Increased Security Arrangements For Ports And Airports – INCREASED SCRUTINY FOR ALL INVOLVED IN THE HANDLING OF IMPORTS AND EXPORTS

Many people will already be aware of the Federal Government’s desire to eliminate organised crime influences on the Australian waterfront.

Some of the first steps have already been seen with the Australian Customs and Border Protection Service (“Customs”) already modifying their computer systems to further restrict access to cargo information so that only those with a direct interest in that cargo (e.g., the shipping line or freight forwarder, the Customs broker, and the container or cargo terminal operator) can access any detailed information.

The next tier of the Government’s plan imposed additional conditions on the licences of cargo terminal operators (there are 3 classes of licence within this category – one for depots, one for warehouses, and one for duty-free stores) and on the licences for Customs brokers.  These new conditions became effective on 1 July, 2012, and industry was advised prior to the renewal cut-off date that they would receive their new licences with the new conditions as soon as possible after 1 July.  At the time of writing, the author is yet to receive his new licence and understands this is the case for the rest of the Customs broking industry practitioners.  One wonders how long it will be until we all receive our new licence document…

For the benefit of readers, there is a copy of the new “Additional Conditions”, ratified by Customs on 29 June, 2012, available here.  Whilst the Government’s desire to weed out criminal activities is to be applauded and the additional conditions appear fair at first glance, a little thought gives the realisation that the Government are perhaps guilty of a “knee-jerk” reaction and have very hastily cobbled together these conditions with little thought about how the goals are to be achieved, or the impact on industry or Customs themselves.  The conditions have been put together with no industry input as to the likely effects on any of the participants in the international trade arena.

Condition 1 is aimed squarely at the holders of corporate Customs broker’s licences.  No problem so far, until you read part 1 of the General Notes on the second page.  What it means is that everyone that works for a Customs broker is liable to be checked, from the Managing Director right down to the office clerk that goes to Customs, or other locations to submit Customs related documents, as part of their job function.  Given the size of some organisations, how much of Customs resources are going to be swallowed up by doing integrity checks?  And if the company’s management structure is such that one of the persons referred to in paragraph (b) of part 1 (i.e., a person with authority to direct another person with an authority as stated in paragraph (a)) resides overseas, nor are they an Australian resident.  How long, or how far, will Customs stretch to check each person?  The Government have been putting Customs under pressure for years to cut costs, so are they now going to give Customs sufficient resources for them to be able to fulfil this task?

Condition 2 has the effect of altering the way that Customs brokers now must deal with any amendments to information provided to Customs.  Up until now, Customs brokers have been able to use their discretion as to whether a matter required only the submission of an amendment to a document or if it required an approach directly to someone in Customs.  This was a recognition by Customs that Customs brokers sometimes receive additional information from their clients after the initial submission of documents, and that Customs placed faith on the integrity of brokers to rectify documents according to the information that had come to light.  Customs brokers have always understood their position of trust given to them by Customs, and in the majority have acted with complete professionalism.  The Customs Act has always held the “big stick” over Customs brokers by means of Customs being able to suspend or revoke a broker’s licence where the broker is found to have acted in contravention of his charter.

The effect of this new Additional Condition is to further place a strict requirement on Customs brokers to submit directly to the CEO of Customs all the details of any additional information that has caused the original documents to be incorrect, or, as the Condition puts it, to be “false, misleading or incomplete.”  In regard to such submissions, refer to General Note 2 on the second page of the Additional Conditions.  Instead of being able to deal with a matter that might be considered minor (e.g., a client produces an additional invoice for an import shipment that changes the value of a duty free import by AU$100.00, meaning that an extra $10.00 of GST is payable, so the broker simply lodges an amendment, payment is made, and the matter is over and done with) the condition implies brokers are now required to send an e-mail with the information to Customs.  Really?  Seriously?  Does the Government realise the implication of this requirement, and how much potential it has to bog down the system?

