Quality Newsletter: January 1, 2004
FDA has published its interim final rules for prior notice and facility registration as required by the BioTerrorism Act of 2002. The rules became effective December 12, 2003. Food manufacturers and handlers can register now on the FDA website, by mail or fax. FDA prefers that registration be done online. Prior notice is not required for articles being exported directly from the Port of Arrival without ever leaving the port (IE). Prior Notice must be received and confirmed electronically by FDA no more than 5 days before arrival and no fewer than:
- 2 hours before arrival by land by road
- 4 hours before arrival by air or by land by rail
- 8 hours before arrival by water
- If an article of food is carried or accompanying an individual and if subject to prior notice, then it must be within the timeframe established for the mode of transportation.
You can read FDA’s Fact Sheet on the Prior Notice requirements by going to this website: http://www.cfsan.fda.gov/~dms/fsbtac13.html
Starting January 1, 2004, customs brokers in Texas will have to exercise a great deal more care when helping their foreign customers apply for sales tax rebates. Those brokers who fail to follow the processing and reporting steps imposed by a new state law are likely to have their broker licenses suspended. Texas allows foreign shoppers to get a refund of sales taxes paid on exported goods (those taxes are exempt from state taxes thanks to the U.S. Constitution). Customs brokers have found a lucrative niche helping foreign shoppers get these refunds. US border communities lure Mexican shoppers by offering a rebate on all the 8.25 percent sales tax on all their US shopping. Billions of dollars are funneled to US border cities every year. Texas, like many other states, is facing a budget squeeze. The state loses millions of dollars in revenue annually because the rebate system is driven by fraud, inefficiencies, and lack of accountability. While it is not elimination refunds outright, Texas is making it much more difficult to get a sales tax rebate.
Beyond increasing the fees to brokers for doing business in Texas, the new law requires that brokers file quarterly reports that trace any refund claim back to the foreign national and the specific property that has been exported.
The Port of New York has issued a large number of Notices of Proposed Action (CF-29s) concerning the classification of handbags. This action could result in significant increases in duties for importers of these articles. Whereas the classification of handbags claimed to be with an outer surface of leather would have entered with a duty between 5.3% and 10% ad valorem Customs has taken the position that these bags feature a coating on the outer surface of leather. As a result, Customs is proposing to classify the bags as having an outer surface of “sheeting of plastic.” Handbags under this classification carry a duty rate of 16.4% ad valorem.
The Bureau of Customs Border and Protection published an updated Suspect Factory List, which added the names of two companies in Hong Kong and one in Botswana. The newly added companies are:
- Hong Kong:
- Fung Ling Garments Factory
- Loyal Garment Factory
- Botswana:
- Uni-Oriental (PTY) Ltd.
The United States, Guatemala, Nicaragua, El Salvador, and Honduras signed the Central American Free Trade Agreement (CAFTA) on December 18, 2003. Congress must still ratify the treaty. Under CAFTA, 80 percent of U.S. consumer and industrial products would be able to enter duty-free as soon as CAFTA went into force, 85 percent within five years, and 100 percent in a decade. Costa Rica has not signed CAFTA, but may do so in the future.
The Trade Act of 2002 set in place Mandatory Electronic Cargo Information rules, which apply as follows:
MODE
| Air |
Import: 4 hours prior to arrival or at “wheels up” Export: 2 hours prior to scheduled departure from the US |
| Rail |
Import: 2 hours prior to arrival at a US port of entry Export: 2 hours prior to the arrival of the train at the border |
| Truck |
Import: Expedited Shipments 30 minutes prior to arrival in US Non-expedited Shipments 1 hour prior to arrival in the US Export: 1 hour prior to the arrival of the truck at the border. |
| Vessel | Import: 24 hours prior to lading at foreign port Export: 24 hours prior to departure from US port where cargo is laden |
**Prior to engine attaching to train
***30 minutes for expedited and 1 hour for non-expedited
US Customs has announced changes in the 24-Hour Advance Manifest rule to allow the ocean carriers to once again submit the master bill of lading to Customs Automated Manifest System. The provisions of this “Special Bill” will require changes in our business processes. The Special Bill requirements entered full production in the Automated Manifest System on December 6, 2003.
