Importers like you are frustrated with the lengthy delays and subsequent costs of Canada Border Services Agency (CBSA) container exams moving through Canadian Ports, especially in the Port of Vancouver. Let's take a closer look at the cause, reasons for extended delays, and the associated fees with the current CBSA Vancouver container exam program.
Why The Trade Community Is Frustrated With Container Exams In Vancouver
According to the Canadian International Freight Forwarders Association (CIFFA) and the container examination cost survey they conducted, delays of up to four weeks were experienced in the Port of Vancouver compared to three to five days in the Port of Montreal. Their blog post entitled "Container Examinations Out of Control" reported that their members have experienced the following with the current container exam process at the Port of Vancouver:
- Six to seven week delays in receiving their goods
- Thousands of dollars in unexpected costs for container exams, storage, detention, per diem and demurrage charges
- Lost sales as a result of the delays
- Lost goods in the case of perishables
CIFFA estimates that invoices for examination, demurrage, and storage of containers can range up to $4,000 per container. Those fees add up to millions of dollars, which are inevitably passed on to the consumer.
CIFFA argues that there is no incentive to improve inspection efficiency because container terminal operators charge daily per container storage fees of $150 or more, and shipping lines bill shippers and freight forwarders for demurrage.
Importers bear all the direct costs incurred for the exams. Importers are also responsible for all indirect costs resulting from exams such as damages or losses during the exam, lost sales, production and/or contract penalties due to delivery delays. Another cause of frustration is the unnecessary confusion an importer is faced with when the demurrage, detention, and per diem terms are often and incorrectly used interchangeably on invoices.
Tip: Always clarify in advance what shipping delay charges you face.
Why Is The Container Exam Process Longer At The Port Of Vancouver?
The two main factors in the delays are the location of the exam facility and the volume of containers at the Port of Vancouver.
It is important to understand CBSA and the transportation industry agreed the best option for examining marine cargo containers for contraband was to use a specialized central examination facility. With this centralized facility, CBSA officers can conduct efficient examinations using high tech equipment in a secure environment. The current inspection facility for the Ports of Vancouver is located in Burnaby, a fair distance away from the ports.
More than 80% of global merchandise is transported across oceans as marine cargo, and over 95% of marine cargo imported into Canada comes through five major marine ports:
- Prince Rupert
- Saint John
The three largest Canadian container ports are the Port of Vancouver, Prince Rupert and Montreal. Together, they handled five million, twenty-foot equivalent units (TEU) in 2016. Around 50% of this freight comes through the Vancouver and Prince Rupert ports. The Port of Vancouver consists of 4 container terminals with an annual capacity of just under three million TEUs per year. The volume clearly shows the one CEF/MCEF in Burnaby is busy.
Who Is Responsible For The Container Exam Delays In Vancouver?
The delays experienced in Vancouver are further compounded by an already lengthy process. To gain an understanding of where issues lie we need to take a quick look at the stakeholders and their general responsibilities and possible contribution to the issue.
The Current Container Examination Process
Regardless of the Port, the container exam steps are the same as detailed below.
- The marine carrier reports to CBSA with information on the vessel, the crew and the routing via Electronic Data Interchange (EDI) at least 96 hours prior to arrival.
- The marine carrier sends cargo data via EDI to CBSA 24 hours prior to loading the cargo onto the vessel at the foreign port.
- Using the marine carrier's information, CBSA performs a risk assessment at the CBSA National Targeting Centre in Ottawa.
- At the first Port of Arrival (POA) the vessel arrives and the containers are discharged, put through a radiation portal, and then stacked at the Terminal storage.
- Containers that are targeted or selected by CBSA for examination are staged for dockside exam, Mobile Large Scale Imaging or for furtherance to Container Examination Facilities (CEF) or Marine Container Examination Facilities (MCEF) for an intrusive examination.
- The containers, which require de-stuffing, are transported to the CEF/MCEF for fumigant testing, possible ventilation, assignment to an examination bay and offloaded and reloaded following an examination.
- Containers are authorized to move by CBSA from the CEF/MCEF back to the Terminal and released for transport to the Importer/Consignee.
CBSA Roles And Responsibilities
CBSA targets 1.3% of all containers for examination as it views containerized cargo as a huge risk. Physical exams are done with the assistance of the Canada Port Authorities. They are legislated to provide facilities for CBSA inspection. These facilities are known as Container Examination Facilities (CEF) and Marine Container Examination Facilities (MCEF).
