The Quest
January 2011 - Issue 70
Inside this issue:
ISF enforcement:
Where we are now

Disaster in Japan: Avalon assists in aid, BCP reminder

CBP updates: Bond insufficiency, new address for mailing checks

FMCSA elimination of Cargo Insurance, BMC-32 takes effect March 21
CSA motor carrier
ratings now in force

New ACORD form changes how logistics providers
verify insurance

Revised Incoterm rules
take effect

UAE joins ATA
Carnet system

Claims corner:
Worldwide Coverage




ISF enforcement: Where we are now
As one year of Importer Security Filing (ISF) enforcement has fully passed on Jan. 26, 2011, the question Avalon keeps hearing is, “Where are we now?”

In terms of data, CBP has received more than 7.7 million ISF transmissions since the rule went into effect. In addition, about 92% of shipments are considered "in compliance," compared to 80% last summer. CBP has also stated that only 2.5% of ISF transmissions are rejected for being incomplete or inaccurate.

Issuance of liquidated damages
Through our active dialogue with CBP and the NCBFAA ISF Committee, Avalon works to remain ahead of ISF issues and regularly communicate any updates with our valued customers. From what we’ve learned, CBP headquarters is currently reviewing liquidated damages cases referred from field offices.

The agency’s priority in issuing liquidated damages will apparently be on “egregious offenders,” (i.e., importers who are not filing ISF and those who have submitted flexible filings that were never updated). CBP will begin issuing holds for shipments without a bond and an ISF on file. Do-Not-Load messages will only be used for matters of national security.

The good news for brokers and importers is that according to CBP, for the time being, liquidated damages will not be issued solely because of late files. It is almost certain that this approach will change in the future. Avalon’s Web Merlin will continue to manage ISF-D bonds for late transmissions in accordance with our current process. Once we become aware that CBP is issuing liquidated damages for late ISFs, we will require collateral in accordance with our original underwriting guidelines. We continue to recommend that importers with more than five shipments per year be transferred to a continuous bond to avoid excessive aggregation.

Statute of limitations
We continue to work with the NCBFAA in requesting that CBP shorten the six-year statute of limitations currently in place for ISF. CBP is aware of our request and has stated that they plan to issue liquidated damages quickly when necessary. CBP also implied that the agency will only use the longer timeframe to demonstrate continued non-compliance with the ISF rule. But without further written confirmation, the six-year statute creates a high risk for importers. We remain an active member of the COAC bond subcommittee to support open discussion on the issue and other items affecting customs brokers as a whole.

ISF programming changes on Jan. 23, 2011
As originally announced in CBP’s ISF FAQ in July 2010 and Avalon’s August 2010 Quest, CBP updated its software to allow for the use of new ISF codes when ISF submissions are filed late and without a bond. Importers unable to secure a bond after the deadline may elect to use the ISF Submission Type 5 “Late ISF-10 – No Bond” or ISF Submission Type 6 “Late ISF-5 – No Bond.” CBP cautions that the use of these codes should be rare, possibly only for new and one-time importers not familiar with the ISF regulations. Use of these codes can cause the cargo to be subject to enhanced security measures and examinations, which can result in delays and additional expenses.

Progress reports
Another of CBP’s initiatives related to ISF is the discontinuation of e-mailed progress reports to importers or their customs brokers. Progress reports were originally issued to filers to help identify problems related to compliance. CBP’s goal is to integrate the progress reports into the Automated Commercial Environment (ACE). The reports will provide filers with the ability to create reports and customize data to support compliance with the ISF rule.

Web Merlin
Avalon's Web Merlin was the first technology in the industry to automate the issuance of ISF-D Bonds and continues to be the industry standard. Since being required on Jan. 26, 2010, more than 60,000 ISF-D bonds have been generated and transmitted to CBP in Web Merlin. We are also proud to announce that our ISF-D bond rejection rate consistently remains lower than 1%.

Web Merlin makes the issuance of ISF-D bonds simple and easy.

  • Brokers can enter bond data in Web Merlin several days before a vessel departs for the United States, allowing for sufficient time, should bond approval be necessary. Entering the bond information in Web Merlin does not automatically send the bond to CBP.

  • The broker will later send the ISF transmission through their own ABI system or other software.

  • The broker can then enter the ISF Transaction Number in Web Merlin and submit the bond directly to CBP. The bond must be submitted to CBP within 12 hours of the ISF transmission. Not doing so could expose the importer to penalties and the broker, if negligent, could be liable for associated costs, resulting in an E&O claim.

As always, Avalon works to keep you apprised of ISF updates. We thank you for your business and the time in reviewing our ISF materials, attending our webinars and learning more about our Web Merlin updates. To view past Quest issues and more information on ISF, please view our ISF archives at www.avalonrisk.com/isf.html

For more information, please contact your local Avalon office or Andriana Davis at (847) 700-8087 or at adavis@avalonrisk.com. A list of our offices may be found at www.avalonrisk.com.

Avalon Risk Management
150 Northwest Point Boulevard | 4th Floor | Elk Grove Village, IL 60007
Phone: (847) 700-8100 | Fax: (847) 700-8116



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