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| 5. CMR Imports: solution or disaster?
In posterity, October 12, 2005 may well be remembered as one of the most controversial dates in the history of the ACS. This was the date for the cutover to the new CMR system. The date had been contentious for some time as sectors of the service industry, such as software developers and customs brokers were concerned about the integrity and robustness of the system. Actually, 12 October 2005 was the last on a list of postponed dates that saw the ACS management buckle under intense pressure from key industry players earlier on. It was this sort of pressure that caused the launch of the CMR imports to be postponed to the final date of 12 October 2005.
By way of background, the CMR project, that can apparently be traced, at least as a concept, back to 1993, was estimated to cost about AUD 30 million. Estimates of actual expenditure are upwards of over AUD 200 million and the system still does not have full functionality as promised.
Below are excerpts from a speech delivered by Opposition Senator J.Ludwig, on 15 October 200512 :
… Customs knew that the ICS would not fully functional as at 4.41 pm on the 11th of October … yet Customs chose to persist with the Minister’s self-imposed deadline … The one saving grace of this project thus far has been the absolute dedication of the actual Customs staff doing their best in a bad situation. Their workarounds have been innovative, their work has been tireless.
These strong comments were publicly aired a mere three days after the launch of the new import system and by all accounts, all was not well. The new system could not cope with the volume of trade it encountered, even though it was supposedly designed with superior architecture to enable it to do just that. Delays, particularly at the nations’ wharves, reached critical proportions and businesses were suffering through delivery delays. This was at a time where the traditional pre-Christmas build up was gaining momentum. The delays caused logistical havoc for Australian importers and the cost to business was high.
The issues associated with the adoption of Customs and cargo management re-engineering Program (“CMR”) for import transactions has now entered the mainstream media. There are reports of stack of containers building up at ports, lines of trucks waiting to collect the containers and importers concerned about delays in receipt of products.13
As an example, a service provider claimed that as a result of the CMR rollout, freight forwarding productivity had plummeted 15% and customs brokers’ efficiency had dropped by 20%14
It was probably the customs brokers who suffered the most under the introduction of the new system, that promised a lot, but unfortunately did not deliver it as promised. There seems to be general consensus among the key stakeholders that the CMR problems will require nine months to fix, so that by the end of 2006, the system should be finally performing as planned.
The ACS has admitted, at a Senate Estimates Hearing post the cutover date of 12 October 2005, that mistakes had taken place15 . Industry lobbying appears to have resulted in an in-principle admission of guilt, by offering compensation to brokers for financial losses, however the process that the ACS has proposed has been subject to criticism. To coin an old cliché: the devil is in the detail. The scheme proposed by the ACS presents problems, including16 :
- Complex forms calling for copious amounts of information that may be irrelevant to the claim,
- The information provided by brokers for compensation claims “may be held against them at a later stage” by importers or others,
- Claimants may face significant costs in complying with the very detailed requirements of any claim and it is unclear whether these will be recoverable,
- The level of detail required expects such intimate knowledge about shipment on particular dates as to make this possibly unreasonable,
- A separate claim for each container is unrealistic,
- Claims appear to be limited to storage costs only. It is unclear whether “other costs” as shown on the form will be considered as part of accepting any claims,
- There is no transparency in the process as there is no independent arbitrator to settle disputes. It seems that the ACS will review themselves!
The issue of compensation is in the process of evolving and it is not possible at this stage to make definitive comments about it. Counsel advising client should encourage the utmost detailed record keeping and documentary evidence to maximise the success of any compensation claim resulting from financial losses as a result of the CMR implementation.
6. Conclusion
The messages from the implementation of the CMR imports are very clear. Compliance with system and regulatory requirements is an increasing consideration. Counsel should ensure that any client understands the options available for communicating with the ACS for import consignment. Choices should only be made after a thorough investigation and costing has been completed. The implementation of the chosen method needs to be carefully monitored to ensure ongoing compliance across a wide variety of requirements, to avoid financial penalties through the Infringement Notice scheme.
The current ICS falls short of expectations by the trading community, but the technical solutions will take many months to rectify and implement. As unfortunate as this situation may be, importers and their service providers have little choice other than to work with this imperfect system.
Australia had a great opportunity to show the world how to implement a state of the art system, but perhaps this opportunity was not quite grasped. The reasons for this situation are many and it may be unjust now, with the benefit of hindsight, to single out a handful of people. Such a complex system was always going to be a challenge to implement, but the old system architecture long outgrown was beyond continual patching and simply had to be replaced. CMR still has the potential to make a positive difference in the long run. |
12. Speech by Senator Joe Ludwig, Shadow Minister for Justice and Customs, Labour Senator for Queensland to the Customs Brokers and Forwarders Council of Australia, national Conference, Adelaide, 15 October 2005
13. Hudson, A (200) Customs, cargo management and compensation – show me the money!, Hunt and Hunt e-news, 29 November.
14. Keown, J (2005)‘We have been reduced to bungling idiots’ – broker, Lloyd’s List DCN, Opinions and Analysis, 8 December, p.9.
15. Chiinery, K (2005) Customs admits its errors, Lloyd’s List DCN, The Year in Review: November, December 29, p. 16.
16. Hudson, A (2005) Developments in compensation. Merry Christmas?, Hunt and Hunt e-news, 23 December |
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| * This article has been reproduced with the kind permission of the Vindobona Journal of International Commercial Law and Arbitration, a publication of the MAA (Austria). Orignal citation: (2005) 9 VJ 341 |
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