International Cargo Conundrum

By Leslie K. Downey

Four New U.S. Programs Since 9/11
Since 9/11, the U.S. government has moved to create a baseline of regulation within its jurisdiction, and to work with other governments toward creation of a worldwide baseline.

Customs organizations play a central role in enforcing such regulations. The World Customs Organization's recently developed "Framework of Standards to Secure and Facilitate Global Trade" calls for national programs that recognize authorized economic operators (AEOs)—shippers and transportation service companies volunteering to comply with the country's cargo security guidelines. These companies and their supply chain partners are considered "trusted," with their cargo marked to receive expedited handling at the country's borders. Such classification enables customs authorities to focus on higher-risk cargo from non-qualifying organizations.

Consistent with WCO's framework, the U.S. Department of Homeland Security (DHS), through its Bureau of Customs and Border Patrol (CBP), has introduced four main programs since 9/11: (1) the Customs-Trade Partnership Against Terrorism (C-TPAT), a voluntary program for shippers, freight forwarders and carriers involved with U.S. importation; (2) the Container Security Initiative (CSI), a port-centric, customs-to-customs program; (3) the Smart Box program promoting technology for securing containers; and (4) the Advanced Trade Data Initiative, requiring shippers to send CBP manifests in advance of shipment to the U.S. Together, the programs specify the collection of more information about supply chain partners and shipments; CBP's use of advanced analytical tools to identify potentially hazardous shipments and its use of noninvasive detection systems (e.g., X-ray and Gamma-ray) to inspect such shipments; and the development of new technology to track and seal cargo containers, and to detect intrusion or any dangerous materials within them.

The December eyefortransport conference largely centered on C-TPAT. Companies apply for C-TPAT certification by completing a standardized evaluation of their own supply chain security practices, as well as those of their suppliers. One of the required practices is securing cargo containers with C-TPAT-specified seals. Currently, these seals are mechanical, not the newer electronic seals. However, CBP encourages use of the latter and may require them in the future.

What Are the Incentives to Complying With C-TPAT?
Complying with C-TPAT necessitates the gathering of information worldwide, as well as process changes and occasional supplier changes, all of which can pose considerable expense. A recent study indicated that "Canadian carriers alone have spent $400 million," noted conference speaker Stephen Evans, vice president of loss control and regulatory compliance, for Alberta, Canada-based H&R Transport.

So, what are the incentives to participate? CBP has described at least four possibilities: fewer inspections of inbound cargo; "green lanes" to expedite handling of C-TPAT-compliant cargo at border crossings and ports; "restart priority" in the event of port closure due to disaster; and paperless information exchange. To date, the only incentive implemented has been reduced cargo inspections.

Without question, avoiding inspections would save most importers money. According to Container Security Inc., an exhibitor at the conference that makes RFID-based security and tracking systems for intermodal containers, one major U.S. retailer estimated that avoidance of a noninvasive inspection saved $300 in cost—that is, $300 in savings accrued from moving cargo faster through the port, and reduced time spent by the retailer's personnel or its appointed cargo handlers. Likewise, avoidance of an invasive inspection saved $1,000. The retailer stated that 20 percent of its containers were inspected.

But does C-TPAT compliance actually translate to reduced inspections? Some speakers from C-TPAT-certified companies confirmed that it had. Others remained unconvinced, though all agreed that, if widely available, green lanes would make a difference. However, green lanes have been implemented only at a few border crossings, and no ports. With border crossings and ports already severely congested, creating green lanes would require expensive infrastructure upgrades or ultra-creative ways to utilize existing infrastructure. A former DHS official told attendees, "Green lanes are like sex in my old high school—everybody talked about it, but no one knew how to do it!" A CBP speaker who followed confirmed not to look for green lanes anytime soon.

Congress may come to the rescue. Irv Varkonyi, president of Supply Chain Operations Preparedness Education (SCOPE)—who filled in for ailing conference chair, Michael Wolfe of North River Consulting—informed this author about the "Greenlane Maritime Cargo Security Act" introduced in November by Senators Patty Murray (D-Washington) and Susan Collins (R-Maine). "Congress knows that appropriations will be needed to support even a modest implementation of green lanes," he said. "It has to walk a fine line between promising things to industry that can't be paid for, and offering no meaningful incentives to compliance." He predicted passage "in some form" next spring.