Borderline frenzy

Homeland security has forced the customs clearance process to go electronic, but the rules remain unclear, confusing and incomplete. Learn what it all means for carriers operating across the borders, now and in the future.

Mel Hennigar knows that eventually the customs clearance process at the U.S.-Canadian border will be automated, but the exact timetable remains uncertain.

“Who knows what’s going to be done three or four months from now?” says Hennigar, who works in the operations department for Warren Gibson Inc., a 350-truck carrier based in Alliston, Ontario. “No one can give you concrete information on what’s going to happen.”

Since the terrorist attacks of Sept. 11, 2001, the U.S. Customs and Border Protection (CBP) – the new name for the agency charged with securing ports of entry and border crossings – has been introducing regulations, creating compliance programs and partnerships, and changing the method of inspections at crucial points of entry. During the last quarter of 2004 and into the first quarter of 2005, CBP is implementing major changes, not all of which are understood universally.

One of CBP’s major initiatives is to ensure compliance with the Trade Act of 2002, which requires that cargo manifests be submitted electronically to customs at least one hour before trucks inbound to the United States arrive at the border. The rule now is being rolled out at three groups of ports. The first group began Nov. 15, which included the largest northern border ports and all of the southern border ports. On Dec. 15, another group comes into compliance, and on Jan. 14, 2005, the last group will be switched over. CBP vows that shipments failing to comply with this rule will be turned back at the border after a period of “informed compliance” and penalties.

The rule will help CBP speed the flow of traffic, but it also could create bottlenecks elsewhere, Hennigar says. Drivers making pickups at locations just minutes from the United States and Canadian border may be forced to wait an hour before entering, for example. The rule is much less of a concern for carriers that haul loads originating in Mexico, says Margaret Irwin, director of customs and cross-border operations for the American Trucking Associations. U.S. carriers pick up loads from border zones inside the United States after Mexican carriers unload the cargo.

Drivers coming into the United States from Canada, however, could be delayed because third parties – namely U.S. customs brokers – aren’t able to enter cargo information into customs’ database on time because of the sudden increase in reporting triggered by Trade Act compliance.

Carriers currently have no way of being notified electronically when the broker transmits the information. “It’s going to involve a lot of phone calling and assumptions,” Irwin says.

This should be a temporary problem if all goes as planned. As CBP continues to roll out its Automated Commercial Environment (ACE), carriers will begin testing a new system that will allow them to have more control over customs clearance, Irwin says. Carriers then should be able to eliminate delays at the border and better manage delays elsewhere. For now, however, the border environment is very much a work in progress.

Creating awareness
To help shippers, carriers and customs filers meet the deadline, the CBP approved two interim methods of advance electronic transmission of truck cargo information: the Pre-Arrival Processing System (PAPS) and QP/WP, which is a set of electronic data interchange transactions for processing in-bond shipments by customs brokers. In-bond shipments are imported merchandise that is allowed to move within the United States without paying taxes and duties. Customs filers (usually brokers) use the Automated Broker Interface (ABI) to create and process shipments via PAPS and QP/WP directly into the agency’s database.

Contract Freighters Inc. (CFI), which hauls freight into the United States from Canada and Mexico for several Fortune 500 companies, anticipates few problems meeting the one-hour advance requirement. “The customs clearance is the unique responsibility of the customer,” says Gary Nichols, director of business development for the Joplin, Mo.-based company. “There will be a few (disruptions), but it’s not a problem.”

A carrier’s role in moving PAPS and QP/WP shipments is to have drivers affix a bar code that identifies the carrier to the inward cargo manifest(s) received from the shipper at pickup. The paperwork then is faxed to the appropriate U.S. customs broker, who enters the information into the ABI. Once at the border, a customs agent scans the bar code and approves the truck or sends it on for further inspection.

Ensuring that the new one-hour rule doesn’t cause delays is primarily a driver awareness issue, says Donna Schense, cross-border operations manager for Schneider National Inc. Currently, Schneider National’s drivers fax the bar-coded documents from the ship location or alternative places such as a truck terminal or truck stop. Drivers need to anticipate the additional time needed to transmit documents to the customs broker and for the paperwork to be processed, Schense says.

