Keeping up with Customs

Keeping up with Customs

Project-cargo shippers can bring new meaning to just-in-time, said Jerry Nagel, traffic manager for Foster Wheeler, Inc., in Houston. Tradition-ally cargo is delivered to the pier just in time, or sometimes almost too late.

"We would be loading cargo up until the ship sailed. As the ship was pulling away, we'd be throwing the last piece on at the last minute. We've had painters go on board to apply primer after the cargo had been loaded," Nagel said. Foster Wheeler, a petrochemical engineering and procurement company, imports pressure vessels from South Korea.

The Bureau of Customs and Border Protection's cargo-security rules are beginning to turn the rush to the port into a more orderly procession. Customs' 24-hour rule for cargo security was intended to address the greatest threat to U.S. security - the millions of containers in commerce - but breakbulk cargo has not been overlooked. The rule, which took effect last December, requires carriers or non-vessel-operating common carriers to provide Customs with critical cargo manifest data 24 hours before a ship is loaded at a foreign port.

That applies to breakbulk carriers' manifests, and one of Customs' hot buttons is a discrepancy between the piece count of items on board, and what's listed on the manifest, said John Amos, president of Amos Logistics in Pleasant Hill, Calif. "They will have a problem if the number of pieces don't add up with the manifest," he said.

Nagel agreed. "Where the rub comes, is that the piece counts jump around. We used to get ladders loaded in bundles, but you never could tell whether there was going to be four or five of them," he said. Now Customs is looking for exact numbers.

John Considine, Customs' director of cargo verification, said that while the agency has never had a specific program focusing on piece counts, accuracy of reporting has always been a basic part of the process. "Match-ups of carrier and entry filer data are very much a basic part of our existing manifest systems," he said. He warned that an incorrect piece count could result in delays or fines.

Amos said it's important to educate foreign suppliers about the new security regime. He is also advising shippers to schedule more lay days at the loading port to ensure that the cargo and manifest match up before the ship sails. The extra time could add to the cost of a charter, but some of that can be reduced during negotiations with the carrier. There is also one other result of the rule: more cargo that may have shipped as breakbulk is now being stuffed in containers, he said.

Some cargo that shippers traditionally think as being breakbulk commodities are actually classified as bulk cargo that is exempt from the 24-hour rule. Customs defines bulk cargo as "homogenous cargo that is stowed loose in the hold and is not enclosed in any container." That includes "uniform cargo that stows as solidly as bulk cargo and requires mechanical handling for lading and discharging."

Steel imports, coils, slabs and structural elements, for example, fit that definition, said Rich Brazzale, manager of special projects for Ferrostaal Inc., a Houston steel trader. "That has relieved the shippers of a lot of responsibility. We have been virtually void of any incidents, he said. "Our shippers have done a very good job. They have to show who's shipping the product, and who's the consignee. It's documentation stuff."

The U.S. security requirements have led to a $1.75-per-net-ton security surcharge on Rickmers-Linie, the German project cargo liner carrier, said Bill Woods, president of Rickmers USA. For that, the carrier channels all manifest data through security centers in Shanghai and Houston that make sure everything is in order before one of their ships sails.

"We're very meticulous about that," Woods said. "We ensure every item is on the manifest when the ship is cleared." The company's newest liners have a service speed of 19.5 knots, but they have enough in reserve to make up time, if a ship is delayed in port, he said. Project cargo carriers frequently do business with the same customers. "We benefit from having known shippers. We have a lot of repeat customers."

Customs is also able to waive the 24-hour rule for breakbulk cargo on a case-by-case basis. Considine said that since the agency began enforcing the rule last February, it has granted 70 exemptions out of 85 applications. In addition to metal plates, tubes and beams, Customs has given exemptions for wood pulp and some perishable cargos that were not in boxes, bags or containers.

While cargo security may require new discipline, it doesn't necessarily have to add to overall costs in breakbulk shipping. Nagel said he "started my in-house preaching" about cargo security shortly after Customs began talking about it in late 2001. "I said the best thing to do was begin preparing for it now." The company now factors in an extra week in transit times, but charters also include some flexibility in the number of lay days: add a few at the loading port, maybe a few less at the port of discharge.

Foster Wheeler also is making sure that suppliers stick to their promises when delivering cargo to the dock. "Our suppliers are learning we can't take the delays," Nagel said. "I had to sting a couple of fabricators with back-charges for holding up the ship. One of them we hit for $100,000." Such penalties quickly get suppliers' attention, he said.

Making sure that cargo is where it is supposed to be, when it is supposed to be there is actually saving the company money, Nagel said. Security has become one of many other things that logistics managers have to keep in mind. "You have a lot of facets to juggle, and security is one of them," Nagel said. "It's a detail we have to handle." _