2006 NCBFAA Annual Report

(Part 1)

President’s Report

by Mary Jo Muoio

At the conclusion of the first year of my presidency, I have searched for a central theme to summarize what I had hoped to accomplish. Last year, to facilitate a smooth transition of officers, NCBFAA leadership convened a strategic-planning retreat. In our discussions we critically studied the focus of the association. The theme that kept coming up in our discussion was the very central idea that the NCBFAA must focus on delivering benefits to our members. When you say it that sounds obvious and simple. Obvious maybe, simple not so!

Upon reflection, I have found that a key benefit to our members comes from the company we keep. During my first year, I have striven to build, or guide the development of, relationships with other organizations in our industry. Establishing partnerships is helpful in many ways:

It expands our membership growth opportunities.
It increases our political leverage.
It spreads our message of accomplishment.
It strengthens our financial structure.

During this year of relationship building, I have sought to focus not only on existing ones but also to initiate new ones. By solidifying our ongoing partnerships through the introduction of expanded programs and greater involvement in each other’s activities, we provide members of both organizations with more effective and useful services. Initiating new relationships broadens our base of supporters and enhances our capacity for influencing the issues facing our constituencies.

One of our existing relationships is the long-standing and vital connection between the national and its many Affiliated Association members who represent “the boots on the ground” intimately involved in the business of commerce. These organizations represent, I think, our best example of grassroots support. They see first hand the effects, good and bad, of national policies and they are our eyes and ears in the final analysis of how successful a given policy execution is. Polling them, interacting with them, communicating with them, has given us a wealth of information with which to weigh important decisions in the coming months and years. It has been my pleasure--and education--to get out and visit a number of our Affiliate Members. It is a priority of mine to visit as many of our Affiliate Associations as I can so that I can learn first hand how the NCBFAA benefits its members and what improvements we can make. I look forward to more visits this year.

Throughout the year we worked to cement the partnerships with our Affiliate Associations in many ways, including:

Open invitation to participate in monthly conference calls to share information on membership retention, meeting planning, and business practices.
Distribution of abridged Monday Morning eBriefings (MMeB), which ALERT their members to important industry topics of the week
Multiple free or reduced rate marketing opportunities throughout the year:
Free listing in the NCBFAA Annual Membership Directory as well as significantly reduced advertising rates
Free listing on the NCBFAA website with expanded opportunities planned on the new upgraded platform
Association information distribution opportunities during Export Pavilion events at the nation’s largest conventions and functions at no cost
Invitation to make a presentation at the NCBFAA Annual Conference updating industry leaders and peers on your organization’s ongoing activities
Eligibility for a 50% mentoring discount on the NCBFAA Annual Conference registration fee for an Affiliate Association activist attending his or her first Annual Conference
Participation in the governance of the NCBFAA through the nomination and election of representatives to the NCBFAA Board of Directors
Active involvement in the NCBFAA’s committee structure thus giving their constituents influence in the decision making process of National
Eligibility to join in or even become part of the leadership of the Affiliate Presidents Network (APN), whereby they may help plan future aspects NCBFAA events
Born from a local association, the NCBFAA values its roots and works to be both accessible and valuable to our local associations.

In a move designed to provide our members with greater global reach as well as enhance the US presence of an international non-governmental agency (NGO), in the last year the NCBFAA has been elected to full membership in the International Federation of Freight Forwarders Associations (FIATA). This is a very exciting opportunity for the NCBFAA and our members.

This NCBFAA involvement with FIATA will provide Association members access to a voice recognized across the world. This is important as NCBFAA members continue to expand operations from single locations to multifaceted logistics providers moving freight to and from all corners of our changing world.

NCBFAA’s FIATA membership allows both organizations to work together on common goals and provides a great forum for our members to meet counterparts in our industry at annual world events as well as the opportunity to develop meaningful agent relationships. In addition, it offers to Association members profound benefits that include, among others:

Use of the FIATA documents, which have an excellent reputation and are recognized as documents of trust
First hand trade/industry information from almost any country
Coordination of the local industry's policy with the worldwide freight forwarding and logistics industry
Active participation in FIATA's various bodies (Regional meeting "Americas," Institutes and Advisory Bodies)
Influence on decisions regarding issues of importance to our industry, which FIATA addresses with international organizations
Platform for communication and networking

Along with uniting worldwide forwarders, FIATA offers vocational training; expertise in Customs, multimodal and airfreight matters through Advisory Boards; and, most importantly, an annual worldwide meeting that allows members to come together to share social and professional experiences.

