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Shapiro, celebrating its 99th year in business, will present a seminar for importers titled “The Essentials of Customs Valuation” on August 14, 2014, at the Hotel Monaco in Baltimore.

The half-day seminar, which runs from 9:30 a.m. to 12:00 p.m., will cover valuation rules, what makes a good commercial invoice, and what charges can be deducted from the dutiable value. Under the law, importers are required to use Reasonable Care for the valuation of imported merchandise so that Customs can properly assess duties, collect accurate statistics and determine whether all applicable legal requirements have been met. Importers must ensure all appropriate costs are reported to Customs. The discussion will also feature how Incoterms can impact Customs valuation.

“With 99 years of experience, we are so pleased to be able to offer these educational opportunities to our customers and the importing community,” said Jane Taeger, Shapiro’s Director of Compliance. “Valuation is a critical element of the Customs entry and certain costs are often overlooked. Those attending this seminar will gain valuable information for their import program.”

Following the seminar, attendees are invited to join Shapiro for the annual Crab Feast which attracts thousands and is arguably the most popular industry event of the year. It draws participants from New York to Norfolk and beyond to enjoy all-you-can-eat steamed crabs and plentiful networking opportunities at Conrad Ruth’s Villa, a waterfront park on Middle River. The feast is a fundraiser for the Propeller Club, enabling the group to make significant contributions to various non-profit maritime organizations.

Date: Thursday, August 14th, 2014

Time:
9:30-10:00: Registration and continental breakfast
10:00-12:00: Seminar
Cost (includes continental breakfast and seminar materials):
$90.00 per person
$75.00 for each crab feast ticket

Location:
Hotel Monaco – Athens North Room
2 North Charles Street
Baltimore, MD 21201
Venue Telephone: 443-692-6170

Registration:
Importers and exporters that would like to attend may register here.

The Generalized System of Preferences (GSP) program expired on July 31, 2013. We are now one year into the lapse and the costs have been significant. Estimates show that U.S. importers of GSP goods have had to pay $672 million in duties over the past year. However, there are other costs to importers beyond paying duties on previously duty free merchandise. These costs may include securing a larger Customs bond as bond values are based on the amount of duties paid. Many brokers charge a fee to outlay duties on behalf of their customers. Importers may have had to secure additional financing from their banks since the cost of procuring their goods is now higher. Many importers have changed sourcing to other countries, so there are sunk costs in finding new suppliers.

Are we any closer to GSP renewal than we were a year ago? Unfortunately, no. Hundreds of companies have written to their Congressional representatives urging renewal, but so far there has been no legislation enacted. Congress needs to find a way to “pay” for GSP before they propose to renew the program. With the annual August recess upon us, we can expect at least another month of paying duties on GSP merchandise.

If you would like to contact your Senator or Congressperson regarding GSP, please log onto www.renewgsptoday.com. The website has the addresses for all representatives along with a template letter you can use.

U.S. Customs and Border Protection (CBP) has announced they will be updating the rules for conducting Focused Assessments (FA). CBP intends to implement the changes in October 2015.

The FA program was started in 2001 as an improvement to the previous Compliance Assessment program, which originated as part of the Customs Modernization Act of 1993. CBP’s Office of International Trade, Regulatory Audit (RA) Division, conducts FAs along with their compliance enforcement, post entry audit, and technical audit assistance responsibilities. Their priority is to conduct in-depth importer review to ensure the declaration of accurate and complete information for goods entering the US. From fiscal years 2008-2010 the RA conducted 1053 audits and recommended collection of approximately $154 million in revenue due CBP.

The FA program consists of 3 steps including a Pre-Assessment Survey (PAS), assessment compliance testing, and post assessment follow up.