Thankfully, someone has realised the implications and Customs today published guidance for brokers to clarify this Condition.  Clients of Customs brokers should understand that brokers are obligated under their licence conditions to report any false, misleading or incomplete information to Customs.  Customs today clarified that the threshold for such reporting by brokers is when such information is likely to cause a “material” difference to revenue or security across the border.  Customs go on to say they consider “material” to mean that the original false, misleading or incomplete information has or may result in prohibited, restricted or regulated goods entering the Australian market other than in accordance with Australian law.  Revenue related errors or omissions will be considered to have been communicated to the CEO when the broker submits an amendment to the import declaration and that declaration is then finalised in the Customs system by payment of any additional amounts due.

Whilst many clients of Customs brokers probably already do this, clients should now ensure they provide any piece of information or documentation relevant to a shipment, no matter how insignificant it may seem, to their broker.  Brokers will be asking their clients for more documentation and information than in the past, and it is likely that initially the outcome of this new condition will be delay in some clearances as clients and brokers work out how best to instigate systems to ensure the broker has all the information and documentation required for the shipment at hand.

After so many years of Customs pushing the “self-assessment” regime, it appears the pendulum has swung back the other way a bit.  Again, will the Government provide Customs with sufficient resources to handle the influx of information and to follow up on the submissions from brokers?

Condition 3 of the Additional Conditions is the one that Customs brokers are greatly annoyed at.  Remember, industry was not given any opportunity to provide comment prior to the establishment of these new conditions.  Customs brokers believe this condition should include the word “knowingly” so that it reads “The holder of the broker’s licence must not knowingly allow…”  The point at issue for brokers is that brokers do not know the motives of the person who comes to them to arrange, say, an import clearance.  Brokers do not have access to the intelligence resources available to Customs so, apart from a few key indicators that Customs have shared with industry, brokers have no way of knowing up front if the importer is legitimate, especially if it’s a new importer just starting up business.

It’s highly unlikely that Customs are going to start sharing their intelligence information with brokers, so the condition as it stands places an unfair and onerous burden on brokers.

Customs today published information as to the things they consider are unauthorised activities or purposes.  Basically, it says things such as attempting to access information in the Customs systems about shipments other than ones where the broker is the authorised representative of the importer are unauthorised activities.

Condition 4 serves to enforce what most active brokers do in any case.  Of course, there is now a scramble on to have training courses certified by Customs so that brokers can commence accruing their CPD points.  Interestingly, it may be the catalyst for a reduction in the overall number of licenced individual brokers.  There are quite a few brokers that are only in management roles and no longer actively engage in the day-to-day procedures of a broker.  It is quite possible many of these will not bother to undergo CPD training and will thus not renew their licences in the next round of renewals due in June 2015.

© Lighthouse Agencies Pty Ltd.  All rights reserved.

Changes To Container Detention Free Periods

The following information has been provided by the Customs Brokers and Forwarders Council of Australia:

CONTAINER DETENTION

The decision of certain container shipping lines to reduce the free time available for import containers to be de-hired will increase international trade costs in Australia for both importers and exporters.

Effective from 1 August 2012, Maersk Line, ANL, CGM-CMA, and Mediterranean Shipping Company (MSC) Container Free Time and Container Detention Tariffs have changed, in most cases, the import container free time period has been reduced from ten (10) calendar days to seven (7) calendar days.

Stephen Morris, Executive Director, Customs Brokers and Forwarders Council of Australia Inc. (CBFCA) said in a recent media release that if Australian port and supply chain efficiency met the benchmark of other global port and supply chains then such change may be acceptable. However it does not.

Considering the current mismatch of operating hours in the supply chain, container availability, customs and biosecurity interventions, the return of the empty container to a de-hire facility with limited operating hours will make it difficult to meet the seven calendar days.

As to the reason for change Maersk advised it was part of the Maersk global standards to bring Australia in line with the rest of the world.  What Maersk has failed to take into consideration in its global benchmark decision is that the port and supply chain efficiency in Australia is not at global best practice or standards.