Our longstanding relationship with the Airforwarders Association (AFA) has been further solidified with the signing of a Memorandum of Understanding to support the AFA’s air cargo security legislative and regulatory advocacy initiatives. To that end, the NCBFAA is providing dedicated funds to offset the expense of AFA’s Air Cargo Security advocacy initiatives with the U.S. Congress and federal regulatory agencies in the coming months. Given that the NCBFAA shares common concerns with AFA as regards Air Cargo Security, it only makes sense that rather than embark on a similar, parallel, and duplicative effort, the NCBFAA support these on-going AFA initiatives on behalf of the NCBFAA membership.

Our continuing relationship with the Canadian Society of Customs Brokers (CSCB) has proven to be gratifying. Popularity of the Certified Customs Specialist (CCS) Program, soon to be followed by our Certified Transportation Specialist program, has formed the foundation of an educational program that will be second to none. The program’s success to date (it now includes nearly 3,300 individuals) is owed in no small part to the vision, assistance and advice of our Canadian friends and speaks to a need in the industry.

The ever-growing complexity of our business model demands a highly educated and motivated work force if we are to remain competitive. Knowledge of the expanding regulatory structure and understanding of improving technology are critical factors in building today’s workforce. As an Association that serves its membership, it is incumbent upon us to provide opportunities and resources to help you and your staff acquire these needed skills. Our Canadian-inspired program appears to be fulfilling that need across the board. I feel strongly that the benefits offered by the National Education Institute, will continue to expand.

Certainly another fundamental relationship, which NCBFAA maintains, is relationship with the Bureau of Customs and Border Protection. Our continuing efforts to assist Customs and Border Protection (CBP) to understand the impact their commercial involvement has on trade has frequently resulted in a streamlined and more targeted regulatory scheme. We are represented in the workgroups, committees and task forces that CBP has established to give voice to our industry so as to inform their deliberations and final decisions. You see we are very fortunate that CBP has always fully understood the critical importance of maintaining open trade flows without unnecessary impediments and the working relationship our members have with CBP help make that a reality. The many dedicated volunteer representatives for the Association work hard to ensure that the NCBFAA is ‘at the table’. Our involvement benefits our members and government alike.

The word ‘association’ is defined, in part, as a partnership. NCBFAA has built and continues to build relationships both among our members and with groups of mutual interests. The Association is involved in a vast array of diverse industry related organizations in its ongoing effort to provide the membership with every opportunity to be heard and to influence the commercial environment within which it conducts the vital business of international trade. During my second year of service to the many members of the National Customs Brokers and Forwarders Association of America, Inc., I will seek to continue fostering relationships of benefit.

Chairman’s Report

By Federico “Kiko” Zuniga

President Theodore Roosevelt frequently referred to his Presidency as a “bully pulpit” from which he could persuade and cajole his contemporaries. I sometimes feel like that about the NCBFAA Chairmanship, which I have had the honor of occupying this past year. My travels during this first year of my Chairmanship have taken me to Europe, China and Mexico where I participated in discussions where I sought to convince our international colleagues of the value our members bring to trans-border commerce in an effort to enhance the NCBFAA’s presence on the world stage. The importance of this work should not be underestimated.

Given the accelerating rate of wealth creation in Eastern Europe, Asia and South America, international trade with these areas will continue to grow and business opportunities for our members will continue to multiply. Add to this, the various free trade agreements in effect and under negotiation and you will get some sense of the enormous prosperity this globalization will generate in the months and years to come.

Whatever authority or legitimacy attaches to my position and that I bring to these meetings comes solely from the solid reputations for service, integrity and trust that you, our members, have achieved for yourselves. The work you perform on behalf of the international trade community not only fulfills the expectations of your clients but also enhances the nation’s commercial standing in the global economy. My colleagues on the NCBFAA Board and I thank you for your contributions to our industry in 2006 and encourage you to continue to strive for excellence in our profession throughout 2007.

For my part, I fully intend to continue representing our organization in the coming year as I did in 2006. Peaceful and prosperous international trade is the key to good relations between nations and people. I am not talking about some utopian pie in the sky vision of brotherly love that transcends fallen human nature. One does not have to love or even necessarily like their trading partners; all that is needed is that we tolerate one another long enough to execute the transaction. After that we can go our separate ways, each made the better for having successfully fulfilled our contracts. That is, I believe, an essential fact of international trade making it vital that all of us work to ensure that opportunities for this trade occur.

