You can’t sell your merchandise if it’s held up at Customs.
Notoriously complex and opaque global supply chains have made the fashion industry especially vulnerable to shipment detentions from U.S. Customs and Border Protection. In fact, fashion is second only to the electronics in terms of CBP examinations, so an ounce of prevention is worth a pound of cure. 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 over forced labor regulations like the Uyghur Forced Labor Prevention Act (UFLPA).
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As explained in the recent Sourcing Journal webinar The True Cost of Detention: Mitigating CBP Seizures with Supply Chain Visibility, costs start incurring as soon as goods are detained under suspicion of forced labor or other violations, including legal fees, container fees and demurrage fees as importers scramble to produce reams of documents from numerous global suppliers along the supply chain. In addition, garments detained over suspicion of non-compliance might mean missing a crucial fashion selling season. With approximately $468 billion dollars of garment imports in the G20 at risk of modern slavery according to Fashion Revolution’s 2023 Fashion Transparency Index, it pays to be vigilant.
And while UFLPA gets most of the attention, it’s not just UFLPA that can hold up goods. The Tariff Act of 1930 gives CBP authority to detain, further examine or seize goods that violate laws ranging from country of origin to intellectual property rights. Willful ignorance won’t get seized shipments out of CBP detention, nor will it prevent future Withhold Release Orders (WROs). The key is to know what’s in your supply chain before it’s too late.
Under UFLPA, for example, companies are given 30 days to submit a “rebuttal presumption” admissibility package demonstrating that the detained goods are not produced with forced labor or not connected to the Xinjiang region of China.
“It’s really important to note that 30 days is not a lot of time, especially if you haven’t already started collecting your supply chain data,” said Ana Hinojosa, former CBP executive director and Oritain advisor, in the webinar, moderated by SJ editor-in-chief Peter Sadera. “It’s virtually impossible to pull up an admissibility package if you haven’t already started doing your homework and collecting and getting transparency into your supply chain. It’s really important to start that process ahead of time.”
Many legal firms specialize in this area, and Richard Mojica, member practice lead, customs & import trade at Miller & Chevalier, has worked with clients who act proactively as well as clients who scramble to produce paperwork after a detention notice. “We help companies develop processes to screen their suppliers and then take action based on whatever comes out of the relevant screening. Sometimes we get involved when the notice of detention is issued, so from the beginning, it’s crisis management—it’s go, go, go to try to find a way to extend that timeline and respond to the notice.”
However necessary, extending the timeline to produce documentation prevents its own set of problems, namely missing a targeted selling season or damaging a relationship with a retailer waiting on a timely shipment.
The key is to know what’s in your supply chain from the get-go, which can be frustratingly difficult. Sam Lind, solutions architect at Oritain, a global leader in forensic verification of product origin, explains: “The first issue is access—going back past a Tier 1 to a Tier 2, because it’s your vendor’s vendor. So there’s a lack of physical access, as well as information access.” The second issue, he said, is the subjective nature of the documentation you’re requesting. “In the case where material is non-compliant, it is unlikely that you are going to receive documentation that would clearly articulate that to you.”
Oritain “absolutely sees the importance of mapping your supply chain and knowing which player is along the chain.” Using isotopic testing, Oritain can do a sample test at any point in supply chain, including at retail, to verify origin of goods. It has also created a Global Reference Library with “thousands of thousands” of reference samples, combined with advanced data science, to help importers.
Still, many companies decide to take the risk, which Liz Hershfield, founder and CEO of consulting firm Green-ish does not advise. “Many companies think, ‘My supply chain is fine,’ but the thing is, you never know when it’s going to creep up on you,” she said. “You know who you know in our industry, and a lot of factories that work with a lot of the different companies and mills, [but] all it takes is one bad choice to be targeted, and for you to be a part of a detention.”
To watch the webinar, click here.