Cooperation from shippers also will be required to limit delays. Cambridge, Ontario-based Transfreight – a 400-truck carrier with offices in the United States – has suppliers that sometimes do not complete the customs paperwork correctly. As errors occur, Transfreight must redo the paperwork and re-fax it to the broker, a process that causes bottlenecks, says Janice Wilkie, the carrier’s manager of safety and compliance.

Drivers at Warren Gibson Inc. typically fax the paperwork to U.S. customs brokers from their pickup location, Hennigar says. Some shippers, however, don’t allow drivers to use their fax machines. As a result, drivers may have to fax the paperwork to a customs broker from a truck stop or from the office, which creates a bottleneck for drivers waiting to head south.

FAST dividends
The new regulation requires a one-hour advance entry for PAPS and QP/WP shipments, but the timetable to submit cargo information is shortened to 30 minutes for carriers that participate in a program called the Customs-Trade Partnership Against Terrorism (C-TPAT). Membership benefits of C-TPAT include dedicated lanes at border crossings and expedited customs clearance at the border.

CPB established C-TPAT in 2002 to work with importers, carriers, brokers and other industry sectors toward a seamless security environment throughout the entire commercial process, from manufacture through transportation and importation to ultimate distribution. Currently, C-TPAT has 7,000 members and is the U.S. federal government’s largest public/private partnership ever, according to CBP.

To use the dedicated lanes, carriers and shippers also must be certified in a program called Free And Secure Trade (FAST). Drivers must apply and go through a background check to obtain a FAST card. But while the program expedites border clearance for shippers and carriers that participate, many shippers have not made the effort. “Canadian importers are not flocking to this program, and it does not work without the importer,” says ATA’s Irwin.

Without all three elements – the carrier being FAST certified, the driver having a FAST card and the importer/exporter certified in FAST – the lane is not available to carriers, Wilkie says. For operations such as less-than-truckload that require multiple pickups en route to the United States, the shortage of C-TPAT qualified shippers is especially frustrating.

For example, Warren Gibson Inc. has one run with five pickups in Canada before crossing into Detroit. While the first three pickups are from C-TPAT shippers, the final two pickups in Windsor are not. Because the last two pickups do not qualify as FAST shipments, drivers have to fax their paperwork to customs in Windsor and wait an hour instead of 30 minutes.

Not so fast
Currently, the only cross-border shipments exempt from the advance electronic cargo information requirement are BRASS and CAFES shipments. BRASS – Border Release Advanced Screening and Selectivity – relates to shipments that consist of high-volume, highly compliant cargo (largely automotive parts) from companies that have been pre-screened and assigned alphanumeric identification codes. About 60 percent of all loads crossing the U.S.-Canada border are BRASS shipments.

CAFES, or Customs Automated Forms Entry System, is a border-crossing program akin to QP/WP. The difference is that the carrier – as opposed to the broker – applies the bond to the freight and uses a 2-D bar code for clearance at the border, Irwin says.

Jim Gibson didn’t worry about drivers for Ryan Transportation Group being delayed by paperwork problems after the Trade Act deadlines. Gibson – manager of safety and personnel for the 115-truck carrier based in Livonia, Mich. – says that most freight that crosses the border qualifies as “in-transit” freight, meaning it originates in the United States and delivers there as well, crossing Ontario from northern New York to Detroit. The rest of the loads are BRASS shipments from large auto manufacturers, and those shippers are up to date on procedure and policies.

But other companies with compliance issues may affect Ryan Transportation’s scheduling. “If we have four- or five-hour backups, we may have to relay drivers to make sure they have enough hours,” Gibson says.

Just like C-TPAT, there’s a catch with BRASS shipments. As of Nov. 15, any BRASS shipment not hauled by a FAST registered driver were to have been denied entry into the United States and into Canada. If shippers are unable to secure a FAST driver to get the BRASS load across the border, BRASS shippers may be switching over to PAPS, which increases the load quite a bit on U.S. customs brokers, Irwin says.

As the Nov. 15 deadline approached, FAST applications accelerated, says David Bradley, chief executive officer of the Canadian Trucking Alliance. Despite the best efforts of the industry on both sides of the border, the number of drivers registered for FAST will not be enough to handle the volume of BRASS shipments across the border, Bradley says.

