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PREPARING FOR CANADA'S CUSTOMS ACTION PLAN
New CCRA initiatives are already in effect with others just around the corner

With the Customs Action Plan gradually coming into effect, importers and exporters alike need to be proactive to avoid unnecessary complications in their supply chain. The Plan outlines a comprehensive approach incorporating self-assessment, advance commercial information and pre-arrival processing to modernize Canada's border operation.

For traders, the overriding theme of the Customs Action Plan is a dramatic shift in responsibility to ensure compliance. The onus is now squarely on the shoulders of the importer and exporter, as opposed to being that of the government. Customs will monitor, verify and penalize but it is now up to businesses to make sure that regulations are being followed. If they are not, strict penalties with far-reaching consequences will be enforced.

Customs Self Assessment (CSA), implemented in the Fall of 2001, is the first of three major initiatives under the Plan. CSA enables pre-approved importers to use their own business systems to meet the Canada Customs & Revenue Agency's (CCRA) trade data and payment requirements, expediting physical clearance at the border.

Due to the considerable technological investment required of businesses to become fully compliant, participation in CSA, to date, has been confined to companies with large transborder operations such as the Big Three auto manufacturers.

Just because CSA is geared towards large importers, Small and Medium Sized Enterprises (SMEs) should not assume that Canada's Customs Action Plan has limited impact on them. Over the next 6 to 18 months, two additional programs will be implemented under the Plan, affecting the entire trading community.

AMPS - The Teeth Behind Compliance

The Administrative Monetary Penalties System (AMPS) is CCRA's new schedule of civil penalties and other sanctions for non-compliance. At the heart of this system is an intention to encourage voluntary compliance and to help correct non-compliance

Under AMPS, penalties appropriate to the level and severity of the non-compliance will be assessed. Failure to declare goods or improper declarations could result in penalties ranging from a "Notice of Infraction" up to a fine of $25,000 per incidence. Seizure of shipments and ascertained forfeitures will be restricted to the most serious offenses.

Considerations such as compliance history now become a factor in assessing penalties. Repeated violations or non-compliance can and will result in higher penalties (e.g. failure to comply with a national Customs ruling; failure to correct trade data even if there is no additional revenue payable).

Offenders can also expect closer scrutiny by Customs officials in the future, and consequently, experience longer time frames for release of goods. Records relating to infractions will be kept in a database for a specified number of years, expected to range from three to six.

AMPS, as it relates to CSA, is already in effect. The broader trading community can expect full implementation by the Fall of 2002. To prepare, businesses should familiarize themselves with the new penalty structure and the implications of non-compliance. Consulting with a licensed professional can be helpful in smoothing out existing Customs practices to promote compliance.

Among the changes accompanying AMPS is a new emphasis on accurate reporting of exported goods. The exporter and/or carrier will ultimately be responsible for ensuring that export regulations are met. This implies that, for goods destined to a country other than the United States, the exporter must provide the carrier with an export declaration. This can be in the form of either a paper B13 or an electronic file via the Canadian Automated Export Declaration (CAED) system. PBB also has the capability to transmit the necessary data using its in-house electronic systems.

The exporter and/or carrier will also be responsible for submitting export permits, licenses or certificates for controlled, prohibited or regulated goods (regardless of value or destination).

The carrier must ensure that all documentation provided to him by the exporter is submitted to Customs at the prescribed time and place. New reporting time frames are being introduced to provide Customs with sufficient time to perform export targeting and, when necessary, conduct export examinations prior to the goods being loaded onto the conveyance.

Advance Commercial Information

Previously referred to as Carrier Re-engineering, Advance Commercial Information (ACI) has three primary objectives:

• Examination at first point of arrival for contraband, safety and security issues
  
• Facilitation of legitimate trade
  
• Increased reliance on electronic processing

ACI reporting will require a significant amount of data prior to arrival of the goods which will allow Customs to better assess risk. Still in the design stages, the program will involve electronic transmission of data from exporters, importers, carriers and brokers.

In May 2002, Customs imposed a mandatory requirement that commercial shipments valued in excess of $1,600.00 CDN must contain a 10-digit Harmonized System (H.S.) code. Failure to provide a valid code will result in release delays and possible penalties.

