Companies get bottom line assist from C-TPAT, CBP says
Preliminary findings show that the cost to apply for and maintain voluntary membership in the Customs-Trade Partnership Against Terrorism is not as great as perceived in some circles, and that improved business is a byproduct of efforts to meet the program's security standards, U.S. Customs and Border Protection officials said Wednesday.
The program is designed to encourage importers to implement strong shipment controls and hold their overseas suppliers to the same standard in exchange for trade facilitation benefits such as reduced frequency of inspections and faster processing in dedicated lanes at land crossings. The goal is make it harder for terrorists to secrete people or weapons into a shipment to attack the United States or its trade lanes.
CBP commissioned the University of Virginia to survey C-TPAT companies in an effort to quantify the program's return on investment and attract more companies to join.
Commissioner Ralph Basham, speaking at the C-TPAT annual conference in New Orleans, said:
* 39 percent of companies experienced a reduction in inspections.
* 29 percent increased their supply chain visibility because of the information they now collect about each shipment.
* 42 percent said their wait times decreased.
Reduction in pilferage and insurance rates were other benefits companies reported, he added.
More than 1,100 companies responded to the survey, which Todd Owen, executive director for cargo and conveyance security, called 'a significant number to do further analysis' on the extent to which security measures can make international shipping more transparent and predictable.
As reported Thursday, CBP has added a new benefit for C-TPAT membership by allowing importers to pick up partial shipments at the terminal when one of the containers is flagged for an inspection. The new procedure, designed to prevent importers from incurring unintended terminal storage fees for containers trapped under a CBP hold order, only applies to a small universe of shipments. Nonetheless, it was met by applause from importers at the conference who see it as a positive step to reduce regulatory side effects.
In fact, most companies today list containers on separate bills of lading and customs entries specifically to avoid having their containers delayed by an inspection that only affects one box in a multicontainer shipment. Customs exams can take several days by the time they are located in the yard, moved to the exam facility and inspected. Terminals typically allow five days of free time for containers offloaded from a vessel before demurrage charges kick in.
According to Owen, the partial release mechanism only applies to random inspections conducted on containers for trade compliance. Those containers have to go to a Central Examination Station to have their contents removed and checked. The partial release of multiple containers under the same Customs entry does not apply to non-intrusive security inspections done on port facilities with large-scale technology.
CBP has instructed its field directors to develop procedures to limit container 'holds' to cargo that has been targeted for inspection at a special cargo examination warehouse.
The C-TPAT importer has to sign an agreement to keep the container intact at its property and not breach the seal until CBP lifts the hold on the entire shipment. The importer will also have to make the other containers available to CBP, if necessary, after the initial inspection.
An ocean carrier representative familiar with the new process said it would be easy to implement and would not require technical adjustments to the Automated Manifest System used by CBP to communicate which containers are flagged for inspection.
The AMS system has an area for notes in which CBP officers can add instructions that unaffected containers on the same bill of lading or entry can be removed from the terminal. The change simply adds the ability to manage exceptions, something that currently occurs on some rare occasions.
Program priorities for 2007 include getting more small- and medium-sized businesses involved in C-TPAT, which is dominated by large importers, Owen said.
Many smaller companies are reluctant to join because of concern about the cost to implement CBP-approved security plans.
'The average financial commitment may not be as significant as people think,' Owen said, referring to the new return-on-investment results.
CBP continues to discuss with trade associations how to make C-TPAT more attractive to smaller companies.
A second priority is to expand C-TPAT membership access to third-party logistics providers, 4PLs, foreign terminal operators and foreign consolidators, Owen said.
The trick will be designing minimum security criteria to make sure those entities can push their security requirements down to their vendors, which may difficult in some logistics sectors that rely heavily on subcontractors, he explained.
CBP is also studying how to make C-TPAT an export, as well as import, security program. In a private meeting with Tier 3 C-TPAT members on Thursday, Owen said that many of the import security practices are the same as export practices and could be replicated in the program, according to one participant.
Pressure for an export component to C-TPAT is coming from the World Customs Organization, which wants countries to have reciprocal supply chain security partnership programs so that industry can be vetted in one country without have to be approved in every location it does business.
More than 6,780 companies have been accepted into C-TPAT, and 4,060 of those have been certified through on-site visits to make sure their procedures are in place.