The 24-Hour Manifest: Security Assurance or Facade?

by Dr. Jim Giermanski, Chairman, Powers Global Holdings, Inc. What Is the Purpose of a Cargo Manifest? Two documents often blurred together are the bill of lading (B/L) and the cargo manifest. The simple difference is that one, the bill of lading, is a contract for carriage between the shipper and the carrier. The manifest, however, is not a contract for carriage but merely a description of the cargo shipped along with additional related information about the cargo, shipper, and consignee required by the carrier or the Customs authorities of the inbound or outbound nations. As an example, the vessel carrier, "K" Line, requires the following information about the shipment necessary to conform with Customs and Border Protection requirements contained in 19CFR4.7(a): • Lowest external package unit (Pallets and skids package types not acceptable); • Precise cargo description or HTS number and weight; • Complete Shipper(s) details - name and address; • Complete Consignee(s) details - name and address; • Container Number(s) • International Maritime Dangerous Goods UN (United Nations) number or the USDOT - NA (North America) number, as applicable for hazardous materials; and • Seal Number(s). The Need by Customs Authorities to Have Them As part of the Container Security Initiative (CSI), the U.S. Customs and Border Protection (CBP) requires vessel carriers to file cargo manifests 24 hours before the cargo is laden into the vessel for movement to the United States. Now, security amendments to the European Union (EU) Customs Code, carriers carrying cargo from the Customs territory or to the Customs Territory of the EU must electronically file "pre-arrival" and "pre-departure" declarations known as "Entry Summary Declaration" (ENS). For containerized shipping, these declarations must be submitted 24 hours before "...commencement of loading in each foreign load port." There are other time limits for filing for other types of cargo. However, both the U.S. and the EU are consistent in requiring the vessel carrier, in the case of containerized cargo, to file the 24-hour manifest. "It is the operator of the active means of transport on or in which the goods are brought into the customs territory of the Community who is responsible for the lodging of an ENS. The operator (or “the carrier”) is the person who brings, or who assumes responsibility for the carriage of the goods into the customs territory of the Community." Even if another entity files it, which can be done in the EU with the carrier's knowledge and consent, that does not relieve the carrier of the responsibility. Ultimately, the carrier that must ensure that an ENS is made, and within the time limits. The assumption is that the filing of the manifest is somehow a method of improving security concerns about the cargo, especially containerized cargo. Believing this is true, one could say, but not accurately, that the EU will be twice as safe as the U.S. since the EU requires the manifest declaration on both incoming and outgoing shipments whereas the U.S. requires its 24-hour manifest filing on only inbound shipments to the United States. But what if filing the declarations is no more than a government mandated practice which lacks any real security assurances? I believe that this is the case. It's filing amounts to a facade designed to make the public feel more secure, a worthy purpose in itself, but not the actual attainment of greater security. The Realistic Role of the Manifest as a Security Instrument For years, containers carried the description of their cargo as FAK (Freight of All Kinds), STC (Said to Contain), SLC (Shippers Load and Count) and more. Why? These terms were used because they were honest, and the vessel carrier moving the cargo from one country to another really didn't know what was in the container since the carrier was not present at "stuffing" or loading, nor present before the container was sealed. The vessel carrier receives the container from a freight forwarder or a motor carrier or rail carrier who doesn't know what is in the container either. The initial motor carrier, for instance, simply picked up the load that was already sealed and was given a bill of lading with all the information that the shipper and carrier needed to be on the bill since it is the legal contract for carriage which includes the liability coverage and limits for the cargo alleged to be in the container. The motor carrier simply accepted the bill of lading or release document printed out by the shipper and began its journey to the seaport where it turned over that container and its paperwork to the vessel carrier who accepted the word of the shipper and intermediary carrier of what's in the container based on the paperwork provided by the motor carrier or perhaps paperwork provided by the shipper if the vessel carrier had valid knowledge of the identify of or access to the shipper. Even today, the vessel carrier has no idea of container contents. The vessel carrier simply files the 24-hr. manifest containing mandated data on the word of the shipper, and/or intermediaries involved in the transaction. The realistic role of the manifest is to complement the B/L by describing the goods in the container should there be an accident or loss which required the