It was also important to note that Maersk determined which Empty Container Parks (ECP) that would receive its containers in Australia and needed to ensure it played its part in improving efficiency as to availability of containers as well as ensuring operating hours at their ECP met industries, as well as Maersk’s needs.

As to the changes it was intriguing that the three carriers had opted for the same period of detention even though each would have a different business pattern and vessel operating schedules.

Maersk advised they are happy to discuss and negotiate with the concerned consignees on the bill of lading as part of the commercial contractual arrangements and members are encouraged to take up this offer.

As not all shipping lines have changed the rules it’s important to consider the potential additional costs of container detention when making a decision to ship with the Shipping Lines who have introduced these unrealistic container detention rules.

© Lighthouse Agencies Pty Ltd.  All rights reserved.

Update On The Port Botany Landside Improvement Strategy

The following information has been provided by the Customs Brokers and Forwarders Council of Australia:

“Representatives from the Customs Brokers and Forwarders Council of Australia Inc. (CBFCA) attended a Port Botany Landside Improvement Strategy (PBLIS) Road Taskforce meeting on 21 July, 2011.  The CBFCA noted improvements in operational performance since PBLIS implementation on 28 February, 2011, which appeared to be in line with data presented by the Sydney Ports Corporation (SPC).

SPC will soon be making adjustments to the PBLIS Mandatory Standards to further refine operational arrangements.  Details of these changes and an overall progress report will be provided to members in the near future in the form of a formal SPC PBLIS Newsletter.  In the interim, the following information may be of interest as a summary of the main issues emerging from the most recent meeting:

Truck Tracking System

SPC have completed installation of a sophisticated Truck Tracking System. Upon implementation, it will be used to measure Truck Turnaround Times (TTT) from when trucks join any queue (rather than a stevedore measurement from the terminal gate) as well as port departure and waiting times.  280 carriers are registered with a total of 2113 tags fitted to vehicles.  Testing is currently taking place and will be ready for a go live by September 2011.  Actual implementation will be delayed until early 2012 to coincide with the introduction of other PBLIS regulations.

Operational Performance System

The CBFCA provided feedback that the compliance verification is excessive for members and transport operators in reconciling stevedore invoices against operational data.  SPC and stevedores claimed that through close collaboration, invoicing accuracy is continually improving.  SPC will soon be releasing a “user friendly” web based reporting tool which will give all registered stakeholders real time access to information to assist in checking invoice accuracy.

Truck Marshalling Area

As outlined in NSWNF 2011/070, SPC have identified a site for a Truck Marshalling area (TMA) at 15 Bumborah Point Road (adjacent to the CEF (the Customs Examination Facility where container x-rays are performed)).  SPC anticipate that construction will commence in October 2011 and will be operational in early 2012.  Upon implementation, PBLIS “early arrival” penalties will commence to deter truck arrival at the stevedore gate prior to commencement of the booked time zone.  Trucks will be permitted to wait at the TMA up to one hour before their allocated zone.  Further flexibility will be offered to country carriers in the use of the TMA.

Unforeseen events

Criteria for stevedores declaring an “Unforeseen Event”, particularly as it relates to IT outages, will be tightened with a revision to the PBLIS Mandatory Standards.  At the request of the CBFCA, SPC will maintain real time details of all “reviewed” and “pending review” unforeseen events on their web site.  Operational arrangements and associated definitions will also be a focus in dealing with trucks in the terminal during a time of an Unforeseen Event.”

© Lighthouse Agencies Pty Ltd.  All rights reserved.

Sydney Ports Corporation Scraps Peak Pricing Plan – N.S.W. Government To Introduce New Regulations To Force Participants To Meet Performance Benchmarks

In May, 2010, the Sydney Ports Corporation presented industry with an overview of its plan for improving the throughput of containers at Port Botany.  A copy of the overview document can be found on our “Resources & Documents” page.

Sydney Ports Corporation has scrapped their earlier announced plan to introduce a Peak Pricing charge, and instead the ongoing costs of the Port Botany Landside Improvement Strategy (“PBLIS”) solution will be funded by a AU$10.00 per container increase in the wharfage charge levied on FULL import and export containers.

