Daily Archives: April 8, 2008

10 + 2 = 690,000,000

CBP. ACE. C-TPAT. SAFE Port Act. You’d think importers already had enough documentation and security initiatives. Apparently not. The U.S. Government recently announced the Secure Freight Initiative in an effort designed to help reduce the risk of terrorism by leveraging trade data, trade partnerships, host country governments and the latest technology to validate the security of goods in maritime shipping containers. Part of this initiative contains a more detailed Security Filing that is being dubbed the “10+2” because it requires 10 data elements from the importer and 2 data elements from the carrier that must be electronically filed 24 hours prior to loading cargo onto a shipping vessel ultimately bound for the US.

The goal may be to:

  • target high-risk cargo through the identification of actual cargo movements,
  • improve the accuracy of cargo descriptions, and
  • speed lawful international trade by recognizing low-risk shipments earlier in the supply chain

… but all it’s likely to do is increase trade costs even more. According to a recent Supply & Demand Chain Executive article, it’s estimated that this new 10+2 program will cost importers $390M to $690M annually due to filing fees levied by the government and surcharges levied by cargo agents for generating the required information.

And, let’s face it – it’s not going to negate the risks it is intended to negate. All it is doing is letting a potential terrorist (who cracks the system) know well in advance which shipments are likely to be identified as “low risk”, and, thus, which shipments provide the greatest opportunity for smuggling his weapons. Furthermore, pre-filing data elements, even if it includes route information, doesn’t necessarily identify high risk shipments – all you can deduce is if a vessel stuck to plan, and you can only deduce that if other global ports are willing to cooperate in your initiative and indicate whether or not a vessel arrived roughly on schedule. In short, the only goal that will be realized is improved accuracy in cargo description – which is valuable, but is a slightly better description worth 690M (or more)?

Considering that most of the data elements are already being provided to customs for clearance and entry via the CBP 7501, why is a whole new initiative needed? Can’t the current programs simply be improved to capture the new data elements and allow earlier submission of the data? It seems to me that this would be a lot less costly to all parties involved for the same net effect, and make a lot more sense. Any trade pros care to chime in?