and tell me you are going to charge me $3,000 for inspecting it,” Morsi said.
Although Customs and Border Protection doesn’t charge HTS for the inspection, that’s the average price the forwarder pays to dray the container from the Port of Houston to a Customs Examination Station, have it unpacked, inspected, repacked and then dray it back to the port for export.
“I don’t think those charges are reasonable, because we ourselves charge $900 to $1,000 for loading and unloading a container,” Morsi said.
HTS itself can’t perform the unpacking and repacking of its customers’ containers for inspections, because Customs picks the bonded warehouses it uses for its Customs Examination Stations. HTS passes the CES charges along to the customers who use the company to arrange logistics for their exports, but Morsi says the exports he handles are mostly low-value used cars, used auto parts and recycled textiles to West Africa and the Middle East. Most of the containers picked for inspection are packed with used cars and car parts bound for Nigeria.
“For the last 10 years, Customs has never had a problem with what’s inside,” he said.
His big issue with the CES charges is that they can wipe out any profit his customers earn on shipping these low-value cargoes to Nigeria. “None of our customers is happy with what Customs is doing today, so we lose a lot of business because of that,” he said.
Morsi’s concern about Customs’ inspection process is one of a number of complaints, mostly around the delays it causes. Although the selection of containers for inspections is called random, CBP targets export containers for inspection through the Automated Export System, where exporters file their cargo manifests in advance.
“We’ve become aware that auto exports are getting a lot of scrutiny because we are getting a lot of complaints from this and other ports that vehicles are being held up,” said Gary Stratton, vice president and general manager of Norman Krieger, a Los Angeles customs broker, and director of the Los Angeles Customs Brokers & Freight Forwarders Association, where he chairs a committee that is looking into barriers to exports.
“Our members have complained to us that these are regular exports by legitimate exporters who are being unduly impacted by whatever this enforcement action is,” Stratton said. He said Customs’ counsel at the Port of Long Beach confirmed that autos are subject to increased inspection but wouldn’t explain why.
Another Los Angeles broker who asked not to be identified said Customs has confirmed to him that it is targeting export containers containing household goods, computers and peripherals, and used vehicles. “They are looking for illegal arms exports,” he said. Customs also may be targeting containers bound for Africa and the Middle East; containers bound for these markets handled by other Houston forwarders also have been picked routinely for inspection.
CBP also may be looking for stolen cars, because professional auto thieves have been known to get rid of their ill-gotten loot quickly by booking export shipments in advance, knowing they can drive stolen cars right into containers already scheduled for delivery to ports for export.
“Customs comes at inspections with the best of all intentions, but it hasn’t been all worked out with the trade as to how to perform them and still facilitate trade,” Stratton said. “Our concern is to find the right balance between enforcement and the facilitation of trade. Exports are important to this country, whether it be autos or anything else, and after President Obama’s declaration that he wants to double exports, it is doubly so,” he said, referring to the 2010 National Export Initiative that aims to double U.S. exports in the five years to 2014.
Stratton’s committee is still gathering information on the problems caused by export inspections. “If unreasonable actions are taking place with respect to autos, then we need to identify them and see if we can find some solution,” he said.
Another barrier to increased exports is Customs’ inspection of consolidated less-than-containerload cargoes. “Customs doesn’t want to examine cargo when it’s an individual lot before it gets consolidated with other lots. They are insisting on waiting until that container is loaded and delivered to the line and then inspect that entire container,” Stratton said. “Unfortunately, other exporters whose cargo is of no concern to Customs get delayed in the process.”
Although this isn’t a frequent occurrence, Stratton said his group is looking for “a way that is functional and limits the inspection to something that the trade considers reasonable and is cost-effective and that doesn’t delay or kill exports that are legitimate.”