The updates/enhancements will include:

• Varying the focus of the audit and its approach based on present importer internal controls over import transactions.
• Replacing the currently utilized questionnaire and worksheets for evaluating internal controls with general guidelines for assessing controls.
• The allowance of testable parameters to allow more flexibility in tailoring audits.
• Replacing sample size matrices and ranges to more general criteria rather than on a judgmental basis as selected by the auditor; but the sample sizes will be larger to help CBP determine whether identified issues are material or systemic and due to lack of internal controls.
• Increasing emphasis on the significance and materiality of any audit findings in making final audit determinations.
• The elimination of the formal advance conference; although CBP will still explain the process and provide reference materials on an informal basis instead of at the onsite meeting.
• Initial contact with the importer much earlier in the process so that the risk assessment plan can be better tailored to the specific importer by requesting information such as general ledger detail and written policies/procedures.
• The elimination of the assessment of risk as high, medium, or low with a final assessment taking place later in the process. The focus will be moved to increased emphasis on significance/materiality. As a result it’s possible that certain areas may be excluded from the audit based on additional information gathered during the survey phase as those areas may be deemed insignificant or immaterial.
• The revamp of the PAS to become the PASQ, Pre-Assessment Survey Questionnaire. The questionnaire will be expanded to obtain additional information through narrative related responses rather than yes/no questions.
• Specific limitations to PAS reports on the findings. Findings will be limited to the audit period with a caveat that if conditions change, the risk evaluation may no longer be valid. Where internal controls aren’t documented and there were no significant findings in the audit, auditors will conclude there is an acceptable risk. Where controls are documented and errors are found but are infrequent and immaterial, the auditors will also conclude there is an acceptable risk.

Importers with an acceptable risk conclusion will be given the opportunity to become a participant in the Importer Self-Assessment (ISA) program. If not already a Customs-Trade Partnership Against Terrorism (C-TPAT) member as required to participate in ISA, the importer will be given fast track approval (30-45 days. vs. 90).

Initially the updates will involve only the PAS phase of the audit process with the other processes to be implemented at a later date.

On July 9^th, U. S. Customs and Border Protection (CBP) posted to its website the Customs-Trade Partnership Against Terrorism (C-TPAT) Exporter Entity Eligibility Requirements and Exporter Minimum Security Requirements.

CBP has been in discussions with the trade and other government agencies for the past several years to determine the requirements for C-TPAT for exporters. They have also asked the trade community what benefits they would like to realize if an exporter is C-TPAT certified. At this point, the benefits have not been hammered out, but CBP has established the following eligibility requirements and minimum security requirements for exporters to join the program. Our foreign trading partners are looking for this type of security program from the U.S. to complement the measures they have already established. Developing this export component for C-TPAT will strengthen the C-TPAT program and will also improve the role of the U.S. and mutually recognized foreign customs administrations to secure and facilitate global trade.

For C-TPAT purposes, an exporter is defined as: A person or company who, as the principal party in interest in the export transaction, has the power and responsibility for determining and controlling the sending of the items out of the United States. This definition varies from that in the Foreign Trade Regulations, so companies should keep that in mind to determine whether or not they are the exporter for C-TPAT purposes.

Entities that wish to participate in the C-TPAT exporter program will be required to invest in their supply chain security, have written procedures, and ensure compliance with Census and other U.S. Government agencies. Companies must meet the program’s definition of an exporter as well as the following eligibility requirements:

1. Be an active U.S. exporter out of the United States.
2. Have a business office staffed in the U.S.
3. Be an active U.S. exporter with (a) a documentable Employee Identification Number (EIN), or (b) Dun & Bradstreet (DUNS) number.
4. Have a documented export security program and a designated officer or manager who will act as the C-TPAT program main point of contact. Additionally the participant should have an alternate point of contact should the designated point of contact be unavailable.
5. Commit to maintaining the C-TPAT supply chain security criteria as outlined in the C- TPAT Exporter agreement.
6. Create and provide CBP with a C-TPAT supply chain security profile which identifies how the exporter will meet, maintain, and enhance internal policy to meet the C-TPAT exporter security criteria.
7. In order to be eligible the exporter must have an acceptable level of compliance for export reporting for the latest 12-month period and be in good standing with U.S. regulatory bodies such as the Department of Commerce, Department of State, Department of Treasury, Nuclear Regulatory Commission, Drug Enforcement Administration, and Department of Defense.

