1. Supply Chain Security Programs: Challenges and Effects - An Ocean Carrier Export View Tradewatch 2011 Andy Lumley OOCL (USA) Inc. February 17, 2011

2. Table of Contents Overview of current programs –AES - Automated Export System –Canada Border Services Agency (CBSA) USA Loaded Cargo FROB Manifest –EU (European Union) 24-HR Advance Security Manifest –China 24-HR Advance Security Manifest Optimizing Changes in Information Submission –Ocean Carrier Role –Shipper/Exporter Role

3. AES – Automated Export System Mandatory compliance began January 31, 2009 – No AES information, No load in place Carrier required to receive AES Internal Transaction Number or exemption statement 24 hours prior to loading on the vessel Carriers have various methods of receipt of AES information: –Shipping Instructions (SI) –On line portals –Email or Fax CBP may request list of AES information from carrier for a particular vessel voyage prior to vessel arrival for pre-screening

4. AES – Automated Export System Challenges: –Carriers established an earlier AES information document cutoff –Timely receipt of AES information from exporters –Receipt of AES information in proper format including Option 4 exporters Opportunities: –Prepares both carrier and exporter for additional destination other countries advance manifest requirements –Further streamline AES information submission process and system support between exporter and ocean carrier –Supports earlier shipping instruction submission

5. Canada Border Services Agency (CBSA) US Loaded FROB Manifest CBSA requires advance manifest submission of USA laden cargo transiting Canada as FROB effective January 1 st, 2011 90 Day grace period through March 31 st Supplementary (House Bill of Lading) submission by NVOCC or carrier still under review by CBSA Reporting Timeframes: –For voyage transit times less than 24 hours to Canada, manifest to be submitted no later than at time of vessel departure from last USA port –For voyage transit times over 24 hours to Canada, manifest must be submitted no later than 24 hours before arrival to first Canadian port Baplie vessel stowage file submission test phase –OOCL pilot

6. Canada Border Services Agency (CBSA) USA Loaded FROB Manifest USA to Canada Example

7. EU 24-Hr Advance Security Manifest European Union Member Countries

8. EU 24-Hr Advance Security Manifest Ocean carrier required to submit electronic manifest information 24 hours before cargo loading to EU customs office at the first EU port of entry/port of discharge –All cargo that will be imported or trans-shipped to EU including Freight Remaining on Board (FROB) Shipper required to provide complete shipping instructions (SI) by ocean carrier’s documentation “cut-off” Lack of uniformity amongst EU countries with enforcement start up dates Do Not Load or other holds – 98% + SI submission compliance by customers – OOCL experience Penalties may be imposed by EU Customs – avoid exposure 3 rd Party NVOCC Filing – Approval by carrier required; carrier still responsible for manifest submission

9. EU 24-Hr Advance Security Manifest Commonly Used Terms ENS – Entry Summary Declaration –Advance manifest submission by ocean carrier on b/l basis EORI – Economic Operators Registration Number –EU registration system – not mandatory –Applicable to consignee (and to shipper if located outside of the EU) that performs an import customs declaration or a customs entry MRN – Movement Reference Number –EU customs EDI manifest receipt confirmation number for every shipment bill of lading issued by carrier – no MRN, No Load concern; protect shipper and OOCL OOFE – EU Customs Office of First Entry –First port of discharge performs security risk analysis for all ENS, and passes risk analysis information along to all subsequent ports

10. EU 24-Hr Advance Security Process Overview ExporterShipping Instructions Entry Summary Declaration Ocean Carrier Documentation EU First Port of EntryOk to Load

11. EU 24-Hr Advance Security Manifest ENS Data Elements Shipper – full name, address, and postal code (or EORI number if available) Consignee - full name, address, and postal code (or EORI number if available) Notify Party (mandatory if To Order BL) Container Number (s) Seal Number (s) Number and type of Packages Cargo Gross Weight Method of payment of freight charges if prepaid (e.g. check/electronic payment) For Dangerous Goods - the UN code HTS code – 6 digit mandatory only if cargo description is not in line with EU guideline of acceptable cargo descriptions (personal effects HTS required)

12. China 24-HR Advance Security Manifest Ocean carrier required to submit electronic manifest information 24 hours before cargo loading to or trans-shipped via China ports –Main Data elements required 24 hours before loading –Other Data elements required 24 hours before vessel arrival in China Not applicable to Hong Kong destined cargo For trans-ship cargo to China, manifest submission required 24 hours before loading at trans-ship port (e.g. Busan) FROB not required for China 24-HR Rule Do Not Load advice potential but none received by OOCL to date Within 24 hours of Vessel ETA at port of load, all B/L amendments must be via hard copy to China Customs Not mandatory phase yet, further information pending OOCL experience is 80-85% SI receipt compliance from shippers

13. China 24-HR Advance Security Manifest Main Data Elements Shipper – full name Container Number Seal Number Number and type of Packages Brief Cargo Description Total Gross Cargo Weight Method of payment of freight charges (prepaid or collect) Must be manifested before loading

14. China 24-HR Advance Security Manifest Other Data Elements Shipper – Full Address Consignee – Name and Full Address Notify Party – Name and Full Address Marks and Numbers Contract of Carriage – CY or Store Door Delivery Container Owner – Carrier or Shipper Owned Container United Nations Dangerous Goods Code (If Dangerous Goods) Dangerous Goods Contact Emergency Person and Phone Number (if Dangerous Goods) Must be manifested 24 hours prior vessel arrival China port

15. Optimizing Change – Ocean Carrier Role Understanding and complying with US CBP requirements Understanding and complying with destination and in transit country new documentation requirements Increased communication to the customer community on requirements System enhancements to meet advance manifest requirements and electronic exchange of required data HTS code internal system updating

16. Optimizing Change – Ocean Carrier Role Earlier documentation cutoffs –Range from 1 – 3 working days before Vessel ETA or Load Port Cargo Cutoff Carrier must provide terminal its load list of security verified containers before vessel arrival Some terminals and railroads have adjusted time frame for export early receiving Gearing up for additional destination country security requirements

17. Optimizing Change – Shipper Role Provide complete SI with container and seal number by carrier documentation cutoff –Paperless SI submission to carrier - EDI or other online web site submission to avoid any missed SI is encouraged Arrange earlier container empty pick up Arrange earlier loading at warehouse Facilitates earlier return of loaded container Provision of HTS code – 2 digit not acceptable

18. Optimizing Change – Shipper Role Destination consignee postal code accuracy is a frequent rejection item by EU Customs – please make sure you and your EU customer get it right Additional Fees –Manifest Submission –Manifest Amendment –Roll/Transfer Charges Actively engage your ocean carrier to develop best practice information submission arrangements

19. Supply Chain Security Programs: Challenges and Effects Q&A Thank you for this opportunity to speak to you today!