February 4, 2016

As ACE deadline looms, doubts about readiness, calls for partial delay grow

Few are fully prepared for the mandated Feb. 28 switch to Customs' Automated Commercial Environment system, raising concerns about potential supply chain disruptions.

By Toby Gooley

On Feb. 28, U.S. Customs and Border Protection (CBP) plans to shut down the Automated Commercial System (ACS)—the mechanism long used by importers and customs brokers to submit, process, and share information about U.S. imports—and require traders to file import entries and associated summaries in the Automated Commercial Environment (ACE), the long-awaited information-management system that's expected to greatly improve the complex transactions required for import and export compliance.

Also on that date, a handful of other federal agencies, including the Food and Drug Administration (FDA), are supposed to begin using ACE's "Single Window" program, which eventually will eliminate the need for traders to submit separate filings to multiple government agencies.

But as the deadline approaches, concerns are growing over whether the trade community—and CBP itself—can make the switch without it causing supply chain disruptions. Though some early adopters were proactive about piloting and implementing ACE, many others are not ready to convert. As a result, stakeholders are becoming more vocal about postponing some aspects of ACE implementation.

In a Jan. 8 open letter to importers, the National Customs Brokers and Forwarders Association of America (NCBFAA) placed much of the blame on CBP, asserting that some functions will not be available until the transition date, and that the agency continues to make software refinements and issue system updates "on an almost daily basis." The group has asked CBP to halt all software changes so that developers of the software required for electronic filing can finalize their products, and so that joint testing by government agencies, customs brokers, importers, and the vendors can be completed. That process requires a minimum of 60 days, the group said.

The ACE implementation deadline originally was set for Nov. 1, 2015. Last August, CBP postponed it to Feb. 28, 2016, after customs brokers and software providers said the original deadline and the slow release of technical specifications did not give them enough time to conduct the necessary programming, integration, testing, and revisions. Even with that delay, just 17 percent of import entries in January were processed through ACE, according to information provided by customs broker Livingston International.

There are a number of reasons why entry filers are at different stages of readiness, Vincent Iacopella, president, U.S. West Division of Janel Group Inc., a provider of integrated international logistics services, said in an interview. Iacopella, who is also the current trade cochair for COAC, a committee that advises CBP on commercial operations, emphasized that his comments were made on behalf of Janel and not COAC.

Iacopella said importers and customs brokers that handle a variety of products and associated regulatory requirements will have to manage more software and process changes than those that are limited to a single industry. In addition, software vendors that importers and customs brokers depend on are, for a number of reasons, "not all in the same place" when it comes to locking down the various functions within ACE, he said.

Other government agencies involved in international trade are at different stages of programming, testing, and implementing the Single Window aspect of ACE. That's a big concern for importers that are highly dependent on a particular government agency, Iacopella said, citing the example of the FDA's control over imports of medical devices. The decisions filers have made about their implementation strategy also are affecting their readiness, he added.

Iacopella said the most effective way to address the situation would be to move forward with what works today, and then phase in additional capabilities as they are finalized. "A wholesale delay off the Feb. 28 deadline, in my opinion, would not be helpful," Iacopella said. "We should stick to the deadline with 'carveouts' for functionality that a broad section of filers will have challenges implementing in ACE, or that cause commercial hardship to filers or the supply chain." It will be critical, he added, that CBP develop contingency plans for preventing or mitigating ACE-related delays in import processing.

About the Author

Toby Gooley
Senior Editor
Before joining DC VELOCITY and its sister publication, CSCMP's Supply Chain Quarterly, where she serves as Editor, Toby Gooley spent 20 years at Logistics Management covering international trade and transportation as Senior Editor and Managing Editor. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

More articles by Toby Gooley

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