The State Food and Drug Administration (SFDA) and General Administration of Customs (GAC) recently adopted new measures for the administration of drug imports with a view to standardizing the filing, customs declaration and inspection of drug imports and ensuring the quality of imported drugs. The new rules will take effect January 1, 2004. Under the new measures, drugs must be imported via designated ports and importers must obtain an imported drug registration certificate (or pharmaceutical product registration certificate) or imported drug approval document from SFDA before completing their import filing and customs inspection formalities.
In the last few years, U.S. Customs and Border Protection has seized millions of dollars worth of Chinese-made garments on the grounds they are going to be or have been smuggled in the U.S. The scheme generally involved importing the goods to Los Angeles and then moving them in-bond supposedly to Mexico. However, according to CBP, these goods were actually being diverted upon arrival in Texas.
The result is several criminal cases and hundreds of seizure cases.
Not sure about the different INCOTERMS, the latest status of the eUCP documentary credit rules, or the scope of the U.S. Carriage of Goods by Sea Act?
These and other questions are answered in a clear, concise guide on liabilities, contracts, and documentation in container shipping published by the Anglo-Dutch carrier P & O Nedlloyd.
The guide can be downloaded at www.ponl.com/external_media/pdf_files/media.101.0pdf
Whatever they’re called, these individuals or companies have been branded with a scarlet “T” by the United States and other nations for having supported terrorism. Four federal agencies publish seven lists that identify those countries, people and entities to which U.S. businesses cannot sell. The U.S. Patriot Act allows the federal government to be more invasive in coming in to look at your books and records, and requires you to come up with requested information that much quicker. The “know your customers” regulations have been around for at least 15 years. It’s the enforcement of such rules that has changed. If you look at today’s broad definition of “customer,” it’s anyone you have dealings with, anywhere in the world.
If you would like a list and location of the websites involved please let us know.
Lake Express a High Speed Ferry service will start operating in May. The ship will carry 46 cars and 270 passengers from Milwaukee, WI to Muskegon, MI with a transit time of only 2.5 hours. The vessel will make three sailings per day from each side of the lake, making a “day trip” possible.
ID theft jumped 81% last year!
Example: A woman had her wallet stolen and within six hours the thieves had charged $5,000.00 to each of her credit cards and wiped out much of her bank account by using her debit card to “purchase” limousine services from a nonexistent company. Worse, the thieves also obtained her Social Security number, which was printed on her health-insurance member card.
Some resources for information on ID theft are: Did you know your personal information AND credit card information are often on electronic hotel room key cards. Southern California law enforcement professionals assigned to detect new threats to personal security issues, recently discovered what type of information is embedded in the credit card type hotel room keys used through-out the industry.
A key obtained from the “Double Tree” chain was found to contain the following information:
- Customers (your) name
- Customers (your) partial home address
- Hotel room number
- Check in date and check out date
- Customers (your) credit card number and expiration date!!!
An employee can take a hand full of cards home and using a scanning device, access the information onto a laptop computer and go shopping at your expense.
Simply put, hotels do not erase these cards until an employee issues the card to the next hotel guest. It is usually kept in a drawer at the front desk with YOUR INFORMATION ON IT!
You may want to keep the electronic room key card when you leave and then destroy it.
Some tips about everyday Identity Safety are:
- The next time you order checks have only your initials (instead of first name) and last name put on them. If someone takes your checkbook they will not know if you sign your checks with just your initials for your name but your bank will know how you sign your checks.
