The new U.S. Customs & Border Protection (CBP) requirement to file the Importer Security Filing (also known as 10+2, or the ISF) was three months old last week.
Just like Y2K, or the dreaded 24-hour Manifest Rule, the ISF rollout has largely been uneventful, except for a few matching errors related to the bill of lading. When this occurs a "Bill not on File" message from CBP results.
Importer Security Filing Data Elements
The bill of lading is actually being called the 11th data element of 10+2, and it is required before an ISF can be filed. The bill of lading number is what CBP is using to match the importer's ISF to the carrier's ISF. That match occurs in the Automated Targeting System (ATS).
The ISF data is fed into ATS using two conduits: the Automated Broker Interface (ABI) system commonly used by customs brokers and importers to file customs entries, and the Automated Manifest System (AMS) typically used by carriers and freight forwarders for the 24-hour rule reporting and other electronic manifest data.
There is currently no relationship between the ISF filing and the subsequent customs entry, and the ISF number is not required at time of entry. According to CBP, there are no future plans to marry the ISF and resultant customs entry together.
CBP has not assigned a specific form or declaration number (like CF-3461 or CF-7501 for the customs entry) to the ISF yet, and it is unclear if they will. The trade is also awaiting CBP guidance on recordkeeping responsibilities for the ISF, but you would be safe to assume five years.
The ISF Interim Final Rule was published by CBP on November 25, 2008. It required all U.S. importers, or their designated agents, to begin filing 10 data elements on the ISF 24-hours prior to lading of the shipment at origin beginning on January 26, 2009.
Full enforcement is scheduled to begin on January 26, 2010. Consignments not meeting the ISF criteria after the enforcement period begins will be subject to a "no-load" message from CBP, and errors will result in a $5,000 penalty.
Implementing Importer Security Filing
Importers are well advised to take this new requirement and rule very seriously. If you have been putting off or delaying implementation of ISF reporting, it may be detrimental to your company's ability to mitigate fines issued after the enforcement period begins.
CBP has publicly announced that they will be keeping report cards on all importers—those filing ISF's and those who are not. It remains unclear how this information will be shared with the trade, but at a minimum it is widely expected that CBP will publish these report cards on the ACE Portal in late April.
Early ISF adaptors with a good report card will be given deference and can benefit greatly from reduced penalties or fines should an error occur after the enforcement period goes into effect. Importers who espouse a laissez faire attitude about ISF are also liable to find themselves trying to adopt and adapt to the new requirements in the midst of peak shipping season.
The most difficult part about preparing to file the ISF is locating, organizing and obtaining the necessary information on a timely basis. Many importers are performing the necessary collating of data here in the U.S. before filing the ISF or turning it over to their customs broker. In other instances importers are opting to have their vendors or foreign suppliers load some or all of the ISF data abroad.
In order to file the ISF, you will need the names and addresses of the following entities to the transaction: the buyer, the seller, the manufacturer, the ship to party, the consolidator, and the stuffing location. You will also need the country of origin and the Harmonized Tariff code at a minimum sixth digit for the goods being imported.
Lastly you will need the lowest level of bill of lading, meaning that if a house or sub-house bill of lading is used on your shipment, you will need that number. On the other hand, if you are moving straight consignments directly with the ocean carrier, you will only need the master bill of lading number from that carrier.
ISF Filing Methods
Once those data elements have been assimilated the ISF can be filed. I can also tell you from empiric evidence that many importers are opting for the do-it-yourself method for filing ISF's. A new ISF fee (ranging from a low of $35 to a high of $100) is a bitter pill to swallow during these difficult economic times.
Internet-based ISF solutions make direct-filing an ISF simple and very cost effective; an ISF can literally be filed in a matter of seconds and takes only two screens to complete.
Direct-filing makes sense because it is the importer who will generally gather the necessary ISF information, and it is also the importer who is liable for timely and accurate filing. And, because filing an ISF is not considered to be "customs business" by CBP, direct-filing importers do not need to worry about obtaining a CBP Filer Code, and there are no permits or licenses necessary.
For more information on ISF, consult the CBP website.