It’s “Survival of the Fittest” as New Pre-Notification Rules Make Electronic Reporting Mandatory
August 1, 2003
Mandatory electronic reporting for pre-notification of exports to the U.S. may well put some carriers out of business, says David Bradley head of the Canadian Trucking Alliance (CTA)."There will no do...
Mandatory electronic reporting for pre-notification of exports to the U.S. may well put some carriers out of business, says David Bradley head of the Canadian Trucking Alliance (CTA).
“There will no doubt be some economic impact,” Bradley acknowledges. “But that’s the price we have to pay to keep the border open.”
No less than 60% of Canadian carriers currently present their cargo information in paper form when arriving at the border, according to a study conducted by the U.S. Bureau of Customs and Border Protection.
The study was conducted to examine the impact of the new pre-notification rules, published July 23 in the Federal Register, which will make electronic pre-notification for goods being exported to the U.S. mandatory.
(FAST-approved motor carriers hauling FAST-approved shipments must pre-notify Customs 30 minutes ahead of arrival at the border; those involved in the PAPS program must report one hour prior to arrival.)
Given the current state of the industry, mandatory electronic reporting will be a challenge, Bradley says.
“Obviously this is going to require some investment on the part of some carriers,” he says. “But I believe our members have long been well aware of the coming changes and are prepared to do what’s necessary.”
Evan MacKinnon, CEO of MacKinnon Transport and chairman of the CTA, points out that small or large carriers that are working for any of the major multinational shippers or 3PLs likely are already into EDI and while there will no doubt be some additional systems work that needs to be done, they should be able to manage it. However, he warns that carriers that are not up to speed technologically, whatever their size, are going to have a tough time.
“Some of them may have to think about whether they wish to continue to try and compete in the transborder market. This obviously will be a hard decision for some of those carriers and no doubt it will be painful,” MacKinnon said. “But, these programs must apply to everyone in order to have a level playing field. If at the end of the day, some are forced or decide to leave that market, those that are able to comply will see it as an opportunity to pick up some business. It is survival of the fittest in the market.”
Even so, there’s no reason to panic yet. Bradley points out the rule is still subject to a 30- day comment period, followed by another 90 days before the final rule appears. The rules will not be finalized until Oct. 1.
“And even then, it may not be implemented for who knows how long,” he says.
“The fact is, many border crossings don’t even have FAST lanes yet, much less the infrastructure necessary for electronic reporting of data to customs brokers. This is going to take some time to implement.”
Carriers who do attempt to beat the system by going out of their way to avoid crossings where FAST lanes and electronic reporting infrastructure do exist should be forewarned however, says Frank Bowen.
While Bradley represented the CTA, Bowen represented the Private Motor Truck Council at the Commercial Operations Advisory Committee to the U.S. Customs Service when the pre-notification rules were being discussed
“If, when the rule is implemented, a driver did go out of his or her way to get to a crossing where there is no electronic reporting or FAST lane available, I think there’s a fair chance the customs officer would notice,” Bowen says. “If I were a customs officer, I would first ask ‘Who is this guy and why is he trying to beat the system?” Then I would ask myself ‘What is he trying to hide?’ And then I would unload his truck.”
Neither Bowen nor Bradley were surprised by the fact carriers will be required to file cargo reports electronically, but they were aware that many carriers don’t do so to date.
“Certainly one of the reasons the lines are so long sometimes at crossings is that the drivers have to go though the paperwork with the brokers,” Bowen pointed out.
Adds Bradley: “Even if the new security measures weren’t part of the reason for this, we would have had to eventually start filing electronically.”
Both Bowen and Bradley are glad the original “strawman” proposal of four hours pre-notification was dumped.
“I wouldn’t say the industry is breathing a sigh of relief, but I will characterize the (new) time frame as livable,” says Bradley.
The new pre-notification rules, published in the U.S. Federal Register on Wednesday, July 23, are as follows:
Imports: 30 minutes to 1 hour before arrival, depending on which reporting systems they use.
Exports: One hour prior to arrival at the border using AES.
Until Customs completes work on its Automated Commercial Environment (ACE) system – expected sometime in the middle of next year – motor carriers will have to live with using a number of existing release systems: Free and Secure Trade (FAST), Pre-Arrival Processing System (PAPS), Border Release Advanced Selectivity System (BRASS), and Customs Automated Forms Entry System (CAFES).
Unfortunately, conflicts within these systems could cause delays. For example, under PAPS brokers fax release data in bar-code form to Customs’ border stations where it is scanned. But if a truck has more than five PAPS shipments, it gets diverted to Customs’ secondary area so the primary booths are not tied up by scanning too many bar codes. If a FAST-approved carrier happens to be carrying several PAPS shipments, he could find himself diverted to the secondary area, effectively losing the benefits of the FAST lane.
Meanwhile, Canada Customs and Revenue has come out with its own pre-notification rule proposals, set to be published, passed and implemented at an as yet undetermined time.
Under the newly proposed Canadian rules, motor carriers bringing goods into Canada will be required to provide electronic cargo data to customs within the following time frames:
Non-FAST shipments: one hour prior to arrival;
FAST shipments: no advance reporting requirement – Canada bound;
The new regulations and an implementation schedule governing mandatory advance cargo reporting will be introduced later this year, according to CCRA officials. Carriers will be consulted, they say.
In the meantime, carriers should view the upcoming mandatory electronic filing for U.S. customs as an opportunity, says Bradley.
“The hope is that filing electronically will actually reduce wait times,” he says.
Bowen, who also just happens to be the marketing mastermind behind Viasafe, a company that supplies secure electronic data transmission services for import/export use, couldn’t agree more. Chances are, once carriers realize they have to go completely electronic or go bust, services such as Viasafe will be a hot commodity.
There are other ways of reporting and there are other companies, Bowen acknowledges but the point is, if carriers don’t go electronic soon they won’t survive.
“All of those companies that waited and said it wouldn’t happen are getting a wake-up call now.”