Kindle for your Chaos Contest

Kinaxis, providers of on-demand supply chain analytics, released a contest recently called Kindle for your Chaos! through their online community and blog called Kinaxis Supply Chain Experts Community.

Congratulations to our own Clorisee Canada [web bio | Facebook | LinkedIn] for her submission and story which one her a brand new Kindle.  Great job, Clorisee! Here is the story that she submitted:

In a previous job, I met with customers who were considering switching their business from one shipping carrier to another.  My role was to evaluate the customers supply chain process and help sales win the business by presenting technology solutions that would help improve the process.  The challenges that I faced were many, but gaining the customers trust by being honest with them about capabilities was a great way to help win business. 

I remember going to Michigan to meet with a company that shipped lots of international packages.  They had 3 systems setup and 35 people to do a 2 person process. You see, their systems were all setup to do a small piece of the shipping process due to limitations in their systems.  So the staff walked from one system to another to complete the shipping process on one shipment.  When I first walked into the warehouse and they showed me their shipping process I looked around the room to see if I was on “Candid Camera” because in this century with all of the technology available no one should have a very manual process for creating a carrier shipping label and documents needed for international shipping.  Once I determined I was not on candid camera I asked a lot of questions and proposed a GREAT solution to pull all of their manual processes together to make it easy and more efficient to ship.   

I am sure by now you are wondering how I knew my solution was a great one. Well here is what happened next.  The Carrier I worked for did not win this business because of pricing.  The Carrier that won the business did not present a solution to help streamline the shipping process but their rates came back so low which allowed the customer to still save money.  Once the customer announced the carrier that was chosen they called me to ask if I could present my proposed solution to the winning carrier because they could not explain it and the winning carrier could not think of anything.  This was wrong on so many levels.  I of course turned them down for so many reasons but this validated that my solution was really good. 

Without going into a lot of details enhanced automation of information would have solved their issue but getting to that required out of the box thinking because this customer had network connectivity limitations. Orders were sent to the warehouse via email because the warehouse was down the road from the customer service office and the internal systems were not connected via a network.  To make all of this happen the carrier needed to build a bridge using a server with a make shift network connection so that communication could happen from system to system. Once this internal fake network was setup we could solve their other issues and eliminate a lot of their manual processing that they did. 

Importer Security Filing Fines, Penalties, and Their Mitigation

As noted in the previous posting, up until recently the required Importer Security Filing (ISF) information was typically provided after the order had shipped.

Because of the change in information and document flow ISF compliance requires, U.S. Customs has allowed a period of “flexible reporting” and “flexible enforcement” ending January 26, 2010. This is when fines, penalties, and “Do Not Load” messages will begin.

Flexible Reporting –

The actual manufacturer or supplier, country of origin, HTSUS (U.S. customs tariff classification), and final ship-to party may not be accurately known 24 hours before the cargo is loaded. Until January 26, 2010 importers will be permitted to submit an initial response based on their knowledge or data available at the time of filing. They must then update the ISF with accurate information no later than 24 hours prior to arrival at the first U.S. port.

Flexible Enforcement –

CBP will refrain from assessing fines or penalties as long as the importer is “showing good faith” in filing accurate and on-time ISFs during this period. CBP has begun issuing “report cards” documenting current accuracy and timeliness, and expects continued importers compliance improvement.

The “flexible reporting” and “flexible enforcement” period ends January 28, 2010, when CBP will begin issuing fines. They will then also issue “Do Not Load” messages via AMS to the carriers, effectively “stranding” containers at origin.


ISF Penalties and Mitigation

CBP has now released their guidelines for determining and levying ISF penalties and what it considers potential mitigating circumstances regarding severity of the penalties.

The ISF ruling and guidelines on penalties and mitigation are written vaguely. They provide CBP almost unprecedented discretion and a wide range of actions in both assessing and resolving claims of infraction. In fact, CBP may simply allege failure to file, incomplete or incorrect data, and treat as breach of the importer’s bond; i.e. the importer failed to comply with U.S. import laws and regulations.

First offenses are subject to fines and penalties (liquidated damages) up to us$5,000, and may increase with subsequent violations. The most serious violation is obviously failure to file and blatant deception.

Major offenses under ISF include failure to file, filing late, filing inaccurate information, failing to file updated information, and failure to withdraw a filing the importer has learned is inaccurate.


Published mitigating factors for importers include:

√ Evidence of good faith progress providing ISF data during the “flexible period”
√ Relatively low number of violations compared to total ISF filings
√ ISF failure due to reasons beyond the control of the importer (i.e. carrier had to divert ship to another port)
√ Faulty ISF data was based on commercial or shipment information from another party but within normal international commercial acceptance.

Cancellation of ISF fines and penalties may be possible if the importer can demonstrate it was not able to verify the data before the filing and / or it was reasonable to believe the information was true, and corrective action has been taken. Up to 50% reduction of fines is possible if the ISF importer is C-TPAT certified.

Published aggravating factors are:

X ISF failures were intentional deception, part of smuggling, or supporting violations of other import laws or regulation
X Consistent faulty data or violation for the same data field
X Consistent multiple errors on the same ISF
X Obstruction or failure to cooperate with Customs investigations of any violation

Due to the fast approaching final deadline (January 26, 2010) to be in full ISF compliance, it is highly recommended that U.S. importers advise their suppliers of these new requirements. It would also be appropriate to revise and amend foreign purchasing agreements, Letters of Credit, etc., to clarify and define supplier or seller support for this data collection. If you are a Supplier or Agent for a U.S. Importer and have not been contacted by your clients please reach out to them now.

If you do not fully understand the Importer Security Filing requirements, need assistance in selecting a partner or implementation, or have any other questions, please contact us immediately!

Scrapping or mothballing ships may keep capacity articially low and rates high

The story by Simon Parry of the UK’s Daily Mail is an excellent overview of the true current crisis in the ocean freight sector ( http://www.dailymail.co.uk/home/moslive/article-1212013/revealed-the-ghost-fleet-recession.html ). This is a “must read” article if you want to know what is really happening in ocean freight and how it will continue to impact all of us over the next few years.


Like many supply chain professionals I like and read the Journal of Commerce daily, and am up-to-date on the changing numbers side of this issue. In short, the current (depending on your sources) idle ship statistics are approximately:

Container traffic = 12-15%
Roll On – Roll Off traffic = 20%
Tanker traffic = 2-15%

While oil production has dropped about 13%, only about 2% of tankers are listed as idle. This is partly due to incomplete reporting, but more likely due to oil producers leasing the idle ships to store crude and keep “market” supplies lower – http://www.msnbc.msn.com/id/29495753/


Simon’s article, however, not only presents the numbers, but has also covered personal viewpoints and details that are typically missing from mainstream industry-related publications. It is really quite good.

You may want to check with the Journal of Commerce occasionally to get updates. Here are links to a few of their recent articles (FYI - Box ship = container ship. TEU = 20 foot container. Divide by 2 to get 40 foot container equivalent).

This year container lines are set to scrap ten times more ships than average and the most ever recorded in one year – http://www.joc.com/node/412132.


Close to 15% of container ships may stand idle by end of 2009 – http://www.joc.com/node/412342.


Roll On – Roll Off = car, truck, equipment carriers – http://www.joc.com/node/412397.

By the way, Baltimore Ro-Ro shipments (the nation’s top overall Ro-Ro port and No. 2 in automobile exports) are down 14 % this year.


Scrapping or idling ships in this manner serve to drive capacity down and provide the basis for higher rates. We have spoken to rising ocean freights rates in a recent post (see below).