1 Importer Security Filing and Additional Carrier Requirements “10+2” Trade Outreach Webinar Spring 2010

2 Today ’ s Presentation on “ 10+2 ”  Overview of the ISF Requirements  Program Update  Enforcement Strategy  Top ISF Issues  Q & A Session Los Angeles - Long Beach Seaport

3 What is the Security Filing? Carrier Requirements: Vessel Stow Plans required for arriving vessels with containers. Container Status Messages required for containers arriving via vessel. The Security Filing, commonly known as the “10+2” initiative, is a Customs and Border Protection (CBP) regulation that requires importers and vessel operating carriers to provide additional advance trade data to for non-bulk cargo shipments arriving into the United States by vessel. Importer Requirements: U.S. Bound Cargo: requires the electronic filing of an Importer Security Filing (ISF) comprised of 10 data elements (a.k.a., “ISF-10”). Transit Cargo: requires the electronic filing of an ISF comprised of 5 data elements (a.k.a., “ISF-5”).

Importer Security Filing (ISF) Importer  The party required to submit the Importer Security Filing (ISF) is the party causing the goods to enter the limits of a port in the United States. This party is known as the “ISF Importer”.  Could be the owner, purchaser, consignee, or agent (e.g. customs broker).  The ISF Importer, as a business decision, may designate an authorized agent to file the Importer Security Filing on the ISF Importer’s behalf.  If an agent is used for ISF purposes, a power of attorney (POA) is required.  The ISF Importer is ultimately responsible for the timely, accurate and complete submission of the ISF filing.

5 ISF-10 Data Elements “U.S.-bound” Cargo (3461 Entries, IT, FTZ) 1. Importer of Record Number 2. Consignee Number 3. Seller (Owner) name/address 4. Buyer (Owner) name/address 5. Ship to Party 6. Manufacturer (Supplier) name/address 7. Country of Origin 8. Commodity HTS-6 9. Container Stuffing Location 10. Consolidator (Stuffer) name/address 11. Bill of Lading Number (house or reg.) 12. ISF Importer CBP Form 3461

6 ISF Importer Importer of Record # Consignee # Buyer (Owner) Ship To Party From Order to Delivery Manufacturer (Supplier) Seller (Owner) ISF Importer Ship To Party Container Stuffing Location Manufacturer (Supplier) Consolidator (Stuffer) ISF Importer Seller (Owner) Purchase Order Ship To PartyConsolidator (Stuffer) Container Stuffing Location Invoice The ISF-10 is due 24 hours prior to vessel lading Overseas Factory/Warehouse Shipper/CarrierDistribution Center Importer/Retailer Vendor/Supplier

7 ISF Filing Requirements  All ISF filings are to be done electronically via the vessel Automated Manifest System (AMS) or the Automated Broker Interface (ABI)  ISFs cannot be done at the Port of Entry (i.e., Custom House) on a walk-in basis  There is no paper form (e.g., 3461)  Bonds are required to cover most ISF transactions

ISF Filing Options  CBP has begun development of an internet-based web portal to accept ISF filings  Importers must pre-register their importer ID numbers with CBP (i.e., IRS# or SSN#)  Registration of the importer ID number can be done in person at a local Port of Entry or by a licensed customs broker via the use of CBP Form 5106  Portal will be available no earlier than August 2010  Use of the portal will probably be limited to no more than two (2) ISF filings per day, with a maximum of twelve (12) per year  In addition, some service providers allow self-filers indirect access to CBP systems via the internet  Contact a CBP Client Representative at to discuss self-filing options

9 “ 10+2 ” Interim Final Rule  Effective Date: The interim final rule (IFR) took effect on January 26, 2009 (60 days after the publication date) and allowed for certain “flexibilities”:  Timing of transmission for 2 of the 10 ISF data elements  Range of responses for 4 of the 10 ISF data elements  All other requirements in this rule were adopted as a final rule.  Compliance (Enforcement) Date: January 26, 2010  The IFR “flexibilities” will stay in effect until the structured review is completed and a decision on keeping, modifying or removing them is made by DHS, OMB and other executive branch agencies.

10 Structured Review and Flexible Filing  CBP monitors all ISF submissions for timeliness, accuracy and completeness.  On the basis of information obtained during the structured review and public comments, DHS will undertake an analysis of the elements subject to flexibilities.  Analyze Flexible Range of Responses (FR) Elements  Ship to Party  Manufacturer (Supplier) name/address  Country of Origin  Commodity HTS-6  Analyze Flexible Timing (FT) Elements  Container Stuffing Location  Consolidator (Stuffer) name/address Only 2% of all filings claim to use the “flexible filing” option If you choose to use a “flexible option”, you MUST amend your filing with a “CT”

11 40’ Container NEW SECURITY FILING DATA BED LINEN CN MFR/Supl. XINJIANG TOP BEDDING PRODUCTS Seller XINJIANG TOP BEDDING PRODUCTS Stuffing Location XINJIANG, CN Buyer BE & D IMPORT INC (PHX., AZ) Consolidator XYZ LOGISTICS Importer BE & D IMPORT INC (PHX., AZ) Ship To Name/Add. THE TRANSFER WHSE (L.B., CA) Consignee BE & D IMPORT INC (PHX., AZ) ISF Data Improves Targeting Capabilities Source Description HTS C/O Role Party BILL OF LADING SHEET N/A N/AShipperXYZ LOGISTICS Consignee ABC TRUCKING What’s in the box? Non Intrusive Inspection (NII) X-Ray Image Only NII Image and Manifest Data

