Stuck in the Fast Lane

Stuck in the Fast Lane

Copyright 2004, Traffic World, Inc.

VF Corp. wanted to get in the importing fast lane when the North Carolina-based apparel giant joined the Customs-Trade Partnership Against Terrorism. Now the company is in "a holding pattern" as it waits to find out where the fast lane begins.

Calgary-based NOVA Chemicals signed up for the U.S. Bureau of Customs and Border Protection program immediately after it was unveiled some 20 months ago and was quickly certified. But, "we are still waiting for the next phase from the U.S. government," said Kevin Duncan, international logistics leader for the chemical manufacturer.

Nearing the second anniversary of what was the first large-scale cargo security initiative to respond to the potential threat of terrorism in the wake of the September 11 terror attacks, the C-TPAT program has won a long line of followers among shippers, carriers and forwarders.

In a series of interviews, many shippers and carriers praise the program for pressing their companies and their suppliers to focus attention on security and to create stricter systems of control and oversight. But many also say they are waiting for the follow-through in a program aimed at keeping weapons of terror out of international cargo networks, and they''re wondering when the benefits to joining the program will show up in their supply chains.

"The promised benefit of expedited cargo processing of imports has yet to materialize in a big way," said John Cutler, principal and attorney at Washington, D.C.-based law firm McCarthy Sweeney & Harkaway. Cutler is general counsel of National Small Shipments Traffic Conference and the Health & Personal care Logistics Conference. "But shippers and carriers report that that the process of becoming C-TPAT certified was beneficial," he said.

Transport operators, too, are wondering about the competitive benefits of joining a program that was billed as voluntary yet in reality is anything but.

There is no clear commercial advantage to joining C-TPAT as practically all carriers have joined, said Rainer Dehe, vice president of operations at shipping line Hamburg Sud North America. In other words, participating in the program has become a competitive necessity making it foolhardy not to join.

Customs launched C-TPAT in the chaotic months after September 11, when Congress was focused on securing passenger travel and new fears were growing that terrorists would use trading freedoms to bring weapons into the United States through corporate supply chains.

Even after various initiatives and requirements from the Transportation Security Administration, C-TPAT is probably the most extensive and familiar security plan across the cargo transport world. Customs wasn''t ordered to come up with the program and really has no enforcement provision other than its stamp of approval and the implicit potential for slowdowns at the border.

C-TPAT has concentrated minds and resources on the issues and brought some rigor to the process. In return, "if a business takes steps to secure its cargo against terrorism, we will give it the fast lane through the border," said Commissioner Robert Bonner when the program was introduced.

Nearly 5,400 companies have enrolled in the program and many say it has been a relatively smooth process, requiring only that they spell out their security processes and safeguards.

Shippers express horror at the idea that their boxes could be used for terror and praise the program for focusing attention on the problem. But many also give it mixed reviews, saying the requirements remain ill-defined and specific guidelines have been slow to arrive.

"We spend an awful lot of time and resources trying to ensure that we have the white on as far as being a good guy in the Customs view," said Steve Bullard, international logistics manager in the jeanswear division of VF Corp.

The enterprise has been accepted into the program. As to the next stage "at some point they will conduct some sort of visit, but have not had the opportunity yet," Bullard said. Until the visits take place the organization is in "a holding pattern," he said.

There also is ambiguity over the fast-lane status that comes with being certified under C-TPAT. "I honestly can''t say that we''ve gotten significantly less intensive exams, but may well have in relation to a period of heightened security," said Bullard. Still, he feels confident that if VF were not a C-TPAT certified importer "we probably would have a higher scrutiny rate."

NOVA''s Duncan says the lack of a timetable means the next steps are "a gray area, so you are kind of left out there hanging."

Transport carriers and intermediaries see nothing "voluntary" about C-TPAT but many say compliance is not a huge burden. Hamburg Sud''s Dehe noted many ocean carriers already participate in programs to combat drug smuggling.

Many carriers say they are in it for comfort - to ensure that they and their customers are comfortable about the security of their delivery chains.

Many truckers, including the American Trucking Associations, are big backers of C-TPAT.