Traders should be communicating with their carriers, vendors and their Customs broker so that all parties involved in the supply chain understand their responsibilities. For example, traders should ensure that the invoice description is clear and concise in order for the Customs broker to be able to determine and apply the correct H.S. codes. Furthermore, carriers need to understand their role and liabilities in the process, particularly in relation to driver registration and admissibility.

Full implementation of ACI is scheduled for November 2003.

Change is Here - What Should the International Trader Do?

With AMPS and ACI on the horizon, businesses need to work more closely with carriers, freight forwarders and their Customs broker to ensure a smooth flow of goods across international boundaries. While there are now serious repercussions for non-compliance, there is also an opportunity to profit from these changes, through improved efficiencies.

Consultation with a licensed professional can be a critical first step in preparing ahead for the new era. By analyzing current Customs practices and those of third party suppliers, these trade experts can help the international trader to consider the best options for compliance well before the new changes come into effect.

For further information on the Customs Action Plan, contact PBB's Trade & Regulatory Services professionals at 1-800-924-4466 Ext. 7000.

SUPPLY CHAIN EFFICIENCY WITH PBB'S E-TRADE DOCUMENTATION

If you're looking for an effective way to increase turnaround time and improve supply chain efficiency, PBB's new e-Trade Documentation is a convenient on-line application that can provide immediate benefits.

PBB's e-Trade Documentation offers two methods for sharing data: either via EDI/FTP or a Web-enabled system. With EDI/FTP, clients send their trade data to PBB electronically which is routed through PBB's system prior to being transmitted to Customs for processing. This provides shippers with a "hands free" solution, taking data from their own system and interfacing directly with PBB.

With the Web-based solution, clients log onto the "Clients Only" section of PBB's Web site and input relevant order data, accessing information as needed from their customized database on PBB's system. Clients are then able to create numerous templates and if necessary can print trade documents. Their entries are also retained on the Web and can be viewed for up to seven years.

Available Web-enabled documents include key forms such as Proforma, CCI, Bill of Lading, B13 and Inward Cargo Manifest.

The benefits of e-Trade Documentation are numerous:

Increased Accuracy and Efficiency - With less re-keying of data, e-Trade Documentation dramatically reduces the amount of paperwork involved and results in far greater accuracy. Customs compliance is ensured thanks to PBB's pre-loaded database, containing all mandatory data requirements.

Customs Integration - Once a client enters data into PBB's system, the transaction can be processed and immediately transmitted to Customs for clearance.

Improved Data Tracking Capabilities - Users can track their entries as soon as they are created on PBB's system. Information can be accessed throughout the transaction, right up to when the entry is billed.

Access - Trade documentation can be accessed and printed at any time of day from anywhere in the world by using PBB's secure Internet-based system.

For more information on PBB's e-Trade Documentation and how it can improve the efficiency of your supply chain, call 1-800-924-4466 Ext. 7000.

2002 ON-LINE TARIFF SEARCH ENGINE NEW AND IMPROVED INCORPORATES LATEST CHANGES TO HARMONIZED SYSTEM OF CLASSIFICATIONS

As part of PBB Global Logistics' dedication to excellence in customer service, the company has dramatically improved and updated its Canadian Customs Tariff Search Engine. Accessed at www.pbb.com, this new and improved database includes Harmonized System (H.S.) codes for 2002 as well as an extremely fast search engine that produces incredibly detailed results.

PBB's on-line database features up-to-date information on approximately 8,000 H.S. classifications. This feature allows traders to access information for planning and costing shipments and is searchable by product keyword or H.S. code number.

The database includes information on 11 different tariff treatments under Canada's Customs Tariff. Instead of searching through lengthy printed lists or consulting out of date Harmonized code CDs, importers can now find 2002 data with just a click of the mouse.

With the numerous changes in the 2002 Tariff, PBB's on-line search engine is a helpful resource for traders to find or double-check their H.S. information. The system, however, should not be considered a substitute for professional Customs compliance and classification advice.

Importers are reminded that effective May 1st, release of their shipments from Customs, utilizing PARS or RMD clearance methods, may only be obtained by quoting the full ten-digit H.S. code.

This mandatory requirement will be applicable to goods valued in excess of $1,600 CDN per shipment.

