I N D U S T R Y   R O U N D U P

 C O M P A N Y   C O R N E R

Think customs brokerage is just about clearing goods?
Think again

To keep your goods moving in today’s complex trade environment, you need the expert support Universal Logistics delivers before and after goods are shipped. That means taking control of your customs data, understanding the NAFTA process, recognizing the increasingly important role of Other Government Departments (OGDs), and committing to voluntary compliance – the same steps recommended by a recent Ontario Chamber of Commerce report on border trade. Settle for anything less and you risk having to deal with higher shipping costs, extended transit times and significant penalties under the Administrative Monetary Penalty System (AMPS).

So why are there so many more challenges today with customs brokerage? Overall, there are three key drivers of the change:

• there is a much higher threat of penalty under the Administrative Monetary Penalty System (AMPS) – just because your goods cleared at the border doesn’t mean you are in the clear with Canada Customs
• programs such as Advance Commercial Information (ACI) have made customs brokerage more complex, making it more important than ever that your customs data is correct, up-to-date and available before your shipment arrives at the border
• there is much higher risk of shipping interruptions as a result of labour disputes, health emergencies, severe weather and threats of terrorist attacks

The good news is that you can answer these challenges by working with Universal Logistics to ensure that all your systems and procedures are correct and in full compliance with customs regulations. Here’s how we can help you:

Taking control of your customs data

While other customs brokers may withhold the database of each importer, we offer our clients complete access via their Tariff Resume, a comprehensive listing of suppliers, products, tariff classifications and duty rates, available online through our Inside Trac service. We work closely with you to ensure the database is accurate – an important goal because database errors could lead to significant AMPS penalties well after your goods are cleared. That’s because Customs only does selective paperwork checks at the point the freight crosses the border, but they can check it afterwards, and if they find an error, you are subject to penalty.

Understanding the NAFTA process

Think you understand the NAFTA process? Here is a quick test of your knowledge:

Here are just a few examples of the tools available from Universal to improve management of your NAFTA process:

• Management reports to identify the NAFTA status of your vendors
• Certificate Checklist to identify areas of potential concern
• Identification of all duty paid on U.S. originating shipments
• Establishment of a program to recover duty paid once a Certificate becomes available
• Vendor disclaimer statement for purchase agreements to protect against origin misdeclarations on shipping documents

Managing Other Government Departments (OGDs)

Many companies are not aware that they could be subject to penalties because they are not in compliance with the regulations of departments other than Customs. For example, did you know that many OGDs require pre-import notifications? Avoid the risk of penalties and delays by ensuring you understand OGD requirements before you ship freight.

Committing to voluntary compliance

The existing customs system is based on voluntary compliance and the importer’s obligation to self-correct once an error has been identified, not enforcement at the point of arrival. Moreover, the system is set up to reward companies that commit to voluntary compliance. There is still enforcement, in the form of a customs audit, but if you have committed to voluntary compliance, there is nothing to fear. Here are just a few of the steps we recommend:

• Maintain records properly
• Perform periodic self-audits
• Ensure your commercial reality matches the information you have reported to Customs
• Identify and report all discrepancies in tariff, value and origin
• Be ready to demonstrate your internal systems

We offer a wide range of value-added services to ensure your goods are cleared and are in full compliance with all government regulations. These services range from research on product classification and GST expertise to consultation on NAFTA origin eligibility and post audit support.

Contact Brian Rowe, General Manager – Customs Consulting Services, to learn more. And remember to ask about our popular, 90-minute Customs Compliance Made Easy EDucation seminar – just $99 for up to three attendees in our office, or $199 at your location.

60 seconds to better U.S. truck freight service

Here is an important question for anyone who ships truck freight from the United States to Canada – When was the last time your truck freight provider talked to you about ACI (Advance Commercial Information)? If the answer is “not recently” or – worse still – “never”, this article is must reading. Why? Because what you don’t know about ACI and northbound truck freight could have big implications for your transit times and freight costs.

First some background: ACI was implemented by the Canada Border Services Agency (CBSA) to put procedures in place to identify any threats to health, safety, and security prior to the arrival of shipments into Canada. Phases 1 and 2 of ACI have already been implemented on marine and air cargo destined for Canada.

Phase 3, which will focus on truck shipments imported to Canada, will be coming soon. Once Phase 3 is implemented, it will be necessary to submit data for truck freight shipments to the CBSA one hour prior to arrival of the goods at the border. Failure to submit this information within the timeframe will result in examination of freight at the border, possible refusal of entry, shipment holds and possible AMPS penalties. Translation: longer transit times, higher freight costs.

