The Evolution of Cargo Security

The tragic London bombings in July 2005 revived a nagging question, "What if terrorists place a bomb in a container headed for a Northeast U.S. port?" Consequently, the next question that comes to mind is, "Are we doing enough to prevent such as attack?" The answers are mixed.

Four years after 9/11, government authorities in the United States and abroad continue to grapple with how to shore up cargo security without hindering efficient commerce. U.S. programs like the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) are still in their relative infancy, yet already they feel the strain of limited resources and a rising volume of trade. Maritime trade is expected to double by the year 2020 or sooner.

What does it all mean for business? Simply put: more cargo inspections, the potential for longer delays and heavier burdens of cost and compliance. As security efforts continue to evolve, importers, shippers and logistics providers should take the following steps to mitigate future delays and costs.

Join C-TPAT To Reduce Inspection Risk

The inspection rate for all containers entering the United States is likely to continue its upward trend as far as U.S. Customs and Border Protection (CBP) resources will allow. Although C-TPAT faces a number of long-term challenges (as detailed in recent reports to Congress), adherence to the voluntary program's standards remains the primary means by which importers can reduce their container targeting risk. Last spring CBP Commissioner Robert Bonner announced an improved plan for tiered benefits, which reward C-TPAT members based on their level of security, validation results and use of best practices.

Divert Trade to Safer Channels

As of July, the number of ports worldwide participating in CSI was 37 and counting. Even though the program faces serious growing pains, CBP hopes to expand it to cover more than 80 percent of all containers shipped to the United States. Containers originating outside the circle of friendly ports, however, will be subject to higher targeting risk, increased inspections and more shipping delays. Early on, trade observers advised U.S. importers working through non-CSI ports to consider diverting shipments to the nearest CSI port. Many have done so already.

Adjust Inventory Management

To maintain supply chain efficiency amid tighter security, firms need to reexamine every aspect of inventory management. These measures might include greater automation of order processing; location of factories, distribution centers and warehouses in areas more strategic for security and disaster mitigation; improved asset visibility and tracking; larger emergency stock levels; and diversion of some supply to stateside sources or at least the plan for such a diversion in a crisis.

Prepare for Broader Reporting Requirements

Carriers currently submit vessel manifests to CBP 24 hours before lading, but the swelling tide of imports and CBP's limited resources may one day push back the 24-hour timeframe. A report by the Government Accountability Office also has suggested that additional trade documents, such as purchase orders, could be used to supplement inadequate manifest data. As a result, importers and foreign shippers, not just carriers, may become responsible for filing advance shipment data. The verification of secure practices in the stuffing, sealing and land transportation of a container overseas may soon play a role in the targeting of suspicious cargo, as well.

Security Goes Global

A fundamental problem behind CBP's duty to protect U.S. trade is the fact that most supply chains are beyond the regulatory capacity of the U.S. government. C-TPAT attempts to address some of these concerns through its standards, although the program still does not include foreign manufacturers (except some in Mexico) that actually pack the containers. Currently C-TPAT covers less than half of containerized imports into the United States, by value, according to CBP.

As a result, U.S. importers and exporters should anticipate the globalization of American security efforts, a trend already underway with the unanimous adoption of the World Customs Organization's (WCO) Framework of Standards to Secure and Facilitate Global Trade in June 2005. Immediately 52 of the WCO's 168 members—CBP among them—indicated their intention to implement the Framework. This should bolster the international reach of programs like C-TPAT and ideally will result in a global "trusted shipper" system. More importantly, its workable standards should eliminate the prospect of a variety of separate C-TPAT-like programs around the world that could clog trade lanes.

According to the WCO, the Framework will:

• Harmonize advance electronic cargo information requirements on inbound, outbound and transit shipments
• Establish a consistent risk management approach to addressing security threats among joining nations
• Require that an exporting nation's customs administration perform an outbound inspection of high-risk cargo at the reasonable request of the importing nation and
• Define benefits that customs will provide to businesses that meet minimal security standards and best practices.

Sound familiar? For companies already dealing with the 24-Hour Rule, CSI and C-TPAT, the Framework in action should appear at first as a convenient outgrowth of those initiatives. Companies not already part of C-TPAT will find more reasons for membership.

While it is impossible to predict exactly where an international cooperative system will ultimately end up—or whether it will eventually evolve into regulations of some kind—clearly the time for thinking of cargo security as a U.S. problem, with strictly a U.S. solution, is long past.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




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