Ocean carriers and consolidators, which are both collaborators and competitors, have never been the best of friends. That relationship is becoming even more tenuous as trade groups representing carriers and consolidators publicly disagree over U.S. Customs' proposed changes to its 24-hour advance manifest rule.

The 24-hour rule requires ocean carriers to collect and submit details about each shipment on an inbound vessel to U.S. Customs via the agency's Automated Manifest System (AMS). Ocean consolidators, known as "non-vessel-operating common carriers" or NVOCCs, say that requirement puts them at a competitive disadvantage against the carriers.

Before the 24-hour rule went into effect, NVOCCs issued house bills of lading to their shipper customers and tendered consolidated containerloads, documented simply as "Freight All Kinds," to ocean carriers. That allowed them to keep customer details confidential so ocean carriers could not solicit that business for themselves. But the 24-hour rule prohibits NVOCCs from hiding that information; instead, they must provide it to the carriers.

In response to the NVOCCs' complaints, Customs last month issued a Notice of Proposed Rulemaking that would allow any party that files inbound manifest information via AMS, including NVOCCs, to request confidentiality when authorized by the importer or consignee. (The governing statute already allowed importers to request confidentiality themselves.)

In comments filed with U.S. Customs regarding the proposed rulemaking, the National Customs Brokers and Forwarders Association of America (NCBFAA), which represents dozens of NVOCCs, approved that measure, but said it still left consolidators at a competitive disadvantage. The group charged that the information required by the 24-hour rule is more detailed than that required for public disclosure of carrier manifests under the applicable statute (19 U.S.C. 1431). In addition, NCBFAA said that shortcomings in the AMS system's operation would preclude Customs from guaranteeing confidentiality. Acerbic comments filed by the World Shipping Council (WSC), which represents ocean carriers, sought to shoot holes in NCBFAA's arguments. WSC insisted that manifest data required by the 24-hour rule is no different than that required for public disclosure under that statute. Since ocean carriers have not suffered substantial harm by publishing such data, NVOCCs have no reason to demand exemption from that same requirement, the group said. In addition, the carriers said, NVOCCs don't need the ability to ask for confidentiality on behalf of their customers when those customers already have the right to file such requests themselves. WSC even took a shot at Customs, suggesting that the proposal would constitute a modification to the statute and questioning whether the agency has the authority to make that change.

NVOCCs aren't the only ones weighing in on this subject: In a recent conference call on the impact of the 24-hour rule held by industry analysts Bear, Stearns, Jonathan Gold, director of international trade policy at the International Mass Retailers Association, suggested that Customs allow importers and exporters to submit data through customs brokers, with whom they already have confidential power-of-attorney agreements, rather than through ocean carriers. "While we fully support what Customs is doing, we question whether getting that from the carrier and the manifest, which is a public document, is the best place to get security-sensitive information," he said. The existing Automated Broker Interface (ABI) system or the upcoming Automated Commercial Environment (ACE) would be more secure than the ocean carriers' manifest systems, he added.

The outcome of this battle will impact how and to whom shippers submit data. For more details on the proposal, see the Notice of Proposed Rulemaking, Docket No. RIN1515-AD18, in the Feb. 9, 2003 Federal Register . Copies of the World Shipping Council's comments are available on the group's Web site (www.worldshipping.org); NCBFAA's filing can be found at www.ncbfaa.org.