Cargo Reporting - need for reform

What is a cargo report?

Most importers use the services of a licensed customs broker to complete the import declarations and will be familiar with this form of reporting to complete payment of duty, GST and Import Processing Charges.

Importers may not be aware that separate statutory reporting is also required for each import consignment. Shipping lines, airlines and freight forwarders must provide a "cargo report" and in the case of consolidated cargo or where wholesale arrangements exist, a series of "cascading" cargo reports are also required.

This process is a largely a hangover from decades of customs reporting requirements. Up until the early 1980s, shipping lines would lodge with customs manifests itemising each Bill of Lading and airlines would lodge paper air waybills. During the 1990s these processes were replaced by electronic reporting systems known as Air Cargo Automation and Sea Cargo Automation.

These systems were replaced on 12 October 2005 with the introduction of the Integrated Cargo System (ICS) which remains in use today.

Why is the cargo report important?

The Australian Border Force (ABF) uses the cargo report to:

1. provide a list of all cargo on board a vessel or aircraft, providing a frame work for reconciliation to import declarations to create a "single status" required to generate a release of cargo.

    

2. provide base information to allow the ABF to commence their profiling and risk assessment of import cargo.

    

Section 64AB of the Customs Act 1901 prescribes timeframes for cargo reports to be lodged prior to the aircraft or vessel arrival at the first Australian airport or port. Failure to meet these timeframes can result in shipping lines, airlines or freight forwarders being subject to significant financial penalties via an Infringement Notices.

It comes as no surprise that the ABF has outlined timeliness and accuracy of cargo reporting in recent Goods Compliance Updates as focus areas as this aligns with efforts to target weaknesses in the existing border control framework.

Challenges faced by freight forwarders

Over recent years, industry across the board remains 90 - 95% compliant in terms of timely cargo reporting.

There are various reasons why freight forwarders fall short of achieving 100% compliance. Delays are commonly caused by human error, systems failures and / or lack of timely receipt of data from overseas agents.

Freight & Trade Alliance (FTA) has been working closely with the ABF and we are pleased to advise freight forwarders will soon have online access to reporting tools to be able to self-assess compliance performance to identify and initiate remedial action. We hope to be in a position very soon to report more detail about this functionality.

Transhipment cargo

Whilst this is positive news, fundamental changes are still required to ICS functionality.

Currently any change to "consignment key" data (vessel, voyage, container no, master air waybill, house air waybill and house bill of lading) requires a cargo report to be cancelled and re-reported.

We remain of the view that the ICS should allow these data fields to be simply amended. We believe that a major underlying reason for the ABF resisting our proposal is that it would be too difficult to enhance the ICS - therefore we must live with "workarounds".

We have provided extensive details to the ABF that freight forwarders commonly withhold their ICS cargo report transmission until they have confirmation of import vessel and voyage data. This in turn delays the timing of the cargo report as increasingly import cargo is being transhipped via intermediary ports.

It is common for freight forwarders to have had an ocean bill of lading available weeks prior to the estimated time of destination. The cargo report will be held back by the freight forwarder as the cargo may be transhipped and import vessel and exact voyage number details are unknown. Further complicating matters is when the first port of arrival for the import vessel is Fremantle before making its way to the Australian east coast. Statutory provisions mandate that the cargo report details be provided at least 48 hours prior to arrival of the first port (not the port of discharge).

Instead of providing a cargo report well in advance of arrival, albeit with the knowledge of having to amend import vessel and voyage data once confirmed, freight forwarder find themselves in a position of failing to comply with legislative requirements by waiting until import vessel details were confirmed.

A need for further reform

So what is the way forward?

In partnership with the Australian International Movers Association (AIMA), FTA has been advocating the merits of introducing a US style "pre-load" model proposing that all cargo reporting must be completed before cargo is loaded for a vessel or aircraft destined for Australia.

We acknowledge that this would be a major reform and in fact was rejected back in 2007 after investigation by a working group involving both industry and government representatives.

Since this time many other customs' administrations have implemented a pre-load model meaning that in the contemporary operating environment, implementing "do not load" requirements for incomplete cargo reporting at overseas ports would align with other global practices.

Whilst we are seeing some systems functionality improvements, the only way that the ABF can rest assured that it will receive 100% timely cargo reporting by freight forwarders is to follow a global trend and implement a "pre-load" model.