International Customer Service Center - Union Pacific Railways

1. ACACSO Armando Gonzalez May 09 - 11, 2018 Lead -International Customer Service Center

2. Topics Union Pacific Intl Customer Center Overview Mission Meeting Schedule Committee Membership Basic Transborder Process Issues Mexican Canadian US

3. International Customer Care & Support Overview Border Operations Support • Manage train offerings and interchange process at seven interchange gateways • Monitor blocking and train make issues • Work with Customs and Border Protection (CBP) and Mexican customs to remain compliant and facilitate the rail car movement • Exception Management • Manifest Errors, Customs Inspections, USDA Setbacks Call Center • Serve as a resource for Mexico Marketing & Sales • Manage southbound clearance processes and pro-actively monitor non-cleared cars • Improve transit time and operating efficiency by avoiding setouts and manifest errors whenever possible • Assist U.S. and Mexican brokers in the clearance process • Identify and resolve EDI errors with customers and railroads • Exception Management • Billing or EDI issue, blocking definitions

4. ICC&S Team Call Center & Border Operations Support 24/7 Border Operations Support Call Center Border Interchange 13% or >$2 Billion Mexico business Over 1.1 Million rail cars annually Train approval within 2 hours of offering 50 Trains Daily Customer Care Ownership Proactive monitoring non-cleared cars Daily Broker and Customer Communication Promote Customer self sufficiency CBP Compliance Customer Focused Initiatives Southbound Clearance Process ATM Southbound/Northbound Setouts

5. Interchange Gateways Seattle Eastport Portland Duluth Twin Cities Chicago • Auto Group • Car Control • CBP/AQI/FDA • Contractors • Finance • HDC • M&S/Mexico Group • Mechanical • Mexican Aduana • NCSC • Operations • US, Mexican & Canadian • Railroads Detroit Omaha SLC Oakland KC Denver St. Louis Memphis LA Dallas Calexico New Orleans Nogales El Paso Houston Eagle Pass Laredo Brownsville

6. Committee Mission Facilitate the Efficient Movement of Rail Traffic Across International Borders Transborder Committee (TC) Deals with Policy Issues Rail Customs Task Force (RCTF) Deals with Implementation Issues

7. Committee Membership • BNSF • Dena Wilds (TC) • Lilia Chaparro (RCTF) • CN • Mike Tamilia (TC) • Annette Theoret (RCTF) • CPRS • Allan Schepens (Both Roles)

8. Committee Membership • CSXT • Andy Higgins (TC) • Roger Sharlow (RCTF) • FXE • Manual Juarez (Both Roles) • KCS • Antonio Robles (TC) • Melissa Collins (RCTF)

9. Committee Membership • KCSM • Luis Herrera (TC) • Carmen Tellez (RCTF) • NS • Paul Young (Both Roles) • UP – Committee Chair • Armanado Gonzalez (TC) • Scott Semanisin (RCTF)

10. Process • Shipper Tenders Bill of Lading (EDI 404) • Railroad Creates • Waybill (EDI 417) • Manifest (EDI 309)

11. Process • Railroad Sends Manifest to Customs • Customs Reviews Manifest • Partner Government Agencies Review Manifest • FDA • EPA • ATF • Census Bureau • Clearance/Hold Provided Through Customs

12. Issues – Mexican Customs • Mexican Customs Issues with Electronic Reporting System – VUCEM • Implementation Must be Slowed until Sufficient Testing is Completed • System Stability Required for Successful Implementation • Especially as Larger Facilities are Included

13. Issues – Mexican Customs • Instruments of International Trade • Racks, Bins, etc. Considered New Loads • Contingency Plans • Decisions Made Only at Headquarters • Delays the Implementation of Contingency Plans

14. Issues - Canadian Customs • Consolidated Indicator • Requires Railroads to Advise Customs if Loads have been Consolidated • Railroads Probably do not Have Accurate Information • Delayed Pending Further Review

15. Issues - Canadian Customs • D4 Notice • Customs Initiative to Simplify the Release of Consolidated Loads • Significant Development Undertaken by Customs and Railroads • Process Did not Work – Made the Process Much more Labor Intensive for Railroads • Corrective Action Under Review

16. Issues – US Customs • New In Bond Regulations • Under Development for 5+ Years • Address the World as it Existed 5+ Years Ago • Not Practical for Current Conditions • Most Provisions will be Effective July 1, 2018

17. Federal Register NoticeNew CBP Requirements Notice Published September 27,2017 New Inbond Regulations • Harmonized Tariff Schedule (HTS) and Facilities Information and Resources Management System (FIRMS) will be required by CBP in EDI for inbond shipments • Implementation extended to August 2018 • Disadvantages • UP description based on STCC • No EDI standards exist Notice Published September 9,2015 Export Reporting Requirement • Export Reporting via CBP approved electronic data interchange (EDI) • Trains exported from the U.S. will require CBP approval • Test Period for Export Reporting extended to October 2018 • Testing at car level at El Paso • Disadvantages • Southbound setouts for inspections • Train delay and cost increase

18. Issues – All Agencies • Rules are Published with Limited Trade Consultation • As Published the Rules may be Impractical • Working with Trade – Especially Railroads – Prior to Publication Would be Advantageous for Customs and Trade

19. Issues – All Agencies • Resource Sharing • TC Always Pushes Customs Agencies Toward Resource Sharing • Gamma Ray Machines – No Reason to Have One on Each Side of a Border • Unified Manifest – A Single Manifest Form Should Suffice for All Three Agencies

20. Armando GonzalezAGONZAL1@up.com Questions? Armando Gonzalez AGONZAL1@UP.COM