carrier to pay a certain amount based on the agreed upon liability of the carrier in moving the cargo. Of course, if there were an accident, one would find out what was really carried in the container and its quantity. And although a contract, the B/L accuracy is still based on the honesty or integrity of the shipper. Carriers have little choice but to accept the word of the shipper on contents when picking up a sealed container. What Security is Provided by the Carrier in Filing the Declaration? The short answer is "none." The vessel carrier is merely telling Customs what the shipper told the carrier. No opening of the container, nor inspection of contents is made by the carrier. This process is actually no more reliable than the former use of the terms STC, or FAK. One may take comfort in taking the word of shippers like IBM, GE, General Motors, or Toyota. But what about a company unknown to the carrier? Take our example for instance. We were a small, unknown firm from Belmont, North Carolina that shipped a sealed container to Germany saying that it contained an installed prototype tracking device for testing in Germany. No S.E.D req'd FTSR 30.55 H. The container was not opened, inspected, nor was information gathered on this new company in Belmont that had no history of exporting at the time the container was shipped. The carrier took the word of our company and freight forwarder about contents. If we were involved in domestic terrorism, and the container contained explosives set to detonate at the U.S. seaport or foreign seaport, would filing a manifest prevent the shipment and the resulting explosion? There is an undeniable problem with the use of the manifest declaration as a security instrument: the vessel carrier does not know what's in the container. It only knows what it is alleged to contain. Can This Weakness be Fixed? The good news is that technology exists today that can fix the problem of not really knowing the contents of the container. Having worked in the law enforcement and counterintelligence field for years, I'll be the first to admit that there is no perfect system of security. All security entails human elements and interactions. The human element, however, can be a strong positive element in the security process as evidenced by the legal concept of a "chain of custody" which inextricably links and depends on individuals to achieve the chain-of-custody's purpose and function. So too, does a human's role relate to knowing the contents of a container. In fact, there are container security devices today that link directly the identity of an accountable person who verifies and certifies a container's content and quantity to the satellite control system that monitors its access and movement through the supply chain, effectively creating a chain of custody for the product's description, quantity, and physical movement from origin to destination. Should the container arrive with different cargo, or short cargo, and it was not opened or accessed during its movement, and its transport was monitored creating a legal, electronic record of events and movement from the time the accountable person verified the cargo, armed the container and sealed it, and the accountable, electronically identified person at destination opened it, the obvious conclusion would point to a problem at either origin or destination and either or both accountable persons will be in trouble with their firms or with law enforcement, or both. These existing devices can provide that level of control necessary to satisfy the needs of exporters, importers, and carriers with respect to supply chain visibility, effectiveness, and efficiency while concomitantly the needs of governments with respect to security. In addition to the benefit of actually knowing the contents of the container, the use of these devices will also provide a special benefit to the vessel carriers in a way that today many of them may not appreciate: their future adherence to the new Rotterdam Rules (Rules) that place the responsibility and obligations of cargo control from a port-to-port liability regime to an origin-to-destination liability regime. That single change among many others will make all vessel carriers review their liability exposure and begin to focus on security issues connected to it since the new Rules clearly place legal liability, risk, and cargo responsibility on the carrier from the shipper's place of business, not at the port where the vessel carrier receives the cargo. Ultimately, the combination of new technology and new rules for vessel carriers will elevate the 24-hr. manifest to be a security assurance as it was meant to be. Until that happens we are at risk. _____ 1) Presentation of Vessel Cargo Declaration to Customs Before Cargo is Laden Aboard Vessel at Foreign Port for Transport to the United States http://www.kline.com/KAMCompliance/USCBP_Advanced_Cargo_Manifest_BL_Preparation.asp 2) The Entry Summary Declaration ( ENS) http://ec.europa.eu/ecip/documents/procedures/entry_summary_declaration_en.pdf 3) The Entry Summary Declaration (ENS) http://ec.europa.eu/ecip/documents/procedures/entry_summary_declaration_en.pdf 4) A comprehensive treatment of the potential impact of the Rotterdam Rules on supply chain security will appear later this year in Cargo Security International.