2009 NCBFAA Annual Report
President’s Report
By Mary Jo Muoio
This is my last Annual Report to you as NCBFAA President. I want everyone to know how honored I have been to represent our Association over these four years and how much I have appreciated the responsibility that you have twice entrusted to me. Throughout my tenure, my only motivation has been to increase the influence and value of the Association to those who participate in this great industry of ours. Naturally, I believe I have succeeded in a number of areas but the real judge of how extensive and enduring that success turns out to be is you and the passage of time.
Regardless of any ultimate outcome, I have certainly enjoyed my service to our organization and its members. The people I have met, the issues I have deliberated, and the challenges I have shared have made me not only a better leader but also a better person. The people in our industry are, I truly believe, the best there are, and the work we do is so vital to the commerce and financial well being of our great nation that I cannot imagine a more rewarding career than the one we have chosen. Thank you for your friendship, for your faith in my judgment, and for all the advice and support I have enjoyed these last four years.
As I leave the office of President, it is with an enormous appreciation for how valuable membership in the NCBFAA is to individual firms. Few Associations enjoy the respect and access to senior regulatory agency personnel, especially those at Customs and Border Protection and the Federal Maritime Commission, that ours does. Our involvement with policy implementation ensures that our members’ interests are considered and included in the final execution of proposals that can literally make or break a member’s company.
Throughout 2009, NCBFAA representatives worked diligently to protect our members’ interests against potential economic burdens created by well intended, but misguided, regulatory efforts. For example, the NCBFAA campaigned diligently to mitigate the effects of proposed Import Food Safety legislation that provided for licensure, penalties and new regulatory authority over customs brokers. By organizing a broad member-supported grassroots effort, the NCBFAA eliminated the substantial civil penalties, the annual registration fee, and minimized the customs broker registration requirements that were part of the original proposal.
Throughout the year, NCBFAA representatives, working with Congress and the USDA, sought to ensure that the Lacey Act required declarations could be filed in an electronic format and that the timing of the overall implementation of this regulation would result in minimal disruption of the trade. Thanks to these ongoing NCBFAA efforts, the environment for customs brokers under this new rule is much less onerous than it would have been.
Relying on its Customs Committee and NCBFAA Educational Institute, the Association has provided the membership with substantial information and educational materials to help them prepare for the additional responsibility of handling importer security filings (10+2 filings) for their clients.
A major challenge for freight forwarders has been the evolving August 2010 requirement for 100 percent air cargo screening, and the NCBFAA has been in the forefront of the efforts to cushion the economic effects of the 100 percent requirement by working with Congressional oversight committees, the Transportation Security Administration (TSA) and industry groups.
Developing new Automated Export System legislation that provides for programming AES prompts to alert filers when their data inputs indicate a violation of export control laws and create a regulatory regime to protect the public against unlicensed and unprofessional companies.
Whether it is these or a host of other current and planned measures that require our members’ attention, the Association stands ready at all times to provide its members with a voice to influence the final decisions in ways that recognize and protect their business interests. Additional benefits of membership include:
Discounts to participate in the major industry events of the year: NCBFAA's Annual Conference as well as the Government Affairs Conference, which is held in Washington, D.C. These events feature presentations by government and industry leaders on the issues that affect your business. They also serve as platforms for the exchange of ideas and networking with colleagues and potential clients.
Access to educational programs and seminars for industry professionals to advance the public’s awareness of the profession and to enhance its professionalism through programs, courses, webinars and industry related opportunities, many of which are held in your own community. These might qualify for continuing education points in the Certified Customs Specialist (CCS) and Certified Export Specialist (CES) programs. The NCBFAA Educational Institute is dedicated to providing you with premier industry training opportunities.
Free Advertising: Listing of your firm's offices, branches and affiliates in the Annual NCBFAA Membership Directory, the "Who's Who" of the transportation industry, distributed worldwide to shippers, importers and exporters at some of the world’s largest conventions and venues. Affiliate members also get free advertising on our online Categorized Affiliate Member Directory, which is visited daily by potential clients, who contact NCBFAA looking for member service assistance; NCBFAA’s Website, members.ncbfaa.org, averages a half of a million hits a month!
Most importantly, membership in the NCBFAA is an important business asset to your firm, which reflects the pride you take in the industry that your firm services.
For these reasons and more, the NCBFAA’s membership has experienced significant growth, despite the difficult fiscal times confronting our industry and nation. Last year we were very pleased to add 106 new members to the rolls. Thanks in large part to our membership marketing efforts we were able to get out the word on our contributions to the industry. We used mailing lists and FMC lists of newly registered forwarders to prospect for new members. We also enjoyed referrals from existing members and even a couple of cases where government employees spoke highly of us to firms that subsequently joined. Of course, those who heard of us through word of mouth were especially welcome because it means that we are succeeding in getting our story out to the industry.
As I move into the Chairmanship of the NCBFAA, I anticipate taking on new challenges with a view to furthering the vital work of our Association and helping to solidify its deserved reputation of accomplishment. I know you join me in wishing only the best to our new Administration as it undertakes the arduous and rewarding work of representing the NCBFAA’s membership.
Vice President’s Report
By Jeffrey Coppersmith
This year as Vice President of NCBFAA I was able to continue to support a variety of committees as an executive advisor. Besides being Co-Chair of the Freight Forwarding committee along with Chairman Billy App, I spent time with Scott Larson, Chairman of the Affiliated Presidents Network. This committee consists of the Presidents of all 29 affiliated associations. They have a monthly phone conference call that gives each association the opportunity to participate with other associations across the country. During the call, they not only get to hear what NCBFAA is doing for them and our industry on a national level, but also get to talk about local issues that other areas or cities may have already dealt with. This year the association from Colorado was included and we welcomed Association President Mr. Patrick Gallagher to our monthly call. There were also seven Presidents added to the call who were newly elected during 2009.
This AP Network is a great opportunity to expose the good work of NCBFAA to the local level. We have included in our calls members of NEI to speak about not only CCS and CES but also the Webinars and Seminars offered around the country. Customs Chair Ken Bargteil spoke on more that one occasion about the issues facing his committee and most recently Dan Meylor Co-Chair of the Ocean Carriers Best Practices committee spoke to the APNs about the Delivery Order issue his committee has been working on. This has given the NCBFAA greater exposure and also allowed the various Presidents to get to know about the various committees and share experiences.
This year the APN collected $17,000-plus for NCBFAA Annual Conference sponsorship and that has been with lots and lots of small donations. As the executive representative on the APN I find that this group is getting more active, resulting in a greater understanding of the importance of getting involved. Thanks to the fine leadership of Chairman Scott Larson and help from EVP barbara reilly and APN Liaison Jeff Short.
One final note. During the year, the US Census Bureau asked the NCBFAA to participate in a very special ongoing project that involves creating and providing export-training videos to the trade community. To date the Bureau, in conjunction with the International Trade Administration, has released a collection of videos to enhance export training. Topics include "The Basics of Exporting," "The Foreign Trade Regulations (FTR)," "Commodity Classification," "NAFTA," and "Taxes and Tariffs." For my contribution, I spoke at length on the value of using freight forwarders to ensure that the export transaction goes smoothly and profitably. As the regulations adjust to changing security and economic demands, it is crucial that exporters understand the importance of using a freight forwarder in order to be successful and compliant. With the push for growth in U.S. exports, I want to ensure that using freight forwarders is a big part of that growth.
I appreciated the opportunity to serve the NCBFAA as the Vice President these last 4 years and look forward to great things in the future.
Chairman’s Report
By Federico "Kiko" Zuniga
Since the formation of Area 8 in the Mid 90s, I have had the privilege of serving our Association’s membership in many capacities; as a board member, as an NCBFAA Committee Member, as an NCBFAA Committee Chairman, as NCBFAA President, as NCBFAA Chairman and, soon, I will begin serving as an NCBFAA Senior Counselor. Regardless of the positions, I have been honored to fill those roles. My aim has always been to better our industry and strengthen our Association; all I have done, or sought to do, in these roles has been directed toward attaining those two goals.
