Customs delays requirement to name "actual shipper" for ocean imports
Industry groups representing ocean shippers, carriers, forwarders, and consolidators unite in their opposition to new rule.
By Staff -- Logistics Management, 3/1/2004
The Bureau of Customs and Border Protection (CBP) has agreed to delay enforcement of a rule requiring ocean carriers to electronically submit the names of the "actual shipper" of containerized cargo destined for the United States. The delay is in response to a petition filed with the Department of Homeland Security by key international trade groups.
As part of its implementation of the Trade Act of 2002 and the Maritime Transportation Security Act, CBP issued a rule requiring carriers to provide the names of all foreign shippers of inbound containerized cargo 24 hours prior to the vessel's departure from the port of loading. That rule went into effect in January, but the agency postponed the compliance date to March 4th.
Last month, however, the World Shipping Council, the National Industrial Transportation League, the National Customs Brokers and Forwarders Association of America, and the Retail Industry Leaders Association asked the government to revise the text of that rule. The groups object to provisions requiring ocean carriers to obtain and provide the names, in some cases, of their "customers' customers"—foreign vendors and suppliers that do business with ocean consolidators (known as NVOCCs) and are not directly involved in a commercial relationship with the carrier.
The petition notes that it's both maritime law and standard commercial practice to list the freight forwarder or NVOCC as the shipper for consolidated shipments. "If you put the vendor on the bill of lading as the shipper of record, then you're jeopardizing the legal relationship (between vendors and shippers)," says Peter J. Gatti, executive vice president of the National Industrial Transportation League.
The four groups also object to a requirement that ocean carriers issue separate bills of lading for each shipment within a consolidated container. Current practice is for an NVOCC to issue a "house" bill of lading as a contract of carriage between itself and its customers. The consolidator then issues a "master" bill of lading, showing itself as the shipper, as a contract of carriage between itself and the vessel operator. Thus, the ocean carrier does not know the identity of the NVOCC's customers, with whom it has no direct contract.
"The bill of lading is a well-established legal instrument," says Christopher L. Koch, president of the World Shipping Council, which represents ocean carriers. "And this proposal, which substitutes a new entity into the parties of the contract, raises a host of problems."
The four industry groups proposed two possible changes to the rule. The first would have CBP amend the definition of "actual shipper" so it would allow foreign consolidators and other parties that had directly contracted with the carrier to be shown as the shipper. The second would change the wording of the rule so it would not require the foreign vendor, supplier, or manufacturer to be shown as the shipper.
Some industry observers suggest that the trade groups are really defending the interests of large importers that want to shield the identities of their suppliers from their competitors. Currently, when importers file customs entries to determine duties, they must name their suppliers; unlike carriers' manifests, those documents are not public records. If that information must be shown on a carrier's manifest, Koch points out, it will become public information.
For the moment, CBP will allow carriers to continue to list the party that contracts for carriage as the shipper. But the federal agency said it was only postponing enforcement while reviewing the petition.
"CBP will work with the trade to clearly define the term 'shipper,'" said CBP Commissioner Robert C. Bonner. "Until a decision is made, CBP will withhold full enforcement of the term 'shipper' as it is defined under the Trade Act final rule for vessel operations."
Because CBP must by law screen the name of the actual shipper for any possible terrorist affiliation, the agency will have to obtain that information in some fashion. Whether it will be able to find a solution that's acceptable to everyone remains an open question. Says Koch: "Importers, carriers, and Customs need to sit down and work out this issue."
Open Options
07/02/2008Are You Listening, Senator?
11/19/2009Management Update
11/30/2007
View All On-Demand Webcasts