Countdown to ACE: Supply Chain Benefits of ACE

In the first of the Kewill Countdown to ACE blog series, we looked at what ACE will mean for customs brokers and the supply chain as a whole. Having established that the move to ACE is fundamental and far-reaching and will require wholesale changes to the processes used by many Customs brokers today, we now focus on the benefits of ACE to the supply chain industry.

 

Any tightening in regulatory procedures is rarely welcomed with a fanfare by those responsible for implementing them, and ACE is no different. However in this case, CBP has softened the blow by structuring ACE in such a way that Customs brokers responsible for transporting large volumes of goods on their customers’ behalf (by road, ocean, air, rail, or multimodal) can realize notable and valuable benefits in three key areas by complying; faster processing, improved productivity and, last but no means least – financial.

 

In an industry where getting goods to where they need to be to schedule is absolutely essential, with delays usually equaling failure to meet customer SLAs and ultimately lost production or distribution time and lost revenue,  any move to speed up the release of shipments through Customs is a major incentive. Alongside the introduction of mandatory e-Manifests submitted in advance to enable the pre-processing of cargo, ACE is promising faster processing and early indications are that it delivering on its promise. 

 

Recent statistics issued by CBP report that electronic truck manifests are averaging 33% faster processing than the paper equivalent (correct at March 21, 2014) based on an average of 200,000 trucks per week. The Simplified Entry pilot scheme already in place for air cargo was recently extended to ocean and rail cargo, with supporting documentation for all modes now permitted to be submitted electronically via EDI or email. Specific data on processing times has not yet been published, however at March 25, approximately 288,000 entries had been filed for 1,438 importers under the scheme, suggesting its popularity is growing.

 

Another pleasant side effect of ACE is improved productivity through the wholesale replacement of manual processes with electronic ones. Exceptions identified by the broker following the submission of an entry filing, e.g. a commodity not meeting the Census Bureau’s criteria for weight/value/quantity  (ie value too high for the expected item – It may be a prototype), can now be handled simply by returning a code to CBP identifying the reason it does not meet criteria, where previously a hard copy letter had to be submitted explaining. Similarly corrections can now be made electronically via ACE Post Summary Corrections.  

 

Documents can also now be sent to CBP electronically through their Document Imaging System (DIS) instead of being hand carried and CBP have also streamlined requests to ensure that when a document is required,  they only ask for the one they need rather than requesting the entire entry packet. 

 

Last but not least, ACE is delivering clear financial benefits through the switch to an account-based model. By simplifying the payment and collection of duties and fees with users now required to make payments monthly rather on an upfront basis, Customs brokers are seeing welcome improvements to their cash flows. And the productivity benefits outlined above also bring associated financial benefits in through lower processing costs.

 

Now of course alongside the ‘carrot’ in the form of these benefits, CBP has also ensured there is a corresponding ‘stick’ to ensure compliance in the form of penalties. Look out for the next in the Kewill ACE blog series for a run-down on the potential effects of non-compliance, and contact us for a ‘healthcheck’ on how prepared your business and customs compliance software is for ACE compliance.

 

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