Customs has also introduced Exporter Minimum Security Requirements to go along with the eligibility requirements. Highlights of these security requirements include:

• Minimum security criteria where a comprehensive risk assessment is expected from the origin point through any service providers to the consignee. Risk assessment of the company’s export program must be completed on an annual basis.
• Written and verifiable processes for the screening and selection of business partners (service providers, manufacturers, product suppliers, and vendors)
• Security procedures for business partners, which would include documentation or a Status Verification Interface (SVI) number for C-TPAT certified partners; or if the partner participates in a reciprocal Authorized Economic Operator (AEO) program, an AEO certificate. All other partners must attest to compliance with C-TPAT security measures via a written security questionnaire or statement.
• Periodic reviews of business partners’ facilities and processes should be conducted.
• Container security, inspection, seals, storage, and conveyance tracking and monitoring must be documented and meet certain criteria to ensure chain of custody security and restrict access to the export shipment to prevent contraband or tampering.
• Physical access controls must be in place and documented for facilities, employees, visitors, vendors, service providers and deliveries.
• Personnel security must be in place to screen prospective employees and current employees, along with termination procedures.
• All cargo discrepancies must be resolved or investigated as appropriate and notification must be made if any illegal or suspicious activities are detected.
• Documentation should be accurate and verified.
• Computer access must be safeguarded.
• Physical security for facilities both inside and outside need to be maintained.
• Screening for prohibited or restricted parties.
• Export training and threat awareness for employees must be documented.
• Training for shipping and receiving and maintaining cargo integrity.
• Information Technology Security.

There are many benefits to an in depth review of supply chain processes. Some benefits that may be realized from a review and implementation of procedures may be:

• Documented procedures to guarantee policies and meet requirements.
• Greater ability to predict lead time
• Protection of personnel with controlled access
• Decrease in supply chain disruptions
• Chain of custody security
• Increase in number of customers and revenues
• Establishment of supply chain security procedures where none existed
• Reduction in cargo theft and pilferage
• Improve security for workforce and eliminate bad actors before hire

CBP has not yet announced when applications will be accepted for exporters to join C-TPAT, but felt it would be beneficial to post the documents for the exporting community to review and start thinking about best practices for the program. Questions or comments should be directed to: [email protected]

In March of 2009, China Customs published Decree of the General Administration of Customs of the People’s Republic of China No. 172 regarding inbound and outbound manifests. Effective June 30, 2014, China Customs ordered all Chinese ports to implement the new China Customs Advanced Manifest (CCAM) system, and enforce the requirements issued in the decree. China Customs may start strict enforcement and issue “Do Not Load” messages for any shipment arriving in China if the below requirements are not transmitted by the carrier by the following deadlines:

a) Twenty-four (24) hours before loading onto container vessels, and twenty-four (24) hours before arrival at the first port of call within the Chinese Customs territory for non-container vessels;

b) Before the time of takeoff for aircrafts with flight time below four (4) hours; and four (4) hours before arrival at the first port of call within the Chinese Customs territory for aircrafts with flight time above four (4) hours;

c) Two (2) hours before arrival at the first station of call within the Chinese Customs territory for railway trains; or

d) One (1) hour before arrival at the first station of call within the Chinese Customs territory for road vehicles

Requirements for CCAM include the following information:

1. Voyage Number
2. Vessel Name
3. Bill Of Lading Number
4. Measurement of Cargo
5. Port Of Loading
6. Payment Method for Ocean Freight (Prepaid or Collect)
7. Total Number of Packages
8. Type of Packages
9. Total Gross Weight of Cargo Including Packaging but Excluding Container Tare Weight
10. Contract of Carriage Condition (CY or SD)
11. Name of Consignee
12. Complete Street Address or P.O. Box Number of Consignee
13. Name of Shipper
14. Complete Street Address or P.O. Box Number of Shipper
15. Name of Notify Party (This is mandatory if consignee is “To Order”.)
16. Complete Street Address or P.O. Box Number of Notify Party (This is mandatory if consignee is “To Order”.)
17. Name of Contact Person for Dangerous Cargo (This is mandatory when such commodity is being shipped.)
18. Contact Number of Contact Person for Dangerous Cargo (This is mandatory when such commodity is being shipped.)
19. Container Number
20. Container Size and Type
21. Seal Numbers for All Seals Affixed To Containers
22. Type of Packages per Commodity Item

At a Senate Appropriations Homeland Security Subcommittee hearing held on July 16^th, Rich DiNucci, the Acting Assistant Commissioner of U.S. Customs and Border Protection’s (CBP) Office of International Trade, advised that Customs bond application and processing automation would limit litigation risks for CBP and aid in the collection of bonds on unpaid antidumping and countervailing duties (ADD/CVD).

