Shippers still adjusting to new trade security rules
Daniel Gottlieb -- Purchasing, 12/9/2004 7:00:00 AM
More than three years after the terrorist attacks of Sept. 11, international trade security measures continue to be at the top of many shippers' concerns as demand for logistics services booms. PURCHASING recently interviewed government officials and representatives of the shipping and security industries to forge a snapshot of where implementation and enforcement stand and where there might be problems and benefits down the road.
The main U.S. security regulations and programs affecting international shippers are:
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The Container Security Initiative (CSI), with its 24-hour prior to loading notice requirement.
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The Maritime Transportation Security Act of 2002, which has mandates for port and vessel security programs.
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The International Maritime Organization (IMO) security code.
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The Transportation Worker Identification Certification (TWIC), which aims to establish a uniform biometric ID card.
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The voluntary Customs-Trade Partnership Against Terrorism (C-TPAT), which offers customs simplification and other benefits to participants in navigating the new security measures from the Department of Homeland Security.
These measures have imposed new costs and requirements on shippers and others in the supply chain, all of them aimed at keeping the supply chain from being shut down by a terrorist attack or other incident and simplifying and expediting customs clearance.
Container Security Initiative
Almost half of U.S. imports (by value) arrive in containers on ships and are offloaded at U.S. ports. By units, that's nearly 7 million containers a year.
The Container Security Initiative (CSI), launched in January 2002, targets maritime containers that pose a risk for terrorism. It imposes a 24-hour notice for certain higher-priority-risk container shipments and inspection before containers are shipped to the U.S.
Presently, 20 foreign ports that ship approximately two-thirds of the volume of containers to the U.S. have agreed to implement CSI, says the Customs and Border Protection (CBP) agency, which hopes to add more ports based on volume, location and strategic concerns. But there's an obstacle looming to further expansion. The General Accountability Office says the CBP does not have a strategic plan to recruit, train and retain staff for such overseas assignments, particularly in hardship posts.
As for the 24-hour-notice rule, some see it as forcing improvements in the supply chain. For example, ocean carrier K Line reported a five-fold increase in productivity since the rule's adoption, says James Loy, deputy secretary of Homeland Security.
However, enforcement of another operational rule from CBP with regard to ocean-shipped goods was suspended in August. That rule, issued in late 2003, requires naming the shipper on the electronic manifest data of all ocean inbound freight entering the U.S. "If implemented, the term 'shipper' would have served to identify the foreign manufacturer, supplier or vendor on bills of lading or advanced electronic manifests," says the National Industrial Traffic League. CBP has suspended enforcement of the rule while it reconsiders its action.
Some guidance on the effectiveness of various container security devices may be forthcoming from a National Cargo Security Council (NCSC) study due out in early 2005.
Port and vessel security
Even though the July 1 deadline—the date by which shipping lines and port facilities had to adopt tightened security plans (under U.S. law) and comply with the international code of the International Maritime Organization—has come and gone, many questions remain as to how extensively the new security measures will be enforced.
One reason: the cost of compliance. The Coast Guard estimates the total cost over 10 years for compliance to be $7.3 billion, most of which will fall on facility and vessel owners for outlays of hardware, such as perimeter fencing, lighting and closed-circuit television, and beefing up of inspection forces.
"There is going to be a tremendous cost for infrastructure," says Kim Petersen, executive director of the Maritime Security Council and president of SeaSecure, a global maritime consulting service. And while the shipping industry is reluctant to raise fees to cover the added security costs, Peterson expects that ultimately there probably will be charges in the form of tonnage on containers, or as a head tax for passengers.
Critically, Peterson doesn't expect the implementation of security improvements to cause delays in the supply chain. But he does add that "there are concerns that an elevated threat level or specific intelligence about a container holding a weapon of mass destruction or other contamination could create significant interruptions in the supply chain."
Impact of security regulations on trade
| Name | Requirements | Potential effects |
| Maritime Security Transportation Act | U.S.-port facility and vessel owners must draw up security threat assessments and plans, and implement mitigation measures. | Higher fees charged by port facility and vessel owners; Delays in cargo movement if ports do not ramp up inspection forces fast enough. |
| Container Security Initiative | Standards for container manifesting, securing and handling. (e.g., 24-hour Rule or advance reporting of container traffic.) | Some shippers claim this speeds up cargo passage through customs. Container shippers may have to install new locking and monitoring technology. |
| Transportation Worker dentification Certification | A biometric ID card that will be used to control access to secure areas at seaports, airports, rail, pipeline, trucking and mass transit facilities nationwide. | TWIC hopes to eliminate the need for multiple ID cards and facilitate cargo movement. |
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