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
The Boston-based enterprise software vendor Board has acquired the California company Prevedere, a provider of predictive planning technology, saying the move will integrate internal performance metrics with external economic intelligence.
According to Board, the combined technologies will integrate millions of external data points—ranging from macroeconomic indicators to AI-driven predictive models—to help companies build predictive models for critical planning needs, cutting costs by reducing inventory excess and optimizing logistics in response to global trade dynamics.
That is particularly valuable in today’s rapidly changing markets, where companies face evolving customer preferences and economic shifts, the company said. “Our customers spend significant time analyzing internal data but often lack visibility into how external factors might impact their planning,” Jeff Casale, CEO of Board, said in a release. “By integrating Prevedere, we eliminate those blind spots, equipping executives with a complete view of their operating environment. This empowers them to respond dynamically to market changes and make informed decisions that drive competitive advantage.”
Material handling automation provider Vecna Robotics today named Karl Iagnemma as its new CEO and announced $14.5 million in additional funding from existing investors, the Waltham, Massachusetts firm said.
The fresh funding is earmarked to accelerate technology and product enhancements to address the automation needs of operators in automotive, general manufacturing, and high-volume warehousing.
Iagnemma comes to the company after roles as an MIT researcher and inventor, and with leadership titles including co-founder and CEO of autonomous vehicle technology company nuTonomy. The tier 1 supplier Aptiv acquired Aptiv in 2017 for $450 million, and named Iagnemma as founding CEO of Motional, its $4 billion robotaxi joint venture with automaker Hyundai Motor Group.
“Automation in logistics today is similar to the current state of robotaxis, in that there is a massive market opportunity but little market penetration,” Iagnemma said in a release. “I join Vecna Robotics at an inflection point in the material handling market, where operators are poised to adopt automation at scale. Vecna is uniquely positioned to shape the market with state-of-the-art technology and products that are easy to purchase, deploy, and operate reliably across many different workflows.”
Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.
Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
By category, 3PLs’ share of 34.1% ranked above other occupier types such as: general retail and wholesale (26.6), food and beverage (9.0), automobiles, tires, and parts (7.9), manufacturing (6.2), building materials and construction (5.6), e-commerce only (5.6), medical (2.7), and undisclosed (2.3).
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023. CBRE pointed to three main reasons for that resurgence:
Import Flexibility. Labor disruptions, extreme weather patterns, and geopolitical uncertainty have led many companies to diversify their import locations. Using 3PLs allows for more inventory flexibility, a key component to retailer success in times of uncertainty.
Capital Allocation/Preservation. Warehousing and distribution of goods is expensive, draining capital resources for transportation costs, rent, or labor. But outsourcing to 3PLs provides companies with more flexibility to increase or decrease their inventories without any risk of signing their own lease commitments. And using a 3PL also allows companies to switch supply chain costs from capital to operational expenses.
Focus on Core Competency. Outsourcing their logistics operations to 3PLs allows companies to focus on core business competencies that drive revenue, such as product development, sales, and customer service.
Looking into the future, these same trends will continue to drive 3PL warehouse demand, CBRE said. Economic, geopolitical and supply chain uncertainty will remain prevalent in the coming quarters but will not diminish the need to effectively manage inventory levels.
In a push to automate manufacturing processes, businesses around the world have turned to robots—the latest figures from the Germany-based International Federation of Robotics (IFR) indicate that there are now 4,281,585 robot units operating in factories worldwide, a 10% jump over the previous year. And the pace of robotic adoption isn’t slowing: Annual installations in 2023 exceeded half a million units for the third consecutive year, the IFR said in its “World Robotics 2024 Report.”
As for where those robotic adoptions took place, the IFR says 70% of all newly deployed robots in 2023 were installed in Asia (with China alone accounting for over half of all global installations), 17% in Europe, and 10% in the Americas. Here’s a look at the numbers for several countries profiled in the report (along with the percentage change from 2022).
Sean Webb’s background is in finance, not package engineering, but he sees that as a plus—particularly when it comes to explaining the financial benefits of automated packaging to clients. Webb is currently vice president of national accounts at Sparck Technologies, a company that manufactures automated solutions that produce right-sized packaging, where he is responsible for the sales and operational teams. Prior to joining Sparck, he worked in the financial sector for PEAK6, E*Trade, and ATD, including experience as an equity trader.