The NSW Government intends to introduce new regulations to force the stevedores and transport operators to cooperate with the introduction of the planned reforms.  Sydney Ports Corporation had hoped the major players and stakeholders would be able to sort out there problems without the need for regulation, however, they have conceded that regulation seems to be the only way there will be any reform.

The regulations are planned for introduction during the third quarter of 2010, and it is anticipated the PBLIS reform process will be in full swing by the fourth quarter of 2010.  One of the major points of the new system will involve a new Operational Performance Management (“OPM”) between stevedores and transport carriers that will include performance benchmarks for BOTH stevedores and truck carriers.  There will be a penalty system in place for both the stevedores and the truck carriers where they do not meet the specified benchmarks.

While this is a good thing overall, as the stevedores are finally on notice that lack of performance will cost them financially, the regulations will create issues in other areas.  For example, at the moment the stevedores have the option of not penalising a truck carrier where a truck doesn’t arrive for its scheduled time slot (such as delays caused by Sydney’s notoriously bad peak hour traffic which gets worse as each year passes – look at what happened when the M5 tunnel was suddenly closed to morning peak hour traffic recently by an accident, which is an all too common scenario), the stevedores will not have that same ability under the regulations currently proposed.  It is to be hoped the NSW Government will build in some sort of flexibility to allow for late arrivals due to circumstances beyond the control of the truck operators, and similarly for circumstances beyond the control of the stevedores if they are found to have fallen short of a specified benchmark.

As one reporter has said “The current PBLIS strategy has already made a major concession to transporters, by putting the peak period pricing regime on the back burner.  With clear, measurable and enforceable operational performance management standards, the current plan gives as much certainty to both parties as is humanly possible under the circumstances.

As for the M5 tunnel, allow an extra three hours and take a good book – something of “War and Peace” proportions.”

© Lighthouse Agencies Pty Ltd.  All rights reserved.

Sydney Ports Corporation Wants To Add A Surcharge For Truck Container Movements During Peak Periods

Following on from the IPART review of the operations on Sydney’s wharves, the Sydney Ports Corporation have been granted the authority to implement procedures for reform on the waterfront. These procedures are currently underway and we believe that the reforms will take the form of 3 or 4 KPI’s (Key Performance Indicators) that will need to be achieved by the wharf stevedoring companies.

We will attempt to keep you informed as and when these KPI’s are advised to us.

Unfortunately we have discovered an issue that we feel is totally detrimental to all importers where the Sydney Ports Corporation, in consultation with the Federal Government, are looking at introducing a Port Peak Pricing charge. This charge will basically be imposed against the importer if they wish to collect their containers during the perceived daily peak period. At this stage the cost of the fee and the exact peak time is still unknown however we believe the fee to be around $100.00 to $120.00 per container and the period to range from 5.00am to 1.00pm.

We cannot see any benefit at all to this charge apart from forcing importers to change their warehouse times and their work practices or else face additional charges. For example, if your warehouse is similar to the 95% of other warehouses in Australia then they generally operate from 7.00 am to say 3.30 pm. Unless you pay the peak period charge you will not be able to receive your container within normal daily operations. Maybe if you are lucky enough to obtain a 1.00 pm or 2.00 pm time slot you might be able to receive the container in time to unpack that day, provided there are no delays loading trucks out at the wharf. Imagine if every importer attempts to get these slots to keep warehousing operation costs down? It will only mean that the port is quiet all day and the peak has been moved to 1.00 to 2.00pm. With only limited slots between this new peak period obviously not everyone can obtain a time slot.

The only other alternative will be to request the carriers to collect the containers during off-peak or shoulder periods and take them back to their yard for delivery during the importer’s normal warehouse hours. This, of course, will have a cost of roughly $250.00 for a 20’ and $350.00 for a 40’ when you allow for cartage to store, lifts, fuel surcharge and storage, making the peak period charge look the cheaper option at first glance.

