As the Jan. 26 enforcement deadline for the "10+2" rule quickly approaches, a new report assesses U.S.-based importers on their compliance efforts toward the importer rule. Are the businesses that depend on importers and carriers prepared?
In November 2008, the United States Department of Homeland Security's Customs and Border Protection published its long-awaited interim final rule on the Importer Security Filing (ISF), also known as the "10+2" rule
. The interim final rule
went into effect last January, and during the first 12 months, importers were warned of infractions instead of being fined.
The flexible enforcement period ends Jan. 26, 2010, at which point importers can face fines of up to $5,000 for each violation of an ISF that is incomplete, inaccurately filed or late.
The 10+2 rule is so named because it requires importers to submit 10 types of information about what they are importing and requires two new types of information from shipping companies. It applies to import cargo arriving to the United States by vessel and is meant to improve U.S. Customs and Border Protection's (CBP) ability to identify high-risk shipments, ultimately to prevent smuggling and ensure cargo safety and security.
However, the rule also poses new challenges for businesses that depend on importers and carriers.
Under the new rule, before merchandise arriving by ocean vessel can be imported into the U.S., the importer or an agent must electronically submit eight data elements to the CBP no later than 24 hours before the cargo is laden aboard a U.S.-bound vessel. The ISF must include two additional data elements that must be submitted as early as possible, but no later than 24 hours prior to the ship's arrival at a U.S. port.
Of carriers, the interim final rule requires they submit two data elements at least 48 hours after departure from the last foreign port (or prior to arrival for voyages less than 48 hours in duration).
U.S. importers now have less than a month to ensure their compliance with the 10+2 rule is up to par.
While many companies have taken the leap and are implementing systems that assist with ISF, still more haven't started or are finding their first attempt is faltering.
In a recent survey of more than 200 companies importing goods into the U.S., nearly all of the respondents (87 percent) expressed confidence that they will be compliant by the late-January enforcement deadline. However, only 42 percent reported in September and October that they were filing ISF for all of their ocean imports at the time.
More than half of the respondents were not completely compliant when surveyed in September and October, when the deadline was already a few short months away.
Last month's published report, Achieving ISF Compliance - Against All Odds
, provides an assessment of U.S.-based importers on their ISF compliance efforts and their preparedness in advance of the January 26 enforcement deadline. Research for the report, the second in a series of benchmark studies on ISF compliance, was conducted by American Shipper
, the International Compliance Professionals Association
, the National Retail Federation
and the American Association of Exporters and Importers
The most significant challenges importing companies face pertain to the timeliness, completeness and accuracy of data: correcting inaccurate data (43 percent) and obtaining additional information about the shipment (32 percent).
The largest issue remains the lack of timely data, with 57 percent of respondents citing this as a problem: 50 percent said that the bill of lading (BoL) was either unavailable or inaccurate 24 hours prior to lading the goods on board, while 48 percent said that the BoL was not reported to the CBP at the time of ISF filing.
About one-third claimed an inability to collect complete ISF data, and 31 percent stated that the data they received was inaccurate.
Even with these challenges, though, 91.6 percent of importers are not using the flexible timing or interpretation option. (See pgs. 9 and 39 of the CBP's 10+2 Program: Importer Presentation
, 2/13/09.) Only 9 percent of survey respondents stated that they filed amendments for flexible timing and interpretation. Overall, 34 percent said they were not filing amendments at all.
Based on responses from 189 respondents, findings suggest there is no standard when it comes to creating ISF filings:
- Twenty-six percent receive advanced shipment notices (ASNs) and build the ISF from electronic data;
- Twenty-four percent use a template for imports and then modify it based on actual shipment details; and
- Twenty percent build their own ISF file and then send it to their ISF filer.
Most of the remaining importers surveyed completely outsource their ISF filing to a third-party filer or send a purchase order to their freight forwarder, who then builds the ISF.
"With no standard emerging, companies are struggling to leverage best practices for ISF filing," the report states. "Either there is still a long way for industry to go towards establishing standardized processes for ISFs or there will never be a standard way to approach such a complex business process as gathering, validating and filing ISFs."
For more detailed information about the ISF/10+2, check out the CBP Web site
, which provides factsheets, FAQs and other public outreach sources.
Earlier: The 411 on 10+2 in 2009
Importer Security Filing and Additional Carrier Requirements, Final Rule
U.S. Customs and Border Protection, Nov. 25, 2008
Fact Sheet: New Cargo Security Requirements for Maritime Carriers and Importers
U.S. Dept. of Homeland Security, Nov. 24, 2008
ISF Benchmark Study: Achieving Compliance - Against All Odds
by James Blaeser and Beth Peterson
American Shipper, BPE, the International Compliance Professionals Association, the National Retail Federation, and the American Association of Exporters and Importers, December 2009
10+2 Program: Importer Presentation
U.S. Customs and Border Protection, Feb. 13, 2009