NOWHERE TO HIDE

NOWHERE TO HIDE

In the lexicon of homeland security, there is a term that has been making the rounds a lot recently called 'domain awareness.' It's less a program than a way of thinking, one that will broadly affect how the government wages the war on terrorism. Domain awareness is the idea that the nation needs to know about potential threats well before they enter the country. If a ship is approaching from a foreign land, for example, the Coast Guard wants to know who is aboard and what the purpose of the voyage is well before the ship comes within sight of land. Authorities want to know who is aboard flights en route to the U.S., so the Customs Service's Advanced Passenger Information System analyzes biographical data on individual air passengers before arrival. The concept of domain awareness is also being applied to the international trade sector, introducing a wholly new element into what is already a complex business environment. We're likely to see it applied to air cargo to a greater extent than the 'known shipper' regulations in effect today. And it's coming to the ocean sector. Consider non-vessel-operating common carriers. NVOs consolidate small shipments into full container loads and then ship those containers with ocean carriers. They are a growing industry and are estimated to control up to 400f the waterborne cargo in certain trade lanes.

For the shipper, the NVO is a carrier just like an ocean carrier, issuing bills of lading the way ocean carriers do and assuming other legal obligations of an ocean common carrier. To the ocean carrier, the NVO is a shipper that receives its own bill of lading, as other shippers do. But the bill of lading that the ocean carrier issues for the NVO describes the contents only as a container loaded with consolidated shipments. The carrier doesn't know who is shipping and receiving the items packed into the container. Therefore, when carriers files their manifests to Customs well before the vessel arrives in the U.S., as they have done for years, a whole set of data about whose cargo is on that ship is omitted. It's only later, after the ship has arrived and the NVO containers have been moved to a deconsolidation facility, that Customs sees the full information about the shipments.In today's world, that is a gap in domain awareness, and one that policymakers are well aware, as Bob Edmonson reports on Page 22 of this week's magazine. Sections of the ever-expanding maritime security bill (S. 1214) being drafted by Sens. Ernest Hollings, D-S.C., and Bob Graham, D-Fla., would attempt to plug the information void created by the NVO data. It would require NVOs to file their manifests containing all the bill-of-lading information on their underlying shipments on the same schedule that ocean carriers file theirs. This would give Customs the ability to run the information through national security databases before the goods arrive in the country.

NVOs as an industry don't appear to object to the provisions, though as a group they lack a formal association in Washington to make their views known. It's understandable why they don't object. They'd rather tell Customs about their shipments than have carriers do it for them -- and learn who the NVOs' customers are. Conveniently, carriers don't object, either; they don't want the responsibility for collecting and submitting information on thousands of underlying NVO shipments.

When the Senate bill is passed, or when Customs issues new regulations, NVOs will have the responsibility for filing their own manifest data electronically and possibly have to post a Customs bond to ensure they do it properly. This will be a challenge for some, and a breeze for others.

But a number of NVOs have raised points worthy of consideration as this policy takes shape in the coming weeks. Michael Troy, chief executive of Troy Container Line, a large NVO based in Red Bank, N.J., said the advanced filing of information will serve a useful purpose only if the government gets it far enough in advance to do something worthwhile with it. That would be the case on transcontinental shipments from such regions as Asia, the Middle East, South America or Africa, but not from the Caribbean or even Europe, because they are so close, he said. 'Every security proposal I've seen in the past month is failing to remember the fact that we have transit times that are far faster than they were 10 to 15 years ago,' he said.

Dennis Colgan, chairman and chief executive of Barthco International, said a system requiring earlier filing of manifest data must be able to account for exceptions, those unique circumstances in modern supply chains where a rigid security screening system may be unable to accommodate unexpected changes in destination or other details. 'Whatever they design should allow flexibility in the system to accommodate the shipments that are expedited' or whose instructions are changed en route, Colgan said. 'Exceptions have to be dealt with.'

Peter Tirschwell is editor of JoC Week. He can be reached at (973) 848-7158, or via e-mail at ptirschwell

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