Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Good morning and good afternoon, depending on where you're located. My name is Nicole Gallanis and I am the Marketing Manager at Expeditors. Today, we're going to be going through a U.S. FDA Import Compliance Update, and we are lucky enough to have FDA on the call with us today to be providing an update as well. So before we get started, I'm just going to go through a few ground rules. Hopefully, you saw in the registration form, we were collecting questions beforehand. So we will get to Q&A question and answer at the end of the session today. FDA and Expeditors will be answering those as they came in and as they can. Some of the questions we may need to collect a bit more information. So if we do need more information on any questions that were submitted, we will reach out and gather that following the webinar today, and we'll get back to you via e-mail. If you do have any questions that were not submitted in the registration form, please put them into the Q&A window. And again, we will follow up after the webinar today. So without further ado, I will go ahead and pass it over to my colleagues who will get started with the webinar.

All right. Thank you, Nicole. I appreciate everyone joining our conversation today as folks are continuing to join the call. I'll do a brief introduction of our topics and the things that we'll be working on today. We are very fortunate, as Nicole mentioned, to have some key leaders from FDA Office of Import Operations among them, Assistant Commissioner, Solis, Deputy Director, Rahaman and Deputy Director, Verbeten, are with us today. My colleagues, Madeleine and Stephanie will also be involved. Today, you really won't be hearing a lot from us at Expeditors. For those of you who been joining our regular monthly calls and webinars like this, we do appreciate it. But we really want to get the focus to our guests from FDA and let them spend a little time. So a quick look at the agenda of things that we will cover today, we will, from the Expeditors group, will provide a quick overview of what FDA regulates. For those of you who are maybe a little bit newer and not quite as familiar with the full scope of FDA operations and then we'll get some resources in, give you a view of some of the common entry errors that FDA sees and some thoughts around that. And then a lot of times, folks tend to ask us where as an importers sit in the range of other importers that we have the pleasure of working with. So we do try to give you a view of our stats as it is when it comes to entry activity related to Food and Drug Administration regulated products. So let's kind of get in a little bit into what is regulated by the Food and Drug Administration. And again, we're speaking here specifically with the Office of Import Operations. FDA has a pretty broad area of responsibility if you -- some of you may only deal with some products that are covered in one of their categories or maybe you don't have a depth of experience on this. So if you really don't have a depth of the experience, please understand that FDA has a very significant responsibility for imported goods coming into the United States. They typically manage probably about 25% of all import goods into the United States. Some of the -- about 25% are regulated by FDA and there's a responsibility they have to ensure the safety and the resty of the components that are in the goods or the actual goods themselves. So the thing that we want to kind of give you a view to, if you are not quite experienced to this is the current way that FDA breaks up into 8 categories, if you will, of regulated products. So as you'll see, there's a pie chart on the left side of the screen, and that gives you a view as to the 8 categories and then basically by entry line activity how much of those articles come in. So as you look at the categories, there's human foods and human foods make up about 30% of the import activity that FDA manages. The big one is medical devices, and that's anything from bandages to surgical instruments, the whole range of things. That's the big area for FDA to keep track of. And then we also have other things, human drugs, vaccines, blood, radiation emitting electronic products, cosmetics, animal and veterinary products and then tobacco products. So again, those are the categories currently that as FDA manages them and some of you get maybe involved in a little bit of that and some of you not. Also, keep in mind, a number of these categories may involve other government agency requirements such as DEA as well. So there may be other government agencies that get involved in this area. If you are just coming in to the conversation now, please be reminded we will be providing a copy of this presentation to you and as you look at this page, you'll see the underlying categories of the regulated products. Please know those are hyperlinks to the actual FDA pages. So as you're getting this presentation later today, you can click on those individual hyperlinks and those will take you directly to U.S. FDA's specific pages for human foods or something else along that line. So part of what this presentation is, is to certainly provide information, but by the same token, we're trying to provide information and resources as it goes. So with that, Madeleine, I think you've got a few more FDA information sources that you'd like to run through as well.