Although the negotiations have progressed to an advanced stage, it still has not been ratified and can hopefully still be quashed. We know that the Transport Industry are strongly opposing this charge and have been actively seeking its demise through discussions with the Sydney Ports Corporation and the Minister, Joe Tripodi. The transport companies want what the importers want, and that is simply for the individual stevedores to implement procedures to work landside operations much more efficiently and be accountable for any delays instead of the Government to simply laying the congestion blame with importers and force them to change their operations or pay a premium.

Below is an extract from one carrier and I believe that this highlights the frustration that the Transport Industry are feeling and also it highlights the need for all of us to act now before it is too late. There is also a copy of a flyer detailing an important meeting set down for the 2nd of April, 2009, at the Stamford Plaza, Mascot, which will have up to date details of this issue as well as the platform for questions and answers.

“Hi Guys, this is very important that you attend and be very vocal from the floor as they will impose onto industry PEAK PRICING and that cost will have to be charged to the importer / exporter and they won’t be happy. The government is not listening to the transport associations solution for the problems at the port and we think it can be easy fixed.

1. The stevedores be penalised if they don’t turn the trucks around in the one hour time slot (they pay the detention)

2 .Empty container depots that are owned by stevedores open 24/5 like they expect transport companies.

3. They say it’s not about money, but they should put a $20 levy on all containers coming through the port.

4. All movements at the port be electronic for quicker turnaround.

Transport companies have changed their operations around and work 24/5 and in peak times 24/6.The only reason we get congestion and big ranks at the port is due to lack of equipment loading the landside transport. Companies are penalised by the stevedores when late or incur no shows so it is only fair they also be accountable for lack of performance.”

We will continue to chase our representative body to fight this charge and will also continue to support the transport companies in an effort to have this overturned, however we feel that maybe some input from the importers would be of assistance. If you feel strongly enough on this issue please send an email to the minister, Joe Tripodi at joe@tripodi.minister.nsw.gov.au . You may also like to voice your concerns with the Chamber of Commerce. There will be a symposium held at the Stamford Hotel in Mascot on 3rd of June, 2009, where this issue will be open for discussion. It is anticipated that Joe Tripodi will be in attendance to field questions.

The Sydney Ports Corporation is currently operating a test of operations on both DP World and Patrick’s wharves and are looking at truck arrival times, slot bookings based on each hour of operation and the individual ports performance. All this data will be used to assess the final decision. Below is a link to the Sydney Ports Corporation website where you can see the daily results of this test.

http://www.sydneyports.com.au/port_development/landside_improvement/performance_reports/industry_trial_1_16_feb_-_1_mar

We will continue to monitor this situation and will let you know details of any developments as they come to hand.

© Lighthouse Agencies Pty Ltd. All rights reserved.

Sydney Wharf Stevedores – Guilty of Gouging?

Early September has always been the “traditional” start of the peak import season for Australia. Normally, import cargo volumes start to increase slowly from the beginning of September until they reach their full peak around early to mid-October, then they tail away back to more normal levels.

This year, however, things are different – at least in Sydney, anyway. Cargo volumes through Sydney’s major working port area for containerised cargo, Port Botany, have been steadily increasing for some years. This is a reflection of the strength of the Australian economy as it pertains to international trade. However, it seems the two main wharf stevedores, DP World and Patricks (now owned by Toll Holdings), have been a bit caught out. We are already seeing major delays for trucks trying to access the port to move containers, and the stevedores are bleating about how hard done by they are as they struggle to cope with the demand. I don’t have any sympathy for the stevedores as they’ve brought this situation on themselves through their own greed, but more of that later.

Following are extracts from some press releases by various participants on the waterfront. Hopefully these will give readers a better picture of the problems on the Sydney waterfront at the moment.

