10+2: All in the Timing

10+2: All in the Timing

While many are focused on the plight of the ocean carrier industry, wondering when the first bankruptcy will occur or when the first announcement of one carrier buying another will be made, there are other issues worth watching in the next several months — some just as important, if not as sexy.
One is the 10+2 program, the long heralded, controversial Importer Security Filing rule that requires importers and carriers to file 12 data elements to Customs and Border Protection 24 hours before a container is loaded aboard a ship at a foreign port.

Now that all, or at least most, of the issues and problems with compliance that dragged out implementation appear to have been resolved, compliance will be required in late January 2010.
In checking with past and current clients, most have resolved or accepted any concerns they had — with one exception: the bill of lading number.

There are a couple reasons this continues to be a problem, albeit not a universal one. Many shipments from China, for example, get to carriers’ facilities — either the consolidation location or the container yard — two or three days before vessel sailing. Containers must be stuffed (if consolidated loads), and paperwork completed and submitted to the ocean carrier, which returns an initial set of documents for review and approval before issuing the bill of lading.

Until now, it was not unusual for the bill of lading to be issued after the vessel sailing. But the requirement that the bill of lading number be included in the 10+2 data presents challenges for many shippers.
Timing is critical. No one wants their goods sitting, least of all the shipper who doesn’t get paid until the goods are moving and the documents from the carrier can be presented to the bank. So it is critical to know when the bill of lading number can be available.

It comes down to process. If you are the shipper, what process does your company use and what is the timing of the activities within that process?

A lot of manufacturers in China, for example, move their cargo at the last minute because their production is geared to vessel sailing schedules. And even with a slowdown in Chinese production, they still schedule production around ship sailings. Obviously, this needs to change because of the timing issues in 10+2.

It also may be an issue for your ocean carrier. Learn your carriers’ processes, because they’re not all the same. Most carriers built their systems on a “needs” basis, and many are not fully integrated, meaning the booking system and the bill of lading system are not truly integrated, even if they are connected.
Some carriers have a booking number and a separate bill of lading number, with the latter not assigned to the shipping documents until the cargo arrives at the container yard, the shippers documentation is received, the information is entered and the information is validated.

That process can take two to three days, so if the shipper is moving goods three days before vessel sailing, it will not comply with 10+2.
Some carriers have adjusted their systems so the booking and bill of lading numbers match, obviously making the bill of lading number known at the time of booking and avoiding the issues above.
But not all carriers have that ability, so each beneficial cargo owner will need to do its homework to understand the differences and adjust its processes accordingly.

I’m sure carrier executives are aware of the issues and will work to make it a smooth transition for their customers, but some systems will take time to convert or change to assist in meeting 10+2’s time requirements.

Of course, if the manufacturers don’t change their processes, it won’t matter — the timing will be off. But as with the ocean carriers, they will have to adjust to meet the requirements of their customers.
To some, it may not be a sexy subject; to others, it’s a critically important one, because the last thing they need to do is have their supply chain extended by several days or a week.

Gary Ferrulli is president of Global Logistics Consulting in Chandler, Ariz. He can be contacted at ferrullig@mindspring.com.