Yes. Thank you so much, Ted. And again, thank you all for joining the call today. Yes. So along with the presentation that we will send out to all of you, we're going to send you a couple of other resources that can be very helpful in regards to FDA. The first one is an actual extract of all the HTS numbers. And with those HTS numbers, as many of you know, there are flags that hang from those HTS numbers. And for all the various PGAs and for FDA, you will see 1 of the 4 flags listed here on the left-hand side, FD1, FD2, FD3 or FD4. And you'll see that for FD1 and FD3, the information may be required for that tariff number. So that's where you need to do further research to determine if you actually do need to provide declaration to the FDA. And then FD2 and FD4 means that absolutely for that product, information is required to be transmitted to FDA. So if this extract can be really helpful if you are a newer importer or maybe you're importing a new product, and you're not 100% sure if you need to declare or transmit information to FDA. And this is a good starting point to guide you in the right direction. So we'll provide you a copy of that extract or the HTS extract. It includes other PGA flags as well, partnering government agencies, but anyway, this is a great place to start to do some research. Second is an informational series that we, as Expeditors develop. We developed these during the implementation of ACE. And as you all know, all the PGAs were coming on board or nearly all of them were coming on board and implementing a message said, do ACE -- through ACE. And so in order to help with some of the technical speak, so to say -- with all the technical requirements or jargon, we put together this informational series, which helps put it more in clear language what the exact data requirements are for each of the agencies. And we have a very thorough one for FDA. I think it's over 10 pages. It covers all the products that are regulated by FDA and it shows exactly what data elements are required to transmit to the FDA. So this is a really helpful series. So we will send this out as well. And then we have a link here within the presentation that goes directly to all the information in regards to FDA product code builder, the actual product code builder and then what is an FDA product code. So this is also very helpful again and FDA product code is a 5- to 7-digit number -- letter and number code. And it has to be transmitted on every FDA line. And it should match exactly what the product is or the actual commercial invoice description. So anyway, there's a helpful link there that will take you directly to the product code builders, so you can search for product codes and build your own product code. So now I will hand it over to my colleague, Stephanie.

Thank you, Madeleine. So real quick, this data is actually taken from FDA's website, and I would encourage you guys took out there. They actually put a lot of effort into trying to help importers understand what they're looking for and provide a lot of data. This, as Ted said also has a link to where this material is from but this shows from FDA's perspective, where are the common entry errors that get made through the import process. So as a broker, when we file, we are filing FDA information and there's a whole bunch of edits that occur and those edits are really was captured as Madeleine said on the informational series guide. So it says, if you're declaring this type of drug with this intended use code, we expect this affirmation of compliance code. And it kind of gives you that goblet of what you need to be able just to get it to FDA. This then how helps you see, once it's to FDA, what are they seeing, what are these stocking points that they're encountering, and what they're looking at. So I'm not going to go through this list extensively. I have some resources of how you could mitigate those. But the underlying theme I want to always stress is Expeditors as a broker or really any broker hopefully, should be using a parts database to store information about your parts. For FDA, we have almost all of the data elements available to store within our parts database. And if you fine-tune that, that we're able to repeat that process over and over again to hopefully provide FDA with the best compliant information in a very easy to access way because some of these parts, of course, we all know, can have as many data elements for, let's say as an entry. So taking some of that heavy lifting away on a day-to-day basis is absolutely crucial to being compliant and getting the information correct to FDA the first time. The last slide we're going to share before we turn it over to FDA is just a whole bunch of pictures. But this is our world from Expeditors perspective with FDA. So that top right pie chart, that's very similar to the one that we showed from an FDA's perspective. Of course, FDA has their whole world that involves Expeditors, but of course, many, many, many other brokers. This is just our world. And I take to match the categories very similar to how they have them. And this is slightly different to you, there shows it by line. This is by entry but I think it shows and what it affirms to me is as a broker, we have a really healthy distribution of business that aligns fairly closely to the world that FDA sees as a whole from an importing perspective. Over in the gold boxes, I have the percentage of importers that claim FDA. So I took our entire universe, how many importers we cleared for and what percentage of them are making claims to FDA and that's 25% which is significant. And then half of our importers have disclaimed and this is during this year. So FDA is a PGA that many, very, many importers touch and, of course, that's because of the breadth of items that they are responsible to regulate. Then I have the number of entries that we claim. So we claim them on about 14%, and we disclaim on 16% of our country. So it's kind of interesting. I did break it out by C. So that's the center of excellence and expertise, and that's customs breakout. Nothing too exciting because I think most of us know like, hey, it's this type of industry is likely going to have FDA, not shocking agriculture, pharma and retail, that's a big one where there's a lot of retailers cover many different commodities and of course, have many pieces of the FDA that they contribute to. And then the bottom right shows, over the last year, Expeditors has claimed FDA on about 2,900. I'm going to round up, I'll take those last 3 HTS numbers, about 2,900 HTS numbers. And out of those 2,900 of them, 40% of HTS numbers don't have any flagging. So Madeleine talked about an HTS number can have an FD1, FD2, FD3, FD4, you're also an import responsible to declare FDA even when it's not required or even when it's required -- or even when it's, sorry, when it's required but not flagged. And so this is showing a large portion of those HTS numbers, we didn't have a flag on them, and we submitted FDA. Now to be fair, a lot of those HTS numbers are 1Cs, 2Cs. And for a good reason, the whole point of them is that, hey, there's not a whole lot of import activity, but they are there, and we are cleaning those. And then the rest is pretty evenly distributed between FD1, FD2, FD3 and FD4. So with that said, a quick detour here. This is going to be on the slide. So those of you that are looking for your CCS, this will be in the slide deck. But with that said, I'm going to stop sharing, and we are going to turn it over to the people that you all came to hear. So with that, FDA, I'll let you share your screen, and we'll get rolling. Yes, we can hear that.

