An unnecessary debate

An unnecessary debate

Last year was decision time for U.S. Customs. It was frighteningly obvious following Sept. 11, 2001, that to whatever extent the nation had grown rich from international trade, the logistics system erected to achieve that had left the nation highly vulnerable to additional, perhaps more devastating, attacks. Customs Commissioner Robert Bonner, grasping that no federal agency knows this system better than his, seized the initiative and launched a series of programs designed to ensure that a weapon of mass destruction not only doesn't arrive at a U.S. port, but doesn't begin its journey to the U.S. in the first place. Because of the unknown nature of the threat, it had to be done quickly.

In ocean shipping, which accounts for the largest portion of U.S. trade by volume, that meant heading off problem shipments at the port of origin. Customs needed information about those shipments early enough in the shipping process to decide which ones to inspect. There were options for obtaining that information, for example, by requiring importers to transmit information directly to Customs. But the agency chose instead to use the vessel manifest, a list of all the contracts of carriage between the steamship line and its customers. In pursuing this route, which Customs was justified in doing, it opened up a veritable Pandora's Box because the manifest is and has always been a public document.

The contents of the manifest have long been available and used by those with an interest in international trade to understand their market and make informed decisions. It's used for analysis and law enforcement by a number of federal agencies, including the Navy, Department of Transportation, Drug Enforcement Administration and U.S. Customs. In its earliest days in the 1820s, The Journal of Commerce reprinted manifests for the benefit of international traders. It still does so through its Port Import/Export Reporting Service (PIERS), which sells data based on manifests to thousands of shippers, carriers, ports and other participants in the trade process. As trade grows in importance to the U.S. economy, so does the need for information that sheds light on this sector. Taking information out of the public domain has rarely served the interests of the country, but that is precisely what Customs is proposing to do.

An association of non-vessel-operating common carriers persuaded Customs to propose a follow-up regulation to the 24-hour advanced manifest rule giving both NVOs and carriers the right to delete their customers' names from the public record. The rule change could significantly reduce the amount of manifest information in the public record.

Ironically, NVOs have been big users of manifest data. Why? Because it gives them a window into the customer lists of the steamship lines, against whom they compete.

Steamship lines have not been able to use the data in a reciprocal fashion because NVOs disguise the names of their customers by listing in the manifest only their own name, not those of their underlying customers. When Customs said the manifest must list all shippers, even those using NVOs, some of the more vocal NVOs naturally cried foul as their customer lists would be exposed, and launched a counterattack.

The NVOs have somewhat disingenuously tried to frame their argument in terms of national security, playing to Washington's fixation on terrorism. Yet Customs itself has all but dismissed this argument, as well it should, because manifest information hardly represents a security breach. It is released to the public weeks after any tainted cargo has landed in the U.S., and the information itself is limited to what appears on the bill of lading, and is far from comprehensive.

It is unclear, therefore, how allowing NVOs and carriers to white-out their customers' names from the public record would yield a public benefit. Shippers already have the right to withhold their names from the record, and have been able to do so for more than 20 years. At no time during that period has there been a serious breach of that confidentiality. Steamship lines, which would appear to suffer at the hands of NVOs armed with such market intelligence, want to keep the information in the public domain because of its research and analytical value.

It would appear, therefore, that the only benefit to allowing NVOs and carriers to remove shipper names themselves would be to cater to a narrow competitive interest. That is not a sufficient rationale for such a drastic change in policy on freedom of information - a policy that in the case of manifest data has been repeatedly endorsed by courts as well as Congress, most recently in the Maritime Transportation Security Act of 2002.

Peter Tirschwell is editor of The Journal of Commerce. He can be reached at (973) 848-7158, or via e-mail at ptirschwell@joc.com.