March 19, 2013

Delays likely as U.S. Customs plans furloughs in response to sequester budget cuts

Agency warns reduced overtime, unpaid furloughs could slow cargo clearance and inspections; trade braces for delays as rising tide of imports rolls toward U.S. shores.

By Toby Gooley

U.S. Customs and Border Protection's (CBP) plans to reduce manpower at the nation's ports of entry as a result of budget cuts is raising concern among U.S. importers that a surge of inbound cargoes from Asia will go days without being inspected, processed, and cleared.

CBP said that effective April 21, 2013, it will require employees to take two days of unpaid leave each month. The furloughs are a cost-cutting measure in response to $85 billion in across-the-board budget cuts mandated under the Budget Control Act of 2011.

According to a letter in early March from Deputy Commissioner David V. Aguilar to international trade and travel organizations, the furloughs plus reductions in overtime and a hiring freeze "will equate to the loss of several thousand" officers at ports of entry.

Aguilar warned in the letter that once furloughs begin, importers and customs brokers could expect delays in expedited processing and that compliance audits could take longer than usual. Cargo inspections at major ocean ports of entry could take five days longer than they normally do, officials said.

But problems could soon crop up at busy West Coast ports like Los Angeles and Long Beach that operate nearly around the clock and depend on CBP officers to routinely work overtime, particularly to operate equipment designed to detect radiation. According to a summary of the first of a series of weekly "sequestration update" conference calls between CBP officials and the international trade community provided by the Coalition of New England Companies for Trade (CONECT), CBP confirmed during the March 8 call that it had eliminated staff overtime and nonessential travel.

The slowdown at West Coast ports has generated a lot of political heat on the West Coast. Members of Congress for the 44th and 47th districts in California, whose economies depend heavily on the ports of Los Angeles and Long Beach—the nation's two busiest—reportedly have asked Deputy Commissioner Aguilar to reconsider eliminating overtime.

International traders are worried that the problem will quickly get worse, said Karen M. Kenney, chief operating officer of Liberty International Inc., a Providence, R.I.-based customs broker and freight forwarder, and CONECT's chair.

"The trade's concern is that the sailings that left right after the Chinese New Year will be arriving as early as next week. That's when volume on the West Coast will tick up," Kenney said in an interview. "We were blessed in a way that we had lower cargo volumes because of Chinese New Year when CBP eliminated overtime. What will happen next week when volumes increase?"

The 2013 Lunar New Year holiday period, when many factories shut down, ended in mid-February.

CBP has sought to reassure international traders that it "will not allow degradation" of the agency's security and antiterrorism efforts, and that it will prioritize "core processing and facilitation operations" for both travelers and cargo. Officials also offered assurances that CBP would continue to prioritize inspections and clearance of perishable products. All "trusted trader" programs, including the Customs-Trade Partnership Against Terrorism (C-TPAT) and Free and Secure Trade (FAST), will be maintained, CBP said.

In another conference call, on March 15, CBP officials said the agency would continue to provide "front of the line" treatment for C-TPAT-certified importers, according to Kenney, who participates in the calls as a member of the Advisory Committee on Commercial Operations of Customs and Border Protection (COAC). Officials also said CBP would post any changes in hours of service at ports of entry on its website. Decisions about service hours will be made at the port level.

What will happen next is anyone's guess. Other agencies that play a role in approving import entries, such as the Food and Drug Administration and the U.S. Fish and Wildlife service, also face budget cuts. On March 11, Fish and Wildlife said it eliminated inspection and clearance of wildlife-related import/export shipments during overtime hours on weekdays, weekends, and federal holidays.

In addition, funding of government activities after March 27 depends on passage of a continuing resolution approved by both houses. It's uncertain whether the bill will pass in time, and whether the final version will include line items that could change importers' situation for better or for worse, Kenney said.

Kenney and other international traders hope the bill will include changes to allow CBP the flexibility to continue to provide overtime services. "That's the trade's biggest concern right now," she said.

CBP has posted information about the potential impact of sequestration on imports.

About the Author

Toby Gooley
Contributing Editor
Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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