KEEPER OF THE PORTS : Customs Service Directs Record Traffic Flow

It was 31 minutes before a quiet, hazy sunrise when the Westwood Cleo, piled high with cargo containers--including two 40-footers full of Belgian chocolate--glided on glassy waters under the Vincent Thomas Bridge.

As a few sea gulls stood watch and dockworkers prepared to grab lines at Berth 101

of the Port of Los Angeles, a sleepy Customs Service agent emerged from his car, ready to begin the complex mission of clearing the chocolate and hundreds of other imports on the ship for entry into the country.

Over the next four days, the shipments would be measured against obscure quotas, subjected to various tariffs and checked for “drugs and bugs”--narcotics, bacteria and insects.

Keeping Up With Torrent

Each step would trigger the activities of specialized people and machines who must keep up with a torrent of goods arriving at the ports of Los Angeles and Long Beach these days. Propelled by Pacific Rim trade, the value of imports coming through the two ports has risen almost 100% during the last five years to $48.7 billion--a faster rate of increase than at any other major port in the country.

The trade has been a boon for importers, freight agents, customs brokers, shippers and others involved in international commerce.

For Customs Service officials, however, it has meant a backbreaking burden requiring expanded staff, a processing facility the length of several football fields and a nationwide computer network that can keep track of every nut, bolt and pound of chocolate shipped into the United States.

As the Westwood Cleo neared the dock, Customs Service Inspector Kenneth S. Gitter huddled against the cold and scanned the approaching ship with a speculative gaze.

Created 198 years ago by the second law passed by the first Congress, the U.S. Customs Service for 125 years was virtually the nation’s sole source of revenue.

Today, the Customs Service remains a money machine for the federal government, spending about $900 million this year and producing more than $15 billion in duties, tariffs, fines, forfeitures and seizures.

The public image of Customs Service activities may still be drawn from airport inspectors rummaging through luggage or triumphant agents on the evening news displaying the latest multimillion-dollar drug seizure. But as trade has increased and the economy has grown more complex, the Custom Service’s role has expanded beyond those traditional responsibilities.

2,000 Regulations

Little noticed by the public, the Customs Service now enforces more than 2,000 regulations of more than 40 federal agencies designed to protect consumers from fraud, the environment from hazardous substances, American industry from unfair foreign competition and the national security from the illegal export of technology.

Reflecting “an increased emphasis on trade fraud,” in the words of John Heinrich, Customs Service district director for Los Angeles and Long Beach, the service seized 372 shipments at the two ports during the 12 months ending Sept. 30--more than double the 164 seized in the previous 12 months. The value of the seizures increased fivefold from $4.8 million to $24.8 million.

Customs Service officials stopped toys that an infant could swallow; textiles shipped in defiance of quotas; sophisticated vacuum furnaces headed for the Soviet Union; substandard steel pipe, acrylic vests, ladies’ jump suits, men’s shirts, golf bags, swimsuits, lace gloves, suspenders, tennis shoes, ties, T-shirts, luggage, leotards, and more.

The 85,800-pound shipment of chocolate--half milk chocolate, half darker blends--began its journey to the United States in the vats of the Callebaut factory, a sprawling complex of red brick buildings and more modern facilities in Lebbekke, Belgium.

Beans from Africa were turned into five-kilogram bars (about 11 pounds)--not the type sold at the store--that were stamped with the company trademark and packed five to a carton; 1,560 cartons were stacked onto 42 wooden freight pallets, and the pallets were loaded into two cargo containers.

The sealed containers were hauled on a truck frame to Rotterdam, Netherlands, where they were hoisted onto the Westwood Cleo, locked into place and plugged into the ship’s electrical power system on Oct. 1. They were on the bottom row of a stack three containers high.

745 Containers Aboard

Five days later, the Westwood Cleo, a 28,805-ton vessel 199.9 meters long--a length of 200 meters means additional port fees--picked up additional cargo in Bremen, West Germany, and left Europe. It had 745 containers on board when Inspector Gitter met it on a Friday at the dock in Los Angeles.

Gitter has achieved a certain fame in the Customs Service as the discoverer of the largest amount of cash in an ocean cargo outbound from Southern California; he found $1,166,650 hidden in oilcans bound for Panama in 1986.

Gitter is a member of the Customs Service’s elite contraband enforcement team, but his presence was no sign that the agency suspected anything out of the ordinary in the chocolate. It simply was his turn to get up early to check the paper work of an arriving vessel.

The ship docked at 6:10 a.m. The sun rose one minute later.