- When you are writing checks to pay on your credit card accounts. DO NOT put the complete account number on the “For” line. Instead, just put the last four numbers. The credit card company knows the rest of the number and anyone who might be handling your check as it passes through all the check processing channels won’t have access to it.
- Put your work phone # on your checks instead of your home phone number. If you have a P O Box use that instead of your home address. Never have your Social Security Number printed on your checks.
- Place the contents of your wallet on a photocopy machine, do both sides of each license, credit card, etc.
Call the three national credit-reporting organizations immediately to place a fraud alert on your name and Social Security number. The alert means any company that checks your credit knows your information was stolen and they have to contact you by phone to authorize new credit.
Important US Credit Numbers:
- Equifax—1-800-525-6285
- Experian (formerly TRW)---1-888-397-3742
- Trans Union---1-800-680-7289
- Social Security Administration (fraud line) 1-800-269-0271
A new tool that will help prevent the theft of trucks and cargo is Qualcomm’s OmniTracs, which can be set to demand a driver password each time he returns to the truck and starts it. If the password is incorrect, the base station is alerted via a transmission from the truck’s OmniTracs unit. The password can even be reconfigured at each stop so thieves would have more difficulty finding and using it. This function will soon be expanded to read such biometric identifiers as fingerprints.
The U.S. Coast Guard has said the cost of implementing security for U.S. Ports is about $1 billion in the first year and $5 billion over 10 years. The IMO security requirements for ships and port facilities become effective in July 2004. The same deadline applies to requirements from the Maritime Transportation Security Act of 2002, which impacts U.S. ports.
US inspectors will screen US-bound containers before they leave Chinese ports at Shanghai and Shenzhen. With the addition of the two Chinese ports, 19 of the world’s top 20 ports have agreed to join the US initiative, which was developed after 9-11.
If you move stuffed toys, beware. Airport screeners in the US and overseas are on the lookout for suspicious pillows, coats and even stuffed animals after US intelligence concluded that al Qaeda operatives are being trained to apply special chemicals to the material inside to transform them into bombs.
Satellite Security Systems (S3), a global provider of asset security and logistics control, in cooperation with the California Highway Patrol and InterState Oil Company, dramatically demonstrated the first wireless remote shutdown of a fully loaded moving petrochemical tanker truck. From S3’s headquarters in San Diego—530 miles from the demonstration site—satellite communications were used to disable the truck in seconds, proving S3’s GlobalGuard and Fleetguard a viable solution to the challenge of controlling rogue hazardous waste vehicles that could pose a treat to homeland security.
It may kill the bar code. It’s called Radio Frequency Identification Technology, and it appears to be the next wave of supply chain technology that will allow real-time tracking of anything with an RFID tag. RFID chips carry descriptive information, most frequently regarding products to which they’re attached.
In March, US West Coast stevedoring companies plan to install RFID systems that will expedite the movement of traffic into and out of container terminals. It will be an additional seal placed on containers or pallets. They will cost about $150.00 each and are reusable.
It can contain all Bill of Lading information, Customs information etc.; can hold and report more info than a barcode and do so wirelessly; allows tracking of containers 24/7/365 via Internet; can speed entry/exit through ports by eliminating manual transfer of data; reports openings of containers; if RFID is broken it sends immediate alert.
The end result will be that users of RFID should see lower cargo losses, and thus lower insurance rates; shippers will have better knowledge of their supply-chain in real time; government can better know what cargo to inspect.
There are drawbacks to RFID and they are:
- Refrigerators will read the RFID tags on your groceries and tell you when to go for milk, but could also tell the grocery what you drink, and everything else in your fridge, in your house, in your car, the clothes on your body.
- Stores in the mall could place scanners to check every RFID tag buried in your clothes, learning who your are, where you bought each piece of clothing, when, what you paid, learn everything in your purse or wallet.
There are productive uses for RFID such as washers in the future that can read the tags and automatically set the washing process; EZ pass used for toll booths; “speed pass” for gasoline purchases; etc. In essence RFID microchips are like the Cookies that end up on your computer.
