Brokers Describe Enforcement, Tariff Impacts on West Coast Ports

The conference had invited CBP port directors to provide updates, but they couldn’t attend because of the government shutdown. Instead, representatives of local customs broker associations spoke on behalf of the ports.

At some ports, federal agencies such as the Drug Enforcement Administration are working with port officials to bring awareness to some of the controlled substances that may be imported for illicit drug production, trade representatives said.

Federal agencies may also be working with the ports to monitor drayage operations with the intent to catch the smuggling of counterfeit goods. This is what happened in January at the Port of Los Angeles/Long Beach, when entities within logistics, warehousing and trucking were found smuggling millions of dollars worth of counterfeit and illegal goods from China, according to Patty Tschaepe, president of the Los Angeles Customs Brokers and Freight Forwarders Association.

“It was a very sophisticated scheme. They even made fake seals that looked real, and they shipped them from China. So it was very elaborate, where the people that were in cahoots here would pick up a cargo that was set up for a trade exam, divert it to a warehouse, take out the stuff that was contraband, fill it with other stuff, and then take it back to Customs” to do the exam, Tschaepe said. In response to the smuggling scheme, the port worked with LACBFFA to develop a streamlined process for cargo to move from the terminals and through centralized examination stations as the cargo gets thoroughly examined, she said.

Besides addressing counterfeit goods and the importation of chemical substances to make illicit drugs, stakeholders supporting the Port of Los Angeles have been grappling with the suspension of the de minimis exemption, Tschaepe continued, with more Type 01 and 11 entries being filed that claim that they are gifts. Brokers are also encountering shippers trying to keep the value under $2,500, even though the cargo is found to be valued at much more, as well as value to weight discrepancies. When CBP asks brokers for help by going to the CES and sorting through packages, it raises a red flag if the brokers seem reluctant to follow through with CBP’s requests, she said.

Trade stakeholders at the Port of Los Angeles are hoping to receive funding that can modernize cargo facilities, particularly as the region is preparing for the 2026 World Cup and the 2028 Olympics, according to Tschaepe.

At the Port of San Diego, the San Diego Customs Brokers Association has been involved with a tunnel and trade task force, where brokers work with CBP, the DEA and other agencies to visit local warehouses, brokerages and local businesses to keep a look out for tunnels crossing the U.S.-Mexico border, according to Carmine Duck, president of the association.

“If you've seen it in the news, we have tunnels to have air conditioning, lighting, and even rail systems,” Duck said. “So it's a big issue around our community.” CBP also has reached out to area customs brokers to inform them about the different chemicals that may be used in illicit drug production, she continued.

While the port appears to be processing fewer de minimis entries compared with a year ago, the new tariffs on wood and furniture “will be a huge impact for our border city, because we have a lot of manufacturers on the Mexico side, on the Baja California side,” Duck said.

Another issue affecting brokers is the new broker regulations for Mexican brokers, which could cause more license cancellations, thus making it harder for brokers to do business, Duck said. A shortage of Mexican truck drivers who are able to go to the U.S. is also affecting trade activity cross border, she continued. This shortage has been brought about by a U.S. government mandate requiring truck drivers to speak English, recent visa denials and a broader trend reflecting a disinterest in the profession, Duck said.

At the Port of Oakland, brokers are experiencing issues with drawback because the four derivatives shipments are split into two different lines, but not one of them is subject to drawback and is thus creating a discrepancy, according to Sung Wook Lee, president of the Northern California District Export Council.

The government shutdown hasn’t affected the FDA’s inspection facility in Alameda, but the port struggles with adequate staffing at CBP to man inspections and get examinations completed efficiently, Lee said.

At the Port of Seattle, another customs examination station could open by the end of this year, although some details are still pending, according to Kiera Conlan, president of the Customs Brokers and International Freight Forwarders Association of Washington State. Bonded warehouses in the area are also nearly full, she said.

Meanwhile, port operations along the Columbia River are also seeing a big increase in bonded warehouse and foreign-trade zone requests at Boise and Portland, according to Tia Sandberg, president of the Columbia River Brokers and Forwarders Association.