The day was a so-so one for the ports in terms of shipping activity--16 ships were scheduled to arrive from Pacific Rim ports; the rest of the world sent three vessels.

The Sakura Cob came from Tokyo, the cruise ship Azure Seas from Ensenada, down the coast in Mexico, and the Sunny Gloria from New Orleans. The Westwood Cleo was the only ship from Europe.

Nine of the 22 ships already in the docks were due to leave that day--bound for Yokohama, Japan; San Francisco; Vancouver, Canada; Buenaventura, Colombia, and elsewhere.

Ten years ago, the ports were not so busy. They were not in the class of New York, Rotterdam or London. But now, “Los Angeles has grown to world port standards,” according to Lee Zitko, a port official for 20 years.

Numbers Tell Story

A series of numbers tell the story.

In 1977, the Port of Los Angeles had six terminals with 11 cranes and handled 594,939 container loads.

By 1986, 270 acres of terminal facilities had been added, channels dredged to accommodate deep-water ships, and there were eight terminals with 30 cranes handling 1,459,174 container loads, a 145% increase.

And the massive expansion of the ports is only at its midpoint.

Preliminary findings of an analysis commissioned by the ports predict that containerized cargo, driven by trade among the 65 Pacific Rim countries, will increase sixfold by 2020.

In anticipation, another $700 million in port facilities are planned in the next five years. Eventually, more than 4 square miles of ocean will be filled in to provide a home for more terminals, cranes and docks.

As soon as the Westwood Cleo was tied fast, a crew of federal officials walked aboard: Gitter; Aileen Colon, the Customs Service’s district enforcement chief; Jim Webber from the U.S. Department of Agriculture, and J. B. Emory of the Immigration and Naturalization Service.

They climbed three steep sets of steel stairs in the seven-story superstructure at the stern, set up camp in a cramped conference room and commenced a busy shuffle of paper work.

Gitter checked through an inch-thick manifest listing loads of Bailey’s Irish Cream, Heineken beer, tires, printing paper, olive oil, vinegar, paint as well as the chocolate. “Everything you buy, eat, see comes on these ships,” he said.

Passports Checked

On a low couch, Emory examined a multicolored pile of passports, scrutinizing photographs as the Westwood Cleo’s Norwegian and Indian officers, Filipino seamen and Chinese cook paraded through the room. Webber went through the list of food products and other commodities that might bring a new type of pest to the United States.

Before the days of containerized cargo, unloading and loading might take a week, particularly if rain or bad weather made surfaces too slick.

Now the process takes fewer than 24 hours, and the crew is kept busy, on this trip painting the ship, not even going ashore for provisions.

As the officials worked around him, the ship’s captain, Charles Westre, a 51-year-old Norwegian who first went to sea 36 years ago, noted that the days when he and the crew invariably went ashore to see the town are long gone.

“No time,” he explained.

Customs Service officials once examined every shipment at the docks or at the importer. But years ago, the government gave up that practice and began scrutinizing only 10% of the shipments.

The job still overwhelmed inspectors on the West Coast. Indeed, the workloads of Customs Service inspectors along the coast were as much as 50% higher in 1986 than in the rest of the country, according to a study by the New York-based consulting firm of Booz, Allen & Hamilton Inc.

The study, commissioned by West Coast port authorities and shipping interests, found that the ports of Los Angeles and Long Beach suffered the severest processing delays on the West Coast. For instance, only 9% of cargo requiring routine inspection cleared customs in eight hours, contrasted with a 42% clearance rate for the entire West Coast.

Need for More Inspectors

The study said the Customs Service needed more inspectors in Los Angeles and warned that importers would go elsewhere if the delays were not alleviated.

“Importers are increasingly selecting ports and carriers which offer the most trouble-free customs clearance,” the report said.

Heinrich said the study is based on obsolete data, from before he got 100 new positions in the last year, including 60 inspectors. The Customs Service now has 680 full-time personnel and 50 part-timers in Los Angeles.

Equally important, Heinrich said, is that the Customs Service is becoming smarter at its work, streamlining procedures and making increasing use of computers to pick out cargoes to examine.

The heart of the new $100-million data processing system is a network linked to two IBM computers in an industrial park in Franconia, Va., just outside Washington.

The idea is ambitious: Put into the computer every scrap of data about the flow of trade in and out of the United States and then record every shipment as it crosses a border.

The memory banks--which contain historical information about importers, exporters, shipping lines, brokerage houses, tariffs, quotas and regulations--have the capacity to store 800 billion characters, more than 10 times enough to list the names, addresses, area codes and phone numbers of every person in the United States.