Yes. All right. Thank you. On behalf of the FDA, we do want to take Expeditors and all who put this webinar together and inviting us and pleasure to be here this morning and afternoon as well, depending on where you are at the time zone. We have an additional colleagues that weren't introduced at the very beginning. We have a bonus presentation here by one of our own data analysts, Tony Nicoli. He's going to be showcasing some of our dashboards and other items that he feels can be shared today. So that's an additional bonus raw material as well as you probably met [indiscernible], she is the Assistant Commissioner within our [ median ] office. So our whole team is here at your disposal. I'm Dan Solis, I'm the Assistant Commission import operations, and we humbly follow our office, OIO or the Office of Import Operations. And it was said earlier, we're -- one of many RRA offices, but we -- our claim of fame within the FDA. We are the main office that liaison with customs and border protection. As we know in the world of trade and it was already presented in some of the earlier slides by Expeditors and the world's trade is very complex. And what you're dealing with there is about 50 federal agencies that have stakehold in trade. Customs and border protection happens to be obviously the main and big federal agency there. And FDA help us to be one of their bigger customers and again, pointing to the products that we regulate, anywhere from food and medical products and tobacco products as well. So we consider that not only a huge obligation that we have towards public health of the American consumer, but a very responsibility that we have an oversight to making sure that FDA products that go through our offices are safe for U.S. commerce. I'm actually going to point at a very high level. I know that the main crux of the presentation is going to be the Q&A session. I think we're also looking forward to that interaction. But I thought it would be worthy for the audience to know some of the latest updates on what's happening on the FDA front. First and foremost, you've been keeping a price on any press or news, FDA is going through a reorganization. The human food program is forming under our new Deputy Commissioner of Human Food program, Jim Jones, formerly from EPA. And what that does is in the future, the consolidation of the food program. So with the standup of the human food program, you will no longer see the center for food safety compliance and nutrition as well as the office of food policy and response and certain components of ORA. All of the food program will be consolidated under HFP and what we call it under the leadership of Jim Jones. So as they're working through the details of that, you'll probably hear more occurring in that space in 2024. No definitive dates yet, but it will definitely start to occur in next fiscal year by some of the exchanges as well as within the office of regulatory affairs, we now have the permanent Associate Commissioner for regulatory affairs, Mr. Mike Rogers was named our permanent ACRA. So he spearheads the office of regulatory affairs. And that means our offices is involved with the other offices that you're familiar within RRA report structurally to the ACRA's offers as well as OIO. Also, some of these organizational changes, as it occurs, obviously, we'll be up right with anything touching trade and the transaction that will occur as you submit FDA regulated products and some other requirements. If any of that starts to touch trade obviously, OIO will be upfront and making sure we share that information and also jump on multiple webinars and be transparent on some of these requirements and changes. From OIO, I did want to also highlight that we also had some recent changes not only from the 5 import divisions, and I think many of you know, my colleagues to my left, Deputy Director, John Verbeten, he's still in charge of the 5 regional import divisions, the northern border, touching anything in the Canadian border, the division of Southwest imports that touches anything, the Mexican border, the West Coast touching the West Coast states of Seattle, Oregon, Nevada, California, Hawaii and the Pacific Islands. And the 2 divisions in the East Coast, division in Northeast and [ forest ], obviously covering the Northeast and the division of Southeast imports that covers Puerto Rico as well as Alaska. John has oversight of those regional import divisions. I think new to the senior leadership of OIO that many of you have not met is my other Deputy Director, Deputy Director, Dr. Faiad Rahaman, who's to the left to John. He's in charge of -- many of you are familiar with OIO division import operation as well as formerly called the prior notice center, [ DOTP ]. So he has oversight of the 2 headquarter division within OIO. And so it would be good for everyone in the OIO side, meet the new leadership of OIO, but also you get familiar with our names as well and what we're responsible for the OIO portfolio. And this is just our organizational chart. We do have a new website for the imports program, where as you click on the map, you also get points of contact and phone numbers as well as the e-mails for their respective ports of entry. And this is really the leadership of OIO from the 5 import divisions that I described and the 2 divisions and headquarters as well as the deputies.