In the first nine months of the year, the main ports recorded 32.3 million TEUs, a rise of over 30% from the corresponding 2002 period and not far off the whole of last year. The country’s largest port, Shanghai, moved 8.2 million TEUs in the first three quarters, up 33%. Shenzhen, the booming complex adjacent to Hong Kong, handled 7.6 million, up 38.6%.
The Canadian Food Inspection Agency (CFIA) Forestry Section will be implementing a new policy directive that outlines new requirements for wood packaged materials entering the country. Effective January 2nd, 2004 all wood packaging entering Canada from all areas except the United States will be prohibited.
The Panama Canal Authority says its $190 million channel-deepening project is 40% complete, ahead of schedule and within budget. The project is scheduled for completion by 2009.
A new “security compliance fee” is to be imposed on all exporting and importing businesses to meet higher standards being imposed on trade by the US.
New Zealand Customs Minister Rick Barker made the unexpected statement, revealing the government would from July 2004 recover approximately $8 million from the export sector, $4 million from importers and $8 million for security screening of goods trans-shipped through New Zealand. New Zealand Customs would need about 130 extra staff and new x-ray and other technologies to ensure that high-risk cargo could be checked and cleared without delay.
USSEC (The United States South Europe Conference) increased rates for dry containers $160 per TEU and $200 per FEU and for reefer containers the rates were increased $240 per TEU and $300 per FEU. The increases were effective on October 1, 2003.
IPBC (The India-Pakistan-Bangladesh-Ceylon Conference) increased rates on cargo moving from the Indian ports of Cochin, Chennai, Tuticorin, Kolkata and Haldia; from Bangladesh and Sri Lanka to the United Kingdom, North Continent, Scandinavian, Baltic and Mediterranean by $150 per TEU and $300 per FEU. The rates were raised $250 in July and by $250 on September 2, 2003.
The MCFC (Mediterranean-Canadian Freight Conference) implemented a 6% currency adjustment surcharge on October 1, 2003.
The Canada United Kingdom and Canadian Continental Eastbound Freight Conferences implemented a rate increase of $150 per TEU, $200 per FEU, and $300 per tank container on October 1, 2003.
The FEFC (Far Eastern Freight Conference) increased rates October 1, 2003. For cargo moving from Asia to Mediterranean ports, North Europe and Scandinavia, a rate restoration of $150 per TEU will apply. The FEFC westbound interim tariff, a surcharge of $75 per TEU will apply on cargo to the United Kingdom, FEFC says a surcharge of $300 is applicable on high cube containers in the trade lanes cited above. For cargo moving from North Europe and Scandinavia to Asia, a rate restoration of $150 per container will apply.
On December 1st the FEFC introduced a winter surcharge of $50 per TEU on cargo loaded at or destined to St. Petersburg, Russia.
The Westbound Transpacific Stabilization Agreement increased lumber rates $200 per FEU and on wood pulp and kraft inerboard container rates increased by $75 per FEU. The increase was effective October 1, 2003.
The TACA (Trans-Atlantic Conference Agreement) increased rates $400 per TEU, $500 per FEU and 45’ container and $25 Weight/Measure on October 1, 2003.
Effective January 1, 2004 TACA will increase it’s eastbound tariff rates $150 per 40-or 45 foot container, $120 per 20 footer and $8 per ton for other cargo.
The ANZ-UE (Eurpoe to Australia and New Zealand conference increased rates $225 per TEU on October 1, 2003.
The Far East-Mideast charges were increased by members of the Informal Rate Agreement shipping lines $150 per TEU for inbound trade from the Far East to Middle East destinations.
Bulk Ship rates are soaring. Capesize rates are at record highs near $35,000 a day.
Shipping lines of the Japan and Hong Kong/South Africa Shipping Conference have announced two rate increases scheduled for 2004. The increases will be $400 per TEU, effective April 1, 2004, and $200 per TEU, effective July 1st.