Along with ACI, there are other important government initiatives (e.g. new Wood Packaging Regulations) that will impact your business and make the relationship between your truck carrier and your customs broker more important than ever before.

What you don’t know about Advance Commercial Information (ACI) could have big implications for your transit times and freight costs

To determine how well prepared you are for ACI and other government initiatives impacting your truck freight, complete our 60-Seconds-To-Better-U.S.-Truck-Service questionnaire. We will respond to every questionnaire with recommendations on how to protect your interests by taking control of your import truck freight:

60-Seconds-To-Better-U.S.-Truck-Service Questionnaire     1. Under the terms of sale with your U.S. vendors, who is responsible for arranging and paying for your truck freight shipments? a. Your company b. Your vendor (with cost of freight built in to cost of goods) c. Your vendor (with freight costs invoiced separately from cost of goods) d. Terms vary according to vendor agreements     2. Do you utilize the services of a Freight Broker or go direct to the Carrier for your northbound truck freight needs? a. Freight Broker b. Carrier c. Unknown (vendor arranges)     3. Has your Truck Freight Provider talked with you about ACI (Advance Commercial Information) and how it will impact your northbound truck freight? a. Yes, in depth b. Yes, briefly c. Not recently d. Never     4. Do you have your own cargo insurance policy for your truck freight shipments or do you rely on the carriers’ limited liability? a. Own policy b. Carriers’ limited liability c. Don’t know     5. On February 1, 2006, Canada, USA and Mexico began Phase 2 of the Wood Packaging Import Regulations. Has your current Truck Freight Provider informed you of these regulations and how they will affect your truck freight shipments? a. Yes b. No   6. Would you consider using a single service provider to handle both your truck freight and Canadian customs requirements? a. Yes b. No             Fields marked with are required Name Company   Address   Province   Postal Code Telephone   Fax Email               Answer: False. Goods are only duty free under NAFTA if:    a) Goods originate in a NAFTA territory, and    b) Valid NAFTA Certificate of Origin is available

Why it pays to register with Canada and U.S. Customs

Are you participating in the voluntary security programs established by the Canada Border Services Agency and U.S. Customs Border Protection? It’s well worth the effort because participating companies get faster clearances at the border and gain a competitive advantage over non-participating companies.

The Canadian program is called Partners in Protection (PIP); the U.S. program is called Customs Trade Partners Against Terrorism (C-TPAT). PIP is open to the entire trade community, while C-TPAT is open to U.S. importers, carriers, brokers, freight forwarders and non-vessel owning common carriers and manufacturers (Mexico only at this time).

Both programs were introduced to enhance border security, increase awareness of customs compliance, combat organized crime and terrorism, and help detect and prevent contraband smuggling. Participating companies benefit, as well, because their goods get quicker release at the border and they are seen in a more favourable light by Customs and supply chain partners. Additional spin-off benefits include higher awareness of compliance and security issues.

The competitive advantage is achieved because many U.S. companies are issuing "corporate" purchasing policies and/or security SOPs that vendors/service providers must be registered under C-TPAT (or equivalent). In short, the only way to do business with these companies is to be registered under C-TPAT or PIP.

Since the focus of both PIP and C-TPAT is supply chain security, approval will only be granted to applicants that show due diligence when selecting business partners. This means every company in the applicant’s supply chain has been petitioned to do a security check and determine whether they are C-TPAT/PIP or the equivalent in other countries.

If you are uneasy about completing two registration processes, keep in mind that registering in one program makes it much easier to obtain approval from the other program. For example, CBSA will provide virtually automatic approval for PIP to any U.S. company that achieves approval under C-TPAT.

 Learn more about PIP          Learn more about C-TPAT

Tighter free-time for CN Brampton –
and the Universal Logistics solution

Effective March 1st 2006, CN Rail – Brampton Intermodal Terminal will reduce the current free-time period from two (2) days to one (1) day on loaded or empty standard containers and containers requiring protective service. This one day of free time will include Saturdays, Sundays and legal holidays, when CN Brampton is open, commencing at 04:00 am after the day of placement for pickup. After free time has expired, a charge of $200 per 24-hour period or portion thereof, up to and including the day of departure or removal from storage, will be assessed.

CN has initiated a number of system and procedural changes which will enable the verification of arrival and container availability status prior to the actual arrival of containers at Brampton. As a result, pickup appointments can be arranged prior to the actual grounding day.