Mr. DiNucci stated that the U.S. government is owed approximately $2.3 billion in unpaid duties from the last 20 years and about one half of that amount has been protested, but CBP has denied 84% of the protests. He and various other speakers stated that automation will allow:

• Better tracking of bonds and their proper execution to avoid subsequent litigation with sureties on improperly executed bonds.
• Improved identification of shell companies where sureties often don’t require said companies to deposit collateral to offset ADD/CVD. Cash deposit requirements should eliminate the use of shell companies. CBP is currently attempting to collect over $80 million through surety companies through approximately 30 lawsuits. Chinese imports account for the bulk of unpaid ADD/CVD and unrecovered bond amounts. It is estimated that CBP currently holds approximately $600 million in new bonds as security for ADD against Chinese garlic, honey, mushroom, and crawfish importations.
• Improved disclosure and broader transparency to allow more pressure to address failed bond collection.

On a side note Mr. DiNucci also advised that CBP continues to increase efforts to improve trade enforcement through initiatives such as ramping up efforts to penalize intellectual property rights violators and to increase collaboration efforts with CBP’s Centers for Excellence and Expertise (CEE) to improve intelligence gathering technics, modernization, and industry relationships.

U.S. Customs and Border Protection has announced this year’s Customs-Trade Partnership Against Terrorism (C-TPAT) annual conference will take place August 26-28 in San Antonio, TX. Attendees can select a workshop day of August 26^th plus the general session on August 27^th, or the general session on the 27^th plus a workshop on August 28^th.

The U.S. Fish & Wildlife Service has posted an announcement that effective August 1^st, the agency will no longer send written notices to wildlife import/export license holders and designated port exception permit holders alerting them of the impending expiration and need for renewal. FWS is ending this service due to “staff and other resource constraints.”

Holders of permits and licenses will be responsible for monitoring expiration dates and obtaining renewals without reminders from FWS. FWS is exploring options for using their eDecs system for electronic reminders, but this is not in place at this time.

Importers are reminded that shipments presented with expired licenses and permits will not be allowed to be cleared.

Many of us in the shipping industry are asking: Why isn’t there news coming out of the West Coast on the Negotiations between the International Longshore & Warehouse Union (ILWU) and Pacific Maritime Association (PMA)? Why is it so quiet on the West Coast this week? Are negotiations between the ILWU and PMA going to continue? Los Angeles and Long Beach have long been the focus of these efforts, but now all eyes are on Washington State.

The ILWU and PMA announced a break in the negotiations, as the ILWU leadership is focusing on two large export grain facilities on the Columbia River in Washington State. The two facilities have been operating without a union contract since September 2012. In February 2013, contract disputes led to a lockout of ILWU workers and ILWU picketing at the terminals, which now operate without ILWU work rules. ILWU leaders obviously want to get those two terminals back under ILWU contract, and have suspended coast wide negotiations with the PMA to do so.

In support of union friends and to pressure the management to agree to terms with the ILWU, the Governor of Washington has terminated the state-paid security guards which accompanied the Washington state agriculture inspectors into the terminals (those inspectors feared for their safety from ILWU pickets). Without the security guards, the inspectors refuse to operate in the terminals, which is bringing terminal operations to a halt. It is unclear what the terminal operators will do, so this is what ILWU leadership is focused on now, and why the West Coast ILWU-PMA container contract is on the back burner for the time being. Negotiations are expected to continue throughout August.

As a contract fails to materialize for the ILWU this peak season, the ocean carriers have been largely successful in implementing the full Peak Season Surcharge of $320/20’, $400/40’, and $450/40’HC in July. On the heels of this increase, the carriers are expected to implement a GRI of $420/20’, $600/40’, and $650/40’HC as of August 1. On top of this, carriers are announcing another rate recovery surcharge of roughly the same amount as the GRI as of September 1. The increases that are taking place are also coming as a result of the strongest peak season with the highest amount of containers shipped during this time of year since 2008. The vessels, particularly to the U.S. east coast and Pacific Northwest and all inland locations are completely full for as much as 3 weeks out. This situation supports the carriers’ push for higher rates during a time of uncertain labor on the U.S. west coast ports.