"Unfortunately, it''s a necessary evil because the world is what it is," said Ned Moritz, vice president of marketing for Con-Way Transportation Services. "If the world is what it was 60 years ago, it would be a waste of time. But the world has changed."

Con-Way has been an active participant from the first day of discussions on C-TPAT and remains active despite the frustrations of dealing with some government agencies that apparently never dealt with transportation companies in the past.

"We want this thing done right," Moritz said. "Some of the proposals have been less than efficient. But in anything like this, you''re going to have ebbs and flows. But hopefully you get information that will have an impact on what the objective is, which is reducing the threat of terrorism."

So far, the government focused on international freight movements but truckers say they expect domestic movements to be tracked soon as well.

Peter Cheviot, director of corporate security at forwarder BAX Global, said C-TPAT was a "pretty strong statement, pretty significant program that caught our attention immediately," he said.

Cheviot noted that all or almost all of BAX''s competitors are most likely in the program as well: "The initial requirements are pretty basic."

But as for the real impact of the "fast lane," that is another matter, said Cheviot. "We haven''t seen any adverse or positive effect in our services. Our services been pretty standard," he said. Even so, he said the program has helped BAX.

"It''s got us really moving forward with our global security program ... It''s driven a lot more conversation and forced us to work closer together than ever before," said Cheviot.

Through C-TPAT, BAX has renewed its scrutiny of facility access controls and procedures, for example.

Chris Corrado, vice president, customer support, APL Logistics, said it is hard to tell whether membership has smoothed the way across the border but the organization plans to sign up under the domestic warehouse category when that program begins.

C-TPAT "has given people a blueprint" for assessing supply-chain security he said, something that the trade community needs. When it comes to the threat of terrorism, "customers are terrified that it''s going to be their container," he said.

Corrado said some of his customers still are waiting six months after submitting paperwork for certification for the validation process to move forward.

"We''ve been asked by a number of our customers to help them out with the validation process," he said. Midsize shippers in particular have needed help, even though the procedures are relatively straightforward, he said.

Some observers say the benefits of C-TPAT haven''t been realized yet but that the program is having an impact on logistics operations.

Laurance Alvarado, managing director in consulting firm BearingPoint''s Global Trade Management practice, believes C-TPAT is bringing more supply-chain transparency. He said companies will gain more visibility and efficiency as they put supply chains under the microscope.

For global shippers the program''s international dimension is important.

"C-TPAT will bring more of a global perspective to the supply chain," Duncan said. He noted that the program is starting to have an impact in other countries.

With most of its business a "closed loop" supply chain, VF Corp. has started to "re-think how we do things" in dealings with contractors. The organization uses logistics services providers that are C-TPAT-compliant. It issues documentation that manufacturing contractors must adhere to. "If nothing else it demonstrates that we are serious about it," he said.

"Becoming certified is not quick or easy but most difficulties can be anticipated," said Cutler. And there are benefits such as supply-chain improvements that result from closer scrutiny of facilities and processes.

Bill Evans, a trade consultant at customs broker and freight forwarder Barthco International, sees CBP raising the compliance bar higher as it absorbs best practices and inspectors gain more experience.

In the meantime, he said, Customs is gearing up to increase the certification rate.

At a recent training seminar on the program, Bonner "talked about raising the bar to the next level" with criteria for achieving green-lane status, said Evans. These express lanes for cargo clearance will be reserved for C-TPAT participants that meet certain requirements including the use of "smart" containers with special security seals and carriers that are also certified under the program.

Meeting the green-lane criteria will be difficult for shippers large and small, said Evans. He estimated that it could cost $40 to $50 per container to qualify for the fast-track program.

Meanwhile, some C-TPAT participants want clearer guidelines from Customs. One carrier described the current security requirements as "fuzzy" and not specific enough to its business.

That could put carriers in a tough position, says Alvarado. He would like to see "companies with common business interests like rolling stock or containerized shipping" get together and hone the security standards, and these could then be incorporated into the federal code.

-- Associate editors John Gallagher, Kathleen Hickey and John D. Schulz contributed to this report.