Category / Cargo Reporting

by Mike Poverello

Shipping lines get tough over new EU cargo information rules

Seems like ‘cargo reporting’ is becoming as infectious as a virus! The shipping industry has warned its customers that failure to comply with new EU regulations will mean fines and their cargo will not be loaded. Following similar measures introduced by the US in 2002, it seems that not only is there a possibility of “fines” and “no loading of cargo”, but that shipping lines even get to cash in on a revenue opportunity; some to the extent of US$25 per bill of lading. It absolutely amazes me that this is allowed to happen – talk about non-tariff barriers!  While SARS, for example, can give thousands of ZA Rands worth of intellectual property (for free) to the trading community – with the hope of making trading easier – why can the bastions of the sea not do likewise? Seems as though the “war on terror” has been interpreted by some as a ‘cash cow’!  Read the full article online: www.bdpinternational.com.

 

by Mike Poverello

Penalties for non-compliant Cargo Reporters

Recently SARS issued a communication signalling its intention to penalise non-conforming cargo reporters as of 1 July 2011, if they fail to report their cargo manifests electronically to SARS. Following international practice, all parties who engage in the contract of carriage of goods internationally are obliged to report the details of such cargoes. While customs has traditionally placed more emphasis on the correctness of the goods declaration alone – due to it being the sole means of duty and tax assessment and collection of revenue, the introduction of measures to safeguard the supply chain and combat other forms of nefarious activities, implies that all supply chain operators are ‘known’ and share in the responsibility for their actions and activities.

Perhaps seen in this guise, the whole matter of supply chain security encompassing the universal adoption of the Authorised Economic Operator (AEO) concept seems less appealing than it did a few years ago. Yes, Customs wants to know more and more about your business and who you do business with. Freight forwarders / Clearing Brokers have borne much of the brunt from customs over the years, it’s now time for parties involved in the conveyance of cargoes to come forward and be counted.

Because international shipping by its very nature transcends borders, it has always been difficult for national authorities to apply effective controls over information and parties who in all honesty are representatives/agents for those supplying the ‘original’ shipping documents. What the law now says is that those acting on behalf of foreign principles, liable for the import leg of imported goods are obligated to submit the ‘manifest information’ of those goods (electronically) to SARS.

For those customs brokers who operate as freight forwarders, this is in essence a further requirement which SARS places on your organisation. In essence a freight forwarder has a dual requirement with SARS – declaring the manifested contents of a consignment, as well as making due clearance for regulatory compliance and payment of duties. Another party with a similar dilemma are certain ‘ground handlers’, specifically those who are contractually responsible for the inbound operations of foreign air carriers, as well as the deconsolidation of aircargo upon arrival in their transit shed. They too must report the aircargo manifests electronically to SARS, and secondly to report the outturn of such goods, once unpacked for temporary storage and customs clearance and release.

The NVOCC or Vessel’s Agent must also report all cargo – for which they are contractually responsible – for the inbound leg into the Republic. These parties represent the foreign carrier and must consequentially report the carrier’s manifest (electronically) to SARS.

SARS is for now focussing principally on the reporting of master and house (sea and air)cargo manifests in this phase. Other reports are to follow.

Details for the registration for reporting electronically to SARS’ Automated Cargo Management (ACM) system have been widely distributed, and for sake of convenience are available for download here.

Consequences for non-compliance post 1 July 2011

SARS has put into place mechanisms to identify non-reporters. In such instances customs officers will call for administrative penalties to the extent of R1000,00 for each ‘manifest’ not reported. Moreover, should SARS take measures to ensure that these penalties are not ‘passed on’ to the importer – this would surely defeat the object of SARS’ intentions? Shortly, we’ll discuss the future matching of electronic cargo reports and goods declarations, but first lets endeavour to accomplish the first milestone.

Related articles
by Mike Poverello

Addressing Apathetic Compliance Mentality – Part 2

Now that Africa has sufficiently patronized the demands of the west and the east, it’s time to focus on the realities in our own back yard – charity begins at home. At this juncture it is a good reminder that had the WCO not had a non Anglo-American chairperson post 9/11, the present climate in Customs could have been a whole lot different from what it is today….someone that had the mind and intent to ensure that ALL of the customs world should have a bite at the ‘modernization’ cherry, not just those paying the highest subs.

The tidal wave of US initiated security measures peeved many foreign governments and at one point even threatened a stand-off between the US and the European Commission over its unilateral approach to annex key European ports to its Container Security Initiative (CSI) programme. Needless to say most international carriers rallied their support for heightened security measures in exchange for ‘green lane’ treatment for their goods arriving in the US. Never before (in living memory) has Customs (in the US that is) been able to impose such influence on the international trading community – all for its own domestic policy.

