Study Guide

Learning objectives

✓	Describe how sea cargo is reported, discharged, and risk-assessed in the seaport environment.
✓	Distinguish between full container loads (FCL) and less-than-container loads (LCL), and explain how each affects customs examination and release.
✓	Explain the role of the bill of lading and the inwards cargo report in the customs clearance of sea cargo.

The sea cargo clearance process follows the same general pattern as air cargo, manifest reporting, risk assessment, import declaration, and release, but the scale and timing differ significantly.

Customs controls the seaport environment by designating the ports that can be used to discharge imported cargo. Vessels arriving from overseas can only arrive at these designated ports and discharge their cargo in certain licensed parts of the port. With most major ports, there are several wharf operators and/or container terminal operators, each with a specific licensed area.

What a container terminal contains

Component	What it does
Container yard	Stacking area where discharged containers are held until they leave the terminal.
Handling equipment	Straddle carriers, rubber-tired gantries, and forklifts that transport and stack containers around the yard.
Shore-based cranes	Lift containers on and off ships at the wharf.

Containers arrive at and leave the terminal by road or rail.

Shipping companies are required to provide a manifest of the cargo on each ship entering a port. The cargo report is required not only by Customs but also by the port authorities. Port authorities need to know the quantity of cargo being offloaded to determine their charges, and they also need to know the commodities being discharged, particularly cargo that requires special treatment such as hazardous cargo.

There are often several charterers of space, or “slots”, on each vessel. These charterers arrange the shipping of containers for importers. For example, one vessel may have three charterers, with several other freight forwarders organizing containers within their chartered space on the vessel. All are required to report the contents of their containers.

Full container load (FCL)	Less-than-container load (LCL)
Most sea cargo containers are shipped as FCL	The remaining containers are usually LCL
Single importer per container	Multiple importers per container, each with a consignment too small to fill a container
Once cleared from the wharf, the container can be taken straight to the importer’s premises	Containers require deconsolidation before delivery to the importers
No deconsolidation step	Deconsolidation usually takes place on the wharf or at a Customs licensed depot

Depending on the number of containers on a vessel, discharging all containers consigned to a port can take more than 24 hours. Containers are not necessarily available immediately after discharge because of other priorities in the container terminal. If the port has limited infrastructure, priority is given to getting export cargo onto the vessel. Delivery of imported containers may have to wait until the vessel departs, which may be 24 hours after import cargo is discharged.

The information that makes up the manifest comes from the individual bills of lading for each consignment. A bill of lading can cover several containers or a consignment that is part of an LCL.

What a bill of lading does

01 Receipt Confirms that the cargo described on it has been received on board.

02 Evidence of contract Documents the contract of carriage between shipper and shipowner.

03 Evidence of title Establishes ownership of the goods described on it.

Customs administrations will usually risk-assess cargo for prohibited import purposes using information from the manifest. Shipping companies therefore need to provide a specified set of data to Customs. This is usually the information contained on the bill of lading.

The risk assessment is done to allow examination of cargo as soon as possible, and before it leaves the wharf. Customs needs to intercept any contraband (such as drugs or firearms) as soon as possible. These goods will not be declared on the manifest or on the import declaration. Customs will often remove these containers from the wharf, once they have been discharged from the ship, to a separate examination facility to conduct the examination. The examination facility may include screening with a container X-ray unit before conducting a full examination of the container.

Unpacking and examining the goods in a 40-foot container can take up to 24 hours. When Customs is satisfied that the container does not contain any contraband, the container is returned to the wharf. If contraband is found by Customs and/or other authorities, an investigation and further action will be undertaken.

Where the targeted consignment is part of an LCL container, the examination is programmed for when the consignment is unpacked at the wharf or at a depot. Depending on the time of unpack, the examination of a consignment from an LCL container may result in lengthy delays in the release of the consignment.

Each sea consignment is also reported to Customs twice: first via the bill of lading data that feeds the inwards cargo report, then on the import declaration lodged by the owner or their broker. The import declaration may cover several containers or a single consignment within an LCL.

Once the import declaration is cleared, goods can leave the wharf for home consumption or for a customs warehouse. LCL containers usually take a separate route to a depot for deconsolidation before the individual consignments are released.

As with air cargo, Customs runs a second risk assessment on the information in the import declaration. With sea cargo this may trigger a documentary check to verify duties and taxes payable, or, given the scale of container cargo, a full physical examination of the goods.

Full physical examination of a container after the lodgment of the import declaration can lead to further delays in clearance, depending on the purpose of the examination and where it takes place.

The sea cargo clearance process, from the time of arrival of a vessel, can be a lengthy one, depending on the timeliness of cargo reporting, the discharge time of the vessel, cargo availability, and the level of customs intervention.

What drives delay in sea cargo clearance

01 Cargo reporting Whether the manifest and bill of lading data reach Customs early enough to risk-assess before the ship arrives.	02 Vessel discharge time How long it takes to offload all containers consigned to the port, sometimes more than 24 hours.
03 Cargo availability Whether containers can be released from the terminal once discharged, given other terminal priorities.	04 Level of customs intervention Whether the consignment is cleared on documents, X-rayed, or selected for full unpack and examination.