Simply ISF

Why ISF compliance does not have to be complex or expensive?

On January 26, 2009 the new Importer Security Filing (ISF) and Additional Carrier Requirements took effect. The ISF required by the U.S. Department of Homeland Security mandates that importers or their agents electronically transmit to U.S. Customs and Border Protection (CBP) 8 data elements and the Bill of Lading number, 24 hours before loading cargo onto a U.S.-bound vessel. The Importer is also required to provide 2 more data elements 24 hours before the vessels arrival at a US port. Ocean Carriers must also provide CBP two additional data points no later than 48 hours of vessel departure. These are the "10+2" data elements that make up the importer/carrier responsibility in fulfilling the ISF requirements.

Importers are required to be fully compliant by January 26, 2010. Failure to comply with this program will result in penalties and fines leading to longer lead times and higher landed costs and inventory requirements.

Importer of Record Number			Order time
Consignee Number			Order time
Seller (Owner) name/address			Order time
Buyer (Owner) name/address			Order time
Ship to Party			Order time
Manufacturer name/address			Order time
Country of Origin			Order time
Commodity HTS-6			Order time
Container Stuffing Location			After loading
Consolidator name/address			After loading
Bill of lading			Biggest Challenge

A More Simple Process

Through this one year period of flexible enforcement, the CBP has given importers time to change and adjust business processes in order to achieve full compliance. In the meantime, the CBP is keeping performance reports on Importers that are making an attempt to comply with the regulation within this 12 month period. These importers will be given deference and can benefit greatly from reduced penalties or fines beginning January 26, 2010.

As importers begin to implement the processes that will create the checks and balances ensuring they are compliant with the new regulation, they are being inundated with misinformation. "In truth, the process for compliance with ISF is much simpler than is being portrayed within the trading community, most of the data elements required for compliance are readily available at the time a purchase order is created," said Sandra Scott, VP of Trade Compliance at TradeMerit.

In fact, 8 of the 11 data elements are available at the time an order is created; this implies that the ISF can be prepared earlier than the CBP deadline. This is the most common misconception about the whole ISF Compliance process; Importers do not need to wait to have all data elements to submit an ISF. There are 9 required data elements that may result in a "no load" response from CBP, with the Bill of Lading number being the only one not immediately available at the time an order is created.

With information available so early in the process, the ISF should really be incorporated into the ordering process and not be made a part of the importation compliance process; this will greatly reduce the risk of a "No Load" message for the importers. There are no penalties for making corrections to an ISF before the "24 hour prior to Lading" deadline. This implies that importers can implement a strategy that will give to them sufficient time to make corrections if and when issues with the data arise.

The Bill of Lading number is the key element to achieving ISF Compliance; it is the only piece for which there is going to be a small window of time from carrier transmission to CBP deadline. Issues with submitting an ISF are really related to how difficult it is to obtain a Bill of Lading number from the Carrier or Freight Forwarder. This is solely the responsibility of the importer and so the use of a third party may hinder the process. Not only is more time required to transmit data, but there is a greater chance for error.

Sandra Scott of TradeMerit says, "Importers need to take advantage of the time and flexibility offered to them by the CBP for these filings. It makes a lot of sense for Importers to leverage the information that they have readily available and manage this process themselves. Ultimately, they can reduce the risk of penalties and decrease the cost of filing."

The remaining two data elements are less critical at the beginning of the order process. In fact, this data would not be made available to importers until after the goods have left the Port of Departure. CBP has recognized this fact and has made the deadline for the filing of these two elements, 24 hours prior to arrival at a US port. This implies that importers have time to ensure that their filings are correct. Once again with early filing of these two data elements Importers can ensure that there is plenty of time to review and correct the data prior to the deadline. The Importer can achieve compliance with little to no effort. Sandra Scott at TradeMerit advocates, "Importers should file immediately upon issuing an order, they should not wait until all data elements have been made available to submit an ISF Importers do not want to be scrambling to connect to Trading Partners in different time zones at the last minute in order to meet the CBP ISF deadline. The earlier they file the less painful the process."

Certainly there are many existing technology solutions that could provide to Importers the means to manage their own ISF process. These services vary greatly, with some being as simple as manually filling out the required data elements of the filing, to more collaborative services that will automatically create and submit the ISF by integrating the Importers' systems with various trading partner.

Sandra Scott of TradeMerit, "The best services are those that address the needs of each Importer, without requiring major changes to their systems and processes. At TradeMerit we offer three distinct services that will help Importers take control of their filing process. The service that best suits an Importer's needs is really dependent on the sophistication of the ordering process they wish to employ and the volume of filings they perform. By answering just a few simple questions before importers commit to any service they can determine which service will work best for them."