Customs Concerns for the Motor Carrier and Transportation Intermediary Presented by Joseph W. Rohe Moderated by Robert D. Moseley, Jr. Smith Moore Leatherwood LLP Attorneys at Law 2 W. Washington Street, Suite 1100, Greenville SC 29601 www.smithmoorelaw.com
Joseph W. Rohe Robert D. Moseley, Jr. Charleston / Greenville Greenville joseph.rohe@smithmoorelaw.com rob.moseley@smithmoorelaw.com
1.) The C-TPAT Program Benefits and Application Process 2.) Movement of In-bond Freight 3.) IMO Container Weight Verification Requirements 4.) INCOTERMS 2010
The C-TPAT Program: Benefits and Application Process
Goals of the C-TPAT Program *Safeguard US and supply chain from acts of terrorism by extending security zone to the point of origin *Maintain the economic health of North America *Increasing security without negatively impacting trade
About C-TPAT Voluntary program started in November 2001 with 7 members, in direct response to the September 11 attacks; Today, there are more than 10,000 certified partners; Accounts for 54.1% of US imports; Provides for increased risk assessment & targeting; and Establishes clear supply chain security criteria.
How Does C-TPAT Work? Partners enter agreement to identify security gaps and implement specific security measures and best practices: Physical Security & Access Control Personnel Security IT Security Procedural Security Conveyance Security Business Partner Auditing Training/Threat Awareness Allows trade community to enhance the security of supply chains though domestic and international partnerships; Operates in conjunction with TSA, FDA and USCG.
Eligibility Highway Carrier: 1.) Active international carrier; 2.) Staffed business office in the US, Mexico or Canada; 3.) Active SCAC code and DOT number 4.) Designated cargo security officer responsible for C-TPAT; 5.) Committed to maintaining C-TPAT security criteria; and 6.) Create security profile, identifying how carrier will meet, maintain and enhance security criteria.
C-TPAT Benefits Active participation in the fight against global terrorism; Security self-assessment; Reduce number of CBP examinations; Shorter wait times at border and express-lane inspections; Mutual recognition with foreign customs officials; Assignment of a Supply Chain Security Specialist; Access to training materials; and Eligibility for other benefit programs.
Applying to C-TPAT Company Profile (online): Security Profile (online): responses reviewed by Supply Chain Security Specialist (SCSS); used to determine your ability to meet the minimum security requirements Acceptance of Security Profile: Site Visit: 2016 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED.
Movement of In-bond Freight
What is In-bond Freight? Freight physically present, but not formally entered into the United States by US Customs: freight transported by rail, truck, air, or sea between ports of entry; freight moving from a port of entry to a foreign trade zone (FTZ), centralized examination station (CES), or bonded warehouse; freight withdrawn from a bonded warehouse or FTZ.
Handling of In-bond Freight Documentation: In-bond document (Form 7512) must accompany shipment; Sealing of Shipments: Must use commercial shipper seals, Customs in-bond seals or other accepted seals; Carrier is responsible for providing seals; Removed only under Customs supervision. Mixed Shipments: Okay if to same destination. 2016 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED.
Handling of In-bond Freight, Cont d Warehouse/FTZ Freight: Released in accordance with Warehouse/FTZ regulations; Permit for release; Customs supervised loading/port Director waiver; Other Freight: Carrier must take receipt within 5 working days of in-bond request; If not, freight is treated as unclaimed (subject to General Order status).
In-bond Freight Liability Initial carrier liable for shortage, irregular and non-delivery; If sealing is waived, carrier is responsible for any loss found to exist; Need to have a properly receipted proof of delivery to Customs. Payment of liquidated damages under the bond; Plus carrier pays duties and other taxes accruing to the government on the goods and all costs/expenses!
The Bonding Process Form 301 Customs Bond (Activity 2) must be continuous issued by surety licensed by Treasury Dept. filed with Port Director Bonds required to protect the government s revenue stream on merchandise imported to the United States and ensure compliance with US trade regulations. Activity 2 Bonded Carriers the bond shall be fixed in an amount to district director may deem necessary value and nature of the merchandise degree and type of Customs supervision required applicant s prior record
Container Weight Verification Requirements
Safety Of Life At Sea Act (SOLAS) 1974 International Convention to which the U.S. is a signatory country; Goal is to establish minimum standards for maritime safety; Safety of the ship itself, safety of cargo, and safety of workers aboard and ashore.
Container Weight Verification Effective July 1, 2016; Must calculate Verified Gross Mass (VGM) of all loaded containers; VGM data communicated to terminal operators/steamship lines; Must be communicated timely so as to allow for implementation into stow plan; No timely VGM data = no loaded container!
Calculating VGM Two Methods: Weigh the entire container after loading & sealing; Weigh the cargo and all contents (pallets, dunnage, etc.) and combine with container s published tare weight. Certified & Calibrated Equipment: Dictated by the laws of each individual country; 2016 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED.
Handling of VGM Data The responsibility for obtaining and documenting the verified gross mass of a packed container lies with the shipper. ~SOLAS. Submitted either electronically or in hard copy to the terminal operator and steamship line; If the shipper does not declare the correct VGM, then a third-party shall perform the verification and charge the shipper.
INCOTERMS 2010
What s an INCOTERM? Published by the International Chamber of Commerce (ICC) and updated about every 10 years. Developed to provide rules and guidance to the shipping community for the international sale of goods. NOT limited to international transactions! Not binding law, but contractually enforceable.
The 11 INCOTERMS Sea & Inland Waterway: FAS (Free Alongside Ship) FOB (Free on Board) CFR (Cost & Freight) CIF (Cost, Insurance & Freight) All Modes of Transport/Multimodal: EXW (Ex Works) FCA (Free Carrier) CPT (Carriage Paid To) CIP (Carriage & Insurance Paid To) DAT (Delivered at Terminal) DAP (Delivered at Place) DDP (Delivered Duty Paid)
What s New? Merged several terms into DAT and DAP; Clarified proper application of the sea/inland waterway transportation terms (FAS, FOB, CFR & CIF); For FOB, the long-standing ship s rail rule has been abolished; now, goods are delivered when they are on board the vessel. Terms should specify destination or point of shipment, as applicable (e.g., DDP Port of Charleston).
Why Are INCOTERMS Important? Establish certain terms, obligations and liabilities of the parties. Contractually enforceable against parties to contracts of carriage. Govern risk of loss! Example: shipment damaged or destroyed en route from the manufacturer to port of lading. EXW vs. FOB? 2016 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED.
Questions?
Joseph W. Rohe Robert D. Moseley, Jr. 864.751.7668 / 843.300.6656 864.751.7643 joseph.rohe@smithmoorelaw.com rob.moseley@smithmoorelaw.com Smith Moore Leatherwood LLP Attorneys at Law www.smithmoorelaw.com