The border between Canada and the United States remains a vast and concrete physical entity, but the "border" in the figurative sense also looms ever-larger as Customs administrators on both sides continue to up the regulatory burden imposed on all supply chain stakeholders.
The aim? A world of smoother trade flows and harmonized regulatory regimes, with attention paid to perimeter security, of course.
The path to getting there? Probably anything but the smoothest.
Ruth Snowden, executive director at the Canadian International Freight Forwarders Association (CIFFA), remembers meetings with Canada Customs officials in the 1990s when talk of release decisions prior to arrival at the border was still a vague concept.
Advance to 2010, and the now Canada Border Services Agency (CBSA) will soon begin accepting electronic manifests containing cargo and conveyance data -first from highway carriers -with electronic transmission of the carrier data mandatory one year after the CBSA's planned Web portal becomes available.
"We're almost 'cleared to land' on eManifest, having come down from a 37,000-ftlevel," said Oryst Dydynsky, vice-president of Cross Border and Regulatory Affairs with the Descartes Systems Group and a consultant on many CBSA committees.
Dydynsky spoke recently at the Canadian Association of Importers and Exporters 19th Annual Conference and Trade Show on Emerging Issues in Customs and Compliance.
"The movement of data and documents has become more important than the movement of the goods themselves. The documents are still going to be there, but they will move differently," he said.
While the Advanced Commercial Information (ACI) Highway eManifest was scheduled to begin this month, CBSA recently indicated that a delay to implementation would be necessary, with testing by industry available this month, and the actual project launch delayed to September.
Highway carriers have already expressed concerns about policy, from the inbond movement of goods to end-state design issues such as changes and amendments to manifest information post-arrival.
"CTA supports getting it right the first time with realistic dead- lines," said Canadian Trucking Alliance CEO David Bradley.
Jason Proceviat, acting director of the stakeholder consultation and implementation division at the CBSA, said that the agency, the oldest serving government department in Canada, has moved from a revenue focus to the provision of integrated border services, health, safety and security.
"This new mandate has changed the game and direction for us. We don't act unilaterally -we administer about 90 pieces of different legislation and over 40 programs at the border," he said. He notes that eManifest aims to deal with volume issues.
"This whole project is about implementing those tools to enable us to do that," said Proceviat of one of the largest projects CBSA has undertaken, and which is supported by Bill S2 Customs Act legislation, which received Royal Assent in June of 2009.
"This will have impacts if you are not prepared and are not ready. We recognize there will be investments for companies, and these may be significant for the SMEs. If you feel that eManifest is not for you, you will have options," he said.
CBSA is developing an enhanced automated risk assessment infrastructure (business intelligence technology and a data warehouse), with an eManifest portal reporting option, an integrated passage system, and the incorporation of transponder technology. A Web portal, similar to those using ACE from the US, will be available to those needing tools. The portal will be "free of charge," but there will be costs relating to data entry, with regard to having staff to enter the data and someone to monitor any error messages.
"Our desire is to harmonize as much as possible with US Customs and Border Protection. We recognize that the US has transponder technology that we'd also like to implement as a harmonization effort," said Proceviat.
Stakeholders may transmit advance information to Customs through EDI systems or the eManifest portal. They can also use a VAN (value added network), a public EDI network, a third-party service provider, or the Customs Internet gateway (CIG), which provides trade chain partners with a direct connection to the CBSA.
The portal, while free, is "probably not the best option if you have high volumes," said Proceviat.
There will also be "broker download functionality" in eManifest, where you can identify a broker and CBSA will push the data to the broker so the broker can capture it and start the PARS.
"We have been working with the trade associations (eManifest Stakeholder Partnership Network or ESPN) established to provide a forum for dialogue with the CBSA," said Proceviat, who noted that the CBSA compliance management regime will become tighter.
Once all reporting systems are publicly available, there will be a 12-month period for clients to incorporate the requirements into their business processes. For 12 to 18 months after the initial year, eManifest requirements will take effect.
