A Big Step

A Big Step

Copyright 2003, Traffic World, Inc.

Commissioner Robert C. Bonner had reason to be upbeat. His Bureau of Customs and Border Protection last week was in the home stretch of a year of intense regulatory activity that will profoundly affect the way companies move cargo across U.S. borders. Customs was closing the circle of rules designed to strike the delicate balance between security and the need keep trade moving.

"These regulations do that. They are a big step toward a smarter border," Bonner told a small group of reporters on July 22. The next day, the Federal Register published proposed rules pursuant to the Trade Act of 2002 that will require shippers, carriers and intermediaries to report essential data about their shipments electronically before they enter or leave a U.S. port, airport or land border crossing.

During the briefing, Bonner repeatedly emphasized that the new rules will not be final until Oct. 1. They are proposed rules and the trade community has 30 days to comment on them. There are details to be worked out, but given the prolonged rule-making process and the urgency of erecting a viable system of cargo security, something closely approximating what Customs offered last week - or what it offered precisely - will be the environment in which shippers, carriers and intermediaries of all stripes will operate for the foreseeable future (see chart).

The rules represent the next major advance in the trade security system that has been evolving since the terrorist attacks on Sept. 11, 2001. A central component of that system is the ability for the government to know more about what is aboard the estimated 7.2 million ocean containers, railcars, trucks and aircraft that enter the U.S. each year, given the possibility they could conceal terrorists or, the sum of all fears, a weapon of mass destruction.

In August 2002, Customs took a big step in creating that system when it issued proposed rules requiring ocean carriers and nonvessel-operating common carriers to file manifest data that answers certain critical questions. What''s in the container? Where did it come from? Who sent it? Who is receiving it? Customs ordered carriers to provide that information on containers at foreign ports 24 hours before they were to be loaded aboard a U.S.-bound ship.

Though that requirement has been controversial because of its reliance on the good-faith declarations of shippers and their logistics providers, the concept is being extended to other transport modes. Now carriers moving cargo by air, rail or truck will have to answer the same questions.

"The days are over of showing up at our border with a truckload of goods without first having notified us in advance," Bonner said. Since the Customs Service was organized in 1789, carriers had provided cargo manifests on arrival in the United States. The shift to advance data will give Customs the opportunity to screen cargo through a targeting system to identify shipments that pose a potential security risk.

"We do targeting for a living," Bonner said. "We risk manage. This advance information will allow us to do a much, much better job in providing the security for our country." The agency began screening sea containers under the 24-hour rule in February. Since then, Customs has identified 4.2 percent of some 3 million containers as high-risk shipments that required further inspection. Bonner said targeting was not intended to find suspicious containers but to filter them out by allowing the overwhelming majority of legitimate cargo to pass through.

Bonner emphasized the electronic aspect of the new rules. Customs had the legal authority to issue the 24-hour rule but Congress had to pass the Trade Act in August 2002 to give the agency authority to require electronic filing.

Customs is requiring rail, air and truck carriers to provide basically the same cargo data that ocean carriers provide under the 24-hour rule. But while Customs found itself lambasted for heavy-handedness in issuing the 24-hour rule without listening to the trade''s concerns, things were different this time. In January, the agency held a series of public meetings that allowed the private sector to offer its ideas up front. Customs wrote a set of "strawman" proposals to get the discussion going but members of the trade were shocked at how restrictive Customs'' first attempt at proposed rules were. The agency quickly retreated, asking the Treasury Advisory Committee on Commercial Operations of the U.S. Customs Service to compile the trade community''s ideas.

Bonner said Customs'' touchstone was what information did the targeters need and how far in advance did they need it. "We''re not requiring information further in advance than we need it," Bonner said.

The proposed rules are less onerous than some may have feared, some believe. "Customs made a good-faith effort to listen to the trade," said Carol Fuchs, trade attorney and chair of the COAC committee that worked on the proposed rules. "There''s a lot of good stuff in there and they understood what we were saying. The rules reflect a lot of listening to the comments made by the trade. There''s going to be some negative comment, but I think Customs expects that."

Not surprisingly, the two modes that offer the most time-sensitive transportation, truckers and air carriers, are likely to have problems with the proposal. Air carriers recommended reporting cargo data one hour before arrival. The proposed rules require four hours for most international flights. For short flights - North America and South American countries north of the equator - carriers may report data at "wheels-up," or as the plane departs.

Michael White, security and government affairs director for the Air Transport Association, said that some international flights take 20 minutes or less from airports in Canada, Mexico or the Caribbean. Even reporting cargo data at wheels up could create enough delay to divert some Canadian cargo to trucks. That''s something that wasn''t intended by the rules, he said. "Four hours we can live with" for long-distance flights, White said. "We hope we can work out the details." For example, Customs could allow a short flight from Canada to land at a U.S. airport but keep the cargo from being released until 30 minutes later.

Until Customs gives truckers an automated manifest system in the new Automated Commercial Environment, which is expected sometime in mid-2004, the industry will have to comply with the advance cargo rules using a gaggle of existing release systems: Free and Secure Trade (FAST), Pre-Arrival Processing System (PAPS), Border Release Advanced Selectivity System (BRASS), and Customs Automated Forms Entry System (CAFES).

Those systems could conflict with each other and cost truckers more delays on the border than they have now, said Sandra Scott, trade advocate for Roadway Express and a COAC member. Under PAPS, for example, brokers fax release data in barcode form to Customs'' border stations. Inspectors scan the information and order the truck to proceed.

Scott said that in practice, if a truck has more than five PAPS shipments, it is diverted to Customs'' secondary inspection area, so the primary booths are not tied up by scanning too many barcodes. If a truck line and driver meet the security requirements of the FAST program, they will not get the expedited treatment that Customs promised. Scott suggested that drivers at least should get head-of-line privileges at the secondary areas. "This is a critical operational process that has to be defined down to the working level," Scott said. "Customs is aware of the issues, but these are very important if we''re going to expedite shipments."