10+2 – Supply Chain Security on 10/2

It is October 2^nd (10/2) so I thought I would post some thoughts on the emerging 10+2 regulations for supply chain security.  10+2 is a new regulation developed by the US Customs and Border Patrol.  It is one of many Homeland Security strategies designed to secure US ports through better levels of supply chain security.  The 10 and the 2 refer to the number of data elements that the importers and transportation carriers must submit for each cargo container shipped into the US.  Importers must transmitted 10 data elements electronically at least 24 hours prior to the loading of cargo onto a US-bound vessel.  Two additional elements are required from the transportation carrier.  The carrier data must be electronically filed even earlier – at least 48 hours in advance.

What is the purpose of 10+2? 

CBP Commissioner W. Ralph Basham describes 10+2 as follows: "The
Security Filing will improve CBP’s ability to target high-risk cargo by
identifying actual cargo movements and improving the accuracy of cargo
descriptions.  It will also improve our ability to facilitate
lawful international trade by identifying low-risk shipments much
earlier in the supply chain."

There have been a number of supply chain
security initiatives introduced by the US Department of Homeland
Security in recent years.   The others include the 24-hour Manifest
Rule, Container Security Initiative, Customs-Trade Partnership Against
Terrorism (C-TPAT), Non-Intrusive Inspection Techniques, Automated
Targeting System, the Secure Freight Initiative, and the National
Targeting Center.  And this is just the beginning.  There are many
more transportation security laws in the pipeline.  There is a delicate
balance between the need to secure the supply chain and the risk of
adding unnecessary cost and complexity to transportation processes.
With rising energy prices adding costs to all manufacturing,
transportation and retailing business processes in 2008, an additional
level of caution and prudence is required by the legislature. 

The Thirteen Data Elements in 10+2 

There are 10 pieces of data that importers are required to submit:

• Manufacturer (or supplier) name and address
• Seller (or owner) name and address
• Buyer (or owner) name and address
• Ship-to name and address
• Container stuffing location
• Consolidator (stuffer) name and address
• Importer of record number/foreign trade zone applicant identification number
• Consignee number(s)
• Country of origin
• Commodity Harmonized Tariff Schedule number

And 2 data elements that the carriers are required to file:

• A vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the U.S.
• Container status messages, which report container movements and changes in status (e.g., empty or full)

There is actually a thirteenth data field that must be included with each filing – the Master Bill of Lading number. 

Costs and Challenges of 10+2 

While gathering of the 12 pieces of data
outlined above might sound like an easy task, it will pose significant
challenges for many importers and transportation carriers.  In many
cases the information is difficult to gather 24 or 48 hours in advance
of a steamship leaving its port of origin.  Carriers or importers who
are unable to electronically file 10+2 requirements may face departure
delays.  An early outcome of the legislation could be disruptions to
shipments around the world.  Air cargo providers may benefit as
importers will need to expedite shipments via air freight in order to
meet customer delivery dates.  Importers or carriers who do not file
documentation or submit incomplete forms will be fined.  Penalties will
range from $5000 per transaction for missing data to fines equal to the
value of the shipment for missed filings.

EDI empowers the Homeland Security Program 

You may be wondering what the technology behind
supply chain security initiatives such as 10+2 is.  Many probably
assume that the US Customs and Border Patrol have developed some new
elegant, web-services based logistics hub to exchange XML documents.
But this is not the case.  The majority of the 10+2 data is exchanged
using the 30-year old EDI technology.  The key EDI transaction sets utilized to exchange these types of transportation data include:

• Purchase Order (ANSI X.12 EDI 850)
• Advanced Ship Notice (ANSI X.12 EDI 856)
• Load Tendering (ANSI X.12 EDI 204)
• Transportation Status (ANSI X.12 EDI 214)
• Ocean Freight Status (ANSI X.12 EDI 315)
• Commercial Invoice (ANSI X.12 EDI 810)

Many of the larger importers and transportation
carriers have sophisticated Transportation Management System (TMS)
applications that are utilized to send and receive EDI documents
today.  TMS applications offer a variety of powerful features for
managing global transportation processes including supply chain
security regulations.  However, many companies are challenged to
optimal use of their TMS.  Many of the small and mid-sized custom
brokers, freight forwarders and foreign exporters involved in the
process are challenged to support electronic filing requirements.  As a
result, importers, who are dependent upon these small businesses for
the 10 data elements, struggle to achieve full compliance.  See my
earlier post on: Is Your TMS Implementation costing you an Arm and a Leg?

Many software vendors have developed pre-configured logistics networks with thousands of trading partners
already connected to reduce on-boarding time.  Regardless of the
approach importers choose to take, supply chain and transportation
managers will need to put a game plan together for 10+2 quickly.

There is a wealth of additional information on the 10+2 initiative which can be found on the US Customs and Border Patrol web site.

Steve Keifer

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