In my role as the current NCBFAA Chairman & IFCBA Chairman I have also endeavored to establish an effective international presence for the Association. The IFCBA provides me with an excellent platform for insuring that the NCBFAA members’ perspective on international commerce is shared with our trading partners. This opportunity to influence IFCBA deliberations ensures that our membership’s voice is, at least, heard on the global stage and is, more often than not, heeded. I have also continued to establish cooperation with other like-minded associations, which concern themselves with trade issues. These include the Canadian Society of Customs Brokers (CSCB), the Confederacion de Asociaciones de Agentes Aduanales de la Republica Mexicana (CAAAREM), La Asociación de Agentes Profesionales de Aduana de las Américas, (ASAPRA) and others. Such efforts continue to foster stronger cooperation within the industry to reflect the effects of globalization on trade.
The NCBFAA has continued to gain respect and importance over the years based on its willingness and capacity to offer sound and well thought out feedback to the various regulatory agencies, with which we are associated. The NCBFAA will continue to remain in the forefront of representing the interest of the membership. Whether mitigating the impact of new or proposed regulations, lobbying legislators to consider the unintended effects of legislation, or seeking ways to cope with federal mandates on our resources, our Association has stood shoulder to shoulder with the membership in working to absorb these changes with minimal adverse effects. To a large extent, I believe that we have been successful in our efforts and that our industry is better for it.
I am continually impressed and amazed at the many volunteers who contribute their time and money to protect our industry’s interest; within this organization, we have so many people who have dedicated countless unseen hours for the betterment of our industry. Our membership continues to grow with over 860 members and, during this difficult economic time, this number demonstrates a great testament to the value seen in our organization. The level of professionalism continues to improve with the establishment of the NEI Educational Institute, which is giving our members the opportunity to increase their knowledge, professionalism and keep up with the ever changing and complex rules that we deal with on a day-to-day basis. We have also been able to enlighten many of the people to whom we provide services, of the complexity of this business and how we, as an industry, make the process manageable for them.
As you will see in the financial report portion of this Annual Report, we have established a strong base for the continued growth and stability of the association. With the creation of the NEI we now have three strong sources of revenue for this association: dues revenues, conference income and NCBFAA Educational Institute funding, all providing significant financial support for our many programs and services. Thanks in large part to the talented management team represented by our outstanding Board of Directors and Executive Committee along with the attentive fiscal management exercised by the professional staff in Washington, the NCBFAA is well prepared to weather whatever challenges may lie ahead.
Within this Annual Report you will find numerous examples where our standing committees in the customs, forwarding and NVOCC areas have worked diligently to insure that the decisions made by regulatory and congressional agencies were well considered. These subject matter experts are to be congratulated on the effective and professional way that they have represented our business community in meetings, forums and hearings throughout the year.
Participation in advisory groups and on task forces is another way the NCBFAA not only continues to further the interests of our industry but also demonstrates its grasp of the issues affecting the trade. Since December 2000, when Congress first appropriated funds for it, the massive Customs Modernization project has involved hundreds of federal and private sector participants as well as thousands of hours to get to where it is today. The success of this Herculean task is essential if the ever increasing trade flows of international commerce are to continue to move smoothly across national borders
In addition to our affiliations with the regulatory agencies, our representatives have worked closely with Congressional representatives and their staffs to help craft legislation that can determine how we will conduct our commercial activities. One of our most effective strategies in pursuing this goal is the annual Government Affairs Conference in Washington DC, where you and your colleagues join together to visit members of Congress and Senators in an effort to communicate directly to them the issues and concerns facing our industry. By supporting your Association in this endeavor you not only reinforce our position as preeminent spokesman for the intermediary industry but also make it possible for us to have a place at the table where and when the deliberations surrounding these issues occurs.
As I conclude my active leadership within the Association, I look back on our accomplishments with pride and look forward to greater success as new and invigorated leaders assume their roles on our Board and Committees. These experienced and knowledgeable individuals will bring new ideas and unique perspectives that will serve the NCBFAA very well in the months and years ahead. During my affiliation with the Association I have made many friends, both personal and professional, not only within our industry but also within the many agencies that monitor our business activities. I would like to take this opportunity to thank them for their friendship and support over these many years and to wish them all well. I leave you with one of my favorite quotes by John Lennon: "Life is what happens while you are busy making other plans". Over the past 15 years, life has been very good to me while I was busy making other plans for this association.
Executive Vice President’s Report
By barbara reilly, CAE
Serving as a Volunteer Leader for any non-profit organization involves a special commitment of time and energy. The impact that voluntary organizations have on the quality of life we presently enjoy in this country is significant as reflected in the high number of us who have joined various associations at different levels and focus.
Given the overall effect of voluntary organizations, the opportunity to serve as a chair, past president, local association president, board member or officer is both an honor and responsibility. I have observed in my 30 plus years of working in this industry for an international trade association that effective leaders, whether elected or appointed, when executing their responsibilities, find some or all of the following five actions useful:
Lead by example;
- Ensure that expectations are clear;
- Don’t be afraid to evaluate the organization’s efficiencies, effectiveness and goals;
- Build a successful volunteer-staff partnership;
- Communicate, Communicate, Communicate!
We have been very fortunate to work with the caliber of volunteers who have dedicated countless hours of their time for the industry. The NCBFAA Team would like to specifically thank all of those on the outgoing administrative team, under President Mary Jo Muoio, for the leadership that they have provided to this organization, including much of the work done behind the scenes by many of the unsung heroes. Special congratulations go to Centurion Award recipient, Peter H. Powell, Sr., of C.H. Powell Company.
And to take that a step further, simply stated, remember that the continued leadership of the new administration, along with that of the innovative emerging leaders from across the country, (also special recognition to all of the new Affiliated Association Presidents) is important and necessary for our organization to be all that it can be. A new Call for Volunteers will soon be made to everyone, so consider stepping up to the plate and becoming part of a stronger, more viable association, serving with your assistance, the members and the industry at large.
Your NCBFAA Team, barbara, Cindy, Tom, Kim, Kim, Jeff, Drenda and Regina.
Treasurer’s Report
By Geoffrey C. Powell
NCBFAA ended 2009 approximately $65,000 ahead of our budget. The three revenue bases of our organization, the Annual Conference, Membership and the NCBFAA Educational Institute (NEI) all met their respective net revenue figures for 2009. Considering 2009 was one of the toughest economic periods that anyone can remember, the NCBFAA’s overall financial picture is strong and bright for our continued work on behalf of our industry.
The mission of the NCBFAA is to work on your behalf on many of the ever-changing issues that affect our industry and our members. As the membership is aware, there is a cost associated with these efforts. Since 2006, the NCBFAA has been running a moderate deficit balance at the end of the year with the full knowledge of the Officers and Board of Directors, understanding that certain critical issues require adequate funding resources to attack the issue. The officers and Board of Directors spent countless hours working together to determine the best path forward to come up with a fiscally responsible plan for the NCBFAA. In 2009, it determined that it was in the best interest of the NCBFAA to raise our membership dues to decrease the gap in revenues and expenses. On behalf of all the officers and Board of Directors of the NCBFAA, I would like to thank each member for their acceptance of this increase in order for the NCBFAA to continue its efforts to work on your behalf every day. I am very pleased to report that in 2009 the NCBFAA showed a positive net result and are very excited about 2010 and beyond.
The NEI not only exceeded its aggressive revenue expectations by $14,000, but also was approximately $11,000 below their budgeted expense. The NEI made some personnel changes in 2008, and with Cindy Allen as the NEI Director in her position for almost a full year in 2009, did a phenomenal job financially. The NEI courses continue to grow, not only through our local associations, but also through other organizations. The NEI continues to educate our growing NEI membership in the multi-topic Webinar Programs, which has proven to facilitate our teaching and yielded very positive results. In 2010, Cindy Allen and the NEI have an aggressive plan in place to educate our industry, which provides a very positive income stream for our organization.
