Global Logistics and Supply Chain Strategies - July 2008 - (Page 68)

The 10 + 2 Rule and Competitive Advantage for You BY MATT GERSPER AND BRYN HEIMBECK Matt Gersper is founder and president of Global Data Mining and an owner of CUSTOMS Info. Visit www.gdmllc.com. T Bryan Heimbeck is CEO of Seattle-based Trade Tech. Visit www.tradetech.net. he 10+2 Rule is potentially the single largest importing process change in U.S. Customs history, and it is moving forward quickly. It will, undoubtedly, be the fastest and broadest importing process change ever implemented. On January 2, 2008, U.S. Customs & Border Protection (CBP) published in the Federal Register a notice of proposed rulemaking for Importer Security Filing and Additional Carrier Requirements, commonly known as “10+2.” Thus far, companies importing into the United States have reacted in three distinct ways. A very small minority of leaders have responded by funding a cross-functional team to study the impact the new rule will have on their business. They have challenged their teams to develop an enterprise-wide strategic solution to meet the new requirements and optimize global trade business processes while they are at it. These best-in-class companies are way ahead of the 10+2 curve. The remaining companies appear to fall into one of two groups. Those companies heading full speed for a cliff and completely unaware of it… and those companies heading full speed for the same cliff, but at least they are aware. The “aware” group has a chance to use this dramatic change in customs regulations as a catalyst for process improvement and to remain competitive with the best-in-class group. Any companies that remain unaware will suffer mightily when 10+2 goes into effect. The reason even “aware” companies are heading towards disaster is while their leadership may be alert to the newly proposed customs regulations; they mistakenly believe it can be managed tactically by their trade compliance department when in actuality it will require an enterprise-wide strategic solution. Background In the 1980s, CBP implemented the Automated Broker Interface (ABI) system that automated the transmission of customs entry data. The number of companies impacted by ABI was significant as all U.S. Customs House Brokers were forced to implement technology to capture and transmit customs entry data. The transition took several years before becoming mandatory. In the 1990s, CBP implemented the Automated Manifest System (AMS), the counterpart to the ABI System which automated transmission of carrier manifest data. In the case of AMS, it took more than 10 years to completely transition fewer than 50 ocean carriers to the new automated system. The 9/11 tragedy has highlighted the risk that terrorists may exploit our international transportation system to deliver a weapon of mass destruction to our shores. Our government’s dilemma is obvious: we simply cannot allow unscreened cargo to enter our ports in ever increasing numbers. Data screening, in conjunction with physical screening of cargo is essential to protect our nation as well as our transportation system. The urgency of this issue is the drive behind 10+2. Both Congress and the president have demanded implementation of 10+2, calling for it specifically in the Safe Port Act. In fact, CBP is already running late on implementing 10+2. With the strength of this mandate in the Safe Port Act, companies importing into the United States should begin to prepare for a major change in import regulations. Complexity It is important for senior management of U.S. importers to understand the significant complexity of the proposed rule and the impact it can bring. CBP is proposing to require importers to transmit an Importer Security Filing 24 hours prior to loading a U.S.-bound vessel. The filing must contain 10 data elements, including three new data elements not currently required for U.S.-bound imports. The existing seven data elements will need to be reported much sooner in the supply chain than is required today. This is not a small change. It will require considerable re-engineering of corporate processes and systems. The challenge of the proposed Importer Security Filing regulation is the compilation of various kinds of data from the multiple parties involved in an import transaction. The software community will develop effective filing solutions for the importer. 68 JULY 2008 http://www.gdmllc.com http://www.tradetech.net

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Global Logistics and Supply Chain Strategies - July 2008 Contents Editorial GL&SCS Exclusive Fastforward Up Front Introduction Menlo Worldwide & Electrolux PathGuide Technologies & Tile City Servigistics & Juniper Networks Transplace & Rock-Tenn ClearOrbit & Blue Bell Creameries Cadec Global & Northwest Food Products Transportation CaseStack & Greystar Products NGC & Parigi Group Supply Chain Consultants & Constar TransGroup Worldwide & Surgiquip Terra Technology & Campbell Soup Baxter Planning Systems & SGI Cadre Technologies & Kansas City SmartPort TransportGistics & FMC Technologies DSC Logistics & Tree of Life FORTE & Vera Bradley Penske Logistics & Eaton Cardinal Logistics & Weyerhaeuser JPMorgan & Black & Decker Opinion Opinion Industry Voices

Global Logistics and Supply Chain Strategies - July 2008

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