By Eric Huang    Photo：CANVA

Amid increasing globalization in trade and heightened concerns about safety and security, the European Union (EU) has launched an advanced customs security program called the Import Control System 2 (ICS2). As a pivotal strategy to safeguard the EU's single market and the well-being of its citizens, ICS2 represents a major transformation in customs risk management practices, aiming to facilitate legitimate trade while ensuring supply chain security. For maritime carriers, ICS2 regulations will become fully mandatory starting December 4, 2024, significantly impacting Non-Vessel Operating Common Carriers (NVOCCs) and freight forwarders. Below, we explore the key aspects of ICS2, its implementation stages, and its impact on global trade.

What is ICS2?

ICS2 is an advanced cargo information system designed to collect, process, and analyze safety and security data for all goods entering the EU, enabling risk assessment before the goods arrive. As the successor to ICS1, ICS2 is supported by modern IT solutions, regulatory updates, and operational improvements. It serves as a core component of the EU's Common Risk Management Framework (CRMF), providing a unified and integrated customs risk management approach for the EU's 27 member states. Through early risk analysis, ICS2 enables customs authorities to identify and mitigate potential threats at the earliest stage of the supply chain.

Key Objectives of ICS2

1. Enhanced Security: Strengthen protection against threats to the EU market and citizens.
2. Efficient Risk Management: Support customs authorities in strategically intervening for high-risk goods.
3. Facilitation of Legitimate Trade: Streamline the movement of goods for compliant trade operations.
4. Crisis Resilience: Implement proportionate customs measures during crisis situations.
5. Seamless Information Exchange: Improve data exchange between Economic Operators (EOs) and customs authorities.

Core Component: Entry Summary Declaration (ENS)

A crucial element of ICS2 is the Entry Summary Declaration (ENS), an electronic declaration that contains detailed information about goods destined for, transiting through, or entering the EU. ENS allows customs authorities to perform pre-arrival risk assessments, ensuring the security of imported goods.

Implementation Phases of ICS2

ICS2 is being implemented in three progressive phases:

1. Phase 1 (March 15, 2021): Express and postal air operators began submitting ENS.
2. Phase 2 (March 1, 2023): All air cargo carriers and related EOs were required to comply.
3. Phase 3 (June 3, 2024): All transport modes, including maritime and rail, will be fully covered.

Key Improvements in ICS2 Over ICS1

1. Detailed Data Submission:
   • Economic Operators must provide a complete commercial description of each item.
   • Declarations must include a six-digit Harmonized System (HS) code for accurate classification.
   • Information about all parties involved (e.g., actual consignors and consignees) must be submitted.
2. Enhanced Reporting Requirements:
   • ENS must now be submitted at the House Bill of Lading (HBL) level, not just at the carrier level.
   • Declarations must be submitted electronically at least 24 hours before loading.
3. Global Alignment:
   • ICS2 adopts methods and experiences from other countries like the US, Canada, and Japan, creating a globally consistent approach to customs security management.

Mandatory Data for ICS2 Compliance

To ensure smooth operations and compliance, the following data must be accurately provided when filing ICS2:

1. Cargo Details:
   • Transport routes and transit information.
   • Carrier and vessel details.
   • Container and seal numbers.
2. Transaction Parties Information:
   • Details of the seller and buyer.
   • Actual consignor (shipper) and consignee (receiver).
   • Economic Operators Registration and Identification (EORI) numbers for all parties.
3. Goods Classification:
   • Detailed description of goods.
   • HS codes for accurate classification.

Consequences of Non-Compliance

Failure to comply with ICS2 regulations could lead to severe repercussions:

1. Cargo Delays: Goods may be held at EU customs, disrupting supply chains.
2. Rejection or Penalties: Incomplete or incorrect declarations may be rejected or penalized.
3. No MRN, No Loading: Carriers strictly enforce the “No MRN, No Loading” policy, preventing shipment without a Movement Reference Number (MRN).
4. Financial Penalties: Late reporting or inaccurate data submission may result in substantial fines.

Benefits of ICS2

Despite its challenges, ICS2 offers significant advantages:

1. Streamlined Trade: Compliant traders benefit from faster customs clearance processes.
2. Enhanced Security: Improved risk management creates a safer trade environment.
3. Global Standardization: Alignment with other major markets simplifies international trade.

Conclusion

The Import Control System 2 (ICS2) marks a critical innovation in customs risk management, balancing the need for security with the facilitation of global trade. While its implementation presents new challenges, proactive preparation and adherence to the regulations will enable Economic Operators to adapt successfully. By adopting ICS2, stakeholders contribute to a safer, more efficient supply chain and foster trust and collaboration within the global trade ecosystem.

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