California Apparel News

Inside a cavernous warehouse the size of five football fields, federal customs inspectors dressed in dark-blue uniforms comb through several mountains of cardboard boxes every year to determine whether goods shipped from overseas have been brought illegally through the local ports.

Cartons of gray slate are stacked next to Chinese noodles. Boxes of cassette tapes are not too far from containers of automobile parts. Khaki shorts hang next to cotton shirts.

This is where imported apparel and other goods suspected of skirting quotas or duties, transshipments, or shipments without appropriate documentation end up after being unloaded at the ports of Los Angeles or Long Beach.

The warehouse is called the Central Examination Station in Long Beach, Calif., and is operated on the grounds of Price Transfer Inc., a 70-year-old business that has evolved from a trucking company to a warehouse and storage facility covering 12 acres.

This is the only trade examination station currently operated by the U.S. Bureau of Customs and Border Protection (CBP) in the Los Angeles area. Soon the government will be adding another Central Examination Station to the Los Angeles area to handle the increased number of inspections mandated by the Bioterrorism Act of 2002.

While customs officials would not say how many containers they inspect at the Long Beach facility, they did note that every week 65,000 containers pass through the ports of Long Beach and Los Angeles. A small percentage is plucked for an intensive examination during which cardboard boxes are opened and goods are manually inspected. Intensive examinations will probably increase next year because the government will be adding more personnel to the facility soon, said Vera Adams, CBP’s port director for the Los Angeles/Long Beach Seaport.

“We are doing more inspections since 9/11,” said Adams. She noted that X-ray examinations of containers at the ports, using portable machines, are up 400 percent since the terrorist attacks in 2001. The more intrusive examinations of containers done at the examination station are also up, said Rick Lorenzen, president and chief executive of Price Transfer.

The result is that more apparel is being scrutinized for false labeling or evidence of transshipment. Customs officials have seized hundreds of faux designer handbags that have come through Los Angeles–area ports. As a reminder, several fake Louis Vuitton and Fendi bags are arrayed in a cabinet at the entrance to the examination station. “We lead the country in apparel and intellectual property counterfeit merchandise,” Adams said.

Because China and other Asian countries are major apparel manufacturers, apparel goods are among the top five imported items coming through the Port of Los Angeles and the Port of Long Beach.

With quotas still in place on many apparel items, some importers have found clever ways of bypassing customs regulations. They sew on fake labels. They manufacture items in China and then ship them out of Vietnam. They disguise the origin of their fabrics. Others are masters at knocking off designer goods.

As apparel imports have grown, so have the U.S. government’s attempts to crack down on counterfeiting and illegal transshipments of apparel. This year, CBP’s Textile Enforcement and Operations division, headed by Janet Labuda in Washington, D.C., received an extra $4.75 million to heighten its enforcement activities. Labuda said that money has enabled her to add 48 import specialists to her nationwide staff.

The money is also funding more inspections, equipment purchases and visits to overseas factories to verify the point of departure for goods.

Because Los Angeles is a principal gateway for Asian imports, it is also becoming a prime inspection point for the CBP.

“China leads the pack in illegal textile transshipments,” Labuda said. “If China is going to bring it into this country, it makes sense from a logistical point of view to bring it in through Los Angeles.”

Centralized location

Before 1986, customs inspectors traveled from one warehouse to another inspecting goods. Then, U.S. Customs decided to conduct inspections at one centralized location to save time.

Since then, Price Transfer has had a contract with customs to house the government’s Los Angeles–area examination station. Officials conduct trade inspections at the Long Beach facility and contraband inspections at another Price Transfer warehouse in Carson, Calif.

With 48 docking stations for trucks, Price Transfer is well equipped to handle the mound of merchandise that passes through its Long Beach site.

As soon as goods are trucked from the ports to the warehouse, Price Transfer personnel unload the cartons onto the floor. Revolver-toting customs inspectors sift through the goods, searching for any inconsistencies with documents or abnormalities in merchandise.

Boxes of goods can sit in the warehouse from three to seven days waiting for an exam. The importer bears the cost of the inspection, which runs from about $200 for a 20-foot container to $400 for a 40-foot container, Adams said. The importer must also arrange for a freight forwarder to truck the goods from the port to the examination station and back.

For apparel importers, the CBP’s eagle eye can turn a lucrative business transaction into a money-losing nightmare.

“Sometimes it is three weeks before they get around to inspecting things,” complained Elon Pollack, a Los Angeles customs attorney who works with a number of apparel clients.

“An examination can cost anywhere from $400 to $1,200,” noted Robert Krieger, president of Norman Krieger Inc., a Los Angeles freight forwarder and customs broker. “And that doesn’t include the extra trucking.”

The expense of an examination can add 30 percent to the $3,000 price tag to ship a 40-foot container of apparel from Hong Kong to Los Angeles.

Customs officials said the decision to pick out containers for intensive exams starts before freight leaves a foreign port. Under the Container Security Initiative passed after the Sept. 11 terrorist attacks, all manifest documents must be forwarded to customs officials 24 hours before being loaded onto a ship.

A manifest review unit in the United States analyzes the information, and an automated targeting system gives the goods a risk determination.

“We are looking for any kind of anomaly,” Adams said. “It could be an enforcement exam, where we are looking for specific noncompliance with import regulations. Or it could be a random exam looking for compliance of all the trade laws, rules and regulations.”

Even though most import quotas on apparel are supposed to disappear in 2005, the CBP will continue its inspection of apparel goods.

“Wearing apparel still has the highest duty rate of anything coming through the country,” Adams said. “So there will still be a motive to avoid the revenue issue.”