Pacific Island project.

Yes. We certainly also expanded the imports programs, area of responsibilities. Not only do we have a responsibility for 328 ports of entry in the U.S., we also have a responsibility to cover U.S. territories. So recently, in addition to what we're doing in Puerto Rico and the Virgin Islands, we have extended our oversight in the Pacific islands. In the Island of Guam and CNMI, we began sending more FDA presence in the island to cover any shipments going in and out of the islands as it's related to FDA regulated products. And here to talk about MoCRA are my colleagues on the call, and then I'll hand the microphone over to whoever is going to cover that. Is that you, John? I think...

Yes, sure. We can talk about the Modernization of Cosmetics Regulation Act. I know that has been a great interest in the importing community especially with some of the requirements that are put into place by MoCRA. What we can say now is that the regulations and the guidance is necessary for industry complying with MoCRA and for FDA. I don't understand how we're going to approach MoCRA, are still in development. I know that in the act itself that indicated that by the end of this calendar year, registration and listing requirements were going to be mandatory. However, hopefully, anyone who's had a foot in the cosmetics world has seen that those have been pushed back to at least July of 2024. As FDA builds out the requirements under MoCRA, we in the import program, we'll keep in contact with the groups that are building out those requirements that we know and understand and can share what the incentives are as implementing that during the entry process, if at all, and what our enforcement approach will be if we do that. There are other requirements beyond the registration of listing. They are specifically manufacturing practice requirements that are put on -- I'm sorry, the manufacturers for cosmetic products, those yet have to be developed as well, and will be applicable to anyone who is on the call or any of your clients who are in the business of manufacturing cosmetic products. There is currently a compliance policy that has been made public. I encourage anyone who imports or otherwise deals in cosmetics to take a look at that, use the link that either have been provided or that we can provide after this call so that you can take a look at what your expectations will be. So in our conversations, we recognize -- in our conversation with the industry, we recognize that it will take time to make the changes that are necessary to implement anything as far as the import entry process. FDA systems will have to be updated. CBP and ACE will have to be updated. We will most likely need to update FDA's ACE rule in order to make that happen. And of course, the entry filers and your software providers are going to need to make changes there as well. So we're very aware of that. We're very sensitive to it, and we will ensure that we're providing a sufficient lead up time for those kind of changes to be made and that's MoCRA and where we're right now.

And here to touch on our AI machine learning pilot with seafood is Dr. Faiad Rahaman

Thanks, Dan, and John, everyone I'm Faiad Rahaman. For our AI and now machine learning, our official intelligence, we -- for it specifically in the seafood operations, really the pilot this is test the concept, the technologies, really understand what we do -- what we need to do as an agency to deploy this across the enterprise. Happy to say that our Phase III pilot has just recently concluded the summer in August, and we're in a phase of sort of doing a postpartum analysis to determine what are the next steps. So really and surely around artificial intelligence, what we're trying to do is to continue to optimize and use our data to improved targeting and to really things that are compliant, led us through things that are -- we believe that we should be looking at. Not detain, but stop for review and examine. Some of those things can be for a simple paper review, whether it's doing an examination or something of that nature. But what we're finding is that AI and ML, it is improvement technologies, continue to increase efficiency in our operations and this is a strategy that imports program, we're continuing to integrate into our normal processes. A lot more we're doing in that space as well, not just in AI and seafood, but we're also using the technologies in terms of how we prioritize things like how we look at filers, what we should look at and why and using a risk-based approach for prioritizing. Similar, have you guys familiar with the drug inspection program CDER manages or CBER where they prioritize inspections for based on risk or taking that same approach with the exception of using machine learning. We also deploying these technologies eventually in our international mail facilities. For example, translating documents that once were taking us a long to long time, now we're cutting those time drastically. So essentially, what we're trying to do is to learn from these experiences and bring it into the operation so that we can expedite trade and have compliant products and [indiscernible]. And so stay tuned, we'll be talking more about how we are unleashing our data, how we are using machine learning to improve our operations and to benefit commerce and of course, the public.

