While the kinks are being worked out of the EU's new cargo security system, here are some precautions U.S. exporters can take to avoid holdups and delays.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. 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.
In January, when the European Union (EU) began enforcing cargo security rules requiring advance notification of shipment details for imports, European importers were up in arms. An article in a European trade publication accused customs authorities of "creating supply chain chaos." The Shippers' Voice, an independent information pOréal, reported that some ocean carriers were asking for freight data five days prior to loading on board a ship, even though the EU requires it only 24 hours in advance. The group quoted an importer who said that one carrier had demanded the information, including the container number and seal, before that carrier had even delivered an empty container to the supplier for loading. "I guess we're supposed to make up the container numbers!" the unidentified importer said.
Things have settled down since then, and at this point, shippers, carriers, freight forwarders, and customs brokers appear to have worked out most of the kinks in the new system. Still, there are some details U.S. exporters that ship goods to Europe should be aware of as well as some things they can do to ensure their shipments aren't held up on the other side of the Atlantic.
Like 10+2, only more so
The advance filing requirement that ruffled so many feathers is part of the EU's Import Control System (ICS). ICS allows customs authorities to electronically review and conduct risk analyses of Entry Summary Declarations (ENS) before goods arrive in EU member countries by air, sea, or land. The ENS does not reflect the goods' monetary value and does not replace import declarations that are used for assessing duties.
Europe's system has two "striking differences" from the similar Importer Security Filing program (known informally as "10+2") in the United States, says Caroline Gubbi, business development and compliance executive for the international logistics company BDP International. "First and most important, the filing under the European security rules must be done by the carrier, which has sole responsibility for it," says the Antwerp, Belgium-based compliance expert. (Another party may do the filing, but only with the carrier's knowledge and consent.) In the United States, the importer and the carrier file. Another difference is that the ENS requires 22 data elements—considerably more than the 12 required for the ISF. (See sidebar for a list of the required ENS data and filing deadlines by mode.)
Many of the 22 elements are familiar to U.S. shippers. "These pieces of data are, for the most part, the same data elements required for the mandatory Electronic Export Information (EEI) filed with the Census Bureau," says John Little, BDP International's director of compliance. The time frames for the EEI filing are the same as those required under the EU regulation, he adds.
But some information is new or somewhat different than before. For instance, the validated Economic Operators Registration and Identification (EORI), a unique number assigned to importers and exporters in the EU that must be shown on the entry summary, is "information that had not been provided in the past by any party," Little says.
Another change: In the past, exporters and forwarders did not have to provide a Harmonized Tariff System (HTS) code for a commodity unless the shipment was valued at $2,500 or more, says Paul King, U.S.-based vice president, product management–airfreight for Schenker Inc., a global freight forwarder and third-party logistics (3PL) company. Now, the HTS requirement is mandatory for all shipments, he notes.
Exporters should also be aware that such vague terms as "freight consolidation," "general cargo," or "parts" are no longer acceptable, Gubbi adds. She encourages shippers to consider adding more detail to product descriptions on their commercial invoices if the description is not specific. However, she concedes, "this might pose challenges to shippers with limited systems capability or restrictions on the length of product descriptions in their legacy systems."
Who's responsible?
Implementing ICS, which applies to all modes of transportation, has largely been smooth sailing. Schenker's King says his company had to make some IT investments to enable it to feed the 22 elements to the carrier and to ensure timely submission, and the airlines themselves had to make similar investments in order to feed the data to European customs, he says. For the most part, though, "this is data that we were already collecting and entering [into operational systems] on the day a shipment was received."
Yet there have been some bumps in the road. For one thing, Gubbi says, the ENS legislation does not specify which party must pay the filing fee to the carrier. Nor is it clear under which international sales term the ENS filing fee falls, Gubbi says. "So, for example, [the fee] cannot be referred to as an FOB (Free on Board) charge," she says.
To avoid confusion, she suggests that the shipper and its European customer agree in advance who will pay the ENS filing fee to the carrier.
A potential source of disagreement between shipper and carrier is the EORI—or to be precise, whether the number is required for an ENS filing. The wording of the EU regulations indicates that the ENS can still be accepted if the EORI numbers are not available. However, some ocean carriers have said they will not accept the ENS data if the EORIs are not included, Little notes.
Another area where carriers and shippers may not see eye to eye is the cutoff time for freight data submissions. Although the data are required 24 hours before loading, some carriers have been requiring the exporter to provide the information 48 hours to four days in advance to give them enough time to process and submit it to European customs authorities, says Sheila Hewitt, vice president of the 3PL Transplace's international arm. "In some cases, shippers have difficulty communicating that information because they have not yet loaded the materials into a container, making a tight window for them to get it to the ocean carrier in time," she observes.
What if the U.S. exporter cannot provide all the necessary information? "We have a list of required information. If any were missing, including one of the mandatory elements, our operating system alerts us, and we have to collect and enter the necessary data before we can proceed," King says. "It's highly unlikely a shipment would get through with missing data; if this happened and the carriers were unable to file with EU customs, then it could result in delays or penalties."
The direct responsibility for filing lies with the carrier, so—depending on the issue, King emphasizes—the carrier, shipper, or forwarder may be liable for any penalties. In some circumstances, carriers could elect to pass those penalties on to customers.
One of the best ways to ensure compliance with the EU's Import Control System, says Hewitt, is to put systems in place to monitor the filing of the data. She suggests that exporters to Europe apply the same kinds of controls their import colleagues use for ISF compliance: early deadlines for having complete filing data in hand, a system for notifying the responsible parties when a deadline draws near or is missed, and a policy of holding back shipments with incomplete data elements lest the customer incur fines.
And, although it may sound like a cliché, communication really is key to assuring compliance. Exporters should work with their ocean and air carriers, non-vessel operating common carriers, and international freight forwarders to make sure all parties are clear on all deadlines for submitting data. Otherwise, Hewitt says, they run the risk of having their cargo held back or getting hit with penalties and additional charges.
And you thought 10+2 was a lot ...
The European Union's Import Control System requires carriers to file an Entry Summary Declaration (ENS) containing 22 data elements prior to a shipment's arrival at the point of entry. They include:
Seller/consignor (Economic Operators Registration and Identification [EORI] number)
Buyer/consignee (EORI number)
House bill of lading number
Master bill of lading number
Carrier
Person entering the filing
Notification party
Country of origin
At least the first four digits of the EU Commodity Harmonized Tariff Schedule (HTS) number
Loading location
First EU port of entry
Description of goods
Packaging type code
Number of packages
Shipment marks and numbers
Container number
Container seal number
Gross weight in kilos
U.N. Dangerous Goods code
Transportation method of payment code
Arrival date at first EU port
Declaration date
The deadlines for filing these data vary by mode of transport.
Maritime:
Containerized ocean transport: 24 hours before loading at the port of departure
Non-containerized ocean transport: four hours before arrival at the first EU port of entry
Short-sea transport: two hours before arrival at the first port of entry
Air:
Long haul (more than four hours): four hours before arrival at first airport of entry
Short haul (less than four hours): at takeoff
Road:
One hour before arrival at the customs office of entry
Rail:
Two hours before arrival at the customs office of entry
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.