Members carriers of the EECSAC (Europe East Coast South America Conference) will increase southbound rates 150 euro per TEU, effective January 1, 2004.
At the end of October APL said the average FEU moving on APL now costs $2,727, which is up 24% from this time last year
The FEFC (Far Eastern Freight Conference) has proposed a 20% increase in rates for 2004. The FEFC lines are trying to push through a $150 per TEU increase on January 1 for westbound Far East-North Europe freight, and follow it with a further $150 rise on April 1 for both North Europe and Mediterranean-bound cargo.
The biggest increase is planned for July 1, which is when all Asia Europe lines look to bump up freight rates to hit the peak season. Next year, the FEFC lines reckon on hitting their customers with a $250 per TEU increase westbound. Another increase westbound is expected on October 1, 2004
Carriers in the (ESPMFC) European/South Pacific & Magellan Freight Conference plan to implement a rate increase of 125 euros ($152) per TEU on April 1, 2004, followed by two further increases on July 1 and October 1, 2004.
On December 5, 2003 President Bush signed a proclamation ending the temporary steel safeguard measures he put in place in March 2002.
Protection and indemnity premiums are set to increase by 15% to 20% during the February 2004 renewal period due to a recent surge in dry cargo claims, according to Rodney Eccleston, joint managing director of the North of England P & I Club. The top International Group clubs suffered an overall underwriting loss of $338 million in the 2002-03-policy year, equivalent to 24% of premium income.
The CN increase rates in about 40% of its open tariffs by 4% on October 1, 2003.
Job stress costs US businesses $300-Billion a year. It is a leading cause of illness, depression and work place violence and is increasing, experts say.
It is expected that 2004 will see the fifth-straight double-digit hike in health insurance premiums with an increase of around 12%. There is some good news, health premiums rose 16% this year.
If you speed through a construction zone in Alabama watch out. The hard hat wearing construction worker may be an Alabama State Trooper running radar. Operation Hard Hat is intended to crack down on speed limit violators in construction zones in Alabama.
For trucking companies the days of low-cost insurance are gone. Budget for a 10% to 15% hike in trucking insurance premiums for this year’s renewal, on top of the huge hikes in recent years.
The new HOS rules become effective on 1/04/04. Allowed time “on duty” changes from “15 hours” to “14 consecutive hours”. The rub is not so much in loss of one hour but in the limitation to “consecutive” hours. Schneider has quantified the impact on costs to be 2% to 19% depending on load, lane, distance characteristics and other requirements lost to the new rule range up to 15% or 20%. Rate increases are predicted to offset declines in driver pay due to fewer miles traveled per tour of duty.
Unloading-who is Responsible/Liable for What? Unless otherwise defined by contract, unloading is normally not a part of delivery. Carmack only applies to goods that “arrive” damaged. The carrier’s obligation is only to place the goods in a position in which they are accessible to the consignee. Once the carrier is instructed to cease the transportation and to make the freight available to the consignee, the carrier has no further obligation to unload, transfer or reload the freight. Accordingly, if a carrier can demonstrate the loss occurred after the goods were given up to the consignee’s possession, the carrier is not liable under Carmack.
Can the carrier be liable on other grounds, for example, failing to use reasonable care in voluntarily assisting the consignee in unloading? Under the “borrowed servant doctrine,” a carrier is not liable for conduct of its driver in voluntarily assisting with unloading. On the other hand, a carrier, which in the regular course of its business undertakes to unload and otherwise provide services “beyond the tailgate,” may be held to a duty of reasonable care in unloading (e.g., the delivery guy who brings the small shipment to your receptionist’s desk).
