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.