For rail, the 18-month implementation will begin in winter 2011, and in summer 2011 for freight forwarders to submit secondary cargo and house bill data. Importers' 18 -month implementation timeline begins in spring 2012 for the marine importers, and this harmonizes them with the US marine importer requirements already in place to submit advanced trade data (formerly Importer Admissibility Data or IAD).
Cargo arriving in the US by ocean vessel became subject to the Importer Security Filing and Additional Carrier Requirements (commonly known as "10+2") rule back in January 2009, with full enforcement taking effect in January 2010.
Under the rule, the ISF importer or agent (i. e. licensed Customs broker) must electronically submit eight cargo elements (24 hours before goods loaded overseas) plus the consolidator name/address and stuffing location to CBP in the form of an Importer Security Filing. (For foreign cargo remaining on board (FROB), the ISF importer is the carrier.)
"We're out of sync with the US approach at the land border," said Carol Buckton, senior director of trade and logistics for Siemens Canada. Buckton said that industry concerns with implementing advanced trade data requirements have to do with the direct and indirect costs that are estimated at more than two million dollars to the Canadian marine industry alone.
"Business does not operate in a 100% electronic world -the use of hardcopy paperwork is prevalent, and electronic processes would require major systems investments. The supply chain would need to be electronic as well, which the Canadian market cannot drive. Also, data sets need to be harmonized or this will multiply the costs enormously," said Buckton.
Carol West, president of the Canadian Society of Customs Brokers, and recently re-elected chair of the WCO (World Customs Organization) Private Sector Consultative Group, said the proposed requirement under ACI/eManifest for "mandatory HS" (classification of everything in a shipment) does not take into account the business realities and costs associated with this.
"Our members tell us that about one in five shipments has something in it that has not been previously classified, i.e. that is not in an existing database. The cost of getting that information can be enormous, and delays are inevitable. Given that the current requirement for HS classification gives CBSA a very high percentage of coverage for targeting purposes, there has to be much more discussion of this. Perhaps this is something that can be linked as a benefit to PIP [Partners in Protection] status," said West.
She added that the requirements for FAST (Free and Secure Trade program) are unique to Canada.
"To have access to FAST lanes, importers must not only have met the requirements of Canada's 'trusted trader' program [PIP], they must also meet the onerous requirements of CSA (a uniquely Canadian program). The CSCB has argued for years that this is unfair since it is inherently biased against SMEs, even if they are known, trusted and frequent importers. With CBSA's recent transition to a new and more meaningful PIP program and the announcement of 'mutual recognition' with the United States, this position is untenable," said West.
For carriers, crossing the border "won't be all that different" with the eManifest requirements, said Karen Richards, customs supervisor at Challenger Motor Freight.
"Right now, many times we have 20 to 30 PARS on a shipment depending on the type of load. I can't see that changing. The paper-based cargo manifest takes too long to review anyway. There is a lot that we have to prepare for as carriers, with our IT departments, etc. Let's just focus on the other data elements to push this along," said Richards.
The benefits of ACI, she said, will be faster processing, and a reduction in errors and omissions, and it should enable online cargo tracking, the storing of data and records for reports, as well as secure data access by users and authorized partners.
Richards recommended that participants submit, as soon as possible, an application to gain access to the ACI portal, and that they determine the best solution and work internally to implement it ASAP.
"There is a lot of work ahead for many carriers and it's important to reach out to the associations you belong to. Carriers should gather and document crew, conveyance and equipment information, contact clients, consignees, brokers, and partner carriers to draft operational procedures to accommodate the logistical changes. Also, if you do not have a valid carrier code, the generic one will be going away," she said.
With regard to the HS code requirements, said Richards: "Shippers must know that the description (of goods) cannot be too vague. That is key for us as carriers. I feel that is really, really important. All carriers also have choices out there as well. I remember when ACE came out and we had some conversations with software providers, and they were swamped because the carriers didn't really believe it was going to happen. ACI will be a little more demanding than what we know of in the ACE system today. We're hoping the Canadian side is going to benefit from what went on in the US with the ACE process," said Richards.