China’s General Administration for Customs has instructed all Chinese ports to implement a new 24-hour advanced reporting system; however, no official notice on the regulation has been released. Little is known of this new regulation creating uncertainty between forwarders.

The regulation appears to apply all containers discharged or transshipped at Shanghai, the pilot city. However there is no clarity of when or how this new policy is going to be implemented by the Chinese authorities.

Two other big concerns are how the data is going to be submitted and how the ruling applies to less-than-container load cargo. According to the regulation, it is the forwarder’s responsibility to submit the advance manifest data to China customs. However there are only eight officially appointed bonded warehouse operators in Shanghai authorized to summit advance manifest data to China customs. Only one offers EDI service and the other seven simply offer a web link for uploading data.

One definite effect is that the ruling will add to the shipper’s costs. Shipping lines have begun advising the market that they will charge $30 per bill of lading for advance manifest filings and $40 for any amendments.

U.S. flag carrier Crowley Maritime Corp. is in talks for the acquisition of Horizon’s entire Puerto Rico business including its ships, routes, and port facilities for a reported $80 million.

The Nicaraguan government has approved plans to build a canal linking the Pacific and Caribbean through Lake Nicaragua. They plan on building a canal to accommodate super-post-panamax ships up to about 23,000 TEUs. This has industry experts skeptical whether it can be done for the proposed US$40 billion and five years the HK Nicaragua Canal Development Investment Co. has estimated. Also most are skeptical of whether a canal of this size and scope will even be needed with the new locks at the Panama Canal slated to open in January 2016.

Hamburg Sud has entered a preliminary agreement to acquire Chilean based Compañía Chilena de Navegación Interoceánica (CCNI) as of December 31, 2014. The deal would combine the 13^th (HSUD) and 28^th (CCNI) largest carriers, moving Hamburg up to the 11^th spot.

Chilean port workers union, Union Portuaria, started an indefinite strike on July 8^th over recent proposed changes to labor laws that affect working hours, particularly lunch and rest breaks.

International Longshore & Warehouse Union (ILWU) workers walked off terminals in early July at both the Port of Long Beach and the Port of Los Angeles in a show of support for the Teamsters Union picketing action. The ILWU had previously stated they would not cross picket lines should the Teamsters Union choose to take action. Teamster drivers claim that they were incorrectly classified as independent contractors instead of true employees by trucking companies. As contractors, the drivers do not receive the same overtime, workers’ compensation coverage, and other guarantees that employees are allotted.

The ILWU, currently in deep negotiations with the Pacific Maritime Association (PMA) over a multi-year contract which technically expired on July 1, are currently on a break from negotiations to allow the union to deal with “an unrelated negotiation.” This action gave the PMA cause to call in the designated arbiter, who determined the picket was illegal under the waterfront contract and thus, instructed longshoremen to return to work. These events have allowed the ILWU to show solidarity for fellow unions without threatening their own negotiations with employers.

Imports into India are now experiencing backlogs of “unprecedented” levels at the country’s largest container gateway. At the present time there is a backlog of 10,000 20’ equivalent units, mostly destined for the Tughlakabad import container depot in the Delhi area. The biggest reason for the backlog is due to insufficient placement of trains to handle the volume to the Delhi area. This is a great concern to officials in India because Nhava Sheva accounts for more than half of India’s container volume.

As reported by the JOC in July, worsening congestion at the port of Rotterdam has prompted two short sea and feeder shipping lines to impose surcharges of around $100 per container. Shippers could also be hit by congestion surcharges at one of Hamburg’s largest terminals, and Antwerp is showing the first signs of cargo bottlenecks as the European vacation season gets into full swing.

Team Lines, a German feeder operator, said the situation in Rotterdam has not shown “any significant improvements” since the end of May, when it was experiencing berthing delays of up to 48 hours at the ECT Delta terminals. The terminals “are still facing severe congestion and the operational constraints are increasing,” leading to extra costs and disruptions to its schedules at Europe’s largest container port, the company said.

Although Europe may see Greece as a troublesome economic basket case, China views its strategic location on the EU’s periphery as an ideal transshipment hub for its European and African markets, thereby reducing the time it takes to move Chinese exports to the EU by 7 to 11 days, and cutting operational costs for firms.

