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ISF/10+2 Are You Ready For Enforcement?
The ISF rule took effect Jan. 26, 2009, full enforcement will take effect on Jan. 26, 2010, following a year of education, outreach and informed compliance efforts. As of that date, importers will be subject to fines of $5,000 each time an ISF filing is late or inaccurate. Importers could face a maximum penalty of $10,000 on one shipment if you file late and have erroneous data. Mitigating circumstances include evidence of progress in the implementation of the ISF requirement during the flexible enforcement period (i.e., January 26, 2009 through January 26, 2010).
Under the ISF rule, importers and maritime cargo carriers must submit additional cargo data to CBP 24 hours prior to vessel loading. Importers are legally responsible for the accuracy and timeliness of their ISF filings, regardless of whether a customs broker or other intermediary does the actual filing. Importers have to report 10 data elements on each ISF, including information that identifies the manufacturer, supplier, seller, buyer and consignee; the country of origin and tariff classification number; where and by whom the goods were stuffed into the container; and the party responsible for compliance with applicable import requirements. CBP’s goal is to have all data elements filed 24 hours prior to lading, but it has allowed for some flexibility either in timing or interpretation for six of the data elements.
There have been many obstacles in ISF implementation. The largest problem has been the carriers and bills of lading numbers. It is imperative the data is reported at the lowest AMS bill of lading number. To avoid problems you must know your carriers. Not all carriers are alike, be extra careful with non-AMS filing carriers. CBP requires ISF filings match AMS and entry data.
Please do not wait until the last minute. DTGruelle can help you with your ISF/10+2 transactions. Please contact Barbara Bachurski at
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, Danelle Tanner at
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, or Jessica Bachurski at
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for details. |
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UPS starts pilot lay-off process
UPS has announced plans to furlough at least 300 of its 2,800 airline pilots, but at the same time continued its effort to find a solution with the pilots' union that would avert or mitigate the layoffs before they take effect.
UPS has been working with its union, the Independent Pilots Association, for the past year to identify ways to cut operating costs to avoid any pilot furloughs.
Last June, the IPA identified significant savings through voluntary programs such as pilots taking short- and long-term leaves of absence; military leaves; job sharing; reduction in flight pay guarantees; early retirement, and sick bank contributions.
UPS subsequently agreed it would not furlough any pilots in 2009.
The two parties have been co-operating since then to identify additional cost-cutting initiatives that would eliminate the threat of layoffs entirely. However, subsequent discussions have failed to identify sufficient operating savings.
If the furloughs go forward, they would be phased, with the first 170 pilots receiving notices in 2010. The initial group would be furloughed in May.
The pilot furloughs, if required, would be one of many steps that UPS has taken over the past two years to match its resources to economic conditions. UPS has engaged in a company-wide, $1.4 billion cost-cutting effort that included a freeze on management salaries in 2009; suspension of the match for 401(k) plans; trimming capital expenditures, and retiring older aircraft.
Most recently, UPS announced in January that it was streamlining its entire domestic US small package structure, eliminating 1,800 management and administrative positions across the country.
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75% Screening Mandate
The entire industry has been looking toward August 1, 2010 when screening 100% of cargo becomes mandatory.
The February 1, 2009 mandate calling for screening of 50% of cargo came and went with little disturbance. None of us saw any major change to the way we did business. However, at that time, the airlines that were screening the vast majority of the freight were in the midst of one of the worst down turns. In addition, TSA allowed for different ways to calculate the 50%, giving the industry a lot of leeway and extra time to get used to screening. 50% of all AWBS is much different from 50% of all freight. These factors made it easier for the airlines to deal with the extra screenings.
The industry as a whole might have been lulled into a stage of passiveness with many companies adopting a “let’s take it as it comes, if it comes” approach. The recently introduced 75% screening mandate, which goes into effect May 1, will be a wake-up call. Almost daily we are seeing news letters from airlines introducing screening fees and new acceptance procedures.
The screening fees seem to vary from 5c/kg to 13c/kg and some airlines are introducing quite heavy fees for breaking down units, banded or shrink wrapped skids to meet the 'screen on a piece level' rule.
The next three months leading up to the 100% mandate on August 1 will be very interesting and will test the airlines’ ability to cope with the task.
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Measuring the Corruption Index
As the world economy begins to register a tentative recovery and some nations continue to wrestle with ongoing conflict and insecurity, it is clear that no region of the world is immune to the perils of corruption.
The vast majority of the 180 countries included in Transparency International's "2009 Corruption Perceptions Index" (CPI) score below, five on a scale from 0 (perceived to be highly corrupt) to 10 (perceived
to have low levels of corruption).
Fragile, unstable states that are scarred by war and ongoing conflict linger at the bottom of the index. These are: Somalia, with a score of 1.1, Afghanistan at 1.3, Myanmar at 1.4 and Sudan tied with Iraq at 1.5.
These results demonstrate that countries which are perceived to have the highest levels of public-sector corruption are also those plagued by long-standing conflicts, which have torn apart their governance infrastructure.
