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.

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