While the kinks are being worked out of the EU's new cargo security system, here are some precautions U.S. exporters can take to avoid holdups and delays.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
In January, when the European Union (EU) began enforcing cargo security rules requiring advance notification of shipment details for imports, European importers were up in arms. An article in a European trade publication accused customs authorities of "creating supply chain chaos." The Shippers' Voice, an independent information pOréal, reported that some ocean carriers were asking for freight data five days prior to loading on board a ship, even though the EU requires it only 24 hours in advance. The group quoted an importer who said that one carrier had demanded the information, including the container number and seal, before that carrier had even delivered an empty container to the supplier for loading. "I guess we're supposed to make up the container numbers!" the unidentified importer said.
Things have settled down since then, and at this point, shippers, carriers, freight forwarders, and customs brokers appear to have worked out most of the kinks in the new system. Still, there are some details U.S. exporters that ship goods to Europe should be aware of as well as some things they can do to ensure their shipments aren't held up on the other side of the Atlantic.
Like 10+2, only more so
The advance filing requirement that ruffled so many feathers is part of the EU's Import Control System (ICS). ICS allows customs authorities to electronically review and conduct risk analyses of Entry Summary Declarations (ENS) before goods arrive in EU member countries by air, sea, or land. The ENS does not reflect the goods' monetary value and does not replace import declarations that are used for assessing duties.
Europe's system has two "striking differences" from the similar Importer Security Filing program (known informally as "10+2") in the United States, says Caroline Gubbi, business development and compliance executive for the international logistics company BDP International. "First and most important, the filing under the European security rules must be done by the carrier, which has sole responsibility for it," says the Antwerp, Belgium-based compliance expert. (Another party may do the filing, but only with the carrier's knowledge and consent.) In the United States, the importer and the carrier file. Another difference is that the ENS requires 22 data elements—considerably more than the 12 required for the ISF. (See sidebar for a list of the required ENS data and filing deadlines by mode.)
Many of the 22 elements are familiar to U.S. shippers. "These pieces of data are, for the most part, the same data elements required for the mandatory Electronic Export Information (EEI) filed with the Census Bureau," says John Little, BDP International's director of compliance. The time frames for the EEI filing are the same as those required under the EU regulation, he adds.
But some information is new or somewhat different than before. For instance, the validated Economic Operators Registration and Identification (EORI), a unique number assigned to importers and exporters in the EU that must be shown on the entry summary, is "information that had not been provided in the past by any party," Little says.
Another change: In the past, exporters and forwarders did not have to provide a Harmonized Tariff System (HTS) code for a commodity unless the shipment was valued at $2,500 or more, says Paul King, U.S.-based vice president, product management–airfreight for Schenker Inc., a global freight forwarder and third-party logistics (3PL) company. Now, the HTS requirement is mandatory for all shipments, he notes.
Exporters should also be aware that such vague terms as "freight consolidation," "general cargo," or "parts" are no longer acceptable, Gubbi adds. She encourages shippers to consider adding more detail to product descriptions on their commercial invoices if the description is not specific. However, she concedes, "this might pose challenges to shippers with limited systems capability or restrictions on the length of product descriptions in their legacy systems."
Who's responsible?
Implementing ICS, which applies to all modes of transportation, has largely been smooth sailing. Schenker's King says his company had to make some IT investments to enable it to feed the 22 elements to the carrier and to ensure timely submission, and the airlines themselves had to make similar investments in order to feed the data to European customs, he says. For the most part, though, "this is data that we were already collecting and entering [into operational systems] on the day a shipment was received."
Yet there have been some bumps in the road. For one thing, Gubbi says, the ENS legislation does not specify which party must pay the filing fee to the carrier. Nor is it clear under which international sales term the ENS filing fee falls, Gubbi says. "So, for example, [the fee] cannot be referred to as an FOB (Free on Board) charge," she says.
To avoid confusion, she suggests that the shipper and its European customer agree in advance who will pay the ENS filing fee to the carrier.
A potential source of disagreement between shipper and carrier is the EORI—or to be precise, whether the number is required for an ENS filing. The wording of the EU regulations indicates that the ENS can still be accepted if the EORI numbers are not available. However, some ocean carriers have said they will not accept the ENS data if the EORIs are not included, Little notes.
Another area where carriers and shippers may not see eye to eye is the cutoff time for freight data submissions. Although the data are required 24 hours before loading, some carriers have been requiring the exporter to provide the information 48 hours to four days in advance to give them enough time to process and submit it to European customs authorities, says Sheila Hewitt, vice president of the 3PL Transplace's international arm. "In some cases, shippers have difficulty communicating that information because they have not yet loaded the materials into a container, making a tight window for them to get it to the ocean carrier in time," she observes.
What if the U.S. exporter cannot provide all the necessary information? "We have a list of required information. If any were missing, including one of the mandatory elements, our operating system alerts us, and we have to collect and enter the necessary data before we can proceed," King says. "It's highly unlikely a shipment would get through with missing data; if this happened and the carriers were unable to file with EU customs, then it could result in delays or penalties."
The direct responsibility for filing lies with the carrier, so—depending on the issue, King emphasizes—the carrier, shipper, or forwarder may be liable for any penalties. In some circumstances, carriers could elect to pass those penalties on to customers.
One of the best ways to ensure compliance with the EU's Import Control System, says Hewitt, is to put systems in place to monitor the filing of the data. She suggests that exporters to Europe apply the same kinds of controls their import colleagues use for ISF compliance: early deadlines for having complete filing data in hand, a system for notifying the responsible parties when a deadline draws near or is missed, and a policy of holding back shipments with incomplete data elements lest the customer incur fines.
And, although it may sound like a cliché, communication really is key to assuring compliance. Exporters should work with their ocean and air carriers, non-vessel operating common carriers, and international freight forwarders to make sure all parties are clear on all deadlines for submitting data. Otherwise, Hewitt says, they run the risk of having their cargo held back or getting hit with penalties and additional charges.
And you thought 10+2 was a lot ...
The European Union's Import Control System requires carriers to file an Entry Summary Declaration (ENS) containing 22 data elements prior to a shipment's arrival at the point of entry. They include:
Seller/consignor (Economic Operators Registration and Identification [EORI] number)
Buyer/consignee (EORI number)
House bill of lading number
Master bill of lading number
Carrier
Person entering the filing
Notification party
Country of origin
At least the first four digits of the EU Commodity Harmonized Tariff Schedule (HTS) number
Loading location
First EU port of entry
Description of goods
Packaging type code
Number of packages
Shipment marks and numbers
Container number
Container seal number
Gross weight in kilos
U.N. Dangerous Goods code
Transportation method of payment code
Arrival date at first EU port
Declaration date
The deadlines for filing these data vary by mode of transport.
Maritime:
Containerized ocean transport: 24 hours before loading at the port of departure
Non-containerized ocean transport: four hours before arrival at the first EU port of entry
Short-sea transport: two hours before arrival at the first port of entry
Air:
Long haul (more than four hours): four hours before arrival at first airport of entry
Short haul (less than four hours): at takeoff
Road:
One hour before arrival at the customs office of entry
Rail:
Two hours before arrival at the customs office of entry
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.