Full Importer Security Filing Compliance Deadline Fast Approaching!

In only three months the Importer Security Filing, also known as ISF or 10+2, will go into full effect. Many importers are still unaware of the consequences of non-compliance, or have simply been postponing implementation. Now, however, it is really time for action.

Basis of ISF

The Importer Security Filing is based on the USA’s SAFE Port Act of 2006. U.S. Customs and Border Protection (CBP) published its ruling on the Importer Security Filing on November 25, 2008. Similar to the 24-Hour Advance Vessel Manifest (AMS) rule, C-TPAT, Container Security Initiative, and other security measures, ISF is designed to improve national and international security.

Since January 26, 2009, all U.S. importers (definition also amended by CBP for this ruling) have been required to electronically submit 10 data elements, plus bill of lading numbers, 24 hours prior to the loading of containers and break bulk cargo onto ocean vessels at the foreign port. The ocean carrier must also file 2 data elements - the vessel stow plan and the container status messages. This is the “+2” of 10+2. The key or connector to the ISF, the AMS, and the customs entry is the house bill. The 24-hour advance “timing” is based on the AMS filing and container status message data.

This ISF information must be filed for all ocean shipments entering, or even just transiting the USA, including shipments going into Free Trade Zones (FTZ). For In-Transit or FTZ shipments only 5 of the 10 data elements must be filed. Please contact me if you are interested in a comparison chart of the individual breakdown of data elements for these shipments.

Filing the ISF

U.S. importers may choose to file this information themselves, or contract with an agent to do this for them. However, only those entities certified for transmitting electronically to U.S. Customs via AMS (normally forwarders and NVOCCs) or ABI (customs brokers) interfaces may submit the actual ISF filing. Obviously most ISF filings will be submitted via a “Filing Agent”, much the same as most customs entries are filed by a customs broker. Either way, legal culpability for filing in an accurate and timely manner remains entirely with the importer.

The best ISF filing programs support web-based, user-level access, allowing both electronic download or manual input of data by the shipper (or its supplier / vendor), and allowing the importer or customs broker to verify / edit data prior to filing. This is a very important aspect as U.S. Customs will later compare the ISF filing with the actual customs entry to verify accuracy of the importer’s ISF data.

Acquiring the ISF Data

Much of the required ISF information has historically not been available until later in the time-line of events, as the export and commercial documents have typically been issued well after the shipment was loaded and placed in transit. U.S. importers must work with and educate their foreign-based suppliers regarding the new information requirements, and develop a method to submit or provide this information to their Filing Agent in a timely fashion. This “need” is critical because fines of $5,000 per incorrect or late filing can be issued.

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.

I will address this “flexible” period as well as ISF fines & penalties, and their potential mitigating factors in my next post.

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).

Ocean Freight Rates Are On The Rise! Have You Renegotiated Your Rates Lately?

Ocean freight rates are on the rise. This is particularly true of ocean container shipments. In the last three months average ocean freight rates (container transport particularly) have climbed up to 55%. Have you renegotiated your rates lately? If not, now is the time!

Effectively negotiating ocean freight is not so simple and depends on knowing a fair amount of detail. Will you have many “one-time” shipments, or more a repetitive business with each shipper? How much product are you shipping at one time, or if repetitive, each shipment? If repetitive, how often? The answers to these questions also determine if you want to use a freight forwarder or negotiate directly with the ocean carriers.

Door to door transit time is also a huge consideration. Will you ship to a major or “gateway” port and then truck to multiple distribution centers? Or will it all go to one DC? If you are planning on moving the containers intact to an inland DC, some difficulty may arise depending on the ocean carrier, and rail charges can be quite high.

There are quite a few charges that may be a part of the total ocean / delivery transport costs on a typical import shipment. Some may be negotiable with the carrier / forwarder (given sufficient volume and frequency) and if you understand how ocean freight rates are calculated.

Some of the most common ocean freight cost components are:

BAF - Bunker Adjustment Factor Surcharge
CAF - Currency Adjustment Factor
PSS - Peak Season Surcharge

… and 10 to 15 more depending on your actual contract and shipments.

Depending on your terms of sale (Incoterms) you may pay origin charges including:

ORC - Origin Receiving Charge
ODF - Origin Documentation Fees
THC - Terminal Handling Charges

If your shipment is moving inland from the port you may pay:

DDC - Destination Delivery Charges
IPI - Inland Point Intermodal or MLB - MiniLandBridge
IFC - Inland Fuel Surcharge

In addition, your container freight rate may depend on the actual commodity being shipped.

Of course for your full “landed cost” there are the myriad of other costs not directly associated with the ocean freight or container rate, some of which include:

Importer security Filing (ISF or 10+2)
Customs Brokerage
Duty & Taxes
Stripping and / or Transloading of Containers
Interim warehousing

and, and, and …


If you need more detail or clarification, we will be happy to work with you to setup a bid or RFP (Request For Proposal), or to audit or review your current rates and processes for possible improvement.

Whatever you do, plan for success! Poor planning can result in much headache and unnecessary expense. Great success will follow your good planning.


Contact us today at ray@paaa.com for more information.