“Stemming corruption requires strong oversight by parliaments, a well performing judiciary, independent and properly resourced audit and anti-corruption agencies, vigorous law enforcement, transparency in public budgets, revenue and aid flows, as well as space for independent media and a vibrant civil society,” said Huguette Labelle, (below) Chair of Transparency International. “The international community must find efficient ways to help war-torn countries to develop and sustain their own institutions.”
Highest scorers in the 2009 CPI are New Zealand at 9.4, Denmark at 9.3, Singapore and Sweden tied at 9.2 and Switzerland at 9.0. These scores reflect political stability, long-established conflict of interest regulations and solid, functioning public institutions.
Industrialized countries cannot be complacent though: the supply of bribery and the facilitation of corruption often involve businesses based in their countries. Financial secrecy jurisdictions, linked to many countries that top the CPI, severely undermine efforts to tackle corruption and recover stolen assets.
Globally and nationally, institutions of oversight and legal frameworks that are actually enforced, coupled with smarter, more effective regulation, will ensure lower levels of corruption. This will lead to a much needed increase of trust in public institutions, sustained economic growth and more effective development assistance. Most importantly, it will alleviate the enormous scale of human suffering in the countries that perform most poorly in the CPI.
Click here for an interactive tool to help you see the CPI in various ways.
The CPI data shows a country's ranking and score, the number of surveys used to determine the score, and the confidence range of the scoring.
The rank shows how one country compares to others included in the index.
The CPI score indicates the perceived level of public-sector corruption in a country/territory.
The CPI is based on 13 independent surveys. However, not all surveys include all countries. The surveys used column indicates how many surveys were relied upon to determine the score for that country.
The confidence range indicates the reliability of the CPI scores and tells us that allowing for a margin of error, we can be 90% confident that the true score for this country lies within this range.
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Bribery Charges Hit Panalpina
The U.S. Justice Department has intervened in a whistleblower lawsuit against Kellogg Brown & Root (KBR), Panalpina Inc. and EGL that alleges that employees of the two freight forwarders doing business with the companies provided unlawful kickbacks to KBR transportation department employees. KBR is the prime contractor under the Logistics Civil Augmentation Program (LOGCAP III) contract for logistical support of U.S. military operations in Iraq.
The whistleblowers also allege overbilling by a KBR subcontractor in the Balkans, Wesco, under a military contract.
The United States is pursuing allegations that the two freight forwarders, Eagle Global Logistics (which has since merged with TNT Logistics and become CEVA) and Panalpina provided unlawful kickbacks in the form of meals, drinks, and tickets to sports events and golf outings to KBR employees.
The government will seek damages and penalties under the False Claims Act and common law, as well as penalties under the Anti-Kickback Act.
The United States has declined to intervene in the remaining allegations of the relators’ suit.
The lawsuit was filed in U.S. District Court for the Eastern District of Texas under the qui tam or whistleblower provisions of the False Claims Act by David Vavra and Jerry Hyatt who have been active in the air cargo business–the industry relevant to the case.
Under the qui tam or whistleblower provisions of the False Claims Act, a private citizen, known as a "relator," can sue on behalf of the United States. If the suit is successful, the relator may share in the recovery.
"Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks," said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice.
"We are committed to maintaining the integrity of the Department of Defense's procurement process."
The United States previously intervened in and settled the relators’ allegations that EGL included non-existent charges for war risk insurance in invoices to KBR for air shipments to Iraq, costs that KBR passed on to the Army.
Two EGL employees pleaded guilty to related criminal charges. EGL paid the United States $4 million in the civil settlement.
The government also intervened in and settled the relators’ allegations that EGL’s local agent in Kuwait, a company known as Al-Rashed, overcharged it for the rental (or demurrage) of shipping containers.
The United States resolved potential claims arising from that matter against EGL for $300,000.
Finally, EGL paid the government $750,000 to settle the relators’ allegations that the company provided kickbacks to employees in KBR’s transportation department.
Former EGL employee Kevin Smoot and former KBR employee Bob Bennett pleaded guilty to related criminal charges in federal court in Rock Island.
For Panalpina, these new charges could also represent an even further challenge.
As a result of a 2007 Department of Justice and Securities and Exchange Commission corruption investigation in Nigeria, the Swiss logistics giant Panalpina said it was not possible to receive official customs clearances for air and ocean freight shipments fast enough in Nigeria to meet customer’s demands without offering “facilitation payments” that violated anti-corruption laws.
In August 2008, Panalpina said these compliance concerns had forced it to withdraw completely from the West African country Nigeria after 50 years of service there.
In other words Panalpina was just doing business as business is done in Nigeria and ended up paying fines for that privilege and decided to pack West Africa in altogether.