1. From the general manager of the Patrick Ports operations:

“There has been major congestion at Patricks Terminal over the past few weeks that has resulted in average times of 4-6 hours to conduct receivals and exports of containers. The problems are causing a “domino” effect with difficulty obtaining slot bookings and turn around times to the wharf increased dramatically. Along with all transport companies we are doing our utmost to keep all charges to a minimum but there will obviously be detentions that are above normal and possibly overtime charges incurred to try and prevent containers going into storage.

Below is a media release that helps explain the situation.

If you would like to discuss this further please call me anytime.
Bruce Gunter
General Manager

Patrick throwing everything at Port Botany congestion

Patrick’s Port Botany terminal manager David Phillips said the stevedore was “throwing everything” it could at relieving congestion caused by an unprecedented build up of import containers this week.

Patrick is training 60 new staff to drive straddles at the terminal, many having been transferred from Darling Harbour, which is due to close soon.

Mr Phillips said this morning (Friday, August 31) that volumes at the Port Botany terminal had not decreased since the Christmas peak.

“There is an unforeseen increase in volume that has not dropped off since September last year,” Mr Phillips said.

“This week and its problems are a direct result of a very busy shipping schedule, but primarily the build up of imports through lack of deliveries over the weekend.”

Mr Phillips said there had been very few take-ups of weekend slots, causing high stack densities at the terminal which was slowing the time it took to retrieve the boxes for each truck pick-up.

“We’re throwing everything at it, we really are,” Mr Phillips said.

“To handle that sort of volume, without stopping, you cannot predict that kind of increase.

“We’re seeing a peak in operation that’s extreme.”

Mr Phillips said Patrick had also temporarily extended the amount of time import containers would remain at the terminal before importers were charged storage fees.

Patrick is adding two new straddles next week and another three in the first few weeks of September.

The stevedore has closed its shipping operations three times so far this week in order to divert resources toward clearing containers from the docks.

Patrick and the Customs Brokers and Forwarders Council of Australia are encouraging the use of extra slots this weekend and particularly over the APEC long weekend starting September 7.

Mr Phillips said Patrick was not counting the Friday public holiday in Sydney as a free day.”

2. From DP World:

“Due to the low number of time slots booked for Friday 07/09 (170 imports) and Saturday 08/09 (60 imports) and the high number of import containers due in over the next few days and already on the ground at the terminal, an estimated 5000+ import containers will be on the ground come Monday morning.

We will be making available additional slots next week to help move these containers, however this will test the terminal’s roadside operational capacity. We are therefore anticipating higher than normal truck turn times from Monday 10/09 and continuing the rest of the week.

We encourage all transport operators to make use of the available timeslots on Friday and Saturday to reduce the number of containers in the terminal early next week and the demand for import timeslots.”

3. From a transport company:

“I think the crazy Christmas rush has come early. As most of you know we have experienced extensive delays at Patricks for the past three weeks due to the high volumes of containers. Looking at next week it is going to be even worse. Both terminals are going to be extremely busy and we are expecting slow turnaround times as well as a shortage of timeslots.

We have been forced to work Friday due to the number of containers available and with our clients not accepting deliveries on Friday, there will be a backlog of containers to deliver from our yard next week. Our main aim next week will be collecting containers from the terminal within the free storage time. We will do our best to meet your delivery dates and times but we will need people to be understanding and flexible by extending their hours of delivery.

With the shortage of timeslots we are expecting any late pre-alerts may incur storage.”

To add the difficulties of the transport companies, police are not allowing trucks to sit in the long queues outside the wharves as they have done in the past (perhaps due to the APEC summit?). Police are forcing the trucks to move on meaning the trucks then lose their position in the queue.

Ultimately, this means additional costs for importers and exporters by way of additional charges from the transport companies for truck waiting time, plus the possibility of storage charges being incurred on import containers due to the lack of available time slots.

There is one recurring theme coming from both stevedores. They both think that because they work 24/7 then so should all the other people involved in the import and export chain. The stevedores are quite happy to arrogantly try to impose their rule onto anyone else that has to use their services in some way. They care not that most importers are not major companies that have facilities that do or could work in such a way that meets the stevedores myopic views. Instead of trying to beat the community into submission and then crying because they can’t have it all their own way, perhaps they should do themselves a favour and work with the community rather than against it. Perhaps they should also make more staff & equipment available during normal working hours on normal working days? Now there’s a novel idea!