Continual errors or inaccurate codes could result in warnings and eventually in Administrative Monetary Penalties - another important reason for importers to ensure their H.S. codes are correct on all of their trade documentation.

For information on Customs compliance and classification matters, consult PBB's Trade & Regulatory Services experts at 1-800-924-4466 Ext. 7000 or e-mail trsca@pbb.com.

PEAK PERFORMANCE FOR PEAK PRODUCTS
PBB'S SUPPLY CHAIN SOLUTIONS DELIVER EFFICIENCY, MARKET REACH

Supply chain management at Peak Products Manufacturing Inc. is more than just a part of its day-to-day operations. Rather, it is considered an essential part of the overall business plan, delivering competitive advantage while providing access to new markets. So when the opportunity came to partner with PBB Global Logistics for its international supply chain needs, Peak Products forged ahead and achieved concrete results.

Peak Products is a manufacturer and distributor of building and consumer products supplying wholesale and retail accounts across North America, including some well-known home improvement chains such as Home Depot, Home Hardware and Lowe's Home Improvement.

As one of several individual logistics suppliers, warehousing products in its Vancouver facility, PBB quickly demonstrated the value of its Supply Chain Solutions and impressed Peak Products with its integrated systems and worldwide capabilities.

Today, with each shipment that Peak Products purchases from its suppliers in China, PBB ensures accurate and efficient Customs clearance at key ports including Vancouver, Seattle, Calgary, Montreal and Toronto. Goods are warehoused in state-of-the-art distribution centers and orders to individual stores are fulfilled, often on a next-day basis. Using PBB's e-globallogistics.comTM tracing system, Peak Products enjoys full visibility of its shipments and inventory from the moment the company purchases products from China, until the time they hit the shelves in North America.

"With our worldwide sourcing of hundreds of products, outbound shipments to cities across Canada, and thousands of individual transactions each month, it was essential that we chose a firm that had the physical and electronic capabilities necessary to handle our requirements," says John Gross, President, Peak Products. "And most importantly, PBB shares our deep commitment to customer service."

Indeed, Mr. Gross attributes customer service as a key success factor in his business. With a complex supply chain extending half way around the world, and customers who depend on fast, accurate shipments to maximize retail sales, Peak Products understands the importance of efficiency and real-time information in getting its products to market. The results of partnering with PBB have indeed been fruitful.

"With PBB, we have definitely experienced savings in a number of ways, including a significant reduction in management and administrative involvement in warehousing and distribution matters," says Mr. Gross. "And not having to worry about our logistics lets us focus on our company's core competencies - manufacturing and marketing."

Peak Products enjoys the efficiencies of a continent-wide distribution network, a competitive advantage when doing business with major retail chains.

Peak Products anticipates continued rapid growth in the future, particularly in new markets in the American South and Midwest. With locations in Chicago, Miami and other key regional centers, PBB is well-positioned to assist its partner with these expansion plans.

MARK YOUR CALENDAR FOR CHINA: TRADE MISSION PBB PLANS NEXT DELEGATION FOR NOVEMBER

Now's the ideal time to make plans to join PBB's upcoming China: Trade Mission 2002 - the third in its highly successful series of trade delegations to China. This privately-led mission is an excellent tool for executives, new business managers and export development professionals seeking initial access to the Chinese market or to expand their existing trade networks. It is an excellent alternative to official government trade missions, particularly for Small and Medium Sized Enterprises (SMEs) exploring the Chinese market for the first time.

Running from November 1st to 16th, PBB's trade mission gives participants the opportunity to visit several key Chinese commercial and industrial centers including Shanghai, Beijing, Dalian, Nanjing and Wuhan.

Participants have the unique opportunity to meet one-on-one with buyers, suppliers, distributors and manufacturers, strategically selected from across China to match their business needs. Expert translators will also accompany the delegation throughout the mission.

"In China, personal relationships are the key to your business success," says Mike Scott, President and CEO, PBB Global Logistics. "By accessing PBB's extensive network of established Chinese contacts, mission participants will have the chance to build the relationships that are critical to their success in the Chinese market."

PBB's China: Trade Mission 2002 is an extremely cost-effective way of traveling to China on business. With travel, luxury accommodations and entertainment organized by PBB's Corporate Travel experts, participants can benefit from significant cost savings and efficiencies.

