3PLs close to getting key customs designation for cross-border trade

SAN DIEGO — A rare Senate and House bipartisan agreement on an issue — the C-TPAT Pilot Program Act of 2022 — is being celebrated by the Transportation Intermediates Association as a major victory for the brokerage sector.

In her state of the industry address here to kick off the group’s first in-person convention since 2019, TIA President Anne Reinke touted the progress of the legislation and placed it No. 1 on her list of the organization’s achievements.

C-TPAT, or Customs Trade Partnership Against Terrorism, serves as sort of a TSA Pre-Check for freight moving across international borders. Carriers and shippers that receive that designation can move more quickly across international lines due to their classification under C-TPAT.

But brokers have not been able to get C-TPAT designation. And that has been a significant problem for 3PLs that regularly engage in cross-border activity.

Chris Burroughs, TIA’s vice president of government affairs, said in an interview at the TIA meeting that not being part of the program has put brokers “at a pretty large competitive disadvantage.”

Burroughs said the original legislation that created the C-TPAT program was not intended to exclude non-asset-based companies moving freight across a border. But that is the way the Customs and Border Protection agency has interpreted this, and freight being moved by a broker has not been able to obtain the C-TPAT designation.

“Shippers want that certification,” Burroughs said. “They want companies to be verified and safe.” And if a broker can’t deliver it, they might turn directly to a carrier that has it, bypassing the broker.

Legislation that would set up a pilot program allowing a small number of brokers and warehouses to receive that designation was discharged in early March by the Subcommittee on Border Security, Facilitation, and Operations of the Homeland Security Committee. That House bill, H.R. 6826, joins a companion bill in the Senate, S. 2322, which also has been voted out of committee. Neither has been approved by the full chamber.

Burroughs said that while CBP opposed brokers receiving C-TPAT designation years ago, there is no clear opposition from the agency now. He added that there does not appear to be any significant opposition to the legislation among lawmakers.

Without the designation, a shipper looking to move freight across the border might be more likely to turn to a carrier that has C-TPAT certification, Burroughs said. Since a broker cannot receive it, a truck booked by a broker “gets in line with everybody else” to get across the border.

If passage of the legislation appears to be the easy part, what might get tricky would be choosing which 20 companies would be enrolled in the pilot. Ten would be non-asset-based carriers; the other 10 would be warehouses.

Burroughs said the TIA had a discussion with CBP as recently as last week, “and they’re trying to figure out how it will look.” How the 10 3PLs will receive that designation is unclear. Burroughs said it also was uncertain whether TIA will have a role in assisting in the selection of the 3PLs receiving the designation.

He recalled a meeting several years ago with CBP, not long after he joined the TIA, when the TIA tried to express its concern about the exclusion of non-asset-based companies from the program. It ended when a CBP official, after resisting the TIA’s overtures, suddenly declared the meeting “done.”

As far as the current group of CBP officials that TIA has been dealing with, “they see the writing on the wall, so they are working on the next steps,” Burroughs said.

“These 10 companies would have a leg up on everybody else,” Burroughs said. But he added that they are likely to be firms that already are doing a lot of cross-border business; they are just doing it without the benefit of C-TPAT designation.

“CBP is not going to do this for somebody moving five loads a month,” Burroughs added.

The bipartisanship on the legislation is notable in looking at its sponsors. The House bill has four co-sponsors, with Rep. Elissa Slotkin, D-Mich., as the lead. Two others are Democrats and one is a Republican. The split among Senate sponsors is three Democrats and two Republicans.

The role of Slotkin as a lead sponsor is understandable: her current district, Michigan’s 8th, and the district she is running to represent in the next Congress, the 7th, are both near the heavily traveled corridor between the U.S. and Canada.