Since the Sept. 11 terrorist attacks, heavy freight is more likely to be inspected--thoroughly, in certain cases--and even express air packages are subjected to an unprecedented level of scrutiny, says Janet Shearn, United Parcel Service Inc. customs-affairs manager. Before, Customs seldom inspected express air packages shipped into or out of the country.
Whether increased screening means slowdowns in the supply chain depends more on shippers' compliance with customs regulations than on any other single factor, at a time when stories abound of shipments sitting on the dock for days because of missing, incomplete, or inaccurate documentation. For the materials it ships across borders, UPS uses software and services from NexLinx Corp. to manage the calculation of duties and tariffs, classify products, maintain shipping manifests, generate import-export documentation, and execute regulatory-compliance checks.
One of the most important tasks made simpler by software for global import-export-regulation compliance is checking inbound and outbound shipments against a list maintained by the U.S. State Department of individuals, businesses, and nations with which companies that operate in the United States may not do business. "The danger is that disallowed persons may be shipping commodities that could put the United States and your company at risk if you don't have these compliance tools in place," Shearn says.
Spokesmen for global compliance software and services vendors NexLinx and Vastera Inc., which also track import-export conditions at U.S. ports and airports where shipments must clear Customs, say Customs agents are so busy inspecting cargo that they simply don't have time to deal with shipments whose documentation is incomplete or contains errors. "Customs just says, 'We are not moving these goods until we get the complete information,' " says Greg Stock, VP of marketing for Vastera.
NexLinx chief operating officer Darren Maynard says that's a major change. Previously, an international shipment could arrive at the airport or dock with incomplete paperwork (not properly filled out or incorrectly filled out), and even some paperwork missing, and Customs officials coordinated with the shipper and the recipient to make sure the paperwork was completed. Because of the increased scrutiny of all shipments since Sept. 11, including more hand inspections of arriving cargo, Customs agents no longer have such a business-friendly attitude, says Maynard.
Shippers whose compliance with Customs regulations is sub-par are facing an additional problem--the probability of more delays. Once Customs identifies a company that's lax about compliance, it tends to be especially rigorous in inspecting all of that company's future shipments, according to UPS, NexLinx, and Vastera. Cargo from shippers whose documentation is consistently in order tends to move through Customs more quickly, those companies say.
Security will only increase in coming weeks and months, as exemplified by numerous changes proposed by Customs for the handling of express air shipments, UPS says. Large shippers currently can book capacity on an airliner without disclosing to Customs the identities of the customers whose packages are being moved in that shipment. Under one proposed rule, however, Customs would require the shippers to present electronic records that document the identities of their customers and the contents of the packages.
In the case of UPS, Shearn says the company has systems in place that will let it instantly comply with this new regulation, which she expects to be approved and to take effect quickly.
Large and midsize companies have been contacting UPS about customs-compliance issues, and UPS is helping some deal with the changing rules, regulations, and list of individuals, companies, and nations prohibited from doing business with U.S. entities.
"When people say global shipping is not going to be the same, they are right. That is the case," says Shearn. With increased Customs scrutiny of cargo and express air packages, dotting the I's and crossing the T's will need to become standard procedure.