February 28 marks a crucial deadline for U.S. Customs, one that has the potential to impact every import and export operation in the country.
According to a time table set by the White House, Customs brokers and U.S. importers have until 2/28 to transition to using a computer system, known as ACE, for filing entry summaries, cargo releases, and other data. However, there appears to be a flaw in their plan: Customs isn’t quite ready to go live with the new system, leaving the trade with many questions about what to expect at the end of next month.
Here are three potential scenarios to consider, each of which would have ramifications for importers and exporters seeking to move cargo internationally, especially through gateway ports such as New York and Los Angeles.
1. MOST LIKELY: THE DRESS REHEARSAL SCENARIO
Customs redefines the 2/28 deadline as the start of an informed compliance period, meaning brokers and U.S. importers would be required to use ACE for entry summary and cargo release but not punished for failing to do so. In the past, Customs has used a similar approach when dealing with the rollout of new automation requirements, such as AMS (Automated Manifest System) and ISF (Importer Security Filing). This would be the most likely scenario and would require Customs to define when enforcement would actually begin.
2. LESS LIKELY: THE PUNT KICK SCENARIO
Customs extends the deadline by 90-120 days. Although unlikely, this scenario would have the least immediate impact on the trade, with Customs simply kicking the can down the road to a new deadline.
3. EVEN LESS LIKELY: THE OMG-NO! SCENARIO
CBP enforces the 2/28 deadline and requires all entries to be filed in ACE, with exceptions for items not yet programmed, such as temporary import bonds, warehouse entries, and hand carries. This would be the worst case scenario, as it would mean that many entries would have to be filed on paper and sent to Customs for manual processing. Stacks of entries would pile up in CBP offices due to the slow, paper-based workflow. This would trigger a domino effect of containers stacking up in the ports. Demurrage, storage, and per diem charges would start to accumulate for importers, as terminals would become overwhelmed with freight that couldn’t be moved in a timely manner. Available containers would be buried among the throngs of those yet to clear Customs. Exporters would suffer from the ripple effects, as the piers would be hampered by congestion. Air freight would also be impacted, with massive slowdowns and extensive wait times.
Take Action: Speak Up
If any of the above scenarios have you worried for your business, you may want to consider sharing your views with the following.
- Your local government representative. Voice your concerns about how enforcement of the impending ACE deadline will cripple your businesses with delays and massive demurrage/storage charges. Lookup your local congressional officials.
- U.S. Customs. Email their ACE outreach office at firstname.lastname@example.org or call Maria Luisa Boyce, Senior Advisor, CBP Trade Relations, at (202) 344-1440.
- Any international trade groups of which you are a member. Many business groups have direct ties to members of Congress and other government officials.
Is there anything shippers can do to prepare?
Unfortunately this situation involves all U.S. ports of entry, so rerouting cargo to less utilized ports may not result in any relief. While we are hopeful for one of the first two scenarios above (or something similar), it is possible that the third, very ugly scenario could come to pass. Should that happen, U.S. importers would experience long delays. Even worse, they will be on the receiving end of exorbitant demurrage and storage charges, over which brokers and forwarders will have little control. U.S. exporters would fare no better under this scenario; since it would likely cause sufficient port congestion and equipment shortages to delay their shipments and generate additional charges such as per diem, attempted delivery, and storage.
Mohawk will continue to work with Customs towards finding a solution to the upcoming ACE programming deadline.
Robert Stein is Vice President, Customs & Trade Compliance for Mohawk Global Logistics.
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