A routed export transaction occurs when the foreign buyer of the goods contracts with a freight forwarder or other agent to export the merchandise from the United States.
This is in contrast to a standard export transaction in which the seller of the goods arranges the transport of the merchandise out of the country.
Why is this important? Because it impacts who is required to file the electronic export information (EEI) through the Automated Export System (AES) when required by the U.S. Foreign Trade Regulations (FTR).
When to File the EEI through AESDirect
The FTR require that the export information for most exports from the U.S. must be filed through AESDirect on the Customs and Border Protection's (CBP) Automated Commercial Environment (ACE) portal. This requirement applies to exports valued at more than $2,500 per Schedule B or Harmonized Tariff Schedule commodity classification except for shipments to Canada.
(This is a simple explanation of AESDirect filing requirements. For a more complete and detailed explanation, download the free white paper: Filing Your Export Shipments through the Automated Export System.)
Once you've determined that an export shipment requires an AESDirect filing, you must then determine who must do the filing. And that's when a routed export transaction versus a standard export transaction comes into play.
It's also important to understand the relevant parties in an export transaction, as defined by the FTR.
Who Is the Foreign Principal Party in Interest?
The Foreign Principal Party in Interest (FPPI) is the party who purchases the goods for export or to whom final delivery or end-use of the goods will be made. This party may be the ultimate consignee.
Who Is the U.S. Principal Party in Interest?
Since exporters fall under the category of the U.S. Principal Party in Interest (USPPI), we’ll discuss their responsibilities in greater detail. The USPPI is the person in the United States who receives the primary benefit monetary or otherwise of the export transaction.
According to the FTR, the USPPI can be a:
- U.S. seller (wholesaler/distributor) of the merchandise for export;
- U.S. manufacturer if selling the merchandise for export;
- U.S. order party who directly negotiated between the U.S. seller and foreign buyer and received the order for the export of the merchandise; or
- Foreign entity if in the U.S. when items are purchased or obtained for export.
Who Must File through AESDirect
Since the USPPI has given up responsibility for exporting the goods in a routed export transaction, you would think they have also given up the responsibility for filing through AESDirect. And that is correct, up to a point. However, the USPPI is still required to provide certain information about the export to whatever party is doing the filing.
Since the FPPI is not typically located in the U.S., they must rely on a third party to file the EEI through AESDirect. They typically have two options:
1. The FPPI can authorize the agent to prepare and file the EEI.
It's not uncommon for the foreign buyer to rely on the same freight forwarder or other agent who is arranging transportation of the goods out of the U.S. to submit the export information via AES on the behalf of the FPPI. In order to legally do so, the authorized agent must obtain a power of attorney or other written authorization from the FPPI.
As noted above, the USPPI must provide the following data to the authorized freight forwarder or other agent in order for them to file through AESDirect:
- The name, as well as the address of the USPPI;
- The employer identification number or other tax identification number of the USPPI;
- The point of origin for the merchandise awaiting exportation;
- The appropriate merchandise code, Domestic (D) or Foreign (F);
- The appropriate Schedule B number;
- The appropriate Schedule B description of commodities;
- The appropriate quantity and unit of measure;
- The appropriate value; and
- The appropriate export control classification number (ECCN) or enough technical information to determine the ECCN.
The National Customs Broker and Freight Forwarder Association of America (NCBFAA) recommends that the USPPI provide this required information to the forwarder or other agent using a Shipper’s Letter of Instruction (SLI) form that matches their suggested model.
Exporters who use the Solutions Solutions export documentation and compliance software to complete their export forms can also quickly and accurately create the SLI in NCBFAA format .
Forwarders or other agents sometimes ask the USPPI to provide a power of attorney or other written authorization for the AESDirect filing. However, the USPPI is not required to provide this authorization for a routed export transactions since that is the responsibility of the FPPI.
In fact, it may be prudent for the USPPI to present a written request to the authorized freight forwarder or other agent for a copy of the power of attorney or other authorization furnished by the FPPI. I recommended the USPPI retain this documentation as part of their permanent file for the FPPI.
2. The FPPI can authorize the USPPI to file the EEI.
Although the USPPI is not required to submit the EEI through AESDirect in a routed export transaction, it may be prudent to negotiate for the ability to do so. It can help ensure that the EEI filing is done correctly. (You'll find a more detailed explanation of why a USPPI may want to do this in my article, Why I Hate Routed Export Transactions. )
Before the USPPI can file the EEI, they must get the power of attorney from the FPPI. Once they've gotten that, they can use an export documentation software program like Shipping Solutions to quickly file through AESDirect with the click of a button.
For more information about each party’s responsibilities, you can reference the Code of Federal Regulations, Title 15—Commerce and Foreign Trade, Part 30 as well as the Export Administration Regulations Part 758.
This article was first published in November 2014 and has been updated to include current information, links and formatting.