The membership within our organization grows every month through the hard efforts of our Membership Chair, Bruce Goodwin in conjunction with our fine staff in Washington D.C. Although consolidations of companies can have a negative impact on NCBFAA’s revenue stream, the membership committee has started off 2010 with record new membership and the 2010 strategic plan will continue to keep the NCBFAA a very strong association.
Our Annual Conference will continue to be the best time spent learning about new issues that affect your business, seeing old friends and meeting new friends. Our association is very dependent on the revenue generated from this annual event to continue its very important work in representing its members. The 2009 Annual Conference held at Western Mission Hills Resort and Spa was a very successful event. Due to the economic situation, the number of attendees was down in 2009, however the net revenue figures still met the aggressive budget. Chairman F.C. (Pancho) Averill, Jr., wanted to ensure that all the members of this organization were treated to a truly first class event and made sure that there was no expense spared. Compliments go out to our Washington staff, barbara reilly and Kim O’Beirne for their work with Chairman Averill in continuing to monitor the expense, yet not to the detriment of providing a first class affair.
NCBFAA has been very busy this year continuing to work on the many issues that affect us all, such as Tariff Filing, the Lacey Amendment, Importer Security Filing (10+2), Consumer Product Safety Commission Act, and Import Safety, to name a few. In 2007, we changed the budgeting process to ensure that all the committees working on your behalf are properly funded, yet properly managed, which we believe has been a very effective means to manage our budget. It has been our belief that, by creating a more detailed budget, we can better control and manage the expenses of the NCBFAA on your behalf. I am happy to report that each committee has been closely scrutinizing all the expenses for their respective committee to ensure your investment is getting the maximum return. In addition, as the NCBFAA has developed close partnerships with other world organizations such as International Federation of Freight Forwarders Associations (FIATA), International Federation of Customs Brokers Associations (IFCBA), Joint Industry Group (JIG), American Association of Exporters and Importers (AAEI) and North American Customs Brokers Association (NACBA), we have budgeted for a number of our dedicated members to devote their time and energy to ensure that the NCBFAA remains an organization respected throughout the world.
I have to acknowledge the professional work that our accountant, Kim Murphy has brought to this association. The accounting can be very complex, but as the Committee Chairs will attest, Kim has done a fantastic job of properly monitoring and allocating expenses.
Although the economy now is faring better than at this time last year, 2010 will continue to require us to monitor revenues and expenses closely. The Trade, all the government organizations and Congress rely upon the NCBFAA for our expertise in shaping and directing the important issues we will need to address in 2010 to not only better our industry, but also to keep America secure.
In the last report, I included the below statement, that I think is still very appropriate for 2010:
The Budget Committee will:
Closely scrutinize all expense accounts
Monitor more closely all spending against the budget and report any discrepancies
Continue to make suggestions on how to improve the finances to the Board through the Executive Committee
Work with all parties to explore ways of spending our limited funds to the best benefit of the association.
The Board of Directors should:
Support the work of the association and its committees by actively working with the committees and encouraging firms to attend the seminars and conferences of the association
Actively solicit new members and sponsors for the Annual Conferences
Actively support and encourage a positive PR effort on behalf of the association
Listen carefully to financial suggestions and act in the best interest of all members
Our Washington staff should:
Carefully monitor expenditures, making sure that expenditures are properly approved and coded to the proper account
Monitor administrative expenses and make suggestions for possible savings in these expenditures
Pursue possible alternative sources such as grant money and reductions in expenses such as the use of interns.
The year 2010 will present a real challenge to all of us. Our Annual Conference Committee is working hard to make sure that this is the most successful conference ever. We face a year of Government agencies promulgating new regulations based on the laws passed last year. Furthermore, we need to make sure our industry can successful operate under the new Homeland Security Department. The Certifications programs and NEI will go into high gear. The bottom line is that there are going to be increased demands on us to spend money to represent the interests of our members. We all need to help make sure that the money is there to be spent and that it is spent to benefit our members.
Customs Committee Report
By Ken Bargteil
Prologue: The NCBFAA Customs Committee is comprised of one representative from each of the nine Association Regions, including the Chairman and Vice Chairwoman. These individuals are among the most dedicated and hardest working NCBFAA volunteers. In 2009 these were – Area One: Vice Chairwoman, Amy Magnus, Area Two: Charles Riley, Area Three: Chairman, Ken Bargteil, Area Four: Donna Mullins, Area Five: Joe Trulik, Area Six: Gary Ryan, Area Seven: Darrell Sekin, Area Eight: Neto Roser, and Area Nine: John Peterson. The Chairman, Vice Chairwoman and Committee Members benefit from the vast experience and sage advice of the Customs Committee Senior Advisers and former Association Presidents: Art Litman, Harold Brauner and Michael Dugan. In these capable and wholly committed hands rests the policy decisions that guide NCBFAA activities as relate to U.S. Customs and Border Protection and the import process in general. To implement its policies the Customs Committee in prior years relied on the strategic mastery, legal brilliance and untiring advocacy of its great benefactor and Customs Counsel, Harvey Isaacs, in recent years on his equally talented and devoted successor, Alan Klestadt, and for so many years, its D.C. Counsel, Jon Kent. This is part of the line-up that deserves credit for the advances and successes leading up to and in many cases culminating in 2009.
In 2009 NCBFAA members and their Customs Committee continued to face serious challenges on several fronts. As the result of the Committee’s hard work and unrelenting efforts over the last decade to establish NCBFAA as the most reliable source of solutions and force multiplication for implementing agency programs, it voice was heard loud and clear, and its influence effectively asserted across the entire field of public and private interests. The greatest achievement of the NCBFAA Customs Committee in 2009 was not the product of its activities in 2009. It was the result of years of strategic planning, tactical maneuvering and an unimaginable legacy of honest hard work, without which the NCBFAA Customs Committee would not have become the preeminent voice for issues on its agenda, and could not have accomplished what it did this past year.
Before moving on to a discussion of 2009 agenda items, the Chairman would like to recognize the balance of the Customs Committee roster. These individuals were also key to the advancement of the Committee’s agenda, and the praises must not go unsung – Automation Subcommittee Chairwoman, Cindy Allen, Large Broker & Forwarder Subcommittee Chairman, Chip Bown, Drawback Subcommittee Chairman, Michael Cerny, ISF Subcommittee Chairman, Don Woods, Carrier Best Practices Subcommittee Co-Chairmen, John Hyatt and Dan Meylor, CESAC Delegate, Michelle Maslow, and ex-Officio, NCBFAA President, Mary Jo Muoio and Chairman of the Board, Federico Zuniga.
ACE Strategy Task Group: On advice of Senior Advisor, Art Litman at the 2009 Annual Conference, the Customs Committee Chairman held an ad hoc meeting at which it was decided to create a small task group to develop an ACE strategy on the heels of CBP’s public admission that it would run out of time and money before it could develop and implement ACE consistent with the original vision shared by both the agency and the trade. Members of the NCBFAA ACE Strategy Task Group are: Mary Jo Muoio, Geoff Powell, Art Litman, Alan Klestadt, Amy Magnus, Cindy Allen, Chip Bown, Stuart Schmidt, with help from Darrell Sekin and John Peterson, under the leadership of Ken Bargteil. At its first meeting on June 2, 2009, the Task Group created a panorama of the customs process and resolved to produce an NCBFAA ACE Strategy White Paper. Cindy Allen accepted an action item for drafting a process map, to serve as a thematic representation of the Task Group’s analysis and visual aid for understanding its business strategy. Art Litman agreed to pull together the critical factors developed during the meeting discussion as a first draft for its white paper.