CBSA has a number of methods to examine Containers:
Container Examination Facilities (CEF) and Marine Container Examination Facilities (MCEF): Containers are moved from the marine port to the CEF or MCEF where they are fully de-stuffed, the contents intrusively examined, followed by an examination of the container itself. CBSA has a service standard for examination, which states that CBSA will strive to conduct a marine container examination within 24 hours of the arrival of the container at the CEF or MCEF. This service standard does not include weekends or holidays. Additional time is required for fumigant testing and ventilation procedures in addition to container reloading times and containers that are resultant for contraband.
Note on fumigation: The CBSA requires testing of all marine containers for fumigants before examination. Fumigants include methyl bromide, phosphine and benzene. Fumigant testing identifies chemical levels prior to the execution of an in-depth examination. Chemical levels found to be above acceptable levels require that the container be ventilated in order to reduce the elevated chemical levels to a safe level. The maximum time that may be required to ventilate is three days. Once the contents and container can be safely examined, the container is de-stuffed, examined, and then reloaded and returned to the port.
Large Scale Imaging (LSI) Examinations: LSI examinations are non-intrusive, dockside x-ray examinations of containers, enabling the CBSA officer to see inside the container. Anomalies deep within a container, such as contraband, can be detected, depending on the commodities density. A LSI examination can also assist in determining whether an intrusive examination is needed, and is especially useful in selective examinations.
Pier Examinations: This dockside examination is partially intrusive and involves the CBSA officer opening the container doors to perform visual inspections and a limited physical examination of the cargo closest to the door. The inspection may result in referral for an intrusive examination conducted at the container examination facility.
The CBSA is responsible only for the costs associated with their services, such as the officers examining the container and the equipment and tools required for marine container examinations. They do not bill the importer for these costs.
Goods found violating Canadian legislation may be subject to enforcement action such as a monetary penalty or seizure.
CEF/MCEF Warehouse Operators Roles And Responsibilities
CBSA informs the Warehouse Operator of the containers requiring exam and works with CBSA on priorities. The Warehouse Operator coordinates with the Highway Carriers to move the containers from the Terminal to the CEF/MCEF. They then coordinate and are responsible for the offloading and reloading of containers for presentation of cargo for exam. The warehouse operator is responsible for all truck movements at the CEF/MCEF such as moves to and from the ventilation area and examination bays.
The CEF Warehouse Operator generates the fees for presenting the goods for exam, to cover the cost of transportation to and from the examination facility and the unloading and reloading of the container. They then bill these costs to the shipping lines that in turn pass the cost on to the importer.
Marine Carriers Roles And Responsibilities
The marine carrier is responsible to present the cargo for examination when requested by CBSA.
If CBSA requests a full container exam the marine carrier is responsible to:
- Ensure the container is picked up from the terminal and transported to the CEF/MCEF
- Monitor the pick-up of the container and the subsequent return of the container to the terminal after examination
- Field any calls from the importer regarding any delays on their shipment
They must obtain any terminal charges for a dockside/tailgate and LSI exam completed at the Terminal. If the CBSA container hold is removed after an exam the carrier then invoices the importer for the costs incurred at the Terminal. Once the importer pays the costs to the marine carrier the container will be released to the importer.
Marine Terminal Operators Roles And Responsibilities
After the Terminal Operator receives EDI data regarding the vessel and the cargo from the marine carrier they will:
- 'Arrive' the cargo electronically to CBSA when the vessel arrives
- Discharges the cargo from the vessel to the shipyard
- Arranges for on-dock and off-dock examinations as requested by the CBSA
- Permits containers to depart the terminal when released by the marine carrier and CBSA
Importer Roles And Responsibilities
The Importer orders goods for import and then organizes logistics or depends on third party links in the supply chain to facilitate the movement and subsequent entry of the import into Canada.
Customs Brokers And Freight Forwarders Roles And Responsibilities
Customs Brokers and/or Freight Forwarders directly represent Importers in the coordination or facilitation of the exam processes with the Terminal Operators, the Marine Carriers, Drayage Carriers and CBSA.
The Customs Broker and/or Freight Forwarders may be involved in the logistics and may pay charges on behalf of the importer as their client. The Customs Broker and/or Freight Forwarder is generally aware that a hold has been placed on an Importer's shipment for examination by CBSA. Although not a responsibility, the Customs Broker and/or Freight Forwarder generally fields calls from the Importer regarding the status of the delays in the release of the container.
