Security About us Buying Selling Export / Import FAQ Library Help Register Now! USD 0
Export Portal
EXPORT PORTAL

The №1 Export & Import Source

Why Export Portal

why ep

1945 Gardena Avenue, Glendale, California 91204-2910, USA
International call:
+1 (818) 691-0079
Free call:
+1 (800) 289-0015
Fax:
+1 (818) 691-0079
+1 (818) 213-6189

Tackling New Rules and Regulations

W
ith an aim to increase compliance and ensure security, countries across the world have introduced a slew of rules, regulations, accreditation programs and other partner programs. Filing of documents, either manually or using e-ling, is the primary touchpoint for any shipment entering a country. Shipments may be subjected to random or 100% inspection based on the procedures established in each country. For example, while the Singapore port has established a process with appropriate technology for 100% inspection of containers, some countries, including the U.S., still use random inspection measures based on risk analysis, due to the large volume of imports. Importers that are part of programs like Customers-Trade Partnership Against Terrorism (C-TPAT) and Importer Self-Assessment (ISA) have the added benefit of reduced inspections and waiting. Some of the key rules, regulations and other mandates put forth by the U.S. and the European Union are detailed in Figure 2.
U.S. and EU Rules, Regulations and Mandates
Figure 2. U.S. and EU Rules, Regulations and Mandates
While rules and regulations for controlling trade hinders the free flow of goods, it is in the interest of all trading parties to adopt new policies as soon as possible. One of the principle benefits of being a member of programs like C-TPAT or being an accredited Authorized Economic Operator (AEO) is the reduction in time for processing shipments and related paperwork. CBP estimates that there is an average 29% reduction in transit times and 49% reduction in cargo delays for shipments made by C-TPAT members.
With automation and possible integration with government systems, shipments no longer need bulky documentation to accompany them. With the advent of paperless transactions, cargo arriving at U.S. ports can be cleared electronically, allowing for more efficient flow of trade. According to a study conducted by UNCTAD (the United Nations Conference on Trade and Development), in a paper-based system, over 30 data elements out of 200 need to be retyped more than 30 times, and 60% to 70% of these data elements have to be re-keyed more than once. Figure 3 shows the steady increase in the rate of paperless filing and entry summaries.
E-Filing Growth Rate in the U.S.
Figure 3. E-Filing Growth Rate in the U.S.
Increasing cost to ensure compliance
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.
Delays in global trade
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.
Managing data for conducting seamless trade
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.
The volume of data also keeps growing, with the increase in the number of players and lists of information furnished for each transaction. A research paper published by the Australian Ministry of Foreign Trade and Economic Cooperation indicates there are more than 27 different parties involved in the international trade supply chain, with over 40 documents and 200 data elements. In Singapore, traders may be required to submit as many as 21 different forms to 23 different agencies, a process that may take up to 15 to 20 days to complete. Even in the case of countries using extensive automation, the volume of data entered could be significant. By the end of the year, CBP expects data volumes to reach 27 million, an increase of 5% over the previous year.
Limitations of current systems
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%.
Level of Automation in Global Trade Management Applications
Figure 4. Level of Automation in Global Trade Management Applications
Сhat with support