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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