Highway Carriers Roles And Responsibilities
The Terminal Operator informs the Highway Carrier which containers need to be examined by CBSA. The Highway Carrier then makes a reservation for pick-up of the container at the Terminal with the Terminal Operator.
Reservations sometimes have to be made about three days in advance. The Highway Carrier then has a one-hour window around their reservation time to pick up the container at the Terminal and transport it to the CEF/MCEF for CBSA examination.
Once the examination is complete, the Highway Carrier returns the container to the Terminal. The container is then released by CBSA and can now be delivered to the Importer/Consignee by the Highway Carrier or the Drayage Company once a reservation has been made to pick the container up from the Terminal.
As each stakeholder carries out their responsibility, it results in more opportunities for delays. These can quickly add up to become lengthy delays.
Many of the stakeholders state there needs to be improved transparency and efficiency in the inspection process by ALL parties. CIFFA urges CBSA to address both the pricing model and the regulatory framework of the shipping lines, terminal operators, and warehouse operators surrounding container examinations across the country.
CBSA's Action To Improve Ocean Trade
The CBSA has made a commitment in their 2017/18 departmental plan "to work with industry partners and the Port Authority in Vancouver to advance the Marine Container Examination Facility (MCEF) project over the course of the year. The opening of a new MCEF will increase the Agency's examination capacity and enhance the facilitation of legitimate trade."
The CBSA held a one-day conference with all stakeholders in Vancouver in September of 2017. The conference identified a number of opportunities for improvement. Some areas of improvement included the communication between all stakeholders regarding delays, service hours, and service standards including:
- Shipping lines, Terminal Operators and Warehouse Operators must post standard fees associated with the movement and facilitation of freight through the marine process.
- Terminal Operators need to improve the reservation system for pickup and return of CBSA examined or targeted containers. CBSA needs to provide proof of examination, LSI exam and ventilation timelines to stakeholders.
- There needs to be a transparent dispute resolution between all stakeholders. Use of technology for real-time status and progress of the exam providing importers and their service providers' insight to better plan and mitigate impacts of the exam to their business and supply chains.
- Importers need the flexibility and the option to deliver direct from the exam site.
- CBSA needs to identify opportunities to improve efficiencies and consistencies with their targeting and examination of container freight. A clear focus on the client is necessary which is transparent with defined and measurable service standards.
Steps To Improve The CBSA Marine Container Exam Program
CBSA argues that numerous factors complicate the issue, and terminal/warehouse operators are only one part. CBSA states it is working with the Port of Vancouver, terminal operators, and other industry stakeholders to improve the system's efficiency.
This initiative includes the construction of a new federal government container examination facility (MCEF) on Tsawwassen First Nation land which is strategically adjacent to the Port of Vancouver's Deltaport and the new Delta iPort container logistics center.
A New MCEF In Tsawwassen
A new MCEF in Tsawwassen (TCEF) will augment the severely constrained facility in Burnaby and will initiate the new CBSA marine container examination program focusing on technology (scans) and less on manual inspections. The TCEF will consist of a new warehouse complex, which will house CBSA container examination facilities, a fumigant ventilation area, a LSI fixed building site and operator transload area in the warehouse. The facility is currently under construction and should be operational as of May 2018.
The Operator of the TCEF will charge fees such as drayage, scans, ventilation and de-stuffing. The Vancouver Fraser Port Authority (VFPA) will set the fees the TCEF Operator can charge but will consult with the Industry to ensure fees stay competitive.
CBSA and VFPA are considering options to release goods at the earliest opportunity for consignees so that delays are minimized. This would suggest that the container arrives at Deltaport and is selected by CBSA to be examined and/or LSI scanned. The container is moved from the adjacent Deltaport to the TCEF and scanned through the LSI facility. Then the container will be released or transported to the adjacent warehouse for examination, ventilation testing and then subsequently released directly from TCEF by CBSA to be delivered to the importer.
Outcome For Importers And Consumers
This post will help you gain a clearer understanding of the issues associated with the current CBSA Vancouver container examination operations. It is a complex problem, which will require all stakeholders to collaborate and take responsibility in improving their role in the process in order to provide consumers with goods that are not subject to a flawed and costly system.