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Annual Survey Highlights Lost Business Due to Export Requirements

Friday, December 06, 2013
Sandler, Travis & Rosenberg Trade Report

A significant percentage of those who responded to a recent survey said they had lost business due to U.S. export requirements, according to the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection. COAC released the results of the survey, which examines the characteristics of exporters, customs brokers, freight forwarders and carriers as well as their concerns with U.S. export policies and practices, at its Nov. 15 meeting.

COAC recommended that CBP share the survey information with participating government agencies to help them better understand the impact of cargo holds, detention and dwell times on the international supply chain. CBP said it will do this and will also continue to coordinate with PGAs to promote greater visibility to the trade community as to the reason for cargo holds. COAC also asked CBP to define delays and holds and then develop national import/export port metrics as a method to (a) understand the complexities associated with goods release by mode of transport and region and (b) achieve standardization of best operating practices across ports. CBP responded that it will look into providing aggregate statistics back to the trade where systems functionality, security requirements, PGA regulations and the Trade Secrets Act allow that data to be gathered and shared.  

Exporters. A majority of exporters are small and medium-sized enterprises (73%) with low annual export declaration counts (72%). About half of these SMEs are involved in complex licensing regulations, and about a third (35%) of all respondents reported licensed shipments. COAC concludes that proposed changes to the export declaration process should be reviewed for economic impact on SMEs prior to implementation, since they may cause U.S. exports to decline, and that SME benefits that promote the use of compliance professionals may serve to increase U.S. exports.

More than three-quarters of exporter respondents (78%) said they are not enrolled in C-TPAT for imports and 59% said they would not join C-TPAT for exports. A slight majority (51%) said they do not see the benefits of mutual recognition agreements with foreign trading partners.

Just over half (55%) of respondents said they seldom experience export delays (1-5% of shipments), and sources of delay (when known) included paperwork (37%), transportation availability (23%) and government review/stop (14%). Delays are most frequent with respect to air shipments, followed by couriers, ocean, truck and rail.

Nearly 20% of respondents said they have experienced lost sales due to U.S. export requirements.

The top export-related trouble spots identified by exporters included U.S. government efficiency in processing, a lack of post-departure filing authorization, no trusted trader programs, paper bills of lading, variation in CBP port processes and other government agency guidance to ports, increasing regulatory compliance costs, duty drawback complexity, lengthy foreign-trade zone entry processing times, variations in the definition of “U.S. person,” damage/theft caused by inspections of sensitive shipment, split shipment handling, and screening.

Brokers/Freight Forwarders. Like exporters, brokers and forwarders are largely SMEs (70% of respondents) with a low transaction count (81% reported less than 25,000 AES filings per year) involved in complex regulations (42% indicated dealing with USML, CCL and OFAC transactions). COAC states that the business model of the SME should therefore be taken into account in any export control analysis process, any proposed new regulations or any proposed streamlining of the current regulations.

The cost of physical exams of export cargo held at the port of departure appears to be a significant addition to the cost of an export, with 43% of respondents indicating average costs of $300 to $1,200. COAC states that this finding validates its efforts to align the export control and outbound exam process more closely with the commercial flow of cargo and information in the private sector supply chain. However, 73% of respondents said no more than 5% of their customers’ shipments are stopped, and just under two-thirds (64%) said holds are resolved within three days.

More than three-quarters (77%) of broker and forwarder respondents said they have turned down business due to a scope requiring license review and obtaining authorizations.

Roughly 70% said they are involved in C-TPAT. While 75% said they would be interested in becoming certified under a potential C-TPAT for exports program, they were split on whether such a program would be useful for exporters.

Respondents said needed improvements include better education and technical training among all parties in the supply chain (CBP, intermediaries and exporters) as well as better and quicker coordination among the agencies involved in export control.

Carriers. Variations in CBP export and inspection processes from port to port were noted by 61% of carrier respondents (analysis is limited to air and ocean carriers, as there was insufficient participation by truck and rail carriers), and 40% of those said this variation was a problem for their business. For example, 27% of respondents said they deliver paper manifests, 39% transmit electronic manifests, and 35% do some combination of the two, with 41% of these indicating that this variability is due to local CBP requirements. In addition, 43% of respondents deliver manifests pre-departure, 37% deliver manifests post-departure, and 20% do both, with this variation resulting from both local port procedures and federal regulatory requirements that vary based on trip destination.

Regarding export process changes that might result from CBP’s automated export manifest initiative, 51% of respondents said the timing of export manifest submissions is critical to departure operations. Carriers expressed a strong desire to move from manual processes to automated systems as well as a belief that an efficient automated system would help standardize export processing, reduce export hold times and facilitate a “one U.S. government at the border” approach to export control.

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