For a financial electronics company like NCR Corp. (www.ncr.com), security used to focus on theft prevention. Not any more. Today, it's all about traffic — specifically, tracking what's coming into the country, and what's going out and reporting that information to the U.S. government, says John Mascaritolo, director of global logistics with the ATM manufacturer.
New rules from the U.S. Department of Homeland Security (DHS) (www.dhs.gov) spell out exact timing on when the agency requires specific cargo information (See timeline at end of article). DHS is responsible for protecting the movement of international trade across U.S. borders, maximizing the security of the international supply chain and engaging foreign governments and trading partners in efforts to identify and eliminate security threats before they arrive at U.S. ports and borders. That mandate covers 11.2 million trucks and 2.2 million rail cars that cross into the U.S. each year, as well as 7,500 foreign-flag ships making 51,000 U.S. port calls annually.
According to Tom Ridge, secretary of the DHS, “Advance information is a cornerstone in our efforts to secure our nation's borders and ensure the flow of trade.” In November 2003, he released final rules that allow U.S. Bureau of Customs and Border Protection (www.cbp.gov) to collect cargo information necessary to identify high-risk shipments that could threaten the safety and security of the country. Customs will process that advance cargo information into an automated targeting system linked to various law enforcement and commercial databases, enabling the agency to identify shipments that pose a potential risk.
Mascaritolo only uses ports of origin that cooperate with this need for information. “They transmit what's in the ocean container to Customs,” he notes. “Customs can stop the container at origin or bar it from being unloaded at the port of entry. And vague descriptions such as freight all kinds (FAK) are no longer acceptable.
“It puts the burden on the shipper to make sure they have accurate information, and on the carrier to transmit information on what they are handling,” Mascaritolo adds. “We're not seeing detailed inspections but we do see a heightened need for information.”
A growing partnership between Customs and shippers and carriers is another avenue to secure the supply chain. The Customs Trade Partnership Against Terrorism (C-TPAT) sets out rules everyone has to follow.
In fact, Patrick Moffett, vice president, international logistics with wireless phone manufacturer Audiovox Corp. (www.audiovox.com), believes that eventually everyone in the supply chain will have to be C-TPAT certified. “It is something we should do,” he urges. “If the government wants to secure the supply chain, they have to start at the point of origin.”
While the steamship lines Moffett uses are notifying him of their C-TPAT certification, his Asian suppliers are a different story. “I need for them to complete questionnaires. Some don't even respond; others respond in unacceptable ways. It's a painful process,” he says.
The C-TPAT advantage is supposed to be fewer cargo inspections. However, Moffett speculates another attack on the U.S. could prompt the government to look even more deeply at imports and exports, especially companies that are not C-TPAT certified.
Moffett believes C-TPAT is a work in process. “As they look at what companies are doing, they look for best practices and incorporate those into the new rule,” he suggests.
In some industries, best practices include tight lips. Bayer (www.bayer.com) is adhering to chemical industry guidelines that stipulate secrecy is the best way to keep their facilities secure.
“While plant safety and security are primary concerns in the chemical industry,” according to Bayer's formal statement, “the DHS has advised the chemical industry not to publicly announce steps it is taking to enhance facility safety. Bayer concurs with the Department's view that unpredictability can deter those who would seek to intentionally harm chemical facilities. Changing security patterns and routines are, therefore, important.”
Changing policies regarding inventory are an after-effect of 9/11. “Before 9/11, the supply chain was very lean and fluid,” notes Mascaritolo. “Manufacturers could lower inventory because they implemented efficiencies to move it through the pipeline rapidly. Post 9/11, it takes longer,” he says.
“We're rethinking inventory levels, looking at where companies add inventory, and how much is industry-specific and product-specific. Some companies are even adding regional warehouses to get product closer to customers in case there is any delay in feeding it through the pipeline,” he notes.
Beefed up inventory levels are a direct result of 9/11 from a capacity standpoint as well, suggests Mascaritolo. Decreased airfreight capacity makes emergency shipments more difficult, especially evident during the West Coast ports shutdown of fall 2002.
“Within a week of the shutdown, companies moving to air freight ran up against diminished capacity,” Mascaritolo claims. “Vessels weren't back in the queue to be refilled, so manufacturers' low inventory levels triggered air cargo. They immediately took up all the excess capacity and had to pay whatever was asked,” he adds.
On the other hand, even though all of Audiovox's suppliers are in Asia, Moffett has seen no delays requiring increased inventory. He anticipated land-bridge delays during the hectic pre-holiday build up, but that had nothing to do with increased security.
Mascaritolo suggests carrier surcharges are directly related to increased security. “Carriers are passing through their higher costs and we pass them along to the consumer.”
While the effects of new security procedures post 9/11 affect companies and industries differently, normal isn't what it used to be for anyone. LT
To satisfy U.S. Customs' need for advance manifest information, freight carriers need to conform to the following timelines:
Source: Dept. of Homeland Security