For containers arriving without a pick-up appointment arranged in advance (excluding containers containing dangerous goods, running reefer containers and containers that have not cleared customs), the containers will be routed to the Mississauga Intermodal Service Center (MISC) to await final pickup instructions. Containers transported to MISC will be assessed a flat fee of $125 that provides for two (2) days of storage (calculated from time of placement at Brampton). After two days of storage at MISC, the storage rate reduces to $75 for each subsequent day.

If you are concerned about container storage at CN and the potential cost increases, it pays to subscribe to Universal's Ocean Freight Handling Service, created to ensure containers are expedited and you are not paying more than you should for storage.

Companies that subscribe to our Ocean Freight Handling Service will receive the following services:

• Track and Trace import containers upon receipt of importer's and/or supplier's documentation
• Contact steamship lines to obtain vessel arrival information
• Contact freight forwarders/steamship lines to obtain necessary Arrival Notices to effect customs clearance
• Submit customs clearance request prior to arrival of containers at CN Brampton
• Pre-arrange delivery appointment (where applicable)

Along with having the option of buying this service separately when we are your customs broker, you can get it automatically as part of the package of services we provide to companies that book their ocean freight directly with Universal Logistics.

For more information or to subscribe to Universal's Ocean Freight Handling Service, contact Brian Rowe, General Manager – Customs Consulting Services (905-882-4880). To obtain a competitive ocean freight quotation, contact David Lychek, Manager – Ocean Services (905-882-4880).

U.S. Customs regulations require that all goods entering the U.S. must be covered by a Surety Bond payable to U.S. Customs as "insurance". There are two kinds of bonds: Continuous and Single-Entry. It’s important to know the difference as having the right bond can save you money.

A Continuous bond, used by importers who have a large volume (quantity/value) of imports, is valid until it is terminated by the surety (insurance company) or principal (importer). The minimum bond amount is $50,000 or 10% of total duty/taxes/fees payable in the previous 12 month period, whichever is greater, and one bond fee covers all transactions for a 12 month period.

Single-Entry bonds cover a single transaction only. The minimum bond amount must equal the value of shipment plus duty/taxes/fees (for goods subject to other federal agencies – e.g. FDA, DOT, etc. – the minimum bond amount equals three times the total entered value of shipment). There is no maximum fee per transaction.

Make sure you are not over paying by opting for Single-Entry bonds when it would be more economical to be on a Continuous Bond.

The MPF (Merchandise Processing Fee) is a fee payable to the U.S. Customs Service on all imports into the U.S., except NAFTA qualifying Canadian origin goods. The MPF is paid per transaction at an assessed rate of 0.21% of the shipment value to a maximum of $485.00. For shipments value under $2,000, the minimum fee is $2.00; for shipments valued over $2,000, the minimum fee is $25.00.

Universal Logistics offers full customs clearance service at ports within the U.S. (via all modes of transport) through our network of service providers. For a competitive quote, contact Mark Glionna.

As of January 1, 2006, all release requests for plant and animal products regulated by the Canadian Food Inspection Agency (CFIA) must be presented at the first port of arrival into Canada.

More specifically, for any product that must be referred to the CFIA, release approval must be granted before the product leaves the seaport, land border, airport, courier depot, mail or any other method of importation. This includes "in-bond" shipments where the Customs port of entry is located at an inland office. Shipments arriving from the U.S. via rail will be allowed to proceed inland to the Central Railyard Hub (a notice of this exemption is expected from the Canada Border Services Agency (CBSA)).

Shipments that move inland without the required CFIA release will have to return to the port of physical entry into Canada. At that time, the entry can be re-submitted to the CFIA for possible release approval. Enforcement action (i.e.: monetary penalties or prosecution) may/will be taken against the importer of record when a shipment of plant or animal products is not presented to the CFIA before or when it first crosses the physical border or touches Canadian soil (i.e.: port of landfall). CFIA have advised that strict enforcement will apply to shipments subject to import permit/license and/or CFIA inspection.

On February 1, 2006, Canada, U.S. and Mexico began Phase 2 of the Wood Packaging Import Regulations. During this Phase, extending from February 1, 2006 to July 4, 2006, international shipments arriving in North America found to have infested wood packaging materials, or lacking an ISPM No. 15 mark or a phytosanitary certificate (Canada only), will be refused entry, whether or not signs of pests have been detected.

Full enforcement will begin on July 5, 2006, when all non-compliant wood packaging will be refused and ordered re-exported from North America.

Upon import, proof of treatment (copy of IPPC Stamp Coding) is required to gain release from the appropriate Plant Protection Organization of Canada, U.S. or Mexico.