The stevedores used to allow 4 working days to collect containers before storage charges started. This meant that Saturdays and Sundays were not taken into account as part of the “free” period, and storage was never charged for those days. These days they only allow 3 days from the first day the containers are declared “available” for collection, and Saturdays and most public holidays are considered “working days” for the purposes of the stevedores “free” period calculations. This means long weekends are quite often a boon for the stevedores in terms of additional revenue from storage charges – kind of like “money for nothing” really.

For example, lets look at the long weekend created by the APEC summit in Sydney, over the period Friday 7 September, 2007 to Sunday 9 September, 2007. Suppose a container was declared first day available on Thursday 6 September, 2007. As businesses would not be working on Friday 7 and Saturday 8 September that leaves just that one day for ALL import containers to be collected from the wharf to avoid storage – a logistic nightmare impossible to achieve.

This sort of arrogance is why the Container Logistics Action Group (“CLAG”) was formed and has taken these issues to IPART (the Independent Pricing and Remuneration Tribunal) under the auspices of the Australian Competition and Consumer Commission who believe the stevedores have a case to answer in regard to probable collusion on pricing, and predatory practices using their duopoly to unfairly seek additional revenue.

The ACCC have provided CLAG with the authority to undertake collective bargaining with the stevedores on behalf of the landside parties that have to use the stevedores facilities (transport companies, freight forwarders, Customs brokers, importers, exporters).

© Lighthouse Agencies Pty Ltd. All rights reserved.

Integrated Cargo System Current State of Play

In October, 2005, the Australian Customs Service (“Customs”) bludgeoned the import and export community with the introduction of the Integrated Cargo System (“ICS”). Anyone that was importing or exporting at that time will be still licking their wounds over the enormous dramas the introduction of the system caused.

As we approach the February, 2007 cut-off of any of the remaining legacy systems that the ICS replaced (e.g., COMPILE), it is perhaps timely that a quick review of the current state of play is considered. There has been an enormous amount of work carried out since the introduction of the ICS, especially in regard to workarounds to some issues that the ICS just couldn’t deliver on, or was too inflexible to cope with the reality of the import or export process from a commercial perspective. This modification of the system that was alleged by Customs to be the ultimate reporting system available at the time continues to this day, with a number of diagnostic functions that were available to the commercial users of COMPILE not available under the ICS. To be fair, there are some other diagnostic functions in the ICS that weren’t available to the users of COMPILE, and some of these have proven to be very useful in providing transparency of the reporting regime. Nevertheless, there are some annoying inadequacies in the diagnostic functions of the ICS.

By this, I mean that all parties in, for example, the import reporting regime, are able to interrogate and access data that will tell them where problems or delays in electronic clearance are occurring and, therefore, who should be responsible for correcting the error that is causing the delay. However, getting the responsible party to correct their error in a timely fashion is often a frustrating exercise for other users down the line from that reporter. And then there are the compulsory “screening” times built into the system. Changes aren’t always immediately effective – depending on the nature of the amendment made there is a delay of between 2 hours and 24 hours until the change is processed and flows down the line.

From a Customs brokers perspective, we are finding that there are many things in the chain that are causing much angst to brokers, and these problems and issues have even forced a lot of skilled players out of the industry in sheer frustration at the extra workload they have been expected to undertake for no increase in remuneration. These frustrations stem right from the importer through to the transport operator delivering the goods from the wharf to the importer. Importers just do not seem to understand their place in the scheme of things – there is a general shift by importers to avoid accepting the inherent risks that being an import trader involves and they try to push these risks to third parties, in particular on to their Customs broker. Freight forwarders, and in some cases, shipping lines, seem to think that the 48 hour reporting cut-off means they don’t have to lodge their reports with Customs until 48 hours before the vessel arrives, irrespective of the fact that they had the documents some 1 or 2 weeks prior to the vessel arrival. Whilst the wharves are generally up to speed with electronic releases, many of the lcl depots are not, and they continue to insist on receiving a piece of paper that shows that the goods are clear of any Customs and AQIS impediments, rather than them interrogating their computer systems to check for the electronic release status that the ICS transmits to the depot on final clearance of the shipment. Similarly, transport companies quite often want that piece of paper, although most of them are vastly improved now they have learnt how the ICS works.