Tony? Here to talk about some of our dashboard updates, as introduced earlier, Mr. Tony Nicoli.

Yes. Thanks, Dan. Thank you, everybody. Thanks for inviting me and I'm on my holiday in [ China ]. So happy holidays for everybody on the call here. I appreciate the conversation we had about the common errors before we get into the FDA data dashboard. We do try to be very transparent on our data, identifying these issues. Obviously, we're looking at the areas internally, what can we do differently on our targeting, what can we do to improve our systems, AI machine learning is one step, other step that we can take to improve that. So there are over 5 million lines that FDA regulated last year alone. We have to figure out how to be as efficient as possible. So that common error is one. We shared the main one. There's also 3 separate categories that are specific to commodity areas. So if you go to FDA's website, type in FDA import common errors. It will bring you to that page, and you can see the common errors for just -- every type of entry, but it also shows you in detail things that we see, for devices, for drugs and for biologics. And so that's our way of trying to say like, these are things that we're seeing. And these are -- a lot of them are really kind of administrative steps that we just need to be checking every time the entry comes in. So we can get those cleaned up. It really helps us process those entries out faster. So definitely take a look at that. The FDA data dashboard is another ability for us to be as transparent as possible. I know a lot of people are going to focus on the 3 important ones that are on here. There's an import summary, import refusal and import entry. The import summary is going to be just overall data for FDA. Just everything that we see, lots of details, countries, what we're doing for field exam samples. And so just our transparency and what we're looking at, what we're doing and what we have done in the last 10, 15 years. Import refusal is going to be a good information for those folks, brokers, for your clients, those kind of things. You can actually look at what we've been doing with the products, what we've been finding, what problems we've been finding, do a little bit of background in some of those things. Hopefully our clients that they're looking for suppliers, they can use some of the data to do their background and do their due diligence on something that FSMA has a really high importantly value on doing your due diligence to make sure that the products you are bringing in our safe as well. And then the imports entry is really a detailed look at all of the data that we have available to. So definitely recommend looking at that, seeing what you can do. You can get down to the manufacturer, you can get down out of the file level, product codes. You can see what happened to all those lines. We talked about unleashing the power of data. There's a ton of data that's available to you. All of those data sets you can view them on the FDA website or you can download them yourself if you like to and you can do any kind of data analysis that you'd like to do there. And I will point out just the import ones there. There are other ones that you can look for, the business data search is really good resources for those folks, your clients that might be looking to do as part of the FSVP program where they're having to do their due diligence checking their suppliers They can use that website. They can use that data to see what's happening with the suppliers, how they have any problems, have they have any issues so they can make sure that they're bringing in compliant product and they will have less problems when they're bringing in that product and make sure it's same.

All right. We have a moment for questions. I'm going to go ahead and start with the ones that we received in advance. And I'm sorry that I'm not in the picture because I'm running the slide. I'm Bridget [indiscernible] I'm a special assistant to Dan. I'm going to narrate some of these. As Stephanie mentioned at the beginning of the call, some of the questions were rather specific, and we need to follow up with some follow-up questions. So please be aware that if you submitted a question before the call and we don't answer it today, we will answer it but we may need to follow up with more information from you. Specifically, we received a lot of questions about intended use codes. Specifically, those intended use codes for medical devices. A lot of those we will follow up on. But there is one that we received quite a few questions on, and that is the 180.014 for bench testing, and I received this question in multiple scenarios. And I want to make sure that we clarify that that intended use code should be used for bench testing or testing in general. So it is not to be used for U.S. goods returned and I received a few different variations of can we use that for a product that's manufactured in the U.S. and then it comes back? There are actually 2 intended use codes specific to U.S. goods return. And those scenarios needed to be clarified a little more, but please make sure if you're using that 180.014 for medical devices, that it is for a bench testing or testing product, and it is not a product that is just coming back for U.S. goods returned. So that was a very common question that we received. With that being said, I am going to turn the next question over to Dan Solis and ask him, there were a few questions we received regarding are there any challenges, including resource challenges at FDA that may account for delays concerning the timely release of FDA products.