If the shipment contains no solid wood packaging, an "exporter's declaration" is required.

Shipments within North America

Wood packaging manufactured from wood of Canadian origin that has not moved internationally is exempt from the treatment and marking requirements of U.S. wood packaging import regulations. Canadian origin wood packaging is also exempt from treatment and marking requirements when moving to non-continental territories of the U.S.

All shipments entering the U.S. (and U.S. non-continental territories) from Canada containing unmarked wood packaging materials must contain a declaration on customs documentation or importer's letterhead stating that "Wood packaging in this shipment is derived from trees harvested in the U.S. or Canada".

If shipments from Canada do not contain the appropriate wood packaging declaration, U.S. Customs will assume that the packaging is of the same origin as the goods contained thereon and may refuse entry. Shipments moving through Canada for ultimate destination to the U.S. are subject to full International regulations.

The current policy, which requires that wood packaging must be free of living pests/diseases or signs thereof, is still in effect for both countries.

Wood packaging manufactured from wood of U.S. origin that has not moved internationally is exempt from the treatment and marking requirements of Canadian wood packaging import regulations.

There are no requirements for treatments, marking or declaration for shipments imported into Canada from the U.S..  Shipments moving through the U.S. for ultimate destination in Canada are subject to full International regulations.

The current policy, which requires that wood packaging must be free of living pests/diseases or signs thereof, is still in effect for both countries.

The same regulations for International shipments apply to all imports into Canada/U.S. from Mexico.

Shipments arriving in North America from Offshore

Proof of Treatment

Upon import, proof of treatment (copy of the IPPC Stamp Coding) is required to gain release from the appropriate Plant Protection Organization of Canada, USA or Mexico.

The IPPC symbol for treated wood packaging materials (as per Annex II of the "International Standard for Phytosanitary Measures #15: Guidelines for Regulating Wood packaging materials Material in International Trade"):

Where XX represents the International Standards Organization two letter country code for the country in which the wood packaging is produced and 000 represents the official certification number issued to the facility producing the compliant wood packaging by the National Plant Protection Organization and YY represents the treatment carried out (e.g. HT for heat treated wood or MB for methyl bromide treated wood)

Exception

There are no exceptions to the policy. Non-compliant wood packaging will be ordered “removed from Canada”. Upon request, and approval by Customs, the non-compliant wood packaging may be separated from the shipment at an approved facility. All costs (cartage, unloading, reloading, fumigation of non-compliant materials, destruction of materials, cartage back to Customs) will be the responsibility of the entity in care and control of the shipment. Note, this is a potential option only and circumstances will be reviewed by Customs on a case-by-case basis.

Exporter Declarations

No Solid Wood Packaging

If the shipment contains no solid wood packaging, a "declaration" should be stated on the bill of lading to alert Customs/Agriculture and potentially avoid unnecessary inspections, for example “No wood packaging contained with shipment".

Marked Wood Packaging

If the shipment contains fully marked/compliant solid wood packaging, a declaration should be provided on the bill of lading to state "Wood packaging contained with shipment displays the ISPM No. 15 compliant stamp."

Exempt Wood Packaging

If the shipment contains processed wood packaging (i.e. plywood, particleboard, etc.) a declaration should be on the bill of lading to state "Wood packaging material is made out of manufactured wood which is exempted from ISPM No. 15." OR (when it applies).

For more information, please contact Brian Rowe, General Manager – Customs Consulting Services or David Lychek, Manager – Ocean Services.

Competitive services from Asia

Are you aware of the freight forwarding services we offer from Asia? With our well established agents located in key locations throughout Asia we can meet many of your needs.

Ask for a quote on our competitive ocean freight (FCL/LCL) and airfreight services, consolidation and direct service to/from Canada and the U.S.

Email Alerts! on breaking news

Have you signed up for our Email Alerts!, issued exclusively to clients of Universal Logistics whenever there is breaking news in the logistics industry? It’s a great way to be among the first to learn about important news that could impact your freight costs and transit times. Typical subjects for Email Alerts! include high priority issues such as labour interruptions, severe weather, government deadlines and terrorist acts or threats.

Yes, I want to sign up

At your service –Josie Di Lonardo, Account Representative, Quebec and Eastern Canada

Call Josie Di Lonardo, our newest account representative in Montreal, for a quote on ocean or air freight shipments in Quebec and Eastern Canada.

Josie brings to her position five years of freight forwarding and international trade experience, a Major in BCommerce in International Business, and the ability to speak four languages (French, English, Italian and Spanish) fluently.