In the war against terrorism, security has taken on a role of extreme importance. With the passage of both the Homeland Security and the Maritime Transportation Security bills, it is certain that the way importers and exporters do business will change. But what kind of changes can you anticipate? And how will the changes impact your business?

Homeland Security Department Created

The Homeland Security department, which combines more than 20 homeland security agencies into one Cabinet department and employs nearly 170,000, became a reality on November 25, 2002. The new department is charged with a number of very serious responsibilities, including analyzing threats, guarding U.S. borders and airports, protecting our country’s critical infrastructure, and coordinating our response for future emergencies. In short, Homeland Security is accountable for ensuring the safety of the American people.

New Responsibilities

In general, the Homeland Security department will analyze intelligence on terror threats collected by the CIA, the FBI, the National Security Agency and other intelligence organizations. It also will combat cyber-terrorism, as well as nuclear, chemical and biological terrorism. Additionally, the new department will bring together the agencies responsible for border, coastline and transportation security. As such, a greater coordinated effort to safeguard America’s transportation systems and secure its borders will take place. Furthermore, the Homeland Security department will work with state and local officials to prepare our country’s response to any future terrorist attacks. And, since the first minutes and hours after an attack are crucial in saving lives, providing first response personnel with appropriate training is imperative. This very necessary effort, however, will mean longer delays in receiving goods.

Maritime Transportation Security Act

The Maritime Transportation Security Act addresses the security of America’s 361 sea and river ports — which handle 95 percent of U.S. international trade and are responsible for the transfer of more than 2 billion tons of freight annually. And although some security improvements have been made, less than 2 percent of the containers that arrive by sea currently are inspected by Customs or other law enforcement officials.

To date, the U.S. Customs is currently focusing on three general categories: inspections, risk reduction and container security. These categories will definitely impact shippers, intermediaries and carriers, so what happens in each of them is important to everyone in the supply chain.

Boosting Cargo Inspection

In the past, U.S. Customs has used physical inspection as its primary means of identifying what was entering the country. And, U.S. Customs often has relied on the good faith of shippers to ensure that all documentation was accurate. But, since only 2 percent of cargo is routinely inspected, leaving 98 percent to chance, changes are being made.

Today, technological inspections are increasing, and this technology, such as x-ray and gamma ray machines, is not only making inspections quicker, it is also making it easier to detect dangerous substances and/or suspicious materials. However, technology is not without fault and can produce some false alarms.

For example, last summer in Miami, a random x-ray examination of a container from Israel indicated that it was filled with explosives. It was later determined by the bomb squad called in to open the container that its contents included two metal flower pots made from an artillery shell and a piece of an exploded test missile. During the lengthy inspection, the port was shut down, which caused delays in terms of time and money.

New Programs in Effect

To address suspicious cargo entering the U.S., a new program called the Sea Cargo Targeting Initiative is beginning to gain momentum. In short, this initiative adds new criteria to Customs’ automated systems, ensures that all manifests are processed through the Automated Targeting System and standardizes Customs’ procedures and practices.

As a result, all high-risk containers are anticipated to be examined by non-intrusive technology; container seals also will be inspected. Overall, the goal is to quickly separate cargo into general and high-risk categories, so general cargo doesn’t experience delays.

Furthermore, two programs are now in place in regard to containers scheduled for shipment to the U.S. from abroad. They are the Container Security Initiative (CSI) and the U.S.-Canada Smart Border Plan. Under CSI, U.S. Customs personnel are scheduled to be stationed at ports in Singapore, Rotterdam, Antwerp, Le Havre, Bremerhaven and Hamburg.

These personnel, in coordination with the host country, will identify and pre-screen U.S.-bound containers before they are even loaded on ships. This is expected to send a strong message to potential terrorists. And although this is a sound approach, some smaller foreign ports feel they will suffer if they do not have a U.S. Customs employee on site. Furthermore, some U.S. importers are asking if they will be penalized in terms of longer inspection times and increased delays for not using those ports.

Since much cargo intended for Canada enters U.S. ports and vice versa, the U.S. and Canada have agreed to a bilateral approach. U.S. and Canadian Customs personnel are now assigned to various ports, where they inspect cargo bound for each others’ countries. The ports currently involved in the Smart Border Program include Newark, Seattle, Vancouver, Halifax and Montreal.

24 Hour Notice Required

Information gathering has quickly become a very important piece of the U.S. Customs’ puzzle. In fact, Customs has enacted a rule that requires carriers to electronically send detailed manifest information at least 24 hours in advance of loading cargo onto U.S.-bound ships. However, this is creating some unrest, since many carriers fear that Customs will be unable to process the manifests in a timely manner, which, in turn, will mean costly delays.

One new program that seems to be working is the Customs-Trade Partnership Against Terrorism (C-TPAT), a voluntary program designed to increase supply chain security. Businesses who participate agree to self-assess their supply chain security under C-TPAT guidelines, submit a supply chain security profile, create and implement a supply chain security program, and communicate C-TPAT guidelines to other businesses with which they work. For doing so, participants may have fewer Customs inspections when their cargo arrives in the U.S.

Look To Shave Delivery Times

New security requirements will undoubtedly be disruptive. Consequently, companies must think ahead. For many, a just-in-time system will be replaced with a larger just-in-case inventory. But in the long-term, businesses will need to improve their delivery systems and anticipate delays beyond their control.

One way to speed merchandise along, for example, is to ship it in containers with tamper-proof seals. Currently under development, these seals would indicate if the containers were opened or tampered with. Plus, global positioning system transponders are being developed, which will enable containers to be continuously tracked, identifying unusual delays or altered destinations.

To stay ahead of the curve, companies will need to make investments in new technology and find ways to improve the management of their supply chain.

This article appeared in Impact Analysis, January-February 2003.
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John Manzella
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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