Few Shippers Found In Compliance With Anti-Terrorism Rule
By DAVID GREENBERG
Nearly every steamship line calling on the Ports of L.A., Long Beach and Hueneme during a 60-day trial period have failed to comply with a new U.S. Customs Service anti-terrorism regulation that formally goes into effect next week.
The regulation requires all vessels to report their cargo manifests at least 24 hours in advance before containers are loaded at foreign ports. Shipping companies still not in compliance by Feb. 2 will be fined up to $5,000 per vessel or refused entry at local ports.
The regulation is being implemented as part of a homeland security effort to improve safety at U.S. ports.
Compliance problems are the result of shippers consolidators, in particular, who store many smaller importers’ items in one container having grown accustomed to loading goods onto a ship just an hour or two before it leaves a port. They also have been allowed to insert vague descriptions of containers’ contents, such as the commonly used “FAK,” for “freight of all kinds.”
Failure to list specific items in containers has been one of the most common violations under the new regulations.
“We are concerned about the level of non-compliance,” said Michael Fleming, a Customs spokesman. “We are making every effort to reach out and advise them of the errors so we can try to resolve the issues.”
The problems were outlined in a Jan. 9 letter by Vera Adams, Customs’ director of the L.A.-Long Beach seaport area, to 30 steamship lines and the trade groups representing them. It confirmed that virtually all cargo lists received during a weeklong evaluation in early January were late and/or lacking necessary data.
Vessel operators traditionally have been allowed to leave their foreign departure points without sending their manifests, as long as they were reported at least four days before they arrive at U.S. ports. It usually takes a ship 12 to 14 days to get from Asia to Los Angeles.
Shipping companies blame their failure to comply on just-in-time delivery practices that make it difficult to quickly gather, coordinate and transmit cargo data to vessels, especially when their goods are produced by numerous small manufacturers rather than one large one.
Additional problems will arise for shippers who rely on foreign factories to coordinate and transmit the data because they might not understand the new regulations.
“It’s going to cause a delay on the other end particularly in Asian ports, which can be very slow and very disorganized in getting the paperwork together and getting all of the goods organized,” said Liza Robinson-Vidal, vice president of U.S. operations for Warison, an L.A.-based home furnishings manufacturer. “It’s going to be a real headache.”
It costs at least $50,000 a day to operate most vessels, which must be nearly filled to capacity to make a profit. Operators will have to decide whether to delay their voyage or embark on it without the cargo to meet the regulations.
“Obviously the lines are struggling to come up with a system that meets the rules,” said Tim Parker, executive secretary of the Steamship Association of Southern California. “I don’t think (Customs) expected it to be this bad. Both sides are a little shocked and they are struggling with it.”
Customs officials stressed that cargo may still be loaded at the last minute as long as appropriate manifests arrive at least 24 hours in advance. But that’s easier said than done, according to shippers and vessel operators.
“This requires a fairly substantial redesign of everybody’s supply chains,” said Robin Lanier, executive director of the West Coast Waterfront Coalition, a shippers trade group. “Many of the people I’ve talked to do not have high levels of confidence that they’ll be ready for Feb. 2.”
Customs inspectors scrutinize containers based on their contents, country of origin, knowledge of the importers and their track record of abiding by safety regulations. Also considered is whether the container has been rerouted and the stated value of the commodity versus what customs believes it should be.
Customs officials also will order cargo removed from ships before leaving a foreign port or prohibit it from being unloaded in the U.S. when manifests arrive late, are incomplete or contain erroneous cargo information.
Robinson-Vidal said that to avoid delays, the company is considering shipping some items by air freight, which costs four times as much as the $4,000 to $5,000 the company pays for each container.
Ultimately, any fines levied against vessels will be passed onto shippers who hire them. But “they are more worried their stuff is going to get stuck for days,” said Lanier. “That’s far more expensive than the fines.”
Adams said officials plan to station U.S. inspectors at Asian ports who will read manifests and have the authority to inspect and detain containers. They will also work with foreign customs offices to help target high-risk containers.