China: Trade Mission 2002 is supported by Canadian Manufacturers & Exporters, the Canadian Association of Importers and Exporters, Team Canada Inc., Ontario Exports Inc. as well as various U.S. trade promotion agencies.

In the past, participating companies have made valuable business contacts and many participants continue to reap the benefits from previous missions.

"The mission provided us with long term success in China today," says Teresa Eyring, Marketing Manager of SR Instruments Inc., who participated in a series of introductory meetings during the March 2000 mission. Now, less than two years later, the Western New York-based manufacturer of digital electronic scales is in co-production with factories in Beijing and Wuxi and component production in Shanghai, Nanjing and Tianjin.

It's the personal attention and the quality of the business match-making that truly makes the difference. "From the political scene to the business world, it is impossible to find either the quality or the volume of contacts I did in just two short weeks," said 2001 mission participant Rod McMillan, International Sales Manager, Darcor Ltd., a Toronto-based manufacturer of casters and other related components.

The mission is part of PBB's Access China program, which helps North American businesses access key resources and services specializing in the Chinese market.

For more on PBB's China: Trade Mission 2002, including video highlights from previous missions, please visit www.pbb.com/china.

ACCESS CHINA

PBB's Access China program provides immediate access to our vast network of partners and connections, developed over 20 years of doing business in the country. We help you locate suitable:

• Vendors
  
• Customers
  
• Business Partners
  
• Joint Ventures
  
• Government Contacts

Business Services
Access China opens the door to a wide variety of business services provided by North American companies specializing in the Chinese market:

• Market Research
  
• Legal
  
• Insurance
  
• Financing
  
• Translation
  
• Sourcing

Logistics Expertise
PBB's logistics experts offer assistance with strategies to ensure your transpacific supply chain is reliable and efficient:

• Service representatives in Beijing
• Weekly ocean freight consolidation
  
• A first-hand knowledge of China's transportation infrastructure and carriers
  
• Expert assistance with Incoterms, trade and regulatory issues, marine insurance and import permits

Business Travel
There is often no substitute for meeting with your potential business partners face-to-face. PBB's Corporate Travel planners have been organizing business and leisure trips to China for many years:

• Air, hotel, car reservations
  
• Special event, convention and trade mission planning
  
• Travel and visa documentation
  

For more information on how the Access China program can help make China an important part of your business strategy, call PBB at 1-800-924-4466 Ext. 7000.

SUPPLY CHAIN SECURITY
The U.S. takes the lead in securing international trade

A number of months have passed since September 11th and the casual observer might be tempted to believe that it's business as usual in the logistics industry. Border waits for commercial traffic between the U.S. and Canada are no more frequent or lengthy than they were before the terrorist attacks. Air freight has witnessed some rate increases due to increased security costs - around 10 percent on average - which stands out perhaps as the most tangible impact.

Otherwise, some may wonder if there will be any long-term repercussions on supply chain management.

The answer is clearly "yes." In reality, the smooth sailing experienced on the shipping front masks a tremendous amount of policy debate regarding measures to secure global supply chains. Championed by the U.S., and supported by countries with a vital interest in protecting their trade with the world's largest economy, a number of security proposals are being discussed behind closed doors and in public forums.

Many details need to be finalized and no doubt there will be challenging implementation issues to overcome. However, some major themes are taking shape, emanating mainly from the U.S., and it is important for shippers to keep informed of developments.

Container Security Initiative (CSI)

For all the attention given to air transportation - justifiably - in the immediate aftermath of September 11th, the emphasis has in recent months turned to container security. Moving 90 percent of the world's cargo, containers are ubiquitous in global trade and easily accessible to terrorist networks.

Last fall, European secret service agencies uncovered 20 vessels owned or chartered by Al-Qaeda and Italian police even discovered a suspect stowed away in a Halifax-bound container, equipped with a laptop, bed, food, water, airport plans and airport mechanic's credentials, among other suspicious items.

To address this threat, the U.S. Customs Service (USCS) is spearheading the Container Security Initiative, in close conjunction with the Department of Transportation and other key government agencies. Recognizing that it is impossible to physically search all 50,000 containers that land in U.S. ports every day, the emphasis instead is placed on targeting high-risk containers.