Customs officials from both the United States and Canada said they planned soft enforcement for several weeks after Nov. 15 to give carriers enough time for drivers to get FAST identification cards. The Canadian Trucking Alliance, for example, estimates that less than one-third of truckers who haul cross-border are registered with FAST. Another 11,000 are awaiting interviews, and a further 13,000 are elsewhere in the process.

While carriers benefit from the expedited clearance of FAST shipments, the program can cause dissention among drivers. More than 50 percent of Warren Gibson Inc.’s drivers have FAST cards, but the company worries about the drivers that don’t.

“They do not want to put up with this crap anymore,” Hennigar says. “To be driving for the last 35 years and be told that he can’t be certified because something was recognized as an offense, when it was overlooked before, doesn’t sit well with them. It is making their job much more difficult.”

Transfreight’s Wilkie says the company spent a tremendous amount of time providing education to its drivers by holding meetings and ensuring they were prepared for the changes.

“This paid off tenfold,” Wilkie says. “Having a well-educated driving force made the transition go much faster.” The company also encouraged drivers to receive their FAST cards by reimbursing the $50 cost, she says.

An ACE in the hole?
Carriers have several interim options to meet the Trade Act deadlines and expedite the flow of legitimate freight across the border. But the programs, IT systems and processes ultimately will be consolidated as CBP completes its rollout of ACE in 2005, says CBP agent Gary Calhoun. Transit times also should improve as shippers and carriers begin sending manifests electronically.

“We’ll be clearing multiple shipments in 15 seconds versus the three minutes it takes now,” Calhoun says. “We’ll be able to do advanced targeting before a load ever reaches the border. And legitimate trade will go through smoothly.”

A major step in the rollout of ACE is set to begin testing in the first quarter of 2005. The rollout of ACE’s “Release 4,” the electronic truck manifest, is planned at the largest and busiest seven ports initially: Buffalo and Lewiston, N.Y.; Champlain, N.Y.; Detroit; Port Huron, Mich.; Blaine, Wash; Laredo, Texas; and Otay Mesa, Calif.

Release 4 has several transforming qualities of interest to motor carriers, says ATA’s Irwin. One of the main benefits for carriers is being able to access their accounts through a Web portal. Carriers in possession of full shipment and trip information may enter and transmit the manifest to customs through electronic data interchange or through a Web portal, Irwin says.

As of press time, however, carriers reported that details were sketchy as to what they will do after Release 4 is available at select border crossings.

“We are going to be doing EDI and have access to the Web portal,” says Jevin Jamison, ABF Freight System’s manager of administration for customs compliance. “I haven’t seen anything as of yet.”

The new ACE system will allow carriers to communicate directly with customs, and for customs to send a notification back through the Web portal or through EDI. Carriers will know exactly when a truck can cross. But carriers will be responsible for entering the load manifest and other required customs information, Irwin says.

“If we’re the ones who have to do it, and dispatchers are handling 40 to 80 shipments a day, who is going to input all the information? Where are we going to recoup that cost? We can’t,” says Hennigar of Warren Gibson Inc.

Having the driver enter the information is one option, but that could be a problem. For example, what happens if a driver arrives at a yard after normal business hours to pick up freight, and the shipper has left the bill of lading attached to the trailer?

“A driver hooks to the trailer and is good to go, but where do they transmit the cargo information from?” Irwin asks. Will drivers be able to use mobile communications to transmit the information to the company? Will they need to carry a PC? Or will there be kiosks before the border?

“Those are big questions because we’ve got the what, but we do not have the how tacked down,” Irwin says.

Gearing up
In addition to questions about their role in data entry, carriers have questions about another technology required by the CBP, namely the use of transponders that emit a radio signal to identify trucks as they approach the U.S. border crossing. The transponders cost about $30 each from the CBP and are tied in with the decal that carriers get every year for their border-crossing fee ($100 a year), Irwin says.

One problem with the transponders is that they are crossing-specific; they only can be used at one border-crossing location and not in combination with other transponder-based programs such as PrePass, Hennigar says.