Through the computer, Customs Service officials can see if any problems or criminal activity occurred in the past, cull 10% of the cargoes for examination and release 90% at the dock, speeding delivery and reducing terminal storage fees.

Another innovation, introduced within the last year, does away with dockside and import house examinations, which frequently kept inspectors hopping from one site to another.

“We were spending as much time traveling as we were inspecting cargo,” said Customs Service spokesman John Miller.

Now all the containers tagged for inspection are trucked to one of five sites for examination by crews of inspectors and import specialists.

“It used to take customs five days. Now it takes one day,” noted John F. Peterson, past president of the Los Angeles Customs Brokers and Freight Forwarders trade group.

The entry of the Westwood Cleo into the Los Angeles Harbor became official at 7:10 a.m. when Gitter scratched his signature onto the last of dozens of documents.

Capt. Westre, who had been up since 2 a.m., celebrated with breakfast, and the unloading began. As Westre raised a spoon filled with cornflakes, the first of 454 containers coming off the Westwood Cleo swung past the dining room window.

On the dock below, empty trucks lined up like shopping carts at a supermarket checkout counter awaited their turn as the containers were delicately lowered onto them from two giant Hitachi cranes. With the easy rhythm of men pacing themselves for a full day’s labor, longshoremen walked on top of the containers, loosening heavy metal fasteners and flinging them into a bin.

With each crane moving at least 10 containers an hour, the pair with the chocolate were reached at 11:20 a.m. They lifted into the air, swung over a truck and settled in with a resounding metallic thump. Then the trucks headed for the vast parking lot at the terminal, unhitched the containers and went back for more.

The chocolate would stay in the lot over the weekend.

Peterson, the trade group official, is president of Wayne M. Withrow & Co. of San Pedro, one of the flock of businesses paid by importers to follow goods through the bureaucratic maze, and he had the account for the chocolate. Peterson’s firm is plugged into the Customs Service computer, and he tapped into his terminal the details of the shipment.

Peterson needed to find out if importers had brought in more than 14,128,000 pounds of Common Market chocolate in 1987.

It was no idle query. Two recent shipments of clothing from the People’s Republic of China had exceeded quotas, Peterson said, and had been sitting in a warehouse “for a couple of months.”

900 Items Covered

Customs quotas, established in 1974 to regulate what domestic producers considered unfair foreign competition, now cover about 900 items. In some instances, the reasons for them escape the people enforcing them.

For example, quotas restrict imports of animal feed, milk products, cotton, peanuts, molasses, stainless steel bars and blue cheeses, such as French Roquefort or Italian Gorgonzola--but not English Stilton cheese.

Customs Service inspections official Colon shook her head when asked why Stilton was exempted. “We only enforce the laws,” she said.

Peterson knew the answer. The United States does not “have any axes to grind against England,” he said. “There is a chicken war with Italy and France.” Those countries put limits on U.S. exports of chicken, he said. “We retaliate against pasta and blue-mold cheese.”

And so it was with the chocolate.

When Spain and Portugal joined the Common Market, they insisted that it limit imports of U.S. corn and animal feed, he said. The United States, in retaliation, imposed what became known in the trade community as the “yuppie tax.” It restricts imports from Common Market countries of candy, apple and pear juice, ale and beer, non-sparkling white wine--and chocolate in bars weighing more than 10 pounds.

Peterson touched a speed-dial phone and waited while his computer checked with the Customs Service mainframe. The answer came back in seconds:

Common Market imports of chocolate in bars of more than 10 pounds up to that point totaled 5,813,582 pounds. The computer dutifully calculated that as 41.149% of the quota.

No problem.

Next stop, Customs House, San Pedro.

The office of the import specialists who check the paper work of toy imports looks like a child’s dream playroom. Stuffed animals, games and toys are everywhere.

The office for apparel specialists looks like a clothing salesroom.

Senior import specialist Michael S. Willis, who handles food imports, has one of the strangest pantries behind his desk.

It is stacked with dozens of exotic foods, including tins of boiled quail eggs; insects identified as “fish bait” but shown on the label garnished with parsley; lobster soup; razor clams from Chile; ginseng chicken broth, and gulabjamun.

‘Have No Idea What That Is’

“I have no idea what that is,” said Willis, 36. (A Customs Service reference book later identified it as a sweet Indian delicacy.)

About 12,000 tariffs apply to all manner of imports, and no one person knows them all.

Willis took Peterson’s documents, opened a huge loose-leaf binder to “Schedule 1. Animal and Vegetable Products Part 10--Sugars; Cocoa, Confectionary. Subpart B. Cocoa.” Item 156.25-00 said no duty is required for sweetened chocolate from Belgium in wholesale-sized bars, those weighing more than 10 pounds.