Right now, the program [indiscernible] program, it's not just OIO, but all of FDA is under budget constraints. And of course, the looming CR is also a challenge for us. We remain at status quo in terms of our FTE ceiling. So we are very well versed in doing what we can with the amount of resources that we have. We see that and whenever there is a continued resolution out there, I think industry is not familiar with our approach. And we continue to be open in those scenarios, but we are also half staffed. We just want folks to be sensitive to that, that only the highest priority shipments will be addressed to work on and then expedite where we can with the amount of folks that we currently have. As that continues to evolve, obviously, we're transparent and communicating back of the industry on how we approach core coverage. So just stay tuned and any messaging that we can share with the industry, we'll continue to do so.

All right. The next question received in advance was regarding MoCRA. And although I do believe we answered this in our presentation, I know it's a very common question. So I'm going to go ahead and give it to John, just so the answer can be reiterated if needed. Will there be additional data elements required on the import entry once MoCRA is required in July of 2024.

We would anticipate that as MoCRA gets built out, there will be some additional data elements. As I mentioned earlier, we're still working through what that's going to look like and how we're going to approach rolling that kind of change. Like I said, it's going to require a regulation change and then just talking about the import side, I mean there's an entire cosmetics side of that made separate from what we're doing in the import entry process. But there will need to be regulations published and go a good review process. We will have to update systems. We have to make sure that everybody knows what's going on there from CDD, FDA. So it's not that, again, the system that the brokers are using to connect the [indiscernible] and transmit through. So the quick answer is yes. But it's going to be a while. And we're committed to ensuring that we continue to message with the import community as these decisions are made or being thought through. I believe we will be providing written responses to a lot of these questions and will include links in there where you've been going before specific questions about MoCRA to the part of the FDA that's building that up.

Absolutely. And we will also include the slide deck, which has the links in them as well. The next question we received is under the FDA entry review process, if an entry is not electronically released and requires manual review, does FDA reviewing personnel or FDA officers at the ports of entry have access and visibility into the respective intended use code, which was submitted at the time of U.S. customs entry submission? And the answer to this is FDA has access to all FDA data transmitted. And you can see the supplemental guide, and we'll send a link to that as well for more information.

We also wanted to share some of the time with questions that might be coming up.

Yes. We will. I think we have about 2 more received in advance, and then we will go ahead and we will switch to -- I see we've got some live questions coming in. The next question I have, and I do want to make sure we hit this one, and we will send links is how may an importer determine the exact hold reason for an entry or for each shipment to avoid reoccurrence and you can monitor the real-time status, submit documents and get notices of FDA action via ITACS. We will supply the link to ITACS as well as instructions for you. We do encourage the use of ITACS and we'll get all of that information out to you guys after the call. But ITACS is an important and for real time viewing of your documents as well as getting the notices of action.

And I think -- I'll add on to this. It can depend on a, your definition of pull, and b, depending on the definition that what kind of hold we're talking about. We have -- I'm certain the majority of the importing community is aware of FDA's PREDICT screening tool, which is what we currently use to do that. First line of review for all of the -- when we have 50 million lines of FDA regulated products that were transmitted to us last fiscal year. So everything goes through our PREDICT screening system -- I'm sorry, PREDICT screening tool for that initial review. And then based on compliance with administrative requirements, like registration listing, things like that, inherent risks of particular products, perhaps a potential problem before, perhaps missing data. And then some of just our surveillance activities that we undertake in our public health protection mission. Some of those are going to be sent over from annual review. And then depending on what our human insurer viewers look at, you may get a hold that is asking for additional documentation or you may get a hold because we've decided we want to go take a look at the product, and we want to collect a sample or you make it a hold because they're saying, you know what, this article appears to not be in compliance, so we're going to send it over to the retention process. So for the first couple of examples, we want additional information either through documentation, collecting a sample, doing an examination. Sometimes, like I said, that's just part of our oversight activities. We are going to always look at products that are being imported sometimes on a forecast basis. And if you're really the importer, you may already have insight into why we're doing that. There was a problem with that product before. But other times, we'll do it as part of our surveillance and their -- in those situations, I don't know if there's a whole lot you can do to say, oh, I don't want to be surveilled like the rest of the industry. It doesn't quite work that way as you can imagine. For those articles where we moved them over to our dedicated compliance staff, both the entry filer and the importer, you're going to get a notice from FDA and that notice is going to tell you why your product has been detained and why we intend to reduce addition of the product, unless you're able to show us that we should. So there are definitely instituted or you will be told directly what is wrong with your product. And there are other times or use may be subject to some of our surveillance activities. So you're not always going to know any specific reason why you have a hold depending on what you consider to be hold.

