Customs Update:  Manifest Rules are Changing - Again
(Published May 8, 2003 -The Journal of Commerce Online)

The requirement for ocean advance manifest information took effect on December 2, 2002. Allowing a transition period, Customs did not begin to enforce the new rules until February 2, 2003 and made clear at the time that it was first going to focus on cargo descriptions. In recent public fora, senior Customs officials have stated approximately 150,000 bills of lading have been reviewed but only about 140 no-load orders have been issued. Customs has also admitted that the new advance manifest rules have led to between six and 12 seizures of arms, war materiel and similar non-drug contraband.

Effective May 4, 2003, individual ports became responsible for identifying, selecting and initiating no-load orders whenever invalid cargo descriptions are used. Any shipments so designated will be referred to Customs Headquarters for coordination and prior approval. Any questions about what constitutes acceptable cargo descriptions can be answered by reading the Frequently Asked Questions section on Customs' Web site.

With this expanded focus, Customs expects to convince the carriers/NVOCCs to input cargo descriptions in that field only and not in other fields like the marks and numbers. While in the long run, penalties may be issued, before any such action is taken, Customs headquarters will require a minimum of three (3) documented informed compliance notifications (warnings) be sent to the carrier/NVOCC in question.

Consignee info under scrutiny

Further expanding its focus to additional important fields, effective May 15, 2003, Customs will begin taking enforcement action when egregious consignee name and address violations occur, i.e., if the name and address are not proper, such sloppiness could also lead to no-load orders. Examples of egregious names would be leaving the field blank, or using "To Order" or "Order of Shipper" without corresponding information in the shipper field and notify party boxes. Other examples are incomplete addresses (such as no street address) or invalid/fictitious addresses.

Also effective May 15, 2003, ports will be authorized to issue monetary penalties for Freight Remaining on Board (FROB) with invalid cargo descriptions or cargo which fails to comply with the 24-hour advance notice requirement. Carriers/NVOCCs could be subject to monetary penalties and/or bond breaches on a per vessel arrival or per bill of lading basis. The initial penalty/bond breach likely will start at $5,000 for the first violation and $10,000 for any subsequent violations. If there are multiple NVOCCs in violation of the requirements, a case may be initiated against each one separately.

While the U.S. continues its advance manifest efforts, Canada has just announced that it, too, will enact a 24-hour rule which will be implemented by April 2004.

As of April 2003, the following are AMS certified: 149 ocean carriers, 618 NVOCCS, 62 service centers, 18 port authorities, 16 secondary notify parties, and 26 software vendors. Another 782 letters of intent have been filed with Customs.

Efforts to speed cargo

In an effort to resolve some of the remaining issues having to do with why freight takes so long to move, Customs is encouraging the bill of lading number be issued at time of booking. Programming has been updated so that NVOCCs are now able to state the master bill of lading in their AMS transmissions. Finally, Customs has also made clear that all amendments to manifest must be made 24 hours prior to loading, with three exceptions: 1) a change in seal number; 2) a change in vessel name and/or voyage number, and 3) when the carrier drops the last port of loading. Customs wants amendments made even after loading so that information is correct upon arrival but, of course, any post-loading amendments could lead to penalties.

While the adversary relationship between carriers and NVOCCs continues but is perhaps a bit toned down, Customs is holding meetings with all sectors of the industry. Currently, there seem to be two quite different ideas about how to speed things up even more. One group of NVOCCs is urging Customs to change things around so the NVOCC transmits manifest information only and all other functions are performed, as was traditionally done, by the vessel operators. The other NVOCC group argues for more flexibility. Their position is NVOCCs should be able to perform whatever functions they deem beneficial for their customers. If that means the NVOCC only handles manifest transmission, that's fine, but if the NVOCC wants to handle everything, Customs should program the AMS system to allow for full service. Which side will be more persuasive remains to be seen. Stay tuned for more details!