At the NCBFAA Board of Directors meeting on June 27, 2009 the Task Group received the Board’s endorsement for its white paper. After working through several drafts, on July 22, 2009 under cover of a transmittal letter co-signed by Mary Jo Muoio, as President and Ken Bargteil as Customs Committee Chairman, NCBFAA presented its ACE Strategy White Paper and Executive Summary to CBP Acting Commissioner Jason P. Ahern. The white paper was a huge success. At a follow-on meeting in his office, the Acting Commissioner quickly indicated his agreement with most of the analysis and recommendations contained in the white paper and advised that he would instruct the CBP ACE Modernization Board to convene a meeting of ACE Project Leadership and Managers with NCBFAA Strategy Task Group delegates to review it in detail. That meeting was held at the CBP Beauregard facility on August 27, 2009.
The NCBFAA ACE Strategy White Paper received widespread acclaim as a clear headed, practical and well constructed plan for best use of the remaining time and resources available in the current contract for ACE development and deployment. It signaled to influential elements in the importer community that NCBFAA interests had moved to center stage, and as a result an initiative to draft Trade Support Network priorities with importer input was hastily organized. This was met by a one-on-one outreach by the NCBFAA ACE Strategy Task Group to explain its white paper to others on the TSN Leadership Council that would draft the "trade" priority list. The final document presented to CBP by the TSN Leadership Council very closely aligned with NCBFAA priorities already on the record. NCBFAA had effectively stolen the march, but the engagement was not over.
At a meeting held during the Trade Symposium with the CBP Assistant Commissioner for the Office of International Trade and other key ACE managers, CBP advised that it could not deliver cargo release for ACE entry within the current contract cycle, and that it needed NCBFAA members to begin filing entry summaries in ACE in large numbers and in time to make the case for ACE funding. The NCBFAA ACE Strategy Task Group met again on November 18, 2009 to rethink its white paper analysis and construct business cases for adoption of ACE prior to ACE cargo release certified from 3461 data. The result was the ACE White Paper – Supplement One. While the Task Group built powerful business cases through critical insight into the customs and business processes and creative employment of existing automation elements, and Supplement One gave full throated voice to the resourcefulness of customs brokers, the story does not end there; it continues into 2010. Soon after delivery of Supplement One to Congressional staff, CBP reported that if they devoted the necessary resources to complete just the first of four priorities enumerated in the paper, it would be unable to do anything more in the current contract cycle. The Task Group is undaunted, and intends to revisit the data edit elements proposed in its first priority to see what might be done to further refine this requirement, and reduce the cost to address it.
Importer Security Filing: At the beginning of 2009 the Customs Committee, through its ISF Subcommittee and in cooperation with the National Education Committee ramped up its outreach to NCBFAA members and its engagement with the Office of Cargo and Conveyance Security in support of "10 + 2" implementation. The principle means by which the ISF Subcommittee lent support to NCBFAA members included timely ISF Blasts when new critical information came to hand, FAQ’s to supplement lagging CBP postings, participation in NEI webinars, channeling of members queries to CBP and providing individual responses, monitoring and redistribution of CBP ISF postings and communications, delivery of ISF panel sessions at the Annual and Government Affairs Conferences, and pursuit of ISF issues and concerns on the Committee’s agenda and at its meetings with CBP on July 17th and September 16th.
On May 29, 2009 comments on the Interim Final Rule drafted by the Customs Committee were filed for NCBFAA.
These comments focused on the flexibility of timing for two of the ten data elements, container stuffing location and consolidator, and accuracy in an initial filing for four other data elements, the manufacturer (or supplier), ship to party, country of origin, and commodity HTSUS number, recommending that this policy and practice continue while the global supply chain became familiar with and accustomed to ISF requirements. The comments also dealt with the lack of visibility throughout the trade to the date and time of container lading, recommending that timeliness be calculated from a highly visible moment, i.e., vessel departure. Concern was registered regarding circumstantial difficulties with house bill of lading numbers. The NCBFAA suggested in its comments that CBP share the results of its structured review with the trade and highlight best practices for informational purposes.
Reiterating a point made by NCBFAA from its earliest meeting with the Deputy Commissioner, the comments urged that the definition of ISF filer should be restricted to entities over whom U.S. Courts have jurisdiction. The comments recommended that unacceptable filings should be identified by ISF transaction number in progress reports and deficiencies specified. Lastly, due to the failure of CBP to publish any bond guidelines, single transaction bond processes or liquidated damages mitigation policy prior to expiration of the IFR comment period, NCBFAA suggested that an additional comment period be provided for those issues following their release.
Important accomplishments of the ISF Subcommittee during 2009 resulted from the numerous meetings held with Richard DiNucci, John Jurgutis and their "10 + 2" team members. Among the successes achieved by the Subcommittee in working with CBP to resolve shortcomings with the ISF program, it brought about the use of vessel departure date as a milestone for calculating ISF timeliness, and it resolved a process for single transaction bond filing. As with the ACE Strategy effort, much remains to be done. The ISF Subcommittee continued its work into 2010 in order to better align the definition of ISF importer for FROB, I.E., T&E and FTZ filings with commercial realities, to fashion a mechanism for terminating the ISF bond obligation as a prerequisite for surety release of collateral, and to eliminate the creation of pseudo-house bill of lading numbers by VOCC’s for unautomated NVOCC’s.
The ISF Subcommittee will continue its engagement with CBP to clarify and resolve other items on its agenda carried over from 2009 and provide a reliable channel of communications for NCBFAA membership, but what is clear from statistics already available is that the Customs Committee undeniably accomplished the single most important goal identified at the joint Forwarding, NVOCC and Customs Committee meeting that launched NCBFAA’s "10 + 2" mission; our members own ISF.
Customs Broker Sanctions: In 2009 the Customs Committee directed NCBFAA in its role as friend of the court in both the UPS andLizarraga cases, the former involving penalties assessed pursuant to 19 U.S.C. 1641 and the latter an attempt to suspend a filer code. In both cases the customs broker has so far prevailed. In UPS the court judged that CBP must follow its own regulations in determining whether a penalty for lack of responsible supervision should be imposed. In Lizarraga the court found that customs brokers have a property interest in their filer code and must be accorded the protections of due process before the government can divest the one from the other. It would be difficult to overstate the importance of these cases to NCBFAA membership and the customs brokerage community at large.
On another front, and partly in an effort to create a meaningful compliance context within which causes for customs broker penalties might be viewed, the Customs Committee helped to create the Broker Self Assessment pilot, and during its initial stage consulted with CBP to clarify broker usages with respect to compliance documentation and to monitor the program’s progress. At the heart of these matters is a dysfunctional CBP broker management program. Customs brokers are faced with wildly disparate treatment by CBP FP&F offices around the country.
FP&F Officers report up through the Office of Field Operations, while broker management policies and principles are established in the Office of International Trade. Whether or not this inherent disconnect is at the root of the incoherent enforcement conduct customs brokers have experienced, the lack of uniformity, and in many cases the lack of justification in the meting out of 1641 penalties was on the Customs Committee agenda in 2009. As a first step toward resolving this issue, the Chairman organized a 1641 Subcommittee headed by Darrell Sekin to help the Customs Committee formulate policy and strategy. One outcome was a decision that the next discussion must be with the Office of Field Operations. A meeting with Tom Winkowski, the Assistant Commissioner for that office will be scheduled.
Summary: As in previous reports this one makes no pretense of providing a comprehensive perspective on the work of the NCBFAA Customs Committee during the preceding year. While such an attempt might make for a better report, it would surely overtax the writer, and be far too long for publication. In any case, the work of the Customs Committee stands on its own, and manifests far better in the very real day-to-day business of NCBFAA members than can be represented in any report. Rather, the Customs Committee Annual Report for 2009 focused on just three of the most critical issues on the Committee’s agenda. The Chairman also wanted to take notice in this report of the inestimable work done by members whose volunteer efforts made even the smallest success of the Customs Committee’s possible, and without whose individual contributions and teamwork the truly heavy lifts could not have even been contemplated. Some of those volunteers are mentioned above, but certainly not all, and at the end of the day, it is the association of NCBFAA’s membership that makes any of it possible. 2009 was an extremely challenging, but highly successful year, in which important milestones were achieved. The Association as a whole can take credit for these impressive accomplishments.