Piraeus is already the world’s fastest-growing container port (98% growth in 2011), primarily because of the involvement of Chinese terminal operator Cosco, which paid $5 billion in 2009 for a 35-year concession to operate two of the three terminals, thus expanding its annual capacity by 1 million TEUs to 2.6 million TEUs. A third terminal is scheduled for completion in 2015. It will include a high-density stacking system that will increase capacity by an additional 1 million TEUs.

A total $5billion of deals in shipping, trade and energy were signed by China and Greece during a three day visit by Premier Li Keqiang to Athens last month. One of the deals signed is a credit line of $1.5 billion between China Development Bank and Costamare (an Athens-based and NYSE-listed container ship owner), securing a potential order of 10,000-plus-TEUs vessels at Chinese shipyards from Costamare.

In spite of extra summer capacity, get ready for airfreight volumes to surge up. New electronics such as the iPhone 6 are reported to be filling the aircraft coming from Shanghai to the U.S. over the next few weeks. Rates in the market have increased by 6 RMB and space is reported as “tight.”

Etihad, an Abu Dhabi based carrier has announced new routes to San Francisco starting November 18^th, and to Dallas-Fort Worth starting December 3^rd.

In July, the U.S. Federal Aviation Administration and EASA (European Aviation Safety Agency) restricted flights in and out of Israel’s Tel Aviv Airport. This was in response to a rocket strike near the airport. As of July 24^th all known restrictions have been lifted. The pressure is on for carriers and aviation agencies to improve risk assessment in light of the attack that brought down MH17 over the Ukraine. Directors of the world’s major aviation organizations met in late July to discuss how best to mitigate risks stemming from conflict zones.

Shapiro proudly congratulates its long-term customer, Feld Entertainment®, for consolidating two smaller Howard County operation centers and signing a 10-year lease to a 250,000-square-foot warehouse in Jessup, Maryland. According to an article recently featured in the Baltimore Sun, Feld Entertainment chooses Jessup distribution hub, the site, which originally housed a manufacturing plant, has been redeveloped to accommodate the live entertainment provider and will employ 60 full-time workers, with 15 additional positions during peak seasons.

Feld Entertainment®, based out of Palmetto, Florida, is a third generation family-owned worldwide leader in producing and presenting live touring family entertainment experiences. Founded in 1967, Feld Entertainment® productions currently include Ringling Bros. and Barnum & Bailey®, Monster Jam®, Monster Energy Supercross, AMSOIL Arenacross, Marvel Universe LIVE!, Disney On Ice, and Disney Live! The Feld philosophy invests passion, innovation and meticulous attention to detail in astonishing shows that enthrall more than 30 million people in 75 countries on six continents, with as many as 5,000 shows each year. The company currently imports into the Port of Baltimore, making the relocation optimal when receiving freight shipments.

Shapiro, also a third generation family-owned company, has been partnering with Feld Entertainment® for over 20 years providing an array of innovative and flexible logistics solutions such as international freight forwarding, Customs brokerage, and Purchase Order Management (POM). “Shapiro is extremely proud to be a part of Feld Entertainment’s® continued growth and expansion,” notes Kathy McKoy, Shapiro’s Regional Manager. “Through our relationship of two decades, we have had the opportunity to experience their growth firsthand, in addition to their support of our beloved Port of Baltimore. They are part of the Shapiro family.”

“Feld Entertainment® is thrilled with all of the new opportunities that will be afforded through our brand new state-of-the-art distribution center in Jessup. We’re looking forward to providing improved and more efficient services to all of the Feld properties worldwide through this facility,” said Thomas Higgerson, Feld’s vice president of transportation and logistics. “In addition, we’re very pleased to be able to continue working with our long time partners in the Baltimore area. In particular, the Shapiro organization has provided Feld Entertainment® with impressive support and we’re very excited about continuing this long and successful partnership going forward. It’s these kind of relationships that have allowed Feld to flourish internationally.”

As previously featured in Shap Talk, Shapiro has been sharing with you the names of employees who have been recognized for their exceptional efforts and contributions to our Company. At Shapiro, we continually work to develop, challenge, and inspire all of our employees to grow individually and with the Company. This month, we would like to recognize Sainabou Jagne, Import Analyst in New York, for her outstanding performance and contributions.

We encourage you to provide us with employee feedback! Please email us at [email protected].