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Decisions 2003: Customs

With the looming threat of terrorists transporting bio and nuclear weapons across the border, delays at Canada-U.S. crossings are an increasing but understandable nuisance. Still, with close to 50% of...


With the looming threat of terrorists transporting bio and nuclear weapons across the border, delays at Canada-U.S. crossings are an increasing but understandable nuisance. Still, with close to 50% of carrier revenues tied up in transborder hauls, delays at the border have become a huge cost to doing business. (The 50% figure refers to carriers earning at least $1 million in annual revenues.)

Canada Customs and Revenue Agency (CCRA) does understand the impact of border delays on both the Canadian economy and carriers. Its response, in cooperation with U.S. Customs, has been a new program to expedite border crossings for carriers: Free and Secure Trade or FAST for short. The two Customs services began registering carriers for the FAST program September 9, 2002 and beginning December 2, 2002, the following border crossings will offer expedited Customs clearance to FAST-registered carriers:

Detroit, Michigan-Windsor, Ontario

Buffalo, New York-Fort Erie, Ontario

Lewiston, New York-Queenston, Ontario

Port Huron, Michigan-Sarnia, Ontario

Champlain, New York-Lacolle, Quebec

Blaine, Washingto-Douglas, British Columbia

Carriers on FAST will enjoy dedicated lanes at the border for speedier clearance and, according to Customs, reduced costs of compliance with Customs requirements, compatible electronic technology throughout the supply chain and an ongoing reliable relationship with the Customs administrative services of both countries. But entry into FAST requires a degree of coordination with supply chain partners and a commitment to an assortment of related Customs programs never seen before by transborder carriers.

FAST requires carriers, shippers and drivers to be pre-authorized by Canada and the U.S. and on Canadian carriers partnering with the CCRA in a joint agreement – Partners in Protection, or PIP, in which carriers give Customs a snapshot of their security practices. To gain approval, drivers must register under NEXUS – a joint Customs and Immigration program already in place for pre-approved, low-risk frequent travelers – and go through security background checks, while carriers must undergo Customs Self-Assessment (CSA). This means they must have a track record free of major Customs infractions and be able to show that their books and records form an audit trail through streamlined accounting and payment processes for imported goods. In addition, they must be capable electronically or by transponder to transmit all Customs documentation, business and cargo information for verification prior to arriving at the border.

The counterpart of PIP in the U.S. is Customs-Trade Partnership Against Terrorism or C-TPAT for short.

“The requirements for both programs are virtually identical. The Customs Services for both countries will be working with carriers over the next months, and perhaps even years, to tighten up any security areas where there is concern. It will not happen overnight, but it is something where eventually the Customs Service will consider only those people who are involved in PIP and C-TPAT to be at low risk,” says Jim Wiser, Executive Vice President in charge of Operations for PBB Global Logistics Inc.

He adds, “If you’re not low risk, you’re high risk. If you’re high risk, you’re not going to get all the expedited release systems that are currently available.”

So, a carrier approaching the border with goods must be pre-authorized and registered, and be driving for a CSA-approved carrier shipping cargo for a CSA-approved importer and/or exporter. To be processed through the FAST lane when the driver arrives at the border, the information must have been sent electronically to Customs ahead of time. The driver then presents his registration card upon arrival and, with the use of bar code technology, the shipment is identified.

Though goods cleared through the FAST program will remain subject to physical examinations that is far less likely to happen, advises the CCRA.

Everything sounds very straightforward, but there is a hitch, notes George Kuhn, Secretary of the Canadian International Freight Forwarders Association (CIFFA). FAST will probably never work for less-than-truckload carriers. “With LTL, you have multi-origins and multi-destinations because you are carrying different shipments.”

Jeffrey Cullen, CEO of Rodair International, agrees. “With FAST, you have to have the shipper onside, the consignee onside, the carrier onside and the individual driver onside. If you’ve got 15 consignees of 15 exporters on one truck, and fourteen of the fifteen customers on that truck are registered with FAST, while one isn’t – everybody is now processed to the weakest link on the vehicle. The truck can still be held up at the border for quite awhile. It only works for truckers who are carrying high volume-low risk commodities such as car manufacturers.”

Lisa MacGillivray, the Canadian Industrial Transportation Association’s President, expands on the carrier’s point of view. “Shippers cannot dictate either the route or even the carrier who eventually carries the traffic under current bills of lading legislation. Carriers prepare waybills and Customs documents. As a result, shippers may put in their contract with a carrier that they cannot subcontract to carry their shipments. [Under FAST], you’ve already got the cargo and the shipper tied to a particular truck and a particular driver. This isn’t a problem until the driver gets sick or the truck has a mechanical failure.”

Carriers may have to change the way they operate in this regard. They may have to ensure all their drivers are registered and that all their sub-contractors are CSA-approved and on the FAST program. That will likely come at fair expense. But according to MacGillivray, the upside is that some of the carriers will “view it as a marketing strategy. Your shipment is guaranteed to get through. We’ve got everyone and their mother registered.”

That’s if Customs can move fast enough to meet the demand for inclusion in the FAST program.

“Right now,” notes Wiser, “there are over a 100,000 independent truckers carrying goods back and forth across the border. On FAST, the sign up is about 15,000 truckers a year. Between Canada and the U.S., it will take us seven years to sign them all up.”

As of press time, only seven Canadian carriers had signed up with PIP and were eligible for FAST.

Carelessness is penalized

Since carriers prepare waybills and Customs documents, they are also liable for goods until the shipment is delivered to the recipient’s door, according to the new Administrative Monetary Penalty System (AMPS) fully enforced October 7, 2002. While the CCRA monitors and verifies, it has shifted its responsibility to making sure Customs regulations are being followed by shippers and carriers, and fining them if they fail to do so.

In the first four months that AMPS was partially implemented, “the Government collected $18 million [from shippers and carriers],” reports George Kuhn, Executive Director of the Canadian International Freight Forwarders Association.”You can be fined $100 for some first infractions, while others start at $1,000.”

For more information on AMPS, see the CCRA web site at http://www.ccra-adrc.gc.ca


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