Washington Representative’s Report
By Jon Kent
As is typical in working with the Congress, and for the many enforcement agencies where our interests reside, 2009 was a topsy-turvy year with great "challenges" for our industry –sometimes euphemistically termed "opportunities", if you disregard the down-side.
It was the year of a new Presidency, premised on a campaign promising dramatic changes to the business of Washington. Most of you are aware of the high profile issues – health care, the recession and the war in Afghanistan; of particular interest to us was the way that changes in policy affected trade and the enforcement agenda of our federal agencies.
First, trade legislation went nowhere in 2009. Even the most mundane and non-controversial bills failed to receive even a hearing. Take, for example, the miscellaneous trade bill: it was not until the end of the year, too late to avoid duty suspensions from lapsing, that a committee bill was introduced in the House. Even less far along is the Senate, where only individual bills have been proposed, but where legislation that can advance through that chamber has not yet been formed. Free trade agreements, ready for action in late 2008, have been bogged down with labor union and partisan objections. Even relatively uncomplicated agreements, such as the Panama FTA, have been held up by a myriad of unrelated controversies.
There were a few modest exceptions to this inaction. Customs authorization legislation, long in development, was introduced and underwent a hearing in the Senate. This legislation provides for major revisions of the drawback program, intellectual property and product safety enforcement, support for ACE, major reorganization at CBP, and a variety of technical revisions of customs law. And, legislation to extend the operation of GSP and Andean Preferences was passed at the last minute, but applies only for the calendar year 2010.
In the air cargo realm, the TSA began to give its absolute attention to the requirement for 100% screening by August 2010. While the agency reached its 50% target in February 2009, it did so by enlisting cargo provided by large shippers and by mandating screening of cargo carried in narrow body aircraft. There will be great pressure on the agency from Congress in 2010 to complete the task, which will be far more difficult when applied to small and medium shippers, as well as to cargo originating overseas.
On the positive side, Obama Administration officials at the Department of Homeland Security effectively admitted to the impossibility of achieving a mandated 100% screening of ocean-bound cargo by 2012. Unlike the air mode, Congress has provided a means of extending the ocean cargo deadline and DHS has announced an across-the-board extension to 2014.
NCBFAA-supported legislation, a bill to improve the priority in bankruptcy court of customs brokers claiming funds advanced to CBP on behalf of their clients, has also suffered from Congress’ inability to pass legislation when it is distracted by the big issues of the day. Active NCBFAA members, notably those in the Southern Border and New York areas, have nonetheless been highly engaged in this effort.
However, the failure of Congress to pass legislation does not overshadow our greatest success in 2009: deletion of language in a food safety bill that would have imposed on customs brokers draconian penalties, expensive registration requirements, and duplicative regulation by the Food and Drug Administration. Beginning with our discovery of these new provisions in the Spring, NCBFAA and its members engaged in an aggressive and high profile campaign to apply reason to a wrong-headed approach of solving the problem of dangerous imports of food products. Our greatest allies in the Congress were the Representatives who best understood our industry – those who have met with you over many years of attending the Government Affairs Conference and those whose jurisdiction brought them expertise on international trade, the House Ways and Means Committee leadership. In the end, Reps. Sandy Levin (D-MI), Dave Camp (R-MI) and others prevailed and we won an important victory.
By reflecting on this pattern, you may rightly conclude that 2010 will not be easy. We count on you to work with the Association to achieve important results for our industry in Congress. It is certainly a tribute to the membership of NCBFAA that we are able to move into 2010 with optimism.
Freight Forwarding/NVOCC Report
By William App, Jr., and Joseph Meunier
Once again, the Forwarding/NVOCC Committee had an extremely busy year and addressed a variety of issues that arise from governmental initiatives and various actions by the steamship lines. In addition, the Committee was very busy in providing information to the members relating to the various events that transpired during 2009.
One significant issue was the Committee’s continuing efforts to persuade the Federal Maritime Commission to grant the NCBFAA’s petition seeking to exempt NVOCCs from having to publish rate tariffs. In its petition, which was actually filed in 2008, the NCBFAA had argued that the shipping industry had changed, that NVOCC tariffs no longer served any valid public purpose, that the FMC had ample authority to grant the exemption, and that there was no longer valid reason for NVOCCs to continue to bear the substantial costs associated with tariff publication. As we reported last year, the NCBFAA efforts to build a consensus in the trade were extremely successful, in that the entire NVOCC industry spoke as a unified group with every commenting NVOCC supporting the initiative. In addition, various governmental agencies and trade associations, including the National Industrial Transportation League, submitted the comments.
When the FMC had still not acted by the end of 2009, the NCBFAA filed a petition seeking to supplement the record in the case so as to bring the Commission’s attention to the economic problems associated with requiring NVOCCs to continue to bear this cost. Ultimately, the Commission granted the petition to reopen the record, took comments from additional companies supporting the exemption, and apparently now intends to issue a decision. It is likely that the Commission’s decision on this effort will be issued prior to this year’s Annual Conference.
The bad economic conditions of 2009 undoubtedly provided a reason for the attempt by the steamship lines, in a number of ways, to utilize their antitrust immunity to keep freight rates elevated. First, in January of 2009, the members of the Transpacific Stabilization Agreement filed an amendment at the FMC that sought to broaden the scope of their immunized agreement. In addition to being able to discuss rates, the carriers also wanted to be able to collectively discuss rationalizing capacity in the Transpacific trades with continued antitrust immunity. In view of the likely adverse effect this would have on both capacity and rates in the Transpacific, the NCBFAA filed pleadings with the Commission and opposed the TSA initiative. As a result of that opposition, the FMC issued an order delaying the effectiveness of TSA’s requested amendment and sought additional information from the carriers, essentially requiring them to demonstrate that their proposed action would not result in either an undue reduction in service or an inappropriate increase in prices. Following that order, the TSA carriers ultimately withdrew their proposal, and accordingly are not able to collectively discuss reducing capacity in the trade. Instead, any decision to take vessels out of service will have to be through individual action.
Several months later, in June of 2009, the ocean carrier members of the U.S. Pacific Coast-Oceania Agreement (involving service to Australia and New Zealand) also sought to amend their antitrust-immunized agreement. On this occasion, the carriers attempted to establish a policing mechanism and impose liquidated damages on any carriers in the Agreement that attempted to compete in any way other than through the collective Agreement. Again, because of the Association’s concern that this would reduce competition in the U.S.-Oceania trade, the NCBFAA filed comments challenging the amendments. And once again, in view of the NCBFAA’s comments, the FMC raised questions with the members of the Oceania agreement about the potential anticompetitive effects of these new provisions, which resulted in the members withdrawing the provision that the NCBFAA had challenged.
In a third proceeding involving the antitrust immunity provisions of the Shipping Act, the FMC issued a notice in July, 2009 that proposed to repeal the exemption that permitted agreements among marine terminal operators (MTOs) to go into effect immediately. But for this exemption, MTO agreements are able to go into effect automatically without waiting for the normal 45-day waiting period that is otherwise applicable to agreements that obtain protection from the antitrust laws. It appears that the Commission’s proposal was a reaction to agreements filed by the ports of Los Angeles and Long Beach relating to the so-called Clean Truck initiatives. The Commission has taken the position that the combined efforts of the two ports raised anticompetitive issues and that the lack of any waiting period for their agreement to become effective – and therefore immunized from the antitrust laws – precluded the public from commenting and the Commission from taking any action to prevent the agreements from taking effect. The NCBFAA filed comments supporting the elimination of the exemption. And, the FMC ultimately agreed with the NCBFAA’s views and repealed the exemption. As a result, future agreements involving the MTOs and complex matters, other than routine landlord/tenant issues, are now subject to the normal 45-day advance notice filing requirement that is applicable to all Agreements that are filed with the FMC.
