The Trade Bridge Blog

C-TPAT Kicking and Screaming?

I've met a new SME ally through this blog, Philip Spayd of Global Trade Systems and formerly of Customs. Phil makes a very good point about SMEs and their importance in the supply chain and its security:

"Our clients at GTS—all predominately SMEs...have for the most part approached C-TPAT as an obligation to be fulfilled.  Often they are pressured to join by customers or other business partners who are C-TPAT certified. They did not initially approach C-TPAT from a strategic interest in improving supply chain management or in recognizing risk within the supply chain. They wanted to take the basic actions to achieve certification.  We help our clients fulfill these needs, but also help them to see the benefits they can achieve in recognizing other risks in their supply chain, and laying the foundation for being able to respond to disruptions.

A point that I believe is important for SMEs to understand is that C-TPAT and SAFE, together with the initiates such as pending product safety and legislation, the TSA air cargo screening initiative (Certified Cargo Screening Program), and efforts to demonstrate environmental responsibility within the supply chain, will create entire classes of firms that are known entities that meet basic international security (and safety and environmental) standards, and that many business relationships will be built on this status.  The risks of doing business with companies outside the network of authorized economic operators (or known parties, or whatever we decide to call them) will be too high.

So, my advice to SMEs would be to find a practical way to approach C-TPAT, and to use it not only to achieve C-TAPT certification, but as a platform to recognize other risks within their supply chains, and to move into the realm of being a known, responsible, stable and secure member of the supply chains of which they are a part."  Well said, Phil.

What is 10+2 Going to Cost Us?

Kudos to Jennifer Baxter, Gail Coad and Christopher Chan at Industrial Economics for digging deep to research what 10+2 is going to cost SMEs. They were retained last year by CBP to do an economic impact analysis of 10+2. On Mike Laden's recommendation, we had a lively, in-depth discussion today as they further researched how 10+2 might impact SMEs. It breaks down into these categories of cost: IT, research, changes in terms of sale, transmitting the security filing. And these costs depend upon the complexity of the supply chain, the level of automation, business style, degree of business process change and the costs charged by the broker or ABI service provider. I'll be putting all this information together into a presentation for the American Association of Importers and Exporters on June 3. Look for my upcoming SME importer survey results and the subsequent detailed analysis on the Trade Bridge web site as well.

Prepare for 10+2 NOW

To help importers prepare for 10+2 I found a great document online. Prepare for 10+2 by understanding how importers need to design and build their databases to accomodate CBP's Security Filing. Global Data Mining presented the step-by-step process at the recent National Customs Brokers and Forwarders Association of America (NCBFAA) convention. The best thing about this document is that it gives you enough direction to work with your IT Department or consultant to estimate this part of the cost of complying with the new rule.

Getting an A+ on Your AES Compliance Review

Jerry Greenwell, Ombudsman for the Census Foreign Trade Division, delivered an informative and entertaining session at the ICPA annual gathering recently. A few key points...

• Don't get confused by the lack of coordination between Incoterms and export regs etc. The only thing to understand is whether the export is buyer or seller-controlled.
• New on his presentation agenda...AES Compliance Review Program...help to avoid costly penalties and being sent to the principal's office, Office of Export Enforcement (ital added for emphasis).
• Best Practices to get an A+ on your compliance review...(I love this one), "Keep your contact data at the Census Foreign Trade Division up-to-date." Duh!
• Voluntary Self-Disclosure is also new...need to report a violation or potential violation? Score brownie points by self-disclosing.
• Routed export transactions (where the overseas buyer controls the movement of the cargo) are not good business practice.
• Option 4, post-departure filing is still under moratorium, "...and probabaly will not re-open..." (This is Jerry opinion.)

Jerry knows his stuff and is available for trainings for the cost of travel and a per diem. If you want to contact him directly call 301-763-6975 or e-mail him.

10 + 2 Becoming a Reality - Get Prepared

10 + 2 is bearing down on us. The rule is now a Notice of Proposed Rule Making (NPRM) and in less than 60 days it is likely to be inevitable. For information on how to prepare your company for this change see Customs web site, the American Association of Exporters and Importers Alert, Trade Innovations' write-up, and any of the Trade Bridge International FAQs on 10+2: October 18th, 2007 webinar, June 7th, 2008 webinar. If you are considering direct-filing of your customs entries with TRG Direct you may automatically be prepared to comply with this new security rule. Contact the direct-filing experts for details.

Trade Bridge at the World Customs Organization

Next week Trade Bridge makes its debut at the WCO in Brussels. I'll be presenting an update on C-TPAT from the perspective of SMEs. Thanks to all of you who completed the survey. Your views will be made known at the WCO SAFE Framework of Standards conference on December 11th. Check www.TradeBridgeInternational.com for the results of the C-TPAT Survey.

What is 10? What is 2? What is 24?

Here are the 10 advance data elements to be required by "10+2" from the responsible party, the importer:

1. Manufacturer name and address
2. Seller name and address
3. Container stuffing location
4. Consolidator name and address 
5. Buyer name and address 
6. Ship to name and address   
7. Importer of record number   
8. Consignee number   
9. Country of origin of the goods   
10. Commodity Harmonized Tariff Schedule number (6 digit)

Here are the 2 additional advance data elements to be required by "10+2" from ocean carriers:

1. Vessel Stow Plan
2. Container Status Messages

Expect to have to produce this info 24 hours before the vessel is loaded.