Out of all these frustrations, it seems to me the most infuriating come from the importers and the freight forwarders. Many importers continue to think they can give the broker the clearance papers on the day the vessel arrives, or maybe only 1 or 2 days before. This of course places great pressure on the brokers as they are continually having to rush clearances through due to late paperwork from importers. If there happens to be a problem with the paperwork, then these importers complain about the delay as if it’s the broker’s fault, when in fact if the importer had sent in the documents early enough the problem could have been resolved before arrival of the cargo. In regard to freight forwarders, they exacerbate the problems by reporting as late as possible, and only then do they issue arrival notices and the like to advise brokers and importers of certain essential details of the impending shipment. So, not only do brokers have to cope with documents being given to them at the last minute by the importer, the broker also has to cope with freight forwarders not having reported the cargo, and therefore there is insufficient information available for the broker to prepare the Customs and AQIS clearances. Further aggravating the freight forwarder issue is that it is not uncommon for the importer to send documents to the broker and when the broker contacts the forwarder for information about the shipment, the forwarder has not yet received any documents from his overseas agent!

Note that if the shipment is selected for a random inspection by Customs or AQIS, this is NOT the broker’s fault – brokers can do nothing about these random selections as they are generated by the Customs and AQIS internal computer systems.

There have been many stories over the last 15 months or so of importers walking away from accepting the risk of being an import trader and foisting the costs back onto the broker. For example, I heard of one broker whose client received a container that was missing about $12,000 worth of material. The container was packed by the importer’s supplier at the suppliers factory, sealed by the supplier at the factory, and had the same seal on it (still intact) when it arrived at the importer’s warehouse. The importer deducted the $12,000 from the broker’s account, as if it was all the broker’s fault!! The importer’s reasoning? “I didn’t receive my goods, so why should I pay you”  This is outrageous!!

Importers complain about additional costs incurred as a result of inadequate documentation from their supplier, or perhaps because AQIS have placed an overseas fumigation company on their unacceptable list and the container has to fumigated again on arrival. They think the broker is somehow responsible and deduct the charges from the broker’s account. How can the broker be considered responsible for such occurrences? These events are completely beyond his control, yet importers seem to think they can force the financial cost back onto the broker when the broker is simply the medium acting on behalf of the importer to get goods cleared and delivered. It would be a different story if the expense arose due to some negligence on the part of the broker, however, in circumstances such as those mentioned above, it is clearly not the broker’s fault and therefore the broker should not be expected to bear the financial burden.

Customs brokers these days seem to spend an inordinate amount of time using their considerable expertise on behalf of their clients to resolve problems caused by other parties in the transport chain, yet brokers are quite often expected to carry the costs of these problems until they are resolved, rather than the importer bearing the cost and receiving a refund should one be forthcoming. In the same vein, brokers very, very rarely receive remuneration that truly reflects the effort they expend on behalf of their clients.

If you are an importer reading this, then I urge you to sit down with your broker and get to understand what he has to go through on your behalf. He has done his best to understand your business and works to help you achieve your aims. Remember also that the arrangement between an importer and his broker is one that falls under the general laws of “Principal & Agent”. The basic tenet of these laws is that the Principal is responsible for everything the Agent does on behalf of the Principal, and this includes bearing the burden of the costs incurred by the Agent on behalf of the Principal. Help your broker to help you – make his life a little easier and be prepared to carry the burden of the costs of being an import trader, and give your broker a “fair days pay for a fair days work” – he bloody deserves it, I can assure you!

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