Finally, in the antitrust area, the Committee has been providing information to the members concerning several class-action lawsuits that involve NVOCCs and air forwarders. One particular matter involved the class-action suits that were filed against Horizon Lines and other domestic shipping lines on behalf of shippers, including NVOCCs, who purchased domestic ocean shipping services in the Puerto Rico/U.S. mainland trade lane between 2002 and 2008. Essentially, those lawsuits alleged that Horizon Lines and other carriers had engaged in unlawful price-fixing in violation of the Sherman Act and Puerto Rican antitrust laws, and sought treble monetary damages from the carriers. As it turns out, Horizon Lines entered into a settlement agreement with the class-action plaintiffs, by which it agreed to pay $20 Million into an escrow account in settlement of the claims. The Committee advised NVOCCs that booked space on Horizon Lines about this settlement and will continue to provide additional information to members that would explain how affected NVOCCs will be able to assemble their claims and seek their share of the Horizon Lines settlement.
Similarly, the Committee has continued to provide to the members concerning the recent adoption by the United Nations of the so-called Rotterdam Rules, whose more formal name is the Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea. The Rotterdam Rules replace, in the United States, the Carriage of Goods by Sea Act (COGSA) and, elsewhere, the Hague/Visby Convention, both of which addressed issues relating to loss or damage to cargo moving in international ocean shipping. Although it is not clear when the Rotterdam Rules will finally become applicable, it is clear that they are a complete new legal framework for international ocean shipping and it is accordingly important for NVOCCs, forwarders and even customs brokers to become familiar with the major changes that this legislation will bring.
The major changes are:
The carriers are giving up their defense to such claims resulting from the antiquated "error in navigation" defense.
The monetary liability limitations will increase from the current $500 per package to $875 Special Drawing Rights (SDRs) which amounts to approximately $1,295 (as of February 9, 2010).
Carriers will now be liable for delay.
The steamship lines and NVOCCs are treated the same under the Rules, and both will be able to enter into contracts with their customers that can vary terms, such as the limitation of liability, either upwards or downwards.
Except in those countries where there is a surface liability scheme that is mandatorily applicable (as is the case in Europe), the Rotterdam Rules will now recognize a single door-to-door liability scheme for intermodal transportation.
It will no longer be possible to compel shippers to litigate in a carrier’s or NVOCC’s preferred venue, as the Rule provide for a variety of possible forums.
The Rules will now specifically recognize negotiable and non-negotiable "electronic transport records" or bills of lading.
In view of the importance of this last item involving electronic transport records, the Committee is sponsoring a presentation at the Annual Conference by Mr. Juerg Bandle of Kuehne + Nagel, who will address that company’s approach to developing a system for exchanging electronic commercial documents that will be acceptable to shippers, the various steamship lines and banks.
In 2008, a majority of the FMC issued a decision requiring that agents of licensed NVOCCs performing services on behalf of their principals needed to have their own licenses. The Commission’s decision was issued despite comments filed by the NCBFAA that had contended that this requirement should only be applicable to foreign-based, registered NVOCCs, that the public was protected even if agents were not separately licensed in view of the bonds and insurance coverage of licensed NVOCCs, and that licensed NVOCCs would always be responsible for the actions of their agents.
Moreover, the NCBFAA pointed out that requiring the U.S. agents of U.S.-licensed NVOCCs to be separately licensed would undoubtedly jeopardize the efficient operations of NVOs, create unnecessary regulatory obstacles for many companies, and was in any event unnecessary. In a decision issued June 2009, in a case entitled Landstar Express America, Inc. v. Federal Maritime Commission, the U.S. Court of Appeals for the District of Columbia Circuit reversed the Commission’s decision. Essentially, the Court held that the plain language of the Shipping Act made it clear that the licensing requirements did not extend to agents of NVOCCs and pointed out, as has the NCBFAA, that the rigid policy adopted by the majority of the Commission threatened to stifle the efficient operation of the OTI industry. As a result, the Commission, in December 2009, reversed field and withdrew the agency’s attempt to regulate this aspect of the industry.
During the course of the year, the Committee had occasion to interact repeatedly with various other governmental agencies, including the Census Bureau. Insofar as the Census Bureau is concerned, we met with and attempted to persuade the agency not to eliminate the ability of forwarders and other parties participating in AES to be able to use the Social Security numbers of their shipper customers (USPPIs) in view of the difficulty that might attach in getting those customers to obtain EINs. However, in view of considerations about privacy and identity theft, the Census Bureau carried out a governmental mandate and went forward with its proposal. As a result, parties can no longer use AES that uses Social Security numbers to identify the USPPI.
The Committee has also, in conjunction with the Carrier Practices Committee, spent a great deal of time working on the issue of whether brokers should be required to issue Delivery Orders. As it turns out, many carriers are insisting that brokers issue delivery orders once the cargo is cleared at the various ports in order to move the cargo beyond the pier, as they appear to be unwilling to accept the delivery information that is contained in the various transportation documents and AMS filings on inbound goods. On the other hand, many brokers are concerned that issuing delivery orders may result in their being brought in to litigation, in the event that the trucker moving the cargo either damages the goods or is involved in an accident. The Forwarding/NVOCC Committee has attempted to establish a line of communication with the carriers in an attempt to remedy this situation, and will report on this further.
The Forwarding/NVO Committee looks forward to continuing its work during 2010 and invites all members either to directly participate in its activities or take advantage of the opportunity to raise any issues that appear to be of general industry concern.
NCBFAA Educational Institute Report
By Janet Fields
2009 will be remembered as a monumental year for the NCBFAA Educational Institute. With the appointment of Cindy Allen to the position of Educational Director in late 2008, we find ourselves with endless possibilities for educational growth. Cindy brings to us an abundance of both import and export experience as a licensed broker, and NEI program experience as both a Certified Customs Specialist and Certified Export Specialist. Devoting this knowledge to a dedicated full-time position has afforded our association with opportunities galore.
Our Certified Customs Specialist program is now fully on line and we currently have almost three hundred students enrolled. Our Certified Export Specialist program was fully launched online in 2009 and we have successfully completed our first year with this improvement. We continue to offer grandfathering opportunities to those who meet the qualifications established within each program.
Last year we were able to provide more opportunities for continued education points than we ever have, many at a reduced cost or completely free of charge. This enabled specialists to remain in the program and demonstrate their current knowledge within our industry even in the toughest economic times.
Our webinars have become a significant source of training and education for both members and non-members to obtain the most up-to-date information on our ever-changing regulations. A perfect example of the value of our webinars is our ability to put together an Importer Security Filing session within three of the request to do so by top level Customs officials updating us on this critical subject. With over 1500 people in attendance, this webinar alone is enough to justify the annual renewal fee to maintain membership. The Certified Export Specialist program was supported with the offering of export oriented webinars in the middle of the year, and we continued to offer both general knowledge import webinars as well as webinars addressing hot topic subjects to support the Certified Customs Specialist participants.
The CCS program is quickly becoming an industry wide measure of the knowledge and professionalism of its participants. Thanks to outreach efforts by the NEI staff at various conferences and events, more importers are becoming aware of the program and its benefits and are actively enrolling their on-site brokerage and logistics staff in the course. Importers are not the only parties who have noticed the program. Cindy Allen is always excited to get that call from Customs and Border Protection staff asking how many points their own events are worth because they have been fielding inquiries!
We realize that last year was a challenging year for many companies to maintain their current staff; therefore we remain flexible for specialists who have lost their jobs, yet want to remain in the program. Our dedication to the well being of our membership is paramount.
To assist members in the area of cost containment, while still providing members with training opportunities, the NEI was able to offer six free Case Studies for our CCS students to obtain those critical continuing education points at no cost. The NEI enjoyed the great privilege of working with Robert Perkins, former NEI Chairman, and Art Litman, former NCBFAA President, who authored the studies. The NEI continues to benefit from the wonderful support of these gentlemen.
