ITDS Draft Report on Pilots Finds GTINs & Product Codes in ACE Would Save Millions
The International Trade Data System has issued a draft report for trade comment by November 15, 2011, on the results of three pilot studies conducted to validate the business case for using e-commerce data, such as global product numbers/codes and electronic product catalogs, to improve product visibility at international borders. The report shows that the three product sets on which the pilots focused - toys, cut flowers, and meat and poultry1 -- all benefited from the use of such data and could save importers millions of dollars. The report also states that a new ACE PGA Message Set will be implemented in 2012 to pass e-commerce data to participating government agencies (PGAs).
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(ITDS created the Product Information Committee (PIC) in 2009 to explore ways to create additional product visibility to improve the efficiency and effectiveness of product admissions at international borders. In a December 2010 report, the PIC recommended supplementing government inspectors' use of Harmonized Tariff Schedule (HTS) codes and text descriptions when making admissions decisions with (1) Global Trade Item Numbers (GTINs) to identify products by brand and model; (2) Global Classification Codes2 to provide "structured" product category codes that computers can process; and (3) Global Product Catalogs already in use by industry. See ITT's Online Archives 10122822 for BP summary of the 2010 report.)
The following are highlights of the results of the three pilot studies:
Use of GTINs Can Reduce Volume of Toys Examined by CPSC by 75-80%
The use of GTINs in the pilot for toys revealed that 75% of toy entry lines are repeating products. For major importers using HTS codes only, all 5,000 line entries are initially high-risk products and subject to targeting. Using GTINs, only about 75% (3,700) line entries can be recognized as products with a previous admissions history. Therefore, the volume of consumer toy products subject to examination by the Consumer Product Safety Commission (CPSC) would be reduced by 75% or more.
When global product classification codes are used in combination with GTINs, CPSC can expect the volume of products subject to examination to be reduced by another 5%, for a total reduction of 80%. This leaves about 20-25% of entries (1,300) as unknown, potential high-risk products, on which the government can increasing targeting.
With ACE, Fewer CPSC Exams Could Save Toy Importers $16.8M over 5 Years
According to the report, the resulting decrease in the number of toy product examinations could create an estimated $16.8 million in savings for toy importers and $775,000 in cost savings for CPSC over five years. The estimated return on investment is over $8 for every dollar invested. These benefits can be accomplished using the new U.S. Customs and Border Protection Automated Broker Interface (ABI) PGA Message Set3 to be implemented in 2012 as part of the Automated Commercial Environment (ACE).
Use of Global Codes for Cut Flowers Could Reduce Inspection Time by 50%
The PIC states that the positive impact of global product classification codes was further exemplified by the cut flower pilot study. In view of the pilot results, CBP and the Animal Plant Health Inspection Service (APHIS) expect the use of UNSPSC global flower codes to reduce the average time required to inspect incoming floral shipments by 50%, paring a typical two-hour inspection back to about one hour.
When these codes are included in PGA Message Set, sampling plans and import volume reports can be computer-generated and sent to APHIS using machine-to-machine processes at lower cost and greater accuracy. This allows for critical admissions processes to be automated. The use of these codes would also speed perishable cut flowers and greenery on their way to florists and consumer outlets.
Could Save CBP and Cut Flowers Trade $2.7M over 5 Years
Savings to CBP and the trade are estimated to be $2.7 million over 5 years, with implementation costs less than $350,000. The estimated return on investment is about $7 for every dollar invested.
Use of Industry Catalogs Can Determine Classification Info for Meat & Poultry Products
Results from the pilot for meat and poultry products displayed the cost feasibility of using cloud-based, industry-standard product catalogs as PGA sources of complex product classification information. The Food Safety Inspection Service (FSIS) confirmed that the complex characteristics of minimally processed and fully processed meat and poultry products can be accurately determined from product classification information downloaded from electronic product catalogs currently used to support business-to-business e-commerce.
Meat Exporters Would Not Have to Separately Enter GTIN and Classification Info
Using this cloud service, FSIS product information automatically stays updated in the background -- keeping product descriptions and export certificates accurate, which help keep foreign markets open for U.S. meat and poultry exports. FSIS can consume this cloud-based product information so that meat and poultry exporters will not need to separately enter GTIN and product classification information about their exported products into government information systems. Additionally, it would reduce the time FSIS spends correcting certificates and resolving admission issues at foreign ports.
Could Save Exporters $1.6M over 5 Years Thru Reduced Errors, Etc.
According to the report, exporters could save $1.6 million over five years by not having to resolve mis-documented shipments or to separately enter product information into the FSIS information system. Reducing product characterization errors on three export certificates a year could save one major exporter about $15,000. The return on investment is estimated to be $5.6 for every dollar invested.
New ABI PGA Message Set to Be Implemented in 2012
Due to the positive return on investment for all three business cases, the PIC believes that all PGAs should carefully examine how e-commerce product identification and classification codes could be used to improve product management at U.S. borders. The PIC notes that the provision of e-commerce data by trade is optional, but states that interested PGAs and trade sectors should proceed with implementation efforts to use the new ABI PGA Message Set, which will be implemented in 20124, and share results with the ITDS and other PGAs.
Final Report Will be Presented to BIEC, CBP for ACE Cargo Release, and WCO
After presenting this draft report to the Trade Support Network and to its ITDS Committee, the PIC will amend the draft report after a 45-day comment period, and publish its final report by posting it on the ITDS website. The PIC will then present its final report to the Border Interagency Executive Council (BIEC), CBP for possible inclusion in ACE cargo release requirements, and to the Information Management Subcommittee of the World Customs Organization Permanent Technical Committee, as requested by the WCO.
1These pilot product sets were selected based on interest shown by different PGAs and trade members with an interest in representing products that were related to government interests in public health, public safety, and pest management.
2Such as the United Nations Standard Product and Service Codes (UNSPSC).
3The PIC refers to the PGA Message Set as the PG Record Set. The PGA Message Set is the single, harmonized set of information that will be collected electronically from international traders by CBP on behalf of the PGAs, thereby allowing CBP and the PGAs to make decisions about what cargo can come into the U.S. without the myriad of paper forms currently required.
4CBP anticipates completing the technology build that will enable the collection of the PGA Message Set in late 2011. Additional work is ongoing to streamline data submission and allow for a paperless system when ACE Cargo Release capabilities begin deploying in 2012.
(See ITT's Online Archives or 11032307 for BP summary of ITDS' piloted use of product codes for toys, cut flowers, and meat products.)
Contact -- Douglas Bailey douglas.bailey@ams.usda.gov
Draft ITDS report on the business case is available here.
ITDS presentation on the business case is available here.