IE Canada's vice-president of policy, Carol Osmond, said that for importers and exporters, "There will be lots of work needed if CSA shipments are ever to be a true alternative to eManifest," and she stressed that the upcoming requirements should be something that stakeholders "get up the management chain of command."
CIFFA president Snowden, meanwhile, said she is worried about the percentage of SMEs and smaller carriers "who are not in the room" during discussion sessions about ACI.
Jean Michel Laurin, Canadian Manufacturers and Exporters' vice-president for global business policy, noted the CME is working hard on enhancing the value of programs such as the trusted shipper program.
"I'm not saying there shouldn't be a border, but I think we have to continue looking at ways to improve border efficiency, maintaining security while increasing efficiency," said Laurin.
The CME has been dealing with fallout from US 'Buy American' issues over the last year, and now has a full-time staff person working in Washington.
"The Buy American concept is the tip of the iceberg. The North America economy is integrated. The border by itself is a cost to doing business in both countries. It's mostly an issue for Canadian companies and most of our companies have to comply with both systems, affecting competitiveness. We're trying to sell more goods in international markets to build competitiveness and reduce some of the regulatory costs. We realize that we have to work harder on building relationships with local US officials, those who have interests in Canada-US relationships. You've got to go deeper and identify the ties to their district and the relationship with the Canadian side," said Laurin.
Snowden said that one of the biggest issues that freight forwarders are dealing with is creating the links to ensure that data is entered once, accurately, and can be used again and again.
With 30 being the number of mandatory or conditional elements currently required on ACI marine mode, and 42 being the number of conditional or mandatory data elements freight forwarders will have to supply on the marine mode 24 hours before goods are loaded overseas, and 3,150 being the number of hours on eManifest CIFFA has spent time on over the last two years, "We really have to get all this stuff fixed before we move on to the next world!" said Snowden.
"We are working with the CBSA on the design of a secondary reporting system to be implemented in June/July 2011. This will radically change consolidation/deconsolidation of the freight forwarding industry in Canada. We will have to deconsolidate electronically before goods are loaded on ocean container overseas," she said.
"One of the issues that CIFFA and CBSA are working on is container inspections, because of all the additional data requests from ACI. It shows that the agency is out there getting stakeholder input -but at a huge cost to industry. We need to have a collaborative environment that works and we will have to find a commercial advantage," she said.
Air cargo is also seeing a fair deal of regulatory action. In the US, mandatory screening of all aircraft belly hold cargo comes into effect Aug. 3. There are fears of bottlenecks and delays with too few forwarders and shippers looking into security certification of their facilities.
In March, Gale Rossides, acting director of the US Transportation Security Administration (TSA), made a statement to the House Homeland Security Appropriations Subcommittee that while it was feasible to screen all domestic cargo by the Aug. 3 deadline, only about 65% of international cargo would be screenable for that date.
Transport Canada is currently wrapping up consultation on its Secure Supply Chain Management System (SSCMS) Pilot Project, as part of its own Air Cargo Security Program (ACS) launched June 2, 2008. The Secure Supply Chain Programs will establish new standards for enhanced air carrier programs, a freight forwarder program, and a shipper program. The agency just announced it will now be providing a single location for the submission of secure documents and participant validations, and a single point of contact for all ACS-related questions and support. (See our In the News section for Ottawa's latest announcement about screening air cargo.)
Christopher Sands, PhD, senior fellow at the Washington, D.C.-based Hudson Institute, and an expert on US-Canada trade, told CT&L that there is not enough differentiation at the border in terms of types of shippers and types of traffic, and this is something that could improve.
"The biggest problem for supply chain professionals is dealing with unpredictability at the border. As long as delays were stable and predictably days long they could be accommodated. What a lot of people are doing now is looking at air shipping. This works for some commodities and not for others. Unfortunately some people are building in inventories to give them a buffer which is a reduction in our overall productivity in Canada and the US, with goods in 'no motion, no progress,'" he said.
Stakeholders are crossing fingers that along with regulatory initiatives, continuous collaboration and committee-building with Customs officials on both sides of the border will lead to more transparency and ease of doing business.