With Release 4, the ACE program will use a single-button decision process for customs agents to release the driver or signal to the driver to pull over for further inspection. The computer system will include features such as driver photos, enforcement data and history files for each truck arriving at the border.

Whatever is in the system should match up with the truck as it approaches and gives its identification through the transponder, but even this process has potential problems that carriers must resolve.

“The drawback is that if we transmit everything off, and the truck breaks down, and we need to re-power that unit with another truck, how do we get the information back in the system again to change driver, truck, etc.? There are little parts that we don’t know,” Hennigar says.

The details regarding the ACE program remain in the works, but Hennigar believes that as changes roll out in the next year, ACE will benefit all parties and the bottlenecks will work their way out.

But he can’t say that with certainty.
Sean Kelley contributed to this article.

Alphabet soup
The following are definitions of key acronyms important for carriers with cross-border operations:

ABI – Automated Broker Interface, software that allows third-party software to enter truck cargo information directly into CPB’s database.

ACE – Automated Commercial Environment, an integrated electronic customs clearance system that remains a work in progress.

BRASS – Border Release Advanced Screening and Selectivity, shipments that consist of high-volume, highly compliant cargo (largely automotive parts) from companies that have been pre-screened and assigned alphanumeric identification codes.

CAFES – Customs Automated Forms Entry System, a software package that trade partners use to create in-bond documents that contain a 2-dimensional bar code for customs clearance at the border. CAFES shipments are temporarily exempt from the electronic pre-notification rule.

CBP – U.S. Customs and Border Protection, the name for the agency charged with securing U.S. ports of entry and border crossings.

C-TPAT – Customs-Trade Partnership Against Terrorism, a customs program for importers, carriers, brokers and other industry sectors to create a seamless security environment throughout the entire commercial process, from manufacture through transportation and importation to ultimate distribution.

FAST – Free And Secure Trade, a program that uses data collection, information sharing and special lanes at major crossings to reduce delays from customs inspections.

PIP – Partners in Protection, the Canadian program that mirrors C-TPAT.

PAPS – Pre-Arrival Processing System, a program used by shippers, carriers and customs brokers to transmit advance electronic truck cargo information.

QP/WP – A set of electronic data interchange transactions for advance electronic processing of in-bond shipments: in-bond request messages (QP) and in-bond arrival, departure and export messages (WP).

Getting on the FAST track
In 2002, U.S. and Canadian customs agencies launched a joint program to improve security and speed commercial traffic at the major border crossings between the two countries. The program – Free And Secure Trade (FAST) – uses improved data collection, information sharing and special lanes at major crossings to reduce customs inspections to less than a minute.

To participate in the FAST program, carriers and importers first must submit one application to both countries’ customs agencies to receive certification in the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) and the Canadian Partners in Protection (PIP) programs. Each country performs an independent risk assessment and issues independent approvals.

To receive C-TPAT certification, carriers must document that their business processes minimize exposure to criminal elements. Applicants must demonstrate how their business systems maintain accurate controls and provide appropriate audit trails to follow a shipment from the initial order through the delivery of that shipment and payment of the invoice.

For Keller Trucking, the time from C-TPAT application to approval was about six months, says Beth Woodberry, safety and human resources manager of the 95-truck, Defiance, Ohio-based company.
Although the application is free, becoming C-TPAT certified isn’t.

“As far as the actual physical cost, I don’t think you can put an accurate dollar figure on that,” says Drew Foulds, dispatch supervisor of Warren Gibson Inc., a 350-truck carrier based in Alliston, Ontario. “There have been hundreds of manhours spent on investigation, application, initialization and follow-up.”

The company has been certified for more than a year. To become C-TPAT compliant, Warren Gibson Inc. secured its yards with gates, installed video monitors, gave employees access cards and ensured that trailers are sealed in transit by providing drivers with padlocks, Foulds says.

In addition to the carrier becoming C-TPAT certified, drivers also must become FAST certified by completing a single Commercial Driver Application for the United States and Canada. The customs and immigration services of both countries assess the risk of applicants with a criminal background check and a personal interview. FAST licenses costs $50 each and the approval process takes about six weeks, according to the U.S. Customs and Border Protection.

For more information on the C-TPAT and FAST programs, visit the U.S. Customs and Border Protection website: