Rezylient: UFLPA Insurance Can Cover 40% of Detention Costs

Executives from FloraTrace, an isotopic testing service, and Rezylient, an UFLPA insurance product, told an audience of customs brokers that isotopic testing isn't just for cotton-containing products.

FloraTrace CEO Terje Gloerstad, when asked if the company's isotopic testing could identify if chemical products are linked to Xinjiang, said that most chemicals are made from oil, and since oil is an organic product, it's easy to tell where it was drilled.

Oil is drilled in Xinjiang, but Gloerstad did not address whether PVC made in Xinjiang is made solely with local oil or natural gas feedstock.

The group is selling both the testing service and insurance that partially covers losses due to detentions and/or rejections of goods through the Uyghur Forced Labor Prevention Act. That insurance will cover up to 40% of the additional costs due to a detention, they said.

Gloerstad said insurance customers get a free isotopic test if their goods are detained. He implied that the firm had done so for a plastic Christmas tree importer last month. "The Christmas trees are made of PVC, and PVC is one of the target products," he said.

One of the audience members questioned whether CBP's own isotopic testing is accurate, either because the database of samples they use is outdated, or because they have a "lack of technically sophisticated equipment."

Gloerstad said the new labs that CBP is launching have "state of the art" equipment, and said that CBP uses a third-party database to see if the isotopic markers match the Xinjiang region.

He said the agency is not yet running the testing at full volume, but thinks they will be early next year.

Gloerstad said his company can return results for testing within 10 days, and they are working on setting up a lab in Vietnam, so goods can be tested there before they are shipped to U.S. customers. Vietnamese goods, when measured by value, were second in the list of targets of UFLPA detentions, after Malaysia.

Malaysia is a source of solar panels, one of the most-detained goods under UFLPA; Gloerstad said that while using isotopic testing on inorganic materials such as silica and aluminum is harder than on oil or cotton, it can be done.

An audience member asked Gloerstad if there's a danger that bad actors could alter the samples database so that it's harder to identify the origin of goods.

"If you look at Customs and Border Protection, they spent 10 years building a database for honey," he said. He said that "bad actors" usually try to disguise the origin of targeted goods by mixing materials.

"We’ve built an algorithm that is able to identify mixtures," he said. "And this is very important because a lot of cotton doesn’t come from just one region in a shirt."

The Rezylient staff also received questions on whether brokers or freight forwarders would be allowed to mark up the cost of the insurance -- sold annually -- so they could make a profit on it, as they do when they sell bonds and insurance.

Kim Gunther, chief revenue officer at FloraTrace and president of Rezylient Insurance Agency, said there are some brokers who don't mark it up as they recommend it to their customers, and others do. "Just so we can get it into the marketplace," she said, Rezylient could call the mark-up "an administrative fee."

Robert Fishman, chief insurance adviser at FloraTrace, added that if regulations allow the broker to do that without disclosing it to their clients, the company does not object.