Want to make sure your fashion goods don’t get detained by U.S. Customs and Border Protection? You need visibility into what is sure to be a highly complex supply chain.
Not knowing exactly what’s in your textiles or apparel — from where the raw materials were sourced to what type of labor was or wasn’t used along the supply chain — is a costly gamble amid CBP crackdowns on forced labor noncompliance. Additionally, willful ignorance won’t get seized shipments out of CBP detention, nor will it prevent future withhold release orders.
The cotton-rich fashion industry is particularly susceptible to shipment scrutiny and seizure, as global supply chains are notoriously opaque. In fact, the category of apparel, footwear and textiles is second only to electronics when it comes to CBP examinations. This turns up the heat on importers, and underscores why companies must be extremely proactive with traceability technology to mitigate any detentions. In fact, the American Apparel and Footwear Association stated that about one-third of its members have experienced merchandise detainment at one point.
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The two-year-old Uyghur Forced Labor Prevention Act pertains to a specific region in China, but there’s more for brands and retailers to worry about. Section 307 of the Tariff Act of 1930 has been targeting shipments using forced labor for almost 100 years, with a broader global focus, and more regulations are coming down the pipeline. The EU’s Corporate Sustainability Due Diligence Directive will come into operation in upcoming years, holding both large EU companies (and non-EU companies that operate in the EU) accountable for environmental and social infractions along their supply chain.
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Detention of shipment has many costs, some measured in dollars, others in less tangible damages. CBP turnaround on detained shipments usually ranges between one week to four months after submitting an admissibility document package, say insiders, and legal fees can reach up to $60,000 for a single shipment. Costs will vary depending on how many different styles are in the shipment, how many different cotton sources there are for any given fabric in a garment, and how prepared and organized the entities are in the supply chain. Time is money, and document organization and thoroughness will speed up reviews.
When looking at direct detention fees, “Costs start at the moment that the shipment has to be inspected,” said Ana Hinojosa, an adviser to Oritain, a global leader in origin verification, and former executive director at CBP with 35 years at the agency. “It’s going to be several thousands of dollars to get that container to a place where it can be opened up, looked at and then, depending on how long that takes, it could be under the control of the warehouse or the container freight station.”
Beyond immediate costs, there are risks for brands of missing a retail delivery and damaging that customer relationship, as well as missing a selling season completely. “If it’s going to take you 30, 60 days [to get goods released], in fashion that is a lifetime,” said Hinojosa, noting that seasons or targeted marketing opportunities can be missed completely, especially if importers are filing longer extensions to procure required documents — bill of materials, transportation documents, payment records, ginning and spinning records, knitting and weaving fabric records, cut-and-sew records, etc.
Obviously, the best strategy against detention is deterrence. Being proactive is key, especially since brands don’t always have direct connections with mills, or even know which mill is making the fabric. Companies must make sure they can track and trace the origin of their products to every single tier along the supply chain — not easy when there’s so much transshipment — and be ready at a moment’s notice to produce the information.
“If you are not set up for this, if you have not conducted what we call mock detentions, or documentation audits, and if your suppliers have not been aware that all this needs to be provided, it is very hard to get all those documents,” said Richard Mojica, member, practice lead, customs and import trade for legal firm Miller & Chevalier (and former attorney with U.S. Customs and Border Protection’s Office of Regulations and Rulings). “It is often the case — especially when someone is detained for the first time — that the importer is able to provide maybe first-tier, second-tier, even third-tier documentation, but the paper trail after that is unavailable. At that point, it will be impossible to get goods released.”
To learn more about the true cost of detentions and how to mitigate them, download the whitepaper.
To register for the webinar “The True Cost of Detention” on Thursday, click here.