Now, unless I’m seriously mistaken local freight forwarders, NVOCCs, consolidators and carriers must at some time or another be confronted with ‘advance security reporting requirements’ for China, EU and North American bound consignments. This being the case, the least your local authority is asking is that you extend the same courtesy here.

It is no understatement that SARS values the time, effort and goodwill of many locally based forwarders, transporters, and their service providers. The input and cooperation gained from fortnightly gatherings of the Cargo Reporting Technical Workgroup is a minor revelation to say the least. It is the dedication of these who stave off the mite which SARS may inflict on non-compliant and apathetic operators, for now.

The co-creation spirit of SARS/Trade interaction therefore implies that SARS considers the latter’s recommendations in pursuit of attaining the desired outcome – a fully automated cargo reporting system, involving known parties committed to the seamless processing of import and export cargoes, creating a real market opportunity for foreign investors and traders. At this point let’s consider a process going forward –

  • Participating cargo reporters (freight forwarders, NVOCCs, and carriers) will continue their efforts to ramp up their performance concerning the submission of manifests (master and house level). SARS will monitor all electronic exchanges and provide continued feedback to these parties on performance and progress.
  • Those (cargo reporters) concerned with cargo outturns, arrival schedules and reports, discharge and load listings, and gate control reports (container depots, transit shed operators, ground handlers, off airport degroupers, and terminal operators), will continue their efforts in testing such electronic exchanges with SARS until an appointed time for ‘live’ operation is determined. Live operation will include the coordination and sequencing of cargo manifests and most important – the issuance of ‘release’ based on manifest/declaration matching.
  • SARS will redress its approach in communication (direct and through the media) with industry stakeholders. This will follow a more focused outreach, in layman’s language, which will leave no doubt in any party’s mind as to what SARS’ cargo reporting requirements are.
  • It is acknowledged that the industry umbrella organisations SAAFF, SAASOA, and ACOC can only do as much according to the extent of their membership. SARS will therefore encourage increased urgency by these associations in bringing their respective constituencies in line with cargo reporting requirements. SARS is satisfied that these association’s membership comprise at least 80-90% of international cargo reporters in the country.
  • Simultaneously, SARS will –
    • Continue its discussion with stakeholders to bring finality relating to cargo outturn, manifest versus declaration matching, acquittal and exception reporting expectations.
    • Finalise and publish the required legislation for the new cargo reporting requirements. Upon publication SARS will have the necessary means to enforce such new provisions as well as the punitive measures associated with non-reporting of manifest and conveyance reports.
    • Broach 2nd phase requirements with stakeholders. This will include discussion and prioritization of remaining modes of transportation (rail and road).

None of the above is beyond the means of reality. To re-iterate, without the abovementioned building blocks in place, there is little chance of extending benefits on an AEO basis. A successful supply chain operation requires all members – be they traders, cargo reporters, third-party logistic providers, port, and airport operators – to act in concert with one another.  In Part 3 (the final part), I will discuss the consequences of any party’s non-compliance with cargo reporting requirements.

by Mike Poverello

Addressing Apathetic Compliance Mentality – Part 1

In 1993, I recall certain members of the shipping community admonishing the Customs and Excise department for being backward, lacking the ability to meet the demands of the community – shipping lines in particular. At the time this criticism was valid, and would have still been relevant for another 10 years – the time it took SARS to eventually implement its first manifest acquittal system (MAS).  Since the inception of MAS (2003) the interest and energy to bring about trade compliance in the submission of manifest and conveyance information has been tardy and uncoordinated from a central viewpoint. In retrospect, several reasons exist for this – erratic and unpredictable systems architecture, as well as the lack of a customs champion to drive the operational compliance initiative from a national level.

Along the way there have been various milestones which have signalled a radical re-think in the philosophy of cargo reporting. Introduction of the ISPS code and the US 24-hour advance manifest rule set the tone for world-wide ‘re-engineering’ (I prefer the word ‘reform’) of processes, information exchange and legal basis. These have continued for supply chain operators through various iterations of ‘advance reporting’ – New Zealand, Canada, China and more recently the EU’s Import Security filing have required shippers and logistics operators to re-align their business models to meet new customs reporting requirements. True, all these initiatives may have their respective national or regional flavours, yet, the Customs data requirements are principally identical.

In 2008 SARS signalled its intent to mandate the electronic submission of cargo reports, supported by legislation to give this due effect. Why electronic? Because there’s a belief that any party involved in international cargo handling, forwarding, and shipping must be computer literate in order to operate (at all) in this highly competitive business. We are not talking about once-off casual importers here, but parties who have a greater or lesser degree of business acumen, knowledge of INCOTERMS and supply chain procedural requirements. Am I mistaken? Perhaps. Maybe the Customs perception of this industry tends to accord it too much credence?