12 What Are “ Casings ” ? ISF Data Improves Cargo Identification Bullet Casings Pipe Casings Gear Casings Motor Casings Computer Casings Bomb Casings Tire CasingsSausage Casings HTS HTS HTS

13 “10+2” Program Update

14 ISF-10s “By the Numbers” January 26, 2010 – May 2, 2010 Importers (IOR #s): 2,453,200Total Submissions: Total Accepted: Total Rejected: 2,372,907 80,293 3% 97% 123,000+ Filers: 2,226 79% 19% <1% Adds: Replaces: Deletes: Note: Do NOT send in a “REPLACE” to simply force an ISF- Bill match message!

15 Top Five Error Messages ISF-10 Errors from January 26, 2010 – April 25, 2010

16 ISF Progress Reports  In production since May 10, 2009  Registration is Required  Reports are on a Monthly Cycle  Reports Cover 122,251 ISF Importers  We Offer.pdf,.csv, and.xls Formats  Four Types Currently in Production:  Importer by Filer Reports (most common) - Over 1,105 ISF Filers are registered  Filer Summary Report  C-TPAT Importer Reports (Tier 3, 2)  C-TPAT Importer Transactional Reports (Tier 3)

Importer Security Filing (ISF) Progress Reports 1. ISF10 Submission Volume:

C-TPAT Benefits of “10+2”  Earlier Decision Making  C-TPAT entities are reliably identified prior to vessel lading  Based on Importer of Record Number on the ISF  No longer tied solely to entry data (24 hours or more prior to arrival)  Better Decision Making  Tangible C-TPAT benefits are applied much further upstream  Receive targeting credit based upon their tier status  Stabilization of Automated Hold Process  Immediate Transportation (IT) in-bond risk assessments are more stable  Validation of Supply Chain Security Reviews  New Entities and Locations Identified and/or Verified  Container Stuffing Location  Consolidator (Stuffer) name/address Customs - Trade Partnership Against Terrorism

19 “10+2” Enforcement Strategy CBP’s Vessel Stow Plan Module Used to identify unmanifested containers

20 ISF Enforcement Strategy The full compliance (enforcement) date for the “10+2” requirements commenced on January 26, 2010, thus ending a 12-month delayed enforcement period in which CBP provided extensive outreach to educate the trade community on the new requirements. CBP will:  Apply a measured, commonsense approach to enforcement  Exercise the least amount of force necessary to obtain full compliance  Evaluate non-compliance on a case-by-case basis  Continue to provide outreach and guidance to the trade X

21 Enforcement Measures  Informed Compliance Efforts  Public outreach (incl. webinars, meetings, ISF Progress Reports)  Informal and formal notification (e.g., warning letters)  Mid-level Compliance Measures  Domestic NII examination manifest holds  Domestic physical examinations  Re-evaluation and possible reduction of C-TPAT status  Strictest Enforcement Measures  ISF Jail (i.e., lengthier manifest holds)  Liquidated Damages  Suspension or Revocation of C-TPAT Status  Do Not Load or Do Not Discharge Orders

22 “10+2” Challenges

23 Top ISF Issues Identified How does CBP measure ISF “Timeliness”?  The regulation states 24 hours prior to lading (Legal)  CBP will measure by the Vessel Departure Date minus 24 hours (Practical) Which bill of lading number do I use?  Must use the lowest bill of lading transmitted in AMS (house or regular)  Contact your shipper  New ABI query functionality will help  CBP allows for the bill of lading number to be updated on the ISF I can’t get a bond because I missed the filing deadline  CBP is considering creating a Type 13 “Late ISF” coded transaction  Importers are acknowledging that they violated the regulations  Will probably not be available for longer than one (1) year

24 Top ISF Issues Identified I didn’t receive the ISF “Bill on File” match message.  This is common; especially when the ISF filing precedes the filing of the customs manifest (i.e., bill info).  Make sure you (or your agent) annotated the correct bill type on the ISF.  Regular Bill – This bill type is also referred to as an “Ocean" or “Simple Bill” and is issued by a Carrier. There are no underlying house bills.  House Bill – Typically issued by a NVOCC (sometimes referred to as an automated freight forwarder). A house bill of lading always falls under a carrier’s Master bill of lading.  ISFs cannot be filed against Master Bills  Do NOT Send in a “REPLACE” to force an ISF-Bill Match message Do I need to file 24 Hours prior to lading of the feeder or mother vessel?  The ISF is due 24 hours prior to lading of the mother vessel

25 Available Resources  Go to:  Copy of the Interim Final Rule  ISF PowerPoint Presentation  General Frequently Asked Questions (FAQs) Document  Copy of the Regulatory Assessment  Implementation Guides (Technical File Formats)  Mitigation Guidelines  News Releases  Outreach Schedule

26 Questions? “10+2” Contacts Richard Di Nucci, Director, Cargo Control Division John Jurgutis, Branch Chief, ISF & Vessel Manifest Stephen Silvestri, Branch Chief, Air & Rail Manifest Craig Clark, Program Manager, ISF Joseph Martella, Program Manager, New York Field Office