We have several goals for 2010, including establishing and expanding a bookstore with offerings of publications such as our current successful Power of Attorney book, continuing to increase the webinar and case study programs in both the import and export area, and ensuring that companies supporting the program’s benefit from the expanded knowledge of their employee participants. It is also our intention to explore a user-friendlier web-based platform to encourage more communication and participation.
We look forward to increasing your opportunities for education through webinars, case studies, and publications and to continued growth throughout the export and import community.
Carrier Best Practices Committee Report
By John Hyatt and Daniel Meylor
The Ocean Carriers Best Practices Committee (OCBPC) had only one meeting in 2009. We covered several Topics. Our first focus was the pulling back of capacity. The carriers explained that the vessels were not operating with enough cargo to be profitable. The carriers also pointed out that shippers should expect more vessel sharing.
Some carriers said that they are not loading cargo if the AES filings have not gone through. We can expect more carriers to take a harder line on cargo that is delivered to the terminals, but the AES information has not been transmitted. The carriers are spending too much time calling forwarders and NVOCC’s for the advance export information and the ITN numbers. Carriers cannot load without the AES information or face CBP penalties. Also some ports are starting to charge export demurrage on rolled over containers.
China is scheduled to start their own version of the 24-hour advance manifest program for exports by ocean freight to China, called China Decree 172. The carriers are testing transmissions with China. This decree was written to go into effect on January 1, 2009, but was postponed until January 1, 2010 and has now faced an indefinite postponement. When this new program goes into effect, it may cause carriers to add an additional day to cut off times to confirm the data and send it.
We spent a long time comparing notes on 10 + 2. The carriers had not experienced any penalties. They also have received very few Do Not Load (DNL) messages. When a DNL message is received the booking party is notified.
The NCBFAA members explained the difficulties experienced with House Bills of Lading (HBL). At this meeting the carriers explained the use of a unique bill of lading in lieu of the on-AMS NVOCC’s HBL. The unique number with the carrier’s SCAC is used to guarantee that a unique number is used for the requirements of AMS.
NCBFAA members brought up the delays on some billing. Bills for demurrage or for detention on containers are often received several months after; sometimes bills come over a year after a container is delivered. Brokers talked about their experiences. We asked the carriers to look at their own policies for limitation for issuing bills after an event occurs for our next meeting.
NCBFAA wanted to address the door moves issue again. As of our last meeting, s a court case has explained our concerns for issuing delivery orders to the carriers for the trucker of their choice. NCBFAA brought up a recent case where a broker/forwarder was assessed a judgment of $23.7 million for a truck accident. We explained how brokers set up their policies on choosing a truck firm, to which they issue a delivery order. Brokers require proof of insurance and check the trucker’s safety rating and operating authority; brokers ask for this information on at least an annual basis. We clarified our position that issuing a delivery order to a carrier for a trucker that broker has not vetted opens very serious obligations for that broker. NCBFAA members warned the carriers about their own liabilities for controlling deliveries that they should review. All the Carriers expressed that they now understand the NCBFAA position. OOCL suggested that we develop a worksheet format for assisting the carriers by either giving them delivery instructions when requested, or confirming that the address on the bill of lading is correct, or give the carrier a contact name and phone number (or e mail address) for the importer to get or confirm delivery instructions. The NCBFAA members will work on a possible format for our next meeting. However, the NCBFAA Board may not support this solution. We will review the issue further at our next meeting.
All the carriers have experienced an increase of on-dock CBP designated exams (called High Line exams). CBP will have officers around the docks when a ship is being unloaded and will pick miscellaneous containers for immediate review. The containers might be reviewed for intact seals, radiation (with the use of hand-held devices) or even for a tailgate inspection. When CBP breaks a seal, a new seal number is given to the carrier. NCBFAA members pointed out that the seal number or any changes are important to an importer’s C-TPAT program.
We discussed if there are more chassis pools planned. OOCL predicted a trend to a European model where a chassis will be leased from a chassis leaser that will contract with the trucker. Maersk initiated a lease in which the trucker would also be responsible for repairs. APL will be slow in using a chassis pool since almost all of its containers are on wheels.
The OCBPC will have its next meeting in March just before the NCBFAA Annual Conference. There will be a report of that meeting at the NCBFAA board meeting during the conference.
Drawback Committee Report
By Michael V. Cerny
2009 was a busy year for the Drawback Committee. The committee worked with Jon Kent and staff at both the Senate Finance Committee and the House Ways & Means Committee on legislation to modernize drawback. Over the past seven years, members of the Drawback Committee have been actively involved with the Customs and the Hill in shaping a consensus drawback reform statute. In 2009, members of our committee were asked by Senate Finance to provide comments to that committee’s proposed drawback reform language contained in the Customs Reauthorization Bill, S. 1631. After members of our committee met with staff from the Finance Committee, our committee submitted testimony as part of the Finance Committee’s public hearing on the Reauthorization Bill. This testimony suggested various changes to the language of the bill based upon, among other things, comments by various members of NCBFAA. As we enter 2010, the committee expects to work closely with the staff at the Finance and Ways & Means Committees towards passage of this important legislation. The Committee wishes to thank Jon Kent for his advice and guidance during the past year and looks forward to working with him in 2010.
The Committee also responded quickly to Notices of Proposed Rulemaking issued by Customs and the Alcohol and Tobacco Tax and Trade Bureau seeking to eliminate drawback of certain excise taxes under substitution unused merchandise drawback. Our committee heard from a number of members that would be adversely impacted by the proposal. In addition, the committee was concerned with Customs establishing a precedent of eliminating drawback rights without Congressional consideration. The primary argument against this action was that the statute specifically provided for this type of drawback and the proposed regulatory changes were beyond the authority of these agencies. Our committee, along with other members of NCBFAA that participate in the committee, put together very detailed comments to the NPRM. These were submitted and we have heard that the notices should be withdrawn in the near future. We are grateful to all members that contributed to this team effort to quickly respond to the NPRM.
The goal of the committee for 2010 will be to continue our leadership on drawback issues, to keep our members informed of proposed changes, and to solicit comments from our members regarding important developments. The Drawback Committee members and its Chairman remain available to discuss these issues, or any other issues related to drawback, with interested members of NCBFAA. All members of NCBFAA with interest in drawback are encouraged to attend our meetings and conference calls.
Bylaws Committee Report
By Lee Hardeman
In 2009, we proposed to substitute the wording "Indirect Air Carrier (IAC)" where the wording "IATA" &/or "Int'l Air Cargo Agents" &/or "International Air Cargo Network Service," &/or "an IATA Company" appears in the Bylaws. This wording aligns with that of the TSA and avoids confusion. The membership approved our recommendations for adoption at the Annual Conference in April.
NCBFAA Political Action Committee Report
By Kathy Wilkins
"The purposes of the PAC shall be to promote the interests of customs broker, freight forwarders, NVOCCs and other transportation intermediaries. It shall solicit and receive voluntary contributions to be expended in support of candidates for election to federal office who have demonstrated their general agreement with and support for the principles to which NCBFAA is dedicated. The PAC is not affiliated with any political party and will dispense contributed funds without regard to party affiliation. The PAC may take any and all actions necessary or desirable for the attainment of the purposes stated above." (PAC By-Laws, 2008).
The PAC, a fairly young non-profit political organization, marked a record high for contributions during 2009. The Annual Conference raised $6,500 in April, while the GAC saw pledges of $2,625, for a 2009 total of $9,125. While just under 8 percent of the total pledges remains uncollected, clearly 2009 was successful and made available funds for legislative support where needed.
Based on the guidance of our extremely informed and competent legislative representative, Jon Kent, the following contributions were made to legislative campaigns:
July 2009: $1,000 to Congressman Brad Sherman (D-CA): Chairman of the Terrorism, Nonproliferation and Trade Subcommittee of the House Foreign Affairs Committee. Rep. Sherman will be principal sponsor of our AES bill, which includes a licensing provision for AES filers.
