Customs’ C-TPAT Goal: Show ’Em the Money
The following is from the 17 January 2013 edition of Journal of Commerce.
For C-TPAT, something has to change. The number of importers, carriers and other private companies involved in the Customs-Trade Partnership Against Terrorism is virtually static. Too many importers are saying “no thanks” to the voluntary security program that reduces the chances participants’ cargo will be stopped for inspection.
C-TPAT importers are 3 ½ times less likely to have their shipments examined by the agency and seven times less likely to see their cargo through an extensive examination, Kevin McAleenan, acting assistant commissioner in Customs’ Office of Field Operations, said at the agency’s annual C-TPAT conference this month.
For many shippers, the program’s requirements and potential costs outweigh the agency’s assurance that C-TPAT members’ cargo will be the first cleared after a major supply chain disruption, such as a port strike, terrorist attack or natural disaster.
The need to boost C-TPAT’s ranks from nearly 10,500 — 4,327 of which are importers and 3,021 are carriers — goes beyond just meeting Customs’ goal to better ensure the secure movements of goods. The program also allows Customs to focus on inspecting shipments that aren’t being handled by companies that have earned the agency’s trust.
The need to use limited resources most effectively comes as the agency faces an annual budget cut of roughly 8 percent, or $955 million, if sequestration takes effect in March, according to a White House report. The Border Protection Division will take the brunt of the hit if Congress and the Obama administration don’t blunt the cuts.
Customs realizes it needs to do a better job of explaining to potential C-TPAT members what financial and intangible benefits the program delivers, said Daniel Baldwin, executive director of cargo and conveyance security at the Office of Field Operations. The agency, he said, has done a good job of explaining to the trade community what C-TPAT does, but hasn’t provided a clear enough understanding of the money that can be saved through less inspections and cheaper insurance.
It’s easy for a company to lose sight of C-TPAT memberships, considering one of its major benefits, reduced inspections, is difficult to quantify. Other benefits, including the fact that some shippers are making C-TPAT membership a contract obligation, can’t be calculated. “If you don’t have (C-TPAT certification) and another major competitor does, there is a good chance you will lose that customer over time,” Barry Brandman, CEO of security and investigative consultant Danbee Investigations, said at the Jan. 10 C-TPAT conference.
Baldwin said the agency doesn’t have a membership number goal, unlike the 40,000 number that then-Customs Commissioner Alan Bersin targeted three years ago. The agency wants partners who will enhance supply chain security and is looking to go beyond importers and carriers to involve the likes of forwarders and foreign trade zone operators.
Despite the need to attract more participants, Baldwin points to the program’s success in involving most of the major rail and ocean carriers, and its importer members accounting for 55 percent of U.S. imported merchandise by value.
The agency sought ideas on how to improve the program from the 1,200 attendees of its conference. For the first time, non-C-TPAT members were able to attend the conference to get a better understanding of the program. “Without you, we don’t have C-TPAT,” Thomas Winkowski, acting chief operating officer, told attendees.
The best way to improve C-TPAT is to streamline the program’s clearance of cargo with the 41 other regulatory agencies involved in allowing shipments into the country, said Marianne Rowden, president and CEO of the American Association of Exporters and Importers. Fourteen of those agencies, including the Food and Drug Administration, can hold up the release of imports.
The program would be more attractive to pharmaceutical companies, for example, if they knew their C-TPAT membership would help speed safety checks from the FDA, not just security checks performed by Customs. Customs is working on creating a mutual recognition program with other agencies, Baldwin said.
“Our members also say they never get a call from Customs saying, ‘We are looking at your data, and we have a few questions,’ ” she said. “It’s always a one-way-street dialogue.”
The agency is working harder to work with C-TPAT members when security questions arise, Baldwin said. Other program benefits sought by the trade community include allowing carriers to move goods toward distribution centers before being cleared and minimizing background checks for those who work in bonded warehouses, said Beth Ring, a trade attorney and a senior member of Sandler, Travis & Rosenberg.
Ring said there also needs to be an operation “line authority” over ports when it comes to policy mandates regarding trade program implementation and enforcement initiatives. Without the top-down authority, port specialists can use their own specific policies, resulting in disparate treatment of shipments depending on the port of entry.
The Centers of Excellence and Expertise will help reduce such discrepancies in the implantation of mandates, Baldwin said, but the program is still in its pilot status. Customs expects to open the majority of its six new CEEs by the first half of the year, and the rest of the facilities, aimed at bringing uniformity to the agency’s handling of major product imports, will be up by the end of 2013. Four CEEs are already online.
For 2013, the agency will continue to create an export component within C-TPAT. The agency during the last eight months has performed validations on the export side and has begun to create criteria for the program.
Customs also will continue its mutual recognition projects with Singapore, Israel, China and Mexico, with the ultimate aim of those countries joining New Zealand, Canada, Jordan, South Korea, the European Union and Taiwan in having mutual recognition agreements for imports. Customs has done joint validations with its Chinese counterparts of roughly 250 Chinese companies, building confidence between the U.S. and Chinese officials and shippers.
“We still have a lot of work to do, but we are working to get our largest trading partner” into a mutual recognition agreement, Baldwin said.
The addition of mutual recognition arrangements with other countries, particularly China and Mexico, will only add to the allure of C-TPAT. But those benefits, along with the ones already in place, won’t get the hearing they deserve unless Customs can explain how they will affect company bottom lines.
Contact Mark Szakonyi at firstname.lastname@example.org and follow him on Twitter at twitter.com/szakonyi_joc.