Con-Way Transportation Services will begin applying a surcharge of 2% to all shipments moving in its less-than-truckload (LTL) operations beginning January 1, 2004. The 2% insurance surcharge will be applied to each shipment’s net line haul charges and appear on the invoice as a separate line and charge. “Health insurance costs are now at crisis proportions,” says Gerald Detter, president and chief executive officer of Con-Way.
UPS says 2004 average ground rates will increase 1.9% and international service rates will rise by an average of 2.9%.
Federal rules governing hazardous materials apply to a carrier’s possession from pickup through delivery, according to the US Department of Transportation’s Research and Special Programs Administration (RSPA). That includes loading or unloading HAZMAT into transport vehicles and storage while in transit.
While most companies have never experienced the loss of a container at sea it does happen. As an example in 1998 the APL China lost 400 containers overboard and about 500 remaining containers were damaged. The over $100 million in loss was the largest container-overboard casualty in history. So why do containers go over the side?
Rogue waves whipped up by a violet storm can be one cause. So can faulty lashings of containers, which can bring on disaster in even moderate wind and sea conditions.
Another common explanation is improperly stowed cargo within a container. When a ship encounters bad weather, improperly stowed cargo breaks loose and starts moving within the container. The cargo will eventually break through the side of the container, which in turn causes a collapse of an entire stack of containers, and can also result in the collapse of other stacks, or cause stacks to go overboard.
Overall only a small percent of all containerized cargo is actually lost or seriously damaged at sea. Remember if your container arrives with the product damaged be sure to check how it was stowed in the container and can improvements be made!
In a related story to the one above the Hong Kong office of NYK Line has warned shippers that they must provide accurate measurements of net cargo weights in containers, or risk extra costs and amendments charges. Shenzhen shippers have been too lax about providing accurate weights, bringing what NYK calls, “risk to sea-worthiness and inconvenience to stowage, because shippers mis-declared the weight.
A federal appeals court in Chicago has ruled that an ocean carrier was not liable for a container that was lost after undergoing inspection by the Bureau of Customs and Border Protection. The court said Hanjin complied with the shipment’s waybill when it followed instructions to deliver the container to Customs for inspection, and that it was not liable when the container vanished.
The US economy added more than twice the number of jobs expected in October, and the third straight monthly gain, and the jobless rate fell. The US economy added 126,000 jobs in October after adding 125,000 in September. In fact the economy roared ahead in the third quarter, growing at its fastest pace in nearly 20 years, fueled by greater business and consumer spending.
The National Association of Business Economists hints that economic growth in 2004 could be the fastest in 20 years.
These excerpts from a Wall Street Journal article will cheer you up if you believe you are technologically challenged:
Compaq is considering changing the command “Press Any Key” to “Press Return Key “ because of the flood of calls asking where the “Any” key is.
A Dell customer called to say he couldn’t get his computer to fax anything. After 40 minutes of troubleshooting, the technician discovered the man was trying to fax a piece of paper by holding it in front of the monitor screen and hitting the “Send” key.
A confused caller to IBM was having trouble printing documents. He told the technician that the computer had said it “couldn’t find the printer.” The user had also tried turning the computer screen to face the printer-but that his computer still couldn’t “see” the printer.
An exasperated caller to Dell Computer Tech Support couldn’t get her new Dell Computer to turn on. After ensuring the computer was plugged in, the technician asker her what happened when she pushed the power button. Her response, “I pushed and pushed on this foot pedal and nothing happened.” The “foot pedal” turned out to be the computer’s mouse.
The US has a reputation for low taxes, but when you calculate what wage earners and their employers actually pay, tax rates are between 50% and 76% of salary at a minimum.
- 15% to 38% Federal Payroll Tax
- 5% to 8% State Payroll Tax
- 7.75% Employee Paid FICA
- 7.75% Employer Paid FICA
- 7% Employer Paid Unemployment
- 7% Average Sales Taxes on Purchases
- TOTAL: between 49.5% and 75.5% of salary goes to direct or indirect taxes!
There are about 50 more taxes that could be listed.
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