Mid-2010, SARS addressed these issues and made a few fundamental decisions to improve this lot. It was time to build a new system from ground up, on a modern, stable technology platform. In order to ensure that the business principles and systems logic were kept intact, it was time to assign the best brains (internally) to accomplish this. In a very short period, a new system was developed and put into production, offering improved predictability in the data validation and processing. Over the last 2-3 months several manifest and cargo conveyance providers have been actively participating in a test initiative.

Automated Cargo Management (ACM) was launched ‘live’ on 6 May 2011. The reality is that the ratio of manifests to clearance declarations is a mere 17% for sea freight and 8% in the case of aircargo, respectively. The take-on in number of new air and sea cargo reporting registrants is equally abysmal. Let’s reserve any further ‘adjectives’ for now.

A recent poll hosted by a local industry web service revealed a predictable outcome (over a 5-day time period) where a vast majority of respondents indicated a negative experience with the introduction of the new system. The reality is that those who participated and the internal Customs’ experience suggest a more positive situation. Why then the poll result? Speculation suggests that the pre-implementation communication campaign was not adequate; that few operators in industry really understand what they are required to do. Is this really palusible when the outreach by SARS, service providers to their clients in trade, and the industry umbrella organisations have all been canvassing their respective members about the developments? How come only 10 new applications for registration were only received by SARS the week after implementation?

Clearly there is no urgency. Almost 10 years of advanced manifest reporting has transpired across various global supply chains, and yet some operators are still unsure of what their obligations are meant to be. So how are we going to fix this? In order to succesfully offer real AEO benefits and other advanced services within the context of Kyoto and the SAFE Framework of Standards, this needs to be rectified. In Part 2, I will sketch the options available to address if not rectify the current state of affairs. Bringing non-cooperating parties into a state of compliance is a SARS’ pastime. Talk to you soon.

by Mike Poverello

SARS to introduce Automated Cargo Management (ACM)

Cargo freighter

Cargo freighter

SARS has announced the decommissioning of its current manifest acquittal system (MAS). This is scheduled for 6 May 2011. The new automated cargo management system (ACM) will be launched simultaneously to allow cargo reporters in the air and sea cargo environments to report cargo bills, and other related cargo reports to SARS. In recent months SARS has worked closely with external stakeholders to impart its vision and intent regarding the launch of the new system. The first phase of the cargo initiative is to ensure that all parties involved in the contract of carriage of goods against a cargo bill (bill of lading or airwaybill) are registered with SARS.

An important facet of this phase is to ensure that not only principal carriers report their cargo manifest to SARS, but also freight forwarders and NVOCCs. Customs’ aim is to perform combined risk assessment and matching of manifests with the goods declaration to enable automatic acquittal. This can only be possible if so-called house manifests are submitted electronically to SARS.

For more information refer to the SARS Customs Modernisation webpage.

by Mike Poverello

Reprieve – SARS postpones implementation of Release 2

At a recent strategic session between SARS and a packed auditorium of supply chain stakeholders, it was jointly agreed to postpone the implementation of Release 2 until June 2011. For SARS there remains a significant change integration exercise – that in upskilling staff members in the use and discipline of its new user interface – Service Manager (SM).

A previous post Modernisation Release 2 – Industry testing to commence highlighted the scope for what is a significant enhancement for internal SARS’ staff. While development and testing has progressed reasonably well, stakeholders agreed that stability of certain software components was needed in order to provide all parties the necessary comfort before rolling out live to the trade. Continue reading →

by Mike Poverello

Modernisation Release 2 – Industry testing to commence

Just 3 months since the first release, SARS and Customs stakeholders together with their service providers will commence testing the second phase of the Customs Modernisation Programme. The scope of this release offers some significant opportunity for improved efficiencies benefitting both customs and trade.

There are 3 key pillars for this implementation:

  1. A new case management and inspection solution will support an automated workflow between customs assessment officers and inspectors, eliminating the current manual stop and inspection process. A modern user interface has been developed and integrated with Customs’ legacy declaration processing systems. For Release 2, this interface will allow the customs officer to initiate a case, where goods are automatically risk profiled for an intervention. A ‘case’ is an electronic stop notice where the officer is able to capture inspection outcomes, as well as view supporting documents electronically submitted by traders in mitigation of a stop or detention. In addition, the system will interface with an electronic inspection booking system which aims at expediting the customs inspection process. The outcome of each stage of an inspection triggers a response to the trader advising of the status of the consignment or inspection outcome. This is a significant step forward and SARS intends that the efficiency benefits derived will directly translate into cost savings for trade.
  2. Customs E@sySCAN and E@syPACKER software solutions. Soon traders will no longer have to hand-deliver clearance supporting documents to customs manually. SARS and service providers have collaborated for over a year developing a functionality that will radically improve efficiencies and response times in regard to ‘stopped/detained’ cargoes. It will enable a customs broker, importer or exporter to upload any required trade document which customs may require in the finalisation of a customs inspection. SARS’ ‘E@sy’ software has been made free of charge to service providers for integration into their trade applications. This forms part of SARS’ overall contribution to keeping cost of compliance to a minimum. For traders not using EDI, SARS will also be offering walk-in scanning facilities at its bulk capturing centres across the country. 
  3. A new cargo management system will replace the existing Manifest Acquittal System (MAS). Cargo operators are already working with SARS to improve the level of data cleanliness. Once the level of data integrity meets an accepted level it is SARS intention to perform the matching of import and export clearance declarations against consignment level transport document information in real time. Mismatches occurring will trigger a customs case which may either take the form of a documentary check, and if necessary a physical inspection. The automatic data matching and acquittal will obviate the need for cargo reporters to print and deliver paper manifests to customs. It will also remove the obligation on reporters to submit paper manifest acquittal documents. Similarly, significant cost savings are envisaged for trade.

It is worth mentioning that some of these innovations are a world first in customs processing, and paves the way for future enhancements in support of the new Customs Duty and Control Bills.

by Mike Poverello

Customs Bill – Poser for Cargo Carriers, Handlers and Reporters

MultimodalThe introduction of new clearance and release formalities in terms of customs procedures has a significant impact on all cargo operators, vessel’s agents, freight forwarders, ground handlers etc. Current provisions in the prevailing Customs and Excise Act, no. 91 of 1964, and its associated rules provide for the ‘clearance-free’ movement of uncleared bonded cargo from place/port of discharge to an inland terminal against the carrier’s manifest. This will not be possible once the new Customs Control and Duty Acts come into being.

Cargo manifested for inland ports will need to be removed under the National Transit procedure, implying the submission of a clearance declaration (formerly an RIB) for each consignment moved. It still needs to be determined if a groupage container can move against a single national transit clearance or if each consignment within such container must be declared for national transit. This could become an onerous burden on the controlling operator of such consol with surety implications. The alternative is for all such cargo to be cleared for ‘home use’ or other permissible procedure (other than national transit) at place/port of discharge. For consolidated cargo, can available de-grouping and depot storage facilities at sea ports manage the volumes?

Similarly transhipment cargo will also require a customs clearance declaration (bill of entry); a further consideration for carriers and agents of carriers – do they have the capacity and expertise to transact ‘national transit’ and ‘transhipment’ clearances electronically to customs? Most probably not. Notwithstanding, Customs Brokers (Clearing Agents) are also eligible to act on behalf of a carrier/cargo reporter to clear goods for transhipment.

These are but a few critical considerations which all cargo reporters need to bear in mind for the future.

by Mike Poverello

Mandatory EDI Submission – SARS engages Cargo Manifest Providers

Some 8 years since the initial implementation of the Manifest Acquittal System (MAS), SARS has recently engaged cargo manifest providers with a fresh urgency to prepare themselves for the impending mandatory requirements for the filing of cargo reports to Customs. The legislation has been in place for several years and a fully revamped cargo management system has since been developed by SARS. Cargo Reporters (shipping lines, airlines, ships agents, terminal operators, freight forwarders, consolidation/deconsolidation agents, depot operators, ground handling agents) are now called upon to ensure that their systems are able to meet the cargo reporting requirements of SARS. (The EDI Mapping requirements for CUSCAR is now available on the SARS website).

The first imperative is to ensure the integrity of data reported to SARS. Once this is at a satisfactory level, SARS will commence the matching of cargo and customs clearance information. Not unlike other customs jurisdictions, the availability of ‘clean data’ from both cargo reporters and declarant’s is imperative to facilitate manifest matching, risk assessment and the release of goods.

A further phase will thereafter introduce measures to ensure that South Africa meets its obligations in terms of the WCO SAFE Framework of Standards. This may require some modification to

  • Data reporting requirements via EDI,
  • Some changes to legislation,
  • Introduction of formal licensing of cargo operators, and
  • Introduction of a seal integrity programme as part of the aforementioned licensing arrangement.

SARS has prioritized air and sea modalities (imports only) for initial implementation, with rail and road modes to follow. The priority not only includes cargo reporting (manifest) requirements but also other reports such as vessel call notifications and advices, discharge lists, gate-in and gate out reports, and cargo outturn reports.

SARS cargo management system will be available for test purposes to all cargo reporters as of 1 March 2011. A period of at least 2 months has been contemplated for such testing, with live implementation occurring in May 2011.