Last May, I participated in the International Federation of Customs Brokers Associations (IFCBA) meeting in Beijing, China where I served on a security panel and a national issues panel. For the former, I approached the issue from a broker prospective, noting that compliance with these evolving security initiatives involves a significant investment by brokers in terms of time and money. On latter panel, I described the NCBFAA initiatives, such as our education efforts, especially the Certified Customs Specialist program, on behalf of the members. I also provided them with an overview of the trading community to familiarize them with the complications inherent with the business of International Trade.

Again I joined with IFCBA Chairman Thomas Nietsch along with fellow IFCBA Managing Directors Michel Vallée, Francisco Jaime King, and Carol West in a side meeting with the World Customs Organization (WCO) Secretary General Michel Danet and WCO US Representative Michael Schmidt during a November meeting in Belgium. Discussions covered WCO positions on authorized economic operator (AEO), mutual recognition of national trade security initiatives, safe framework of standards and efforts to secure the broker’s role in international trade.

This meeting served to identify the important role that customs brokers play in the facilitation of international trade. An important outcome of this meeting was a well-received proposal that the IFCBA serve as an information bridge between the WCO and small to medium international traders represented by customs brokers in the North American Customs Broker Alliance (NACBA) countries (United States, Canada and Mexico) as well as South America.

The NCBFAA involvement with NACBA, on which I serve, began almost two years ago when we formed an alliance with Canada’s and Mexico’s customs broker organizations. The group has undertaken a number of meetings to discuss common issues related to conducting business in a security environment. It is currently focusing on reconciling security processes by encouraging their respective governments to harmonize risk assessment mechanisms, exchange information, and establish protocols to facilitate detection of fraud and smuggling.

In addition to representing the Association internationally, I served on the U.S. Treasury’s Commercial Operational Advisory Committee (COAC) team representing, along with the NCBFAA President Mary Jo Muoio, and others, the brokerage community in advising the Federal government on matters involving the commercial operations of Customs and Border Protection and other Department of Homeland Security functions. Until recently, I oversaw the operation of the NCBFAA Educational Institute and was closely involved along with my colleagues on the NEI committee in our very well received Certified Customs Specialist (CCS) program. I fully expect the whole program to continue to expand significantly in the months and years ahead.

Before closing, I would like to express my sincere appreciation to the Association’s professional staff in Washington, DC whose execution of the Board and Committees’ directives makes the successful operation of the NCBFAA possible. Also most deserving of our gratitude are the NCBFAA Board of Directors, Officers Committee and numerous Committee members and others whose voluntary efforts on behalf of the membership at large are critical to fulfilling the NCBFAA mission and objectives.

The NCBFAA is an important institution to the trade community and one that I take great pride in being allowed to represent. Together, we have forged a forward-looking organization that serves a diverse membership in ways that guarantee the watchwords – Service, Integrity, Trust – will be as honored tomorrow as they have been throughout our history.

Treasurer’s Report

By Geoffrey C. Powell and David E. Katzman

2006 was another financially strong year for the NCBFAA. The proverbial three-legged stool that has been meticulously crafted by our three strong committees, Annual Conference, Membership and our newest, NEI, has transformed our association into a strong foundation for us all to stand.

When we look at the historical figures, we can see that we had two main revenue streams – dues and the annual conference. In 2006 the third revenue stream, NEI exceeded its revenue budget by over $80,000.00. In 2007 we are expecting the revenue to exceed over $450,000.00 As this institute is so important for the future of the NCBFAA and to benefit our members, we have invested in a Director, additional office space within our Washington office and are making a large investment in an interactive web site to better manage the data. In 2007, we should see approximately $200,000 revenue from the grandfathering CCS program and the remaining portion will come from NEI courses and Third Thursday seminars. In order to be more efficient in our Third Thursday, we have invested in Webinar, an interactive program that facilitates our teaching and benefits our members.

Although consolidations of companies within our industry continue, we are very pleased that our overall membership increased by approximately 15% in 2006, resulting in a 5.7% net increase in dues. Our membership Chair has been very busy working with the Washington staff to proactively approach non-members about joining the NCBFAA, and the results noted above prove the great job they continue to do.

Our Annual conference will always continue to be not only the best time spent learning about new issues that effect your business, seeing old friends, meeting new friends, but our association is very dependent on the revenue generated from this annual event. The 2006 Annual Conference, held at the Diplomat Hotel in Hollywood, Florida was a very successful event. Although the revenue figures were below the budgeted figures, the conference chair and our Washington staff did a very commendable job in keeping down the expenses, making the conference very profitable for the association and most enjoyable. At this writing, the Annual Conference for 2007 scheduled at Wild Horse Pass in Phoenix, Arizona is looking to be a phenomenal event run by Chairman Pancho Averil. It is not too soon to be blocking off dates for the 2008 Annual Conference to be held at the completely remodeled Contemporary Hotel in Disney World to support your NCBFAA.