Webb holds a bachelor’s degree from Michigan State and an MBA in finance from Western Michigan University.
Q: How would you describe the current state of the packaging industry?
A: The packaging and e-commerce industries are rapidly evolving, driven by shifting consumer preferences, technological advancements, and a heightened focus on sustainability. The packaging sector is increasingly prioritizing eco-friendly materials to reduce waste, while integrating smart technologies and customizable solutions to enhance brand engagement.
The e-commerce industry continues to expand, fueled by the convenience of online shopping and accelerated by the pandemic. Advances in artificial intelligence and augmented reality are enhancing the online shopping experience, while consumer expectations for fast delivery and seamless transactions are reshaping logistics and operations.
In addition, with the growth in environmental and sustainability regulatory initiatives—like Extended Producer Responsibility (EPR) laws and a New Jersey bill that would require retailers to use right-sized shipping boxes—right-sized packaging is playing a crucial role in reducing packaging waste and box volume.
Q: You came from the financial and equity markets. How has that been an advantage in your work as an executive at Sparck?
A: My background has allowed me to effectively communicate the incredible ROI [return on investment] and value that right-size automated packaging provides in a way that financial teams understand. Investment in this technology provides significant labor, transportation, and material savings that typically deliver a positive ROI in six to 18 months.
Q: What are the advantages to using automated right-sized packaging equipment?
A: By automating the packaging process to create right-sized boxes, facilities can boost productivity by streamlining operations and reducing manual handling. This leads to greater operational efficiency as automated systems handle tasks with precision and speed, minimizing downtime.
The use of right-sized packaging also results in substantial labor savings, as less labor is required for packaging tasks. In addition, these systems support scalability, allowing facilities to easily adapt to increased order volumes and evolving needs without compromising performance.
Q: How can automation help ease the labor problems associated with time-consuming pack-out operations?
A: Not only has the cost of labor increased dramatically, but finding a consistent labor force to keep up with the constant fluctuations around peak seasons is very challenging. Typically, one manual laborer can pack at a rate of 20 to 35 packages per hour. Our CVP automated packaging solution can pack up to 1,100 orders per hour utilizing a fully integrated system. This system not only creates a right-sized box, but also accurately weighs it, captures its dimensions, and adds the necessary carrier information.
Q: Beyond material savings, are there other advantages for transportation and warehouse functions in using right-sized packaging?
A: Yes. By creating smaller boxes, right-sizing enables more parcels to fit on a truck, leading to significant shipping and transportation savings. This also results in reduced CO2 emissions, as fewer truckloads are required. In addition, parcels with right-sized packaging are less prone to damage, and automation helps minimize errors.
In a warehouse setting, smaller packages are easier to convey and sort. Using a fully integrated system that combines multiple functions into a smaller footprint can also lead to operational space savings.
Q: Can you share any details on the typical ROI and the savings associated with packaging automation?
A: Three-dimensional right-sized packaging automation boosts productivity significantly, leading to increased overall revenue. Labor savings average 88%, and transportation savings accrue with each right-sized box. In addition, material savings from less wasteful use of corrugated packaging enhance the return on investment for companies. Together, these typically deliver returns in under 18 months, with some projects achieving ROI in as little as six months. These savings can total millions of dollars for businesses.
Q: How can facility managers convince corporate executives that automated packaging technology is a good investment for their operation?
A: We like to take a data-driven approach and utilize the actual data from the customer to understand the right fit. Using those results, we utilize our ROI tool to accurately project the savings, ROI, IRR (internal rate of return), and NPV (net present value) that facility managers can then use to [elicit] the support needed to make a good investment for their operation.
Q: Could you talk a little about the enhancements you’ve recently made to your automated solutions?
A: Sparck has introduced a number of enhancements to its packaging solutions, including fluting corrugate that supports packages of various weights and sizes, allowing the production of ultra-slim boxes with a minimum height of 28mm (1.1 inches). This innovation revolutionizes e-commerce packaging by enabling smaller parcels to fit through most European mailboxes, optimizing space in transit and increasing throughput rates for automated orders.
In addition, Sparck’s new real-time data monitoring tools provide detailed machine performance insights through various software solutions, allowing businesses to manage and optimize their packaging operations. These developments offer significant delivery performance improvements and cost savings globally.