Why Export Portal
Tackling New Rules and Regulations
Increasing self-compliance mandated for importers requires upfront investment in equipment, as well as manpower. According to a cost/benefit survey major expenditure items. The average start-up costs for C-TPAT were approximately $187,000, while the maintenance costs were around $118,000. In addition to the costs related to investments, importers also have to face penalties for non- compliance. CBP assessed more than $120 mil- lion in penalties to non-compliant importers in 2009. In addition to these, penalties for failing to le correctly are also increasing. In 2009, CBP issued over 500 penalties to exporters and freight forwarders for failing to le timely or accurate Automated Export System (AES) lings. Each penalty amounted to $10,000. When considering a global trade management solution strategy, it is important to consider the role that supply chain partners and solution providers play, but it is also very important to understand each party’s risks and responsibilities.
Increased inspections have led to considerable delays for shipments and increased customer dissatisfaction. These delays are often due to multiple reasons, including a time lapse in fur- finishing information, ling incorrect information and random inspection of shipments. There are economic tradeoffs between the frequency and rigor of inspection and the rate of turnaround for containers. While more inspection leads to less chances of a security hazard going undetected, it also increases the delays in the supply chain. In one study (conducted by Martonosi, et al, 2006), it was estimated that the cost of delay per day can approach 0.5% of the value of a container. Even when the delays due to inspection are anticipated in the long run, the extra pipeline inventory required to accommodate delays can be costly.
Although programs like C-TPAT reduce the number of inspections and, consequently, associated delays for members, it has led to increased requirements for data collection, as well as modifications to processes and systems able to fulfill the requirements of these programs. In addition, with varying regulatory frameworks associated with each country, filing has become a complex procedure for trade partners.
Most companies have a plethora of applications to manage their global trade activities. Many operators, however, still use applications such as spreadsheets to perform daily tasks. Traditional document management systems are also manually intensive, requiring laborious processes for gathering data and disseminating information. These cumbersome processes lead to inaccuracies and delays. Currently, most large companies use ERP systems to handle trade management. However, due to the rigidity of their framework, as well as a lack of integrity with outside systems, ERP systems have issues with supporting data content requirements and are unable to handle the complexities of documentation and filling.
The importer must be able to reference lists such as denied-party lists and other blacklisted-party lists for each shipment. In addition, legislation seeking to curtail global money laundering and terrorist financing requires businesses to verify customer identities. These lists, which are updated by government agencies from time to time, must be accessed in real time to ensure the accuracy of declarations. Most companies do not have the technological capability to handle these situations, causing errors and omissions and, in severe cases, leading to penalties and lawsuits. Most companies also do not understand how to use the online information systems deployed by government agencies for automating the submission of forms and shipment data. For example, in spite of the introduction and upgrades of the AES, companies are having problems using the Export Classification Control Number (ECCN) with the country chart. Users often see incorrect ECCN and license exception combinations and are referring cases to export enforcement agents when AES data does not appear to be correct. CBP is also on the alert, contacting exporters with warning and penalty letters for AES violations.
In a survey conducted by Kewill, only 16% of exporters have fully automated systems for preparing export documentation (see Figure 4). Ahigher level of automation is seen in large shippers, while smaller ones still struggle with manual, semi-automated or third-party systems. Currently, less than half of all shippers surveyed are able to produce and distribute export-related documentation efficiently in less than 10 minutes. For half the respondents, more than 1% of shipments have errors that lead to delays and rework. However, of those using completely automated systems, only 37% had an error rate of more than 1%.