September 2009: $500 for the campaign of Rep. Peter King (R-NY): Peter King for Congress. Mr. King is the ranking Republican on the House Homeland Security Committee. His reasonable approach to security issues has been important to NCBFAA as we struggle with overly burdensome security measures that have an impact on trade.
His committee staff has participated in our GACs in recent years.
October 2009: $1,000 contribution for Nydia Velazquez (D-NY) who is chairwoman of the House Small Business Committee and a long-time, close friend of the association. In fact, it was in her committee room that we met for the GAC debriefing. She has made strong statements in the past to TSA to ensure that small business concerns be included in the agency’s security programs. It will be important to have her support in the next Congress
October 2009: $1,000 to Senator Max Baucus (D-MT): Chairman Baucus heads the Senate Finance Committee. Together with Senator Chuck Grassley (R-IA), he has introduced a far-reaching CBP Authorization bill. He will be the primary arbiter of what is added, what is deleted and what is worked out with the House. We have had a long history with him; he introduced and shepherded the Customs Broker legislation that passed in the 80s.
December 2009: $1,500 to Congressman Sander Levin (D-MI): Chairman of the Trade Subcommittee of the House Ways and Means Committee and has had a longstanding relationship with NCBFAA and brokers in Michigan. During the food safety legislative fight in the House, it was his intervention that saved the day for customs brokers; Levin objected to double regulation, by both CBP and FDA, and to excessive fees and penalties.
Based on the mission and purpose of the PAC, the Committee feels that the expenditure of funds this year was necessary and for the good of the NCBFAA members as a whole. Thanks so much to those of you who helped to fund the power of the PAC.
Counsel Review Committee Report
By Lee Hardeman
The Counsel Review Committee was formerly established in 2004 under President Kiko Zuniga to develop an orderly process to review current counsel and to select new counsel. The process development took over a year and, in the summer of 2005, resulted in an exhaustive list of qualifications and criteria for each of our three counsel positions. We have found, however, we usually add criteria during each review, as we better understand what our counsel actually do for our Association. We attempt to review each counsel position every three years.
This year, we completed the review of our Washington Counsel, Jon Kent, in April, and Customs Counsel, Alan Klestadt, in September. The Committee determined both these counsel are serving NCBFAA in an OUTSTANDING manner.
In 2010, we will review our General Counsel, Ed Greenberg, who is also our Transportation Counsel.
Membership Committee Report
By Bruce Goodwin
2009 was a year like none we have ever experienced, nor do we ever want to again. Between cutbacks, mergers and companies just folding up their tents, it would seem that the last thing on the minds of companies was joining an association. Yet in 2009, the NCBFAA broke a record for new memberships with 106 new members.
WHY WAS THAT??
Was it so members can stay connected with current industry changes i.e. ISF and ISF enforcement issues, 1641 penalties and sanctions, ITAR license procedures, ACE, RLF, etc.? Was it because we have national representation on border and inbound cargo issues? Was it to learn to stay compliant with new import and export regulations? Was it because the NCBFAA is well represented on Capitol Hill and is invited to have its position heard? Was it because of the tremendously successful NEI and the opportunity for continuing education and in-house training? Was it because of the Certified Customs Specialist (CCS) and the Certified Export Specialist (CES) programs?
Was it because they would receive weekly industry updates via the Monday Morning e-Briefing? Was it the chance to network with industry peers at the Annual Conference or try to sway valuable legislation at the Government Affairs Conference?
This list could go on or it could be as simple as "the Association watches out for my business when I just don’t have the time or manpower!"
As you see, it is likely that the reason that you are all members is listed in the above paragraph. For 113 years, this Association has represented the interests of customhouse brokers, freight forwarders, OTIs and NVOCCs and, through these fine logistics professionals, of every import, export, trucking and warehouse customer.
I would like to thank barbara reilly and the Washington staff, especially Jeff Short. I appreciate the comments and support of the membership. Finally, to steal a phrase from Billy "Who Dat" App: "Stay involved if you already are and get involved, if you’re not!"
Thank you all for your support.
Large Broker & Forwarder Subcommittee Report
By Leman G. (Chip) Bown, Jr.
The Large Broker & Forwarder Committee (LB&F) focuses on the impact of Customs and Border Protection (CBP), Federal Maritime Commission (FMC) and other government agency directives, actions and initiatives on large member corporations. As a subcommittee of the Customs Committee, LB&F is charged with the identification of issues, proposed solutions, and the elevation of both to the Customs Committee.
In 2009, the LB&F Sub-Committee convened via conference call and in person. The main topics were the Importer Security Filing (10+2); the Interagency Safety Working Group initiatives; 1641 Amendments; the Food Safety Enhancement Act of 2009; ACE ESAR III and delays with the ACE system, the Consumer Product Safety Improvement Act; Section and informal value limits; Social Security Numbers as ID for AES; and Broker Self Assessment.
Issues Identified for Customs Committee Consideration
A primary focus was development of a Broker Self Assessment program in conjunction with CBP. An ad-hoc sub-committee comprised of various volunteers from across NCBFAA was formed. The proposed program was developed through a series of committee conference calls. Face-to-face meetings with committee representatives and CBP officials were conducted to formalize proposals.
As of this writing (February 2010) the Broker Self Assessment program has been implemented by CBP as a pilot and has four broker participants. The pilot program results should be announced later this year.
Air Freight Subcommittee Report
By Scott Case
The NCBFAA Air Freight Subcommittee continues to remain engaged with our fellow private sector stakeholders and the Transportation Security Administration (TSA) as we move towards an event that is foremost in everyone’s minds, 100 percent screening of cargo aboard passenger aircraft.
Last year, the law required that a threshold of 50 percent be reached in February. This was done with little pain. The TSA has placed an interim requirement on the industry that 75 percent be screened by May 1 in anticipation of the 100 percent mark on August 1. Airlines, indirect air carriers and other private sector stakeholders have been examining cargo screening equipment, discussing things frankly with the TSA and many IACs have begun the process of becoming screening facilities and non-IAC Certified Cargo Screening Facilities (CCSF’s) are opening in the major gateway airports that feed nearly all of the USA departing wide body traffic. The agency has also felt tremendous pressure from Congress to be sure that all cargo on passenger aircraft is screened, including that which is arriving from overseas. The TSA is working through the Department of Homeland Security to reach agreements and common principles with the air cargo regulatory bodies in our key trading partners to insure cargo security as quickly as possible.
The TSA has undertaken a massive outreach effort to not just IACs, but also to shippers themselves to get them to become screening facilities at origin, which would further reduce the downstream demands of the system. There has been pushback on key facets of the program including ready accessibility to TSA air cargo inspectors as well as background checks on employees with unescorted access to cargo.
Change 5 to the IACSSP was also released in March for comment and review before being finalized, likely in the summer of 2010 after all comments have been adjudicated.
Also this year, TSA lost a valuable leader and champion of the industry, Edward Kelly, who passed away after a short and unexpected illness in November 2009. Ed came from the private sector (Emery) and assembled a capable team and was driving towards the goal. Ed was a force to be reckoned with and fought hard for what was best for industry stakeholders and the most pragmatic for security. His position as of this writing remains unfilled at TSA, as does the position of the TSA Administrator. We, like everyone else, hope this is resolved soon.
There also appears to be progress, albeit slow, on the harmonization of background checks for workers in the transportation supply chain. COAC has a subcommittee reviewing and making recommendations to the department on how to find a common ground for the multiple types of credentialing which takes place within DHS, CBP and TSA.
We are thankful for the opportunities afforded us by the NCBFAA and thank our outgoing president, Mary Jo Muoio, for her stewardship through an evolutionary time within the air cargo industry. We hope to continue our positive working relationships with TSA and other stakeholders such as the Airforwarders Association under the new administration.