All right. Thank you. Stephanie, I do notice there's quite a few questions in the chat. Would you like to read this? Or would you like me to go through those?

Bridget, you can totally pick the ones that you want.

All right. We will try to get through as many of the items that are coming through live in the chat today as we can. With that being said, there are quite a few, and we may not make it to all of them. If we don't make it to all of them, Stephanie will provide these to me correct after this presentation for us to be back and answer, and we'll make sure we give you guys an answer to all of your questions. All right. All right. We have a general question here. Are there any updates, change in enforcement of imports of animal health supplements from foreign countries. Often the same products with the same ingredients and claims could be sold in the U.S. under FDA discretionary enforcement. But when they are imported, they are stopped at the border due to claim language.

Well, the direct answer is, no, there haven't been any updates or changes for the animal health supplements and for FDA pilots, when we're talking about something we're talking about dietary supplements and there's a very specific definition for that and our enforcement has been pretty consistent for dietary supplements over the past couple of decades. With respect to products that have claims, their use can potentially start getting into the realm of being considered a drug. It depends on the nature of the claim. But once you get to that, whether you're preventing, curing, mitigating a disease human or animals, you're now in the drug realm, and it would no longer be considered a supplement and the requirements for drugs would then come into play. So it really depends on the claim and how that establishes the intended use of the product.

All right. The next question is going to go to John as it has to do with the divisions. And the question is out of curiosity, what is the territory vary by region versus type of commodity similar to CBP CEE?

Unlike the CEE -- FDA, we don't have specific oversight of commodity in that way. We're ranged operationally. So we're -- in these geographic regions that we have put together our 5 import divisions are constructed in order to help facilitate the operations. We do have within FDA, we have our centers, center for valuation research, center for Food Safety and Applied Nutrition, soon to be the human food program, center for veterinary medicine, et cetera. That is where the subject matter expertise for the various commodity areas resides. Our people within the Office of Regulatory Affairs, Dan talked about earlier and now within the Office of Import Operations, they are trained in the technical aspects of all the commodity areas, and they are also specifically trained in all of our operational activities. So from our entry review through our folks who are conducting our field exams, sample collections, following up on refusal activities, conducting filer evaluations, doing our FSEP inspections, this is where our investigators come into play. So we're set up overall differently than customs and border protection and then with the way that we're constructed, we're really looking at how we handle things operationally at the new...

And I'll add to that, part of the mapping that we have for FDA is unique in that we were trying make it more efficient, not only in the way we communicate with that mode of transportation, but certain sections of the country. For example, in the northern border used to deal with 7 district offices and 7 district modes of decision on your entry. Now you're dealing with one in the northern border. Same goes through the theory in the Southwest. So it has always been that that's been there and is persistent. But now what we're applying is you have 1 division to work with, with anything coming up from Mexico. And then in the Southeast, we know that the majority of the headquarter components of express cosigner [indiscernible] are down there. So division of Southeast imports has oversight of express cosigner operations. So we had a rhyme and reason behind the map as well as gaining some efficiencies and how we make a [indiscernible] decisions.

All right. The next question, there is a current global business identifier pilot program underway with CBP and select importers. We understand that the data universal numbering system DUNS, global location number, GLN and legal entity identifier are the 3 unique identifiers being piloted. I heard that FDA is considering use of a different unique identifiers for manufacturer suppliers other than DUNS, is this information correct? If so, will the identifiers be considered to be aligned with CBP?

