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  3. Proper Freight Charges Required at Entry Summary; Ocean Shipping Reform Act

Proper Freight Charges Required at Entry Summary; Ocean Shipping Reform Act

This message is to advise that where freight charges are required to be reported to CBP on entry summaries, accurate and timely information is required. The Ocean Shipping Reform Act does not change these requirements. Other methods for collecting the freight data, including the Reconciliation Prototype, have been suggested, but are not to be used for this purpose.

The Ocean Shipping Reform Act (OSRA) became effective on May 1, 1999. One provision of OSRA is the confidential treatment of freight rates that can now be freely negotiated between shippers and shipping lines.

There now exists the potential for conflict between confidentiality and the reporting requirements of CBP and Census. This is particularly true when charges are declared through a third party (such as a Customhouse broker) who may have interests in the matter, as a customer or competitor of the shipping line.

The current reporting requirements do not anticipate the changes brought about by OSRA, but the requirements do exist nonetheless.

The statistics collected by CBP and compiled and disseminated by Census have a variety of users. The Bureau of Economic Analysis (BEA) uses data from international transactions to prepare its widely published and closely scrutinized estimates of the nation's international trade accounts, which in turn feed directly into BEA's estimates of the U.S. Gross Domestic Product (GDP). The data are also used by a myriad of other public and private concerns.

Under 13 U.S.C. 301, the Department of Commerce is required to compile and publish data on import charges. Under section 303, the Department of Treasury is charged with collecting the information required by the Department of Commerce in preparing our nationals trade statistics. While there may be a potential conflict between this law and OSRA, CBP cannot ignore the responsibilities specifically provided in section 303.

Some in the trade community have suggested alternative methods for the relevant data to be given to CBP. Many of these suggested methods rely on manual processing, which is impractical due to the volume of activity involved. Manual processing is also incompatible with the automated environment in which CBP and Census operate, and would delay the collection of time-sensitive statistics.

The ACS Reconciliation Prototype has also been suggested as a possible solution to the problem. However, Reconciliation as provided for by the Customs Modernization Act is only allowed for information that is undeterminable at the time of entry summary, which is not the case with the freight rates we are discussing. Moreover, as the Reconciliation concept has begun to evolve away from per-entry processing and toward an account-based approach, the structure of the Prototype would not support the collection of freight rate data, which is required at the entry summary line level.

Within the constraints of current law and automated system limitations, CBP has no choice but to require accurate data such as freight charges at the time the entry summary is filed, and to assist the Bureau of Census in ensuring that the data provided are accurate.

We believe that the issues here may be larger in scope than this specific reporting requirement conflict. Deregulation has opened this particular issue, and while the industry in general will benefit from deregulation, it changes the working environment in which the industry functions. This is especially true of the specific roles and relationships of different parties in the industry. This issue, as others, may be an industry issue best addressed by an industry solution.

Last Modified: August 16, 2019