News / Forwarders warned: keep up with US regulations or pay the penalty

© Olivier Le Queinec

As tension mounts between the US, Russia and Ukraine, forwarders must understand export regulations and US restrictions, or face significant penalties.

Last month, the US published its latest “Entity”, and “Specially Designated Nationals” (SDN) lists, which reflects its growing unease at Russia’s involvement in Ukraine.

The latest SDN list includes several forwarders, including the Sovfracht-Sovmortrans group of companies, as well as shipyards in Ukraine and electronics companies in China.

Once a company is on the SDN list, its assets, and those of some individuals, are blocked and “US persons are generally prohibited from dealing with them”.

This can also mean that a non-US company with an office or any interests in the US can also be banned from trading with them.

Those on the Entity List have been accused of being involved, or are likely to become involved, in activities “contrary to the national security  or foreign policy interests of the US”.

Once a company is placed on this list, its ability to export, re-export or transfer goods is limited.

The list is updated through the year – but many names, including several forwarding companies, have been languishing on it for several years.

One listed forwarder told The Loadstar he wanted to warn companies of the risks of breaking any US export rules.

“It was a very unlucky situation, and I would like to forget it,” he said. “However the issue itself is quite important, especially now when there is lot of tension globally between the US, China and Russia.”

Forwarders are more likely than most companies to get caught up, he noted. His company was placed on the list in 2012 – around the time of the last US presidential election –  after it transhipped some hi-tech equipment originating in the US and going to Russia.

“This case was somehow related to actions by US policy makers during the election campaign. US authorities found out that Russia had bought some items which should have had an export licence. We handled the transit shipments going into Russia.

“All the operations were handled properly and the shipments were marked as electronic components. There were no charges or investigations in our country, it was just a normal business. This scandal came suddenly and we never had any questions from US authorities.”

Business soon dropped off after the list was published, and the forwarder had to find work elsewhere. But he wants to ensure that other SME and independent forwarders don’t fall into the same trap.

“The main point of this story was about the export of sensitive technology from the US. As far as I understand, it’s quite easy to buy sensitive dual usage technology in the US domestic market, but the exporter needs a licence for export. This may include commodities such as high-end routers with high encryption and so on.

“It’s very difficult for a small forwarder to keep up with situation – we were only operating in one country, outside the US, and the export had already happened.

“Unfortunately, small freight forwarders have no chance to check all the US export regulations, especially at the destination when you have the shipment in your hand already. Global companies are able to use risk consultant companies, independents  do not. And unfortunately our colleges and other institutions do not give you lessons on US export laws.”