WHAT THE ISF?! – Universal Cargo

No, it’s not an expletive, but you’d think shippers were cussing when they talk about ISF. Actually, in some cases they probably are cursing because of how much money these three little letters have cost them.

Many shippers are needlessly losing money in $5,000 and $10,000 increments. Why? Failure to follow a rule U.S. Customs and Border Protection put into effect all the way back on January 26^th, 2009.

The rule is called Importer Security Filing and Additional Carrier Requirements. Shippers would more commonly hear this rule referred to as ISF or 10+2. Not complying with the rule has not just cost thousands of dollars in penalties, as mentioned above, but also increased inspections and cargo delays.

A long, graduated enforcement policy, including things like delayed enforcement, reviews of liquidated damages claims, and even a procedure of giving 3 warnings to violators protected shippers from huge losses while the international shipping industry got used to the new requirements of importing to the U.S.

Full enforcement finally went into effect May 14^th, 2015. Shippers now must get ISF correct or pay a heavy price that will undoubtedly evoke heavy uses of expletives.

Failure to file an ISF, late ISF, inaccurate ISF, incomplete ISF, and failure to withdraw an ISF all result in a $5,000 fine. These fines can accumulate; luckily however, the maximum liquidated damages per ISF filing is $10,000. Still, that is a very steep fine on a shipment.[1]

ISF, as stated above, stands for Importer Security Filing. When we talk about ISF, we’re talking about ISF-10. It is often referred to as 10+2, but the plus two portion are requirements for the carriers instead of the shippers. Shippers have 10 pieces of information that they must provide for U.S. bound cargo.

There is also an ISF-5 for transit cargo; however, enforcement has not yet begun on this second type of ISF.

Here are the 10 data elements required of a shipper for ISF:

1. Importer of Record or FTZ Number
2. Consignee Number(s)
3. Seller (Owner) name/address
4. Buyer (Owner) name/address
5. Ship to Party name/address
6. Manufacturer (Supplier) name/address
7. Country of Origin
8. Commodity HTS-6 digit level
9. Container Stuffing Location
10. Consolidator (Stuffer) name/address

It is very important that a shipper links his or her ISF to his or her shipment’s bill of lading (B/L). Many consider this to be an 11^th data element to the ISF.

The B/L is required as part of the ISF transmission. If your ISF is not matched to your B/L, when your cargo arrives at port it will look like your ISF was not filed at all. Such cargo shipments will be marked with a failure to file ISF status and their shippers treated as though they were in complete non-compliance to ISF.

Shipments where the ISF was filled out but not matched to B/L are subject to a $5,000 liquidated damages fee. We’ll talk about liquidated damages more in the enforcement section below.

ISF should be filed 24 hours prior to lading and must be linked together as a line-item at the ISF shipment level. ISFs for “exempt” break bulk shipments are required no later than 24 hours prior to arrival.

Putting it as simple as possible, to ensure ISF timeliness, shippers should get their ISF on file 24 hours prior to the vessel departure message. Shippers need to make sure all their ISF data matches up before arrival.[2]

We actually suggest having ISF completed 72 hours in advance instead of the required 24 hours. The problem many shippers run into is missing information from suppliers or overseas agents. You want extra time to communicate with those you’re doing business with overseas in the event any information is missing to avoid a late ISF fee.

At Universal Cargo, we always make sure ISF is completed before the deadline when handling shipments.

The ISF violations listed above from failure to file to failure to withdraw are enforced at a port level. Shippers who violate ISF policy face two kinds of penalties: Liquidated Damages and Cargo Holds.

With the full enforcement that went into effect on May 14^th, shippers can be fined $5,000 to $10,000 in liquidated damages on ISF filing violation(s) per shipment. No longer are these liquidated damages fines required to go to CBP-HQ for approval nor are ports required to give shippers warnings as they used to be.

Liquidated damages will be focused on “significantly late” or missing ISF filing and repeat violators.

“Significantly late” could mean different things for different shippers depending on what port they import through. Here’s how the CBP sheds light on this focus in their ISF Enforcement FAQ:

– “Significantly late” will be defined by the individual ports, and is intended to only apply to those shipments where the ISF filing (or lack thereof) negatively impacted CBP’s ability to effectively assess risk and hold cargo.

– ISF filings after arrival are always late and exposed to both liquidated damages claims and ISF holds.[3]

One upside, and enforcement policy that has not changed from the graduated enforcement, is that liquidated damages claims against shippers must be issued within 6 months of the violation.

Of course, it is best that shippers make sure they file ISF completely, accurately, and timely to make sure they avoid expensive liquidated damages fines and costly cargo holds.

As a friend to your business, Universal Cargo wants to help you avoid liquidated damages fines and cargo holds.

In our next blog, we share ISF tips, like the 72 hour prior filing suggested above, to help you get through filing smoothly so you won’t be treating the ISF acronym as an expletive.

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SOURCES:

[1] http://www.shapiro.com/7-importer-security-filing-isf-best-practices-you-shouldnt-ignore/

[2] https://dhs.adobeconnect.com/_a956619115/p29y223nm1i/?launcher=false&fcsContent=true&pbMode=normal

[3] https://www.cbp.gov/sites/default/files/documents/Addendum%20to%20FAQ_Updated%20ISF%20Enforcement%20Strategy.pdf