The Government Affairs Conference held this past year in Washington was one of the highest attended September affairs this association has enjoyed and congratulations go out to Lee Connor, Jon Kent, our Washington representative and our Washington staff for making this such a successful event. The success is defined not only in how our congressional representatives view the importance of the NCBFAA, but is also measured in the financial return to our association as it becomes stronger and more respected in Washington.

The NCBFAA has been very busy this year working on a myriad of issues that affect us all, and we therefore have changed the budgeting format to ensure that all the committees working on your behalf are properly funded, yet properly managed. In prior years, we put a lot of the expenses under two main standing committees, The Customs Committee and The Forwarding Committee. The 2007 budget is comprised of a culmination of many smaller budgets from The Forwarding Committee, The Customs Committee, the Airfreight Committee, the Ocean Carrier Best Practices Committee, the Affiliated Presidents Network, the OGA Committee, the NVOCC Committee, too name a few. It is our belief that by creating a more detailed budget allows us to better control and manage the expenses of the NCBFAA on your behalf. In addition, as the NCBFAA has developed close partnerships with other world organizations such as FIATA, IFCBA, JIG, AAEI and 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.

In the last report, I included the below statement, that I think is still very appropriate for 2007:

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 2007 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 successfully operate under the new Homeland Security Department. The CCS program and NEI will go into high gear.

The bottom line is that there is 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.

Washington Representative’s Report

By Jon Kent

The year 2006 was a very active year in the US Congress despite reports to the contrary. It witnessed a major, final push to enact homeland security legislation that will have an important impact on both the sea and air modes of transportation. We saw the final burst of Free Trade Agreement legislation in a race against expiration of the President’s trading authority. And, we continue to see Congress engage in technical customs-related issues important to our industry.

The SAFE port security legislation had been under consideration by the Homeland Security Committees for some time when Congressional leaders from both parties embraced new security updates as a positive path to the fall 2006 elections. NCBFAA had consulted with principle sponsors of the legislation from the beginning—meeting with Senator Patty Murray to discuss the beginnings of the Collins-Murray bill, working with staff to ensure that the bill’s provisions would be trade community-friendly, and then communicating our wishes to the House via a large coalition of private sector interests.

NCBFAA was particularly interested in a provision that would recognize the International Trade Data System (ITDS) as the single portal for all government agencies engaged in the import and export process. ITDS needed to become obligatory for the numerous agencies that were dragging their feet and failing to fully participate.

Another essential issue for the association evolved from CBP’s determination to require additional data elements for inclusion in the Automated Targeting System. It was plain to everyone that manifest data in itself was not sufficient, but it was also equally clear that a 24-hour rule requiring entry data would have disastrous results. Finally, it was important that any required data for early filing had to make sense. In the end, the law passed in the final days of the regular session and provides a reasonably balanced approach for serving the interests of both trade and security. Implementation however will be the key and 2007 will provide the basis for judging our success.

2006 was also the year for the scheduled expiration of the Generalized System of Preferences and other preference programs, such as the Andean accord. Further, as a practical matter, year’s end was the deadline for enacting newly negotiated free trade agreements. In the end, after a year of involvement by NCBFAA and others in the trade community, an omnibus trade bill finally emerged at the tail end of the “lame duck” session. This last-minute breakthrough spared customs brokers and importers the upheaval of a lapse in existing agreements. NCBFAA, teaming with the American Association of Exporters and Importers, seized this opportunity to provide extra time for our members to prepare for the introduction of major new changes to the HTS. The bill provided for additional time for publication and a means of leverage for CBP to provide a grace period.

NCBFAA also embarked on an effort to enact various elements of technical customs legislation. Asked by the Trade Support Network to oversee the enactment of provisions designed to facilitate the Automated Commercial Environment (ACE), NCBFAA shepherded the legislation to final passage in a pension bill enacted in August. Then the association went to work on finally passing a drawback modernization bill that was the subject of extensive negotiation between CBP and drawback brokers. While we came close to success, this too will require our continued attention in 2007.

In the year ahead, the new Congress has promised a close review of CBP operations, including the functioning of the fledgling Office of International Trade. And, early in the year, the newly established Democratic majority will try to enact a new version of SAFE, this time with a major focus on air cargo. This will pose both opportunities and challenges for the Association. The continued active involvement of our members is essential; your expertise in the operations of trade is highly valued and the foundation for positive change.