Executive Briefings

Importers: Security Gaps to Impact Cargo Costs & Delivery  

The Government Accountability Office released a report on May 27 as a follow-up to a similar report released in 2005 that assesses the effectiveness of the Customs Trade Against Terrorism (C-TPAT) program. The conclusion is that there are still gaps in supply chain security that terrorists could exploit to smuggle weapons of mass destruction in cargo containers.

The possibility that any kind of nuclear weapon could be moved through a supply chain is being addressed through the GAO's report. CNN reports that the Department of Homeland Security finds the likelihood of weapons being smuggled into the US through cargo containers is low, but vulnerability is high, as are the consequences of such an attack.

These findings and the GAO's new recommendations present a challenge for the majority of supply chains that move cargo under C-TPAT requirements and procedures.

According to the report, current problems with the C-TPAT program include:

1. C-TPAT certifications are based on self-reporting and are not verified or tested by CBP before benefits are granted.
2. Companies are getting certified before they fully implement requested security improvements.

There is no follow up by CBP (Customs and Border Protection) to make sure the requested improvements were made and that security practices remain consistent with the minimum criteria.

A few of the GAO's recommended changes to CBP include:

1. Exploring the need for performance measures that assess how effective C-TPAT is in improving supply chain security.
2. Urging CBP to ensure that companies are in compliance with C-TPAT requirements before they are certified.
3. Implementing a process to ensure that CBP recommendations have been implemented.

CBP has stated that they use discretion when assessing the risk inherent in a supply chain and then take appropriate measures to ensure that the company is in compliance. In addition, CBP has said that "the program overall has made the nation safer."

Regardless of CBP's response to this report, companies that are C-TPAT members should not rely on their C-TPAT certifications or certifications from other supply chain security programs as the measure as to how effectively they mitigate the risk in their supply chains.

It's important to recognize that the risk of terrorism is not the only thing threatening companies and the movement of cargo globally; other security concerns such as theft, product safety, intellectual property, competition in the ports, road and rail congestion, poor infrastructure, and environmental concerns are challenges as well.

Companies should focus on developing an overall trade compliance, trade facilitation and risk management program that goes far beyond C-TPAT and security requirements for the supply chain.

To ensure supply chain survival, companies need to answer this crucial question, "What should my global supply chain look like?" Consider all the elements throughout the modules of a supply chain, including:

1. Supply chain control and visibility
2. Multi-modal integration
3. Terminal layout, access, capacity and productivity
4. Road and rail infrastructure capacity
5. Labor supply
6. Trucker and drayage supply
7. Security policies, processes and procedures
8. Environmental concerns9. Legislative initiatives/ Governmental intervention
10. Customs and duty drawbacks with analysis
11. Carrier selection and negotiation strategy

This is what CBP, the WCO and other government agencies are seeking: the best leading the best, which will result in companies establishing best practices in trade compliance, trade management and risk management. The end result is the protection of revenue generated from the supply chain.
http://www.tompkinsinc.com

The Government Accountability Office released a report on May 27 as a follow-up to a similar report released in 2005 that assesses the effectiveness of the Customs Trade Against Terrorism (C-TPAT) program. The conclusion is that there are still gaps in supply chain security that terrorists could exploit to smuggle weapons of mass destruction in cargo containers.

The possibility that any kind of nuclear weapon could be moved through a supply chain is being addressed through the GAO's report. CNN reports that the Department of Homeland Security finds the likelihood of weapons being smuggled into the US through cargo containers is low, but vulnerability is high, as are the consequences of such an attack.

These findings and the GAO's new recommendations present a challenge for the majority of supply chains that move cargo under C-TPAT requirements and procedures.

According to the report, current problems with the C-TPAT program include:

1. C-TPAT certifications are based on self-reporting and are not verified or tested by CBP before benefits are granted.
2. Companies are getting certified before they fully implement requested security improvements.

There is no follow up by CBP (Customs and Border Protection) to make sure the requested improvements were made and that security practices remain consistent with the minimum criteria.

A few of the GAO's recommended changes to CBP include:

1. Exploring the need for performance measures that assess how effective C-TPAT is in improving supply chain security.
2. Urging CBP to ensure that companies are in compliance with C-TPAT requirements before they are certified.
3. Implementing a process to ensure that CBP recommendations have been implemented.

CBP has stated that they use discretion when assessing the risk inherent in a supply chain and then take appropriate measures to ensure that the company is in compliance. In addition, CBP has said that "the program overall has made the nation safer."

Regardless of CBP's response to this report, companies that are C-TPAT members should not rely on their C-TPAT certifications or certifications from other supply chain security programs as the measure as to how effectively they mitigate the risk in their supply chains.

It's important to recognize that the risk of terrorism is not the only thing threatening companies and the movement of cargo globally; other security concerns such as theft, product safety, intellectual property, competition in the ports, road and rail congestion, poor infrastructure, and environmental concerns are challenges as well.

Companies should focus on developing an overall trade compliance, trade facilitation and risk management program that goes far beyond C-TPAT and security requirements for the supply chain.

To ensure supply chain survival, companies need to answer this crucial question, "What should my global supply chain look like?" Consider all the elements throughout the modules of a supply chain, including:

1. Supply chain control and visibility
2. Multi-modal integration
3. Terminal layout, access, capacity and productivity
4. Road and rail infrastructure capacity
5. Labor supply
6. Trucker and drayage supply
7. Security policies, processes and procedures
8. Environmental concerns9. Legislative initiatives/ Governmental intervention
10. Customs and duty drawbacks with analysis
11. Carrier selection and negotiation strategy

This is what CBP, the WCO and other government agencies are seeking: the best leading the best, which will result in companies establishing best practices in trade compliance, trade management and risk management. The end result is the protection of revenue generated from the supply chain.
http://www.tompkinsinc.com