Your Shipment is Flagged for a Customs Exam…Don’t Panic
Margaret Lange | M.E. Dey & Co.
Every year, Customs and Border Protection (CBP) processes over 53 million entries of merchandise arriving through ocean, land, and airports of entry. In addition to ensuring that proper duties and fees are collected, CBP is responsible for knowing what is arriving in each container or box, where it came from, and whether it poses a risk to the security and health of the American people, economy or environment.
Whether you are a one-time, small, medium or large importer, your shipment has the potential to be flagged and held for a Customs exam. With the authority provided by U.S. regulation (19 USC 1467), CBP targets shipments for exams based on undisclosed algorithms, an importer’s history, commodity, value, country of origin, or intelligence from a variety of sources; all in an effort to identify and inspect high-risk shipments before they enter the U.S. Although CBP does not disclose the exact targeting methodology used for a flagged shipment, CBP has implemented initiatives to streamline and enhance targeting, increase its ability to effectively manage the examination of cargo, and to reduce the impact to the flow of trade.
It never feels good when you get that call from your Broker that your shipment has been flagged for an exam, but don’t panic. It is important to know that CBP’s efforts to protect the American economy and consumer means that your shipments can be flagged at any time. The key is to remain calm, work with your broker, and be prepared to respond to any requests from CBP. Once flagged, your cargo will be subject to one of several types of exams.
Manifest Hold / MET Hold
When goods are shipped to the U.S., a manifest is required to be submitted to CBP through the Automated Manifest System (AMS) prior to arrival. The manifest provides specific information about the arriving cargo for CBP to review and assess risk. The CBP Manifest Examination Team (MET) verifies the manifested information, and if needed, will put a hold on the shipment and will request supporting documentation. CBP will hold release of the cargo until the Importer has provided the requested information. In the instance where CBP has concerns with the information provided, they will flag the shipment for a VACIS/NII exam or will want to physically examine the shipment, and the goods will need to be moved to the nearest Container Examination Station (CES).
The Vehicle and Cargo Inspection System (VACIS) or Non-Intrusive Inspection (NII) exam is conducted at the terminal and uses gamma-ray technology. A VACIS scans the entire container, providing a visual of any anomalies inside the container. This type of exam does not break the container seal or open the container. CBP flags shipments for this type of exam prior to arrival, and once unloaded, will be moved to the VACIS location within the port. If anomalies are detected, CBP will request a tailgate or intensive exam.
CBP might select the container for a tailgate exam. The CBP Officers will cut the container seal, open the container, and conduct a visual inspection. If the contents appear to be normal, the container will be closed and released. If anything looks suspicious, the container will be moved to a CES for an Intensive Exam.
An Intensive Exam is the most intrusive exam and requires the cargo to be transferred to a Centralized Examination Station (CES) or Customs-bonded facility. The container will be fully unloaded, and the contents will be physically inspected by CBP. This process can delay a shipment anywhere from a week to 30 days. This exam can be triggered by the random/algorithm, risk factors, a Partnering Government Agency (PGA) officer, a CBP officer, a suspicious VACIS or NII Exam or after a tailgate exam.
A Contraband Enforcement Team (CET) Hold requires information related to consumer product safety standards, copyright or trademark, or ensuring correct HTSUS classification and valuation of commodities. This exam is intended to protect U.S. consumers from illegal narcotics, alcohol, and weapons. CET exams are physical inspections conducted at a CES.
The U.S. Department of Agriculture (USDA) flags cargo for exams, and the exams are conducted by USDA inspectors. This exam physically inspects the cargo for outside pests or anything that will disrupt or harm the U.S. environment. Cargo subject to the USDA exam includes food products or wood products, including shipping pallets and crating, that may contain harmful pests.
How long will this take, and what will it cost??
Each type of exam has its own timeline and associated fees. It is hard to define the exact cost or the amount of time an exam will take as factors such as the type of exam, port congestion, availability of equipment and inspectors and moving freight to the CES, all have an impact on the timing and cost.
The importer is ultimately responsible for providing any required information and bears all associated costs for moving cargo, storage, and the exam.
Being prepared to respond to CBP on a Manifest Hold request can result in the expedited release of your cargo. There is no cost for these holds, however, delays in providing requested information can result in storage costs.
VACIS/NII and Tailgate/backdoor exams are typically conducted shipside or in the terminal premises and usually take a few days once unloaded from the vessel. CBP fees for these exams are assessed to recover the costs of the NII technology and for CBP inspectors. The fees vary by port and must be paid prior to removing the cargo from the port.
Exams start to get expensive once they are subject to the Intensive or CET exam. The freight has to be moved to the CES, at the importer’s expense. The CES staff will unload and prepare the freight for the exam, reload the container after the exam is completed, and will charge for all handling and any storage that may occur.
How can Exams be Avoided?
Unfortunately, no Importer is fully exempt from cargo exams; however, there are ways to minimize the pain. Keep in mind that CBP does maintain your history, and how you respond to requests can have a lasting impact. Make sure you fully engage with your Broker, and that you respond to any requests from CBP timely; but do your due diligence.
- Make sure that you know ALL your business partners. That includes having established relationships with your suppliers, vendors, and manufacturers. Make sure you can easily obtain requested information about the product and all parties in the transaction. Additionally, use reputable freight forwarders, carriers, and customs brokers.
- Ensure that your shipping documents are complete and accurate. This includes clear product descriptions, accurate HTS#, product value, and country of origin. Work closely with your shippers, and review documentation prior to shipping to ensure accuracy.
- If you have two or more shipments a year, secure a Continuous Bond rather than a Single Entry Bond with each shipment.
- Make sure your Importer Security Filing (ISF) is filled timely-24 hours prior to loading overseas.
- Avoid Co-Loading your freight (LCL/LTL) whenever possible as your shipment can be held up while another importer’s freight is under exam.
- If you are sourcing from “high-risk” countries, make sure to regularly audit your supply chain to identify potential risks, and have a corrective action plan in place.
- Be aware of CBP’s Priority Trade Issues (PTIs) as they represent identified high-risk shipments and carry a high probability for cargo exams.
- Apply for Customs-Trade Partnership Against Terrorism (CTPAT).
- Have an ACE account and regularly audit your Customs Entries.
Most importantly, understand that cargo exams are necessary to the security and welfare of U.S. citizens, economy and environment. Be proactive, respond to CBP requests timely, and ALWAYS demonstrate partnership! Maintain a good relationship with your Customs Broker as they have the expertise to help you through the complexities of the exam process.