For this, the USCS must rely on two things: technology and information. Advanced x-ray and radiological detection systems are one part of the technological solution. Another is the development of "smart" boxes: secure containers with electronic seals and sensors that will notify Customs if any tampering has taken place.

Advance information is critical for good targeting, and Customs is seeking to obtain complete knowledge on every container before it actually leaves the foreign port. The Container Security Initiative seeks to pre-screen high-risk containers at the port of origin and, for efficiency in implementation, it proposes focusing on the world's ten largest seaports. These "mega-ports" account for nearly half of all ocean containers imported into the U.S.

Mandatory advance shipping information represents a significant change from what used to be voluntary submissions. It also exerts pressures on shippers to refrain from common freight practices such as Order of Shipper and Freight All Kinds (FAK) shipments. The former does not disclose the actual name of the consignee on the bill of lading, while the latter does not provide an accurate description of all goods involved. These instances would certainly raise red flags during targeting and potentially lead to physical inspection.

The Container Security Initiative has the potential to shift global trade routes, concentrating traffic through the mega-ports. Some observers question their capacity to cope with increased traffic and pre-screening responsibilities. Look for other major ports to voluntary comply with U.S. pre-screening standards in an effort to protect their shipping volumes.

Smart Border

In December, the U.S. and Canada signed the 30-point Smart Border Declaration to harmonize security measures between the two countries and work towards a North American "perimeter". The agreement was multi-faceted, covering the flow of goods and people, infrastructure improvements and information sharing.

Targeting of container in transit shipments was among the points discussed, and the language used was very similar to the Container Security Initiative. Other items include clearance away from the border at large ports and joint facilities at smaller ones. Shared Customs data and harmonized commercial processing, including audit-based programs, were among other points of interest to transborder shippers.

These measures really aren't new to the policy arena and the same stumbling blocks must be overcome: budget, bureaucracy and conflicting standards. The Smart Border Declaration, however, should help accelerate these proposals, many of which have been advocated by the business community for some time.

Partnership Against Terrorism

Today, U.S. Customs recognizes that close cooperation with importers and the logistics industry can pay many dividends in the quest for security. Through its new voluntary program, Customs-Trade Partnership Against Terrorism (C-TPAT), the USCS is asking businesses to review their entire supply chain and adopt practices to enhance security.

Participants - importers, carriers, brokers, warehouse operators and manufacturers - must conduct a comprehensive self-assessment of security practices throughout their supply chain. Companies not currently registered as a Low-Risk Importer must also undergo a security evaluation process. Compliance with security standards will require administrative resources and could involve expenses to upgrade security systems, but overall, the guidelines are not too onerous.

Reduced inspections and fewer delays are a major benefit of participating in the program, as well as other advantages such as eligibility for account-based processes and the assignment of an account manager. In general, C-TPAT may lend itself better to larger companies with global supply chains and Just-In-Time operations. Small and medium sized businesses may be wise to approach the program using a cost-benefit analysis.

From Policy to Practice

The Container Security Initiative, the Smart Border Declaration and C-TPAT are in the stages of infancy. Details may yet be refined, but it would be a mistake to underestimate the resolve of governments, particularly the U.S., to consider stricter measures affecting security of international supply chains.

Shippers need to keep informed of new developments and their potential impact, including possible increased transportation costs related to enhanced security and insurance.

Even if companies do not participate in formal programs such as C-TPAT, if they rely on international trade to any degree, they will have to allow for increased administrative and managerial resources associated with security compliance. Indeed, more electronic monitoring, more emphasis on data collection and less privacy will be among the lasting effects of September 11th on international business supply chains.

STEPPING UP TO THE CHALLENGE

PBB showcased its logistics expertise, playing an integral role in the rebuilding of a New York City amphitheater and soccer field - a project featured on ABC's prime-time special entitled "Challenge America with Erin Brockovich: The Miracle in Manhattan."

The premise behind the show was to challenge Americans to step up and help those less fortunate. On December 10th's "Good Morning America", Mayor Rudolph Guiliani issued the challenge to host Erin Brockovich to revitalize the East River Park by rebuilding a dilapidated amphitheater and restoring a soccer field in just one week. The challenge was particularly meaningful because the park is located only 1-1/2 miles from Ground Zero and many children in the neighborhood had lost family members on September 11th.

