10+2: Impact to the U.S. Importer

By Susan Pomerantz, Vice President, Trade Management Consulting -- Logistics Management, 2/12/2008 11:30:00 AM

10+2: Impact to the U.S. Importer

Most of the 10 data elements required to be reported prior to shipment are already being provided to Customs for clearance and entry into the United States via the CBP Form 7501. As it has traditionally been the importer's responsibility to ensure the accuracy of these elements, there has been little effort to coordinate this detail between an importers' suppliers, forwarders and carriers. The potential impact or change to an importer's international supply chain will be:

Anticipated transactional costs
CBP estimates incremental supply chain costs of $24-$38 per import transaction and that filing costs will average $10-$50 per transaction.
Potential liquidated damages
Importers could be charged fines equal to the value of the shipment if they fail to file. Importers also face potential charges of $5,000 per transaction for inaccurate or missing data.
Supply chain delays
Anticipate an increased volume of airfreight due to delays in shipment of containerized cargo and failure to meet customer delivery dates due to delays in shipment.
Need for improved collaboration with suppliers
Suppliers, freight forwarders and carriers will need to develop, document and implement better procedures to handle the additional filing requirements. Importers now will be required to manage supplier exports for compliance to ensure the accuracy of the data being filed and transmitted via the Import Security Filing. Shipment pre-alerts or pre-advice will no longer be optional. Bill of Lading detail must be obtained by the importer or its agent prior to container arrival at the foreign port.
More stringent product classification
Identify and implement a procedure for advance determination of the commodity's HTSUS classification. The main objective should be consistency down to the 6-digit level for export formalities, various filings for entry including "10+2", Automated Manifest System (AMS), free trade agreements, OGA (other government agencies) and Advanced Trade Data Initiative (ATDI). More stringent product classification will force a change in process for many importers as they will no longer be able to declare a single HTSUS at origin and no longer be able to group parts under an "other, other" classification.
Adjustment to internal systems
Implement or improve upon procedures for complete and accurate Country of Origin determination with an emphasis on proper reporting of origin of manufacture. This may require revisions to Enterprise Resource Planning (ERP) systems that default on purchase orders and shipping documents for "place of shipment" as origin.
Additional reporting requirements
Document and implement a procedure to accommodate additional reporting requirements associated with Carnet shipments and shipments purchased under the INCOTERM DDP, or Deliver Duty Paid. These transactions did not previously require an electronic submission of data or classification of a product by the importer.
Potential revisions to customs bond
Revisions to an Importer's Customs Bond may result from failure to timely or accurately file the "10+2" information and pay liquidated damages.

Recommendations for global shippers

The "10+2" program will have cascading impacts to global trade. U.S. Importers and any organization exporting to the United States should heed the following advice:

Stay current with the "10+2" initiative by visiting CBP's website.
Analyze your current processes and procedures to ensure that you are prepared to handle the additional filing requirements of "10+2".
Focus on how "10+2" impacts your supply chain in terms of costs and sourcing.
- Do changes need to be made to your current supply chain practices?
- Will new sourcing strategies need to be implemented?
- Will contracts or Service Level Agreements need to be revised with your forwarders, brokers or carriers?
If the filing requirements of "10+2" seem too cumbersome to manage, consider outsourcing to a trade expert.

Import/export improvements: Don't let your guard down

Our international trade attorney gives global shippers an update on 10+2, C-TPAT, and ACE—and shares the consequences of not following a solid compliance program. Read this article.