The Customs Service did collect some money, however--.04% of the cargo’s official value went for harbor maintenance and .17% for Customs Service processing. The total was $214.61.

Willis checked the papers and signed. Peterson moved on to the one-stop quota desk.

In a tiny office tucked behind doors not open to the public, Customs Service Inspector Arthur Condon sits all day before a terminal, running data about shipments through the computer 3,000 miles away.

Condon is the one who decides whether the Customs Service needs to examine a shipment. He and two clerks handle between 200 and 300 shipments a day, assisted by a computer program that looks for indicators of a high probability of questionable activity.

Examination Required

Condon tapped in the chocolate shipment, thought over what the computer kicked out and marked the shipment for intensive examination.

The problem that the computer spotted concerned weight. Before switching to the heavier five-kilogram bar, the Callebaut chocolate firm had used a mold for 10-pound bars that occasionally produced slightly underweight bars. Under 10 pounds, a tariff applies.

If it turns out that a shipment he tagged for an examination is not right, Condon gets recognition.

“Just like the cop on the beat has to have so many tickets, the inspectors have to show they are enforcement minded. So we keep track,” enforcement official Colon said.

On Monday morning, almost two days after the Westwood Cleo left for Oakland, truck driver Anthony Cordova arrived at the terminal parking lot in San Pedro to pick up the chocolate. Shortly before noon, he hitched up one of the containers and headed to Price Transfer Inc., seven miles away in Carson.

Customs Service inspectors process about 1,000 containers a week in the price transfer building, a cavernous facility so long (1,122 feet) that employees bicycle from one end to the other.

Complaints From Neighbors

The firm, the largest facility in Los Angeles County used for intensive Customs Service cargo exams, can accommodate 39 trucks at one time--creating a daily procession of tractor-trailers that has prompted repeated complaints over the years from the people who live in the single-family homes across the street.

Cordova and the chocolate arrived at 12:30 p.m.

“Paper work! Paper work!” he said, apologizing for a delay caused by a hassle over insurance coverage.

It fell to Customs Service Inspector Katie Marian Rollins, 30, to examine the shipment.

She broke the seals that had been affixed on the container in Europe, then started opening individual boxes, setting loose the aroma of fresh chocolate. She weighed a bar from each box on a scale accurate to one-hundredth of a pound.

The bars ranged in weight from 11.04 to 11.06 pounds. Had any showed large differences, Rollins said, she would have broken them apart to see if they contained narcotics.

But the first nine she weighed were all about the same.

“We’re satisfied that it’s OK,” she declared, indicating her examination was finished.

It is not always that easy.

On some days the inspectors make so many seizures, noted Jess Lopez, price transfer marketing vice president, that “they get tired because they have to write up all the reports.”

Tip Paid Off

A year ago, he said, federal officials got a tip and tore apart a backhoe imported from South Africa. They found 60 pounds of marijuana. Last spring, agents at price transfer discovered Uzi machine guns in the trunks of two Mercedes headed for the Philippines.

The Customs Service also helped convict a West German businessman who had diverted $30 million in sophisticated technology to the Soviet Union, much of it through a Torrance firm.

One of the largest active cases in the country, which began in Los Angeles, involves 20 Japanese companies, 35 to 40 U.S. importers, firms in Korea, Singapore and Canada and more than 7 million square yards of polyester cloth.

The scheme was simple: Evade strict quotas on cloth made in Korea by shipping it through Japan, which had no quota for that type of cloth. Undiscovered for more than a year, the plan unraveled when Customs Service Senior Import Specialist Susan L. Bain found cloth in a shipment from a Japanese port stamped “Made in Korea.”

“They were dumb enough, blatant enough to do that,” she said.

At price transfer, truck driver Cordova collected what was by now a sheaf of paper work--the Customs Service clearance form, bill of lading, proof of insurance and various carbon copies--and relocked the container rig. Then he headed out.

The chocolate was trucked first to a refrigerated warehouse in Fontana, then to a nondescript beige plaster building in Lynwood, the home of Helen Grace Chocolates, the largest family held chocolate manufacturing company west of the Mississippi. There it was broken into chunks, melted in a 5,000-gallon vat and turned into candy--200 different types of candy.

“It could be anything: our candy bars (or) a hundred different molded items, from a 4-foot-high Easter bunny to golf balls,” said Vice President James R. Grace Jr. It is worth all the trouble to import the Callebaut chocolate, he said.

“We really like the taste and flavor.”