10+2 Redux, featuring John Jurgutis, CBP

Trade Bridge members met with CBP this month courtesy of TBI, to hear about CBP's Security Filing (10+2). Members met in the San Francisco Bay area with John Jurgutis, a Management and Program Analyst for the Secure Freight Initiative. The seminar was simultaneously broadcast to a TBI SME webinar audience. Over 200 SME participants were engaged in finding out what CBP's latest Security Filing (10+2) means for them and their business operations. (The WCO also addressed the audience from Brussels but I'll discuss that topic in a later post.) This effort by CBP to talk directly to SMEs is part of their response to demands from the trade that "CBP needs to reach out and get our feedback." If you're interested in seeing the program materials check out this TBI page. Feedback to CBP can be sent to John Jurgutis.

Timing is Everything

It's amazing how important a few data elements can be when it comes to national security. CBP is turning the importers' world upside down just by requiring that they produce the data elements for a shipment at different times than in the past. It is rumored that those who sit back and do nothing are guaranteed to pay more to their customs broker and/or other intermediaries to have them manage this aspect of compliance and file the security information with CBP. For more on this CBP Security Filing go to the FAQ.

$1,000,000 Per Keystroke? Let's Talk!

  According to one of the senior members of the Private Sector Consultative Group of the WCO, that's the cost per keystroke to multinational international traders every time a government agency or regulatory body imposes new guidelines or requirements on them. I have no idea how accurate this estimate is but even if it costs $10,000 per keystroke, that's enough to put some SME international traders out of business. And it's enough reason for TBI members to be concerned about the impact that 10+2 and the SAFE framework will have on their businesses. TBI addressed the CBP 10+2 issue with members recently. Now it's on to the WCO and the SAFE Framework.

On June 10, 2007 Trade Bridge International 6000 SME importer and exporters began whispering to Michael Schmitz, Director of Facilitation and Compliance for the WCO. Today, July 18th, 2007, that whispering grew to a harmonized dialogue between TBI and the WCO. Director Schmitz, Mr. Simon Royals of the WCO - Facilitation Sub-Directorate (Procedures) and yours truly had the first of, what I hope are, numerous conversations about the interests of SMEs and the impact of WCO initiatives on their operations.

As the sponsors of TBI accurately perceived before TBIs formation, there were no national or international organizations speaking exclusive on behalf of SME importers and exporters. Thus, not only is CBP anxious to reach our members as demonstrated by TBI's recent seminar-webinar on 10+2, the WCO is eager to hear from our SME members as well. The exchange between the WCO and TBI today confirmed that perception.

Director Schmitz tentatively invited me to speak on behalf of the Trade Bridge SME members at the World Customs Forum scheduled for February of 2008 in Brussels. This would be the first formal introduction of TBI to the WCO and it would be an opportunity for SME importers and exporters to be heard directly at the international level. While these are all preliminary plans, the tone and content of the conversations were very positive for TBI members.

Director Schmitz has also offered to speak to an audience of TBI members in the U.S. on the topic of the SAFE Framework of standards to secure and facilitate global trade. Coincidentally Richard DiNucci, Program Director for CBPs Security Filing (10+2) has offered to speak to TBI members again to update them on the progress of the Security Filing. (Mr. DiNucci spoke to TBI members on June 7, 2007.) Note that 10+2 and the SAFE framework are not the same and an opportunity for SMEs to hear from both CBP and the WCO could be both timely and eye-opening for SMEs, CBP and the WCO.

We'll keep you posted on how, when and where you can learn more about the impact of the tightening security environment on your business operations. And, as we suggested with direct-filing of customs entries, we are committed to finding solutions that mitigate the negative impact of the changing security and regulatory environment. To learn more about securing your supply chain contact the guys at Trade Innovations. Not only can they help secure your supply chain, they can find ways to reduce your costs of importing.

The Value of Direct-Filing for SME Importers

Trade Bridge's sponsor, TRG Direct/TBI Brokers, Inc., recently introduced a direct-filing service for SME importers (AKA self-filing). However, for most SME importers, direct-filing still exists in that dreamland of "what might be." This situation, I hope, is poised for change.

This morning I received a Research Brief by Aberdeen Group: Download aberdeen_group_on_tradecompliancevalue_2007.pdf . In a few pages they illustrate 5 compliance-related savings opportunities including "potential self-filing savings." This is the result of research conducted by Aberdeen, "the leading provider of fact-based research focused on the global technology-driven value chain."

It's obvious that Aberdeen is researching larger companies but, in this case, that doesn't make the conclusions they arrive at less relevant to SMEs. Usually, the solutions are not realistic for SMEs or there are no solutions designed for SMEs. In the example of direct-filing this is not true.

TRG Direct is the only direct-filing service designed specifically for use by SME importers. The cost of entry is low, there are no long-term contracts, the transition can be phased in and support from licensed customs brokers is included in the service. To date the ROI, return on investment, for TRG Direct clients ranges from 261% to 1148%. It makes sense for SME importers to take Aberdeen's advice and "assess the feasibility of using a self-filing service."