PBB joined in the efforts the next day after hearing about the cause from one of its customers, The Landtek Group, who was donating the artificial turf to rebuild the soccer field. PBB's expertise was critical in getting the artificial turf delivered from its source in Amsterdam. At one point, the airline that previously committed to transporting the shipment could no longer accommodate space for the 15' rolls on their aircraft.

PBB immediately went to work and arranged the first available space on alternate carriers for the shipment. In addition to handling the last minute air freight arrangements, PBB also ensured that the shipment cleared U.S. Customs promptly and paid the duty as a donation to the cause.

On December 15th, the freight arrived at JFK Airport and was subsequently transported to the park where a crew of 25 police and fire volunteers helped lay the field. The first game was played on the new field on December 16th, and the grand re-dedication of the park took place later that day. A project of this magnitude would normally take over a year to complete at a cost of $6 million. But through the efforts of Erin Brockovich, hundreds of volunteers and businesses like PBB, the project was completed in only six days.

"It was a privilege to work with Ms. Brockovich and her dedicated team of volunteers," says Mike Scott, President and CEO, PBB Global Logistics. "As one of over 100 companies that participated in the Challenge, PBB was very pleased to lend our logistics expertise and assistance to such a worthy cause."

WESTERN NEW YORK FACILITY SERVES KEY GATEWAY

PBB's 76,000 sq. ft. Logistics Center in Buffalo, NY, is the ideal solution for companies on both sides of the border seeking efficient access to new markets.

This cross-functional facility is an important resource for shippers using the nearby Canada-U.S. gateway to serve the North American marketplace. It gives Canadian exporters a direct presence in the U.S. market without incurring traditional 'bricks and mortar' costs.

By managing inventory in PBB's Western New York facility, not only do Canadian companies achieve efficiencies from consolidated transportation and Customs clearance, they also improve customer service by avoiding border delays.

With PBB's facility as a key part of their cross-border supply chain, these companies find that picking and fulfilling individual orders from Buffalo is a very cost-effective alternative to the cumbersome process of preparing individual orders through their existing Canadian distribution network.

Likewise, the Logistics Center can also serve as an essential consolidation point for American companies shipping to Canada.

PBB EARNS 50 BEST DISTINCTION AGAIN

PBB Global Logistics once again demonstrated its ongoing commitment to excellence by re-qualifying as one of Canada's 50 Best Managed Companies.

PBB earned this important designation for the third consecutive year, placing PBB among the elite of Canadian enterprise. The judging panel recognized the global logistics leader for the quality of its employees, its superior service, its strategic expansion, and its dedication to technological innovation.

"Everyone at PBB is proud and honored to receive this national recognition," says Mike Scott, President and CEO, PBB Global Logistics. "Over the past year, PBB has committed to enhancing our supply chain solutions by expanding our North American network, and investing in the development of new emerging markets such as                                                                       China and Latin America as well as new technologies. This award                                                                  is the culmination of these efforts."

All award winners are selected through a comprehensive research and review process. The companies are evaluated on the quality of their products and services, employee motivation, commitment to customer service and ability to implement results-oriented business strategies. Companies can re-qualify for the award by demonstrating continued commitment to their strategic plan and delivering significant results.

During 2001, PBB executed a number of strategic goals including the expansion of its infrastructure in North American markets and investment in new service offerings. PBB opened new logistics facilities in Alberta, British Columbia and Western New York as well as expanded its Toronto Distribution Center. The company also expanded its service offerings to Alberta's oil and gas sector by integrating Project Cargo into its menu of logistics solutions.

The company continued its initiatives in new emerging markets, leading its China: Trade Mission 2001 in April. This mission visited five key commercial centers in China and helped foster business relationships between Chinese and North American companies. PBB also opened up a new office in Beijing to facilitate its expanding activities in China.

PBB launched its latest on-line ordering and inventory management application - e-Fulfillment solutions - reflecting its commitment to new technologies. As part of the e-globallogistics.comTM range of on-line tools, e-Fulfillment uses the Web to improve efficiencies within the supply chain.

PBB Global Logistics first won the 50 Best award in 2000 and re-qualified in 2001 and 2002.