Interestingly on April 29, 2010, Panalpina posted the following statement on the company website:
“In view of the advanced stage of the settlement negotiations with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC), Panalpina has decided to reserve CHF 120 million, an amount anticipated to cover fines, other penalties and legal expenses relating to the settlement of both the U.S. Foreign Corrupt Practices Act (FCPA) and the U.S. antitrust investigations.”
This newest case is being prosecuted as part of a USA National Procurement Fraud Initiative that was initiated in October 2006 with formation of a National Procurement Fraud Task Force in USA. |
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Agility Lands on US Blacklist
https://www.epls.gov/epls/search.do?debar_recid=167565&status=current&vindex=0&xref=true
Agility recently agreed to pay the U.S. government $600 million for overcharging the military on supply contracts in the Middle East. Now USA has blacklisted the company altogether.
The U.S. government has imposed an indefinite ban on Kuwait-based Agility, its Defense and Government Service Division (DFS), and a large number of the logistic provider’s subsidiaries worldwide.
The black list includes prominent firms like The Public Warehouse Company (PWC), GeoLogistics Americas Inc., LEP Int’l Pty Ltd., Ostram Holdings Ltd., Sea Bridge Container Lines, Natural Freight Ltd. or Tristar Transport, just to name a few.
All together 120 companies are named in the Washington-published ‘Excluded Parties List System’ (EPLS), nearly fifty of them local entities of Agility like Agility France, Agility Germany or Agility Dubai.
The other seventy are daughter companies that fulfill special services as exemplified by 1991-founded Taos Industries of Madison, Alabama that provides tailored projects mainly for the military ranging from base operations, transportation, warehousing, and material management.
“At Camp Arifjan (Middle East), Agility related company Taos is losing a $5 million contract,” ACNFT was told in an e-mail sent by a person close to the case.
Why these 120 Agility entities or satellites of the Arabian logistics player are excluded from tenders by Washington for an indefinite time are not given in the EPLS filing.
They are obvious, however.
Three weeks ago, Agility agreed to pay the U.S. government $600 million to settle a fraud case, a result of overcharging the military on supply contracts in the Middle East, including food, mail and supply for the armed forces as well as civil servants based in Iraq, Jordan and Kuwait.
Only days later, however, Washington came up with a new indictment accusing Agility and its subsidiaries for overcharging the U.S. Army on a number of multibillion dollars worth of contracts for transporting, storing and delivering food and beverages to American soldiers based in the Middle East.
Since the U.S. invasion of Iraq 2003, the Public Warehouse Company, GeoLogistics and some more firms that later merged and were bundled in 2006 under the Agility brand became the biggest logistics provider for the U.S. government in the Arabian peninsula, Afghanistan and some other hot spots of international conflicts.
Washington apparently was intrigued by the ‘ethics’ and ‘values’ Agility proudly proclaims and displays on its website homepage.
“Agility believes strongly in conducting business with integrity.
“Building trust with customers and suppliers by doing what is right: keeping our promises, being a good citizen, complying with regulations and laws, and honoring rules of engagement,” the Agility website concludes.
At Agility’s Hamburg, Germany headquarters nobody wanted to comment on the black listing or on what consequences it might have for the logistics provider’s global business.
Approached by ACNFT, Agility Europe spokesperson Marina Targa stated: “PWC continues its discussions with the U.S. government with a view to resolving the current legal cases; however there is no guarantee that the parties can reach a mutually agreeable settlement.“
Click on link below to view ‘Excluded Parties List System’
https://www.epls.gov/epls/search.do?debar_recid=167565&status=current&vindex=0&xref=true
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More pain expected in 2010 as volume, rates recover slowly
The world’s top 22 ocean container carriers lost some $11 billion in the first nine months of the year and face further losses in 2010 as the industry digs out from the worst downturn in its 50-plus history.
Sixteen of the carriers that have published third-quarter results reported cumulative operating losses of $9 billion in the first nine months of 2009, according to a survey by AXS-Alphaliner, the Paris-based shipping analyst and consultant. This compares with a combined operating profit of $5.3 billion in the corresponding period of 2008.
The remaining six carriers — Mediterranean Shipping Co., CMA CGM, Orient Overseas International Ltd., Hamburg Sud, United Arab Shipping and Pacific International Line — are estimated to have incurred another $2 billion in operating losses from their liner units.
The total shipping revenue of the 16 carriers publishing results — including Maersk Line, Hapag-Lloyd, China Shipping, “K” Line and NYK Line — plunged 40 percent in the first nine months, to $56 billion from $94 million a year earlier.
The Transpacific Stabilization Agreement, a discussion agreement of carriers that control 90 percent of U.S. containerized imports from Asia, last week predicted losses in that trade would hit $20 billion this year, and recommended an “emergency revenue program” involving a rate hike of $400 per 40-foot container on Jan. 15. The Westbound Transpacific Stabilization Agreement, representing carriers in the U.S.-to-Asia trade, on Monday followed with its own recommendation for similar hikes.
Most ocean carriers surveyed by Alphaliner expect cargo volume and rates to recover in 2010, but most also expect to lose money next year.
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