So I'll take this one and John and I will tee it up. So the GBI initiative is specific to CBP. As you guys are aware, FDA has some career requirements for registration and listing of products. For example, for drugs we have DUNS, food as well and the medical devices. What CBP is doing is trying to understand what a different variation of these 3 different identifier could they get a better understanding of the supply chain and understand risk. And so in this initiative that CBP is embarking on, they're trying to check for ways. We have these GBI, for example, of drugs, how could it give us a different understanding of the supply chain? At this point, it's a pilot. We are looking at how we can partner with CBP to test a few of their hypothesis and test a few of the operations on our end. And at the end of it, the study will return on what's best. And obviously, it will need to be comply to what we have on the FDA and because we have some very specific requirements for each of the commodity areas that we regulate. So in partnership with CBP, we'll sort of go through that assessment and determine the best approach for what works for us as well for that.

Quickly as a matter of fact, we have a meeting with CBP tomorrow, talk about that topic. And in addition, I think the awareness now that FDA is part of that conversation early. Obviously, they can't involve all or part of the release at one time, but they made a concerted effort to invite FDA early in a lot of those discussions.

I would add on there that FDA is fully supportive of the GBI pilot and what Customs and Border Protection is doing here. And any of these types of meetings we have, we strongly encourage members of the imported community to participate in the pilot. And with the last part of this question about alignment between FDA and consider this for other agencies as well, we're definitely looking to see how can we align what we're doing with FDA in the aspect of handling our mission as it relates to the importation of products that we regulate, how can we best leverage what CBP has and how we align that with our processes. And it's important to remember, again, that FDA is a very large agency. What we do on the import side and how we manage the import process is a large part of what FDA does, but it's definitely not the only thing that we do. And so things like Faiad mentioned our registration and listing requirements, approval requirements, all of those kinds of things are managed and run by our product centers. So it's a matter of looking at the unique facility identifier that Customs and Border Protection is looking to put together. And then how can we integrate or align that with what FDA has as far as our internal information and how can we make those work together. If we are successful with that, I think that it will be better off for everybody. It'd be better for FDA, it'd be better for CBP and it will be better for you all in the trade.

Yes. And that's a good point, John. It's the lion piece. So what we will hope to test in the pilot is how do we reduce burden of information. You submit in one place and it's transmitted, you validate it. Some of the things that already that Tony mentioned, for example, the affirmation of compliance, what holds up your line sometimes is a data quality issue. So those are some of the things we are hoping to test in the pilot. And like Dan already alluded to, tomorrow, we're having a meeting to better understand all those pieces, how to bring it together. So we're hoping that we minimize duplication, improve data quality, expedite rate, assess risk and get a better understanding, right? Always use the word get better because they get more data, how could we look at our supply chain from a different lens? And so in partnership with CBP, we're hoping that we can test and answer these questions.

All right. Our last question that we'll have time for today. Is there a recommended process to escalate holds or entries under review for an extended period of time when FDA has not issued a notice of action. Sometimes, we are unable to get a response from FDA on what is needed for a release.

I would -- I'd recommend that you go to the FDA.com and we will provide the link to the contact points for all of the divisions down to their local office levels. And if you're not getting a response, you can reach out to those. A lot of the divisions have general e-mail boxes for those kinds of things. And unfortunately, if you've done that and still don't have a response, there is also contact the management, you can escalate within the division.

And just for you guys to note, the link is on the bottom of Slide 5, but we'll also supply it in our response as well. Noting that we are running out of time. I'll turn it over to Dan for his last slide here on contact the FDA import program.

Yes. We provide a lot of resources and contact as we alluded to earlier, that this is going to be accessible to the audience. So we'll be sharing our slide set with Expeditors and continually also listening to any improvements that we can make on our FDA website. So we've done quite a bit to make it easier for the user interface and be glad to receive additional inputs that we think we can make things easier to navigate. And with that, on behalf of the FDA, we do want to thank Expeditors for inviting us in this year's webinar. Happy to continue to have these webinars as we make our time available.

Thank you so much, Dan and John and Dr. Rahaman and all of you for joining our webinar. We really appreciate it. It was such great information.

Thank you again to the FDA and to Expeditors for the great information. Thank you to all the participants who continuously joined our webinars in 2023. We're looking forward to offering more in 2024. And with that, I will be sending out a survey after this webinar today. We really appreciate any feedback that you have to offer. Upon completion of that short feedback survey, you'll receive a link to the slides that you saw today and you will have access to all of that information. So thank you again, and have a happy new year. Appreciate it.

Happy holidays, everyone.