C-TPAT ARTICLES

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House Introduces Bill to Allow C-TPAT Certification for Non-Asset 3PL’sWashington – Rep. William Owens [D-NY23] introduced H.R. 5619, which will allow many non-asset logistics companies to obtain Customs-Trade Partnership Against Terrorism (C-TPAT) Certification. The Safe Port Act, which was passed after the 911 terrorist attacks specifically included non-asset logistics providers involved in the international supply chain to be eligible for certification, but CBP has given these companies a thumbs down without offering an explanation. This bill will force CBP to allow certification for non-asset logistics providers such as 3PL’s (Third Party Logistics).

Once the bill has been passed CBP will have 60 days to define the criteria for non-asset logistics providers.

There is certain to be a rush of logistics companies to become C-TPAT Certified after the passage of this bill. Logistics providers should strongly consider becoming C-TPAT Compliant immediately, because this will make certification a substantially easier and faster process once it is available.

Here’s the full bill:

111th CONGRESS, 2d Session, H. R. 5619

IN THE HOUSE OF REPRESENTATIVES

June 28, 2010

Mr. OWENS introduced the following bill; which was referred to the Committee on Homeland Security

A BILL

To amend the SAFE Port Act to provide for the eligibility of certain third party logistics providers for participation in the Customs-Trade Partnership Against Terrorism program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. ELIGIBILITY OF CERTAIN THIRD PARTY LOGISTICS PROVIDERS FOR PARTICIPATION IN C-TPAT PROGRAM.

(a) In General- Section 212 of the SAFE Port Act (Public Law 109-347; 6 U.S.C. 962) is amended by inserting after ‘contract logistics providers,’ the following: ‘non-asset based third party logistics providers that arrange international transportation of freight, including motor carrier brokers of property licensed by the Department of Transportation,’.

(b) Effective Date-

(1) IN GENERAL- The amendment made by subsection (a) takes effect on the date of the enactment of this Act and applies with respect to applicants seeking to participate in the Customs-Trade Partnership Against Terrorism (‘C-TPAT’) program on or after the date on which the regulations published pursuant to paragraph (2) take effect.

(2) REGULATIONS- The Secretary of Homeland Security, acting through the Commissioner responsible for United States Customs and Border Protection of the Department of Homeland Security, shall publish in the Federal Register criteria for participation in C-TPAT program of non-asset based third party logistics providers described in section 212 of the SAFE Port Act, as added by subsection (a), not later than 60 days after the date of the enactment of this Act.

Olympic Freight Announces C-TPAT Certification

Pathfinder Logistics International, LLC DBA Olympic Freight, an NVOCC located in Santa Rosa, California, announced that it has successfully achieved C-TPAT Certification status through U.S. Customs and Border Protection.

C-TPAT (Customs-Trade Partnership Against Terrorism) is a voluntary program administered by U.S. Customs and Border Protection. C-TPAT Certified companies must have fully documented processes and procedures and must demonstrate that they are actively complying with all C-TPAT requirements in their day-to-day business operations.

C-TPAT Certified companies are required to use other C-TPAT Certified companies as their business partners whenever possible. They are also allowed to use C-TPAT Compliant companies, which are companies that are in full compliance with all C-TPAT requirements, but are not certified by U.S. Customs.

Olympic Frieight’s web site is http://www.pathfinder-logistics.com/. They can be reached by telephone at 707-528-1487.

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Customs-Trade Partnership Against Terrorism – 2010 Partner Survey

Customs-Trade Partnership Against Terrorism – 2010 Partner Survey

Overview of Surveyed Companies

• At the time of the survey, C-TPAT had 8,166 business partners. For the purpose of the study, these C-TPAT business partners were grouped into Importers (3,822); Carriers (2,270), including U.S/Canada Highway Carriers, U.S/Mexico Highway Carriers, Rail Carriers, Sea Carriers, and Air Carriers; Service Providers (1,400), including U.S. Marine Port Authority and Terminal Operators, U.S. Air Freight Consolidators, Ocean Transportation Intermediaries or Non- Vessel Operating Common Carriers (NVOCC), and Licensed U.S. Customs Brokers; and, finally, Foreign Manufacturers (674).

• Of the 8,166 companies participating in CTPAT, a total of 3,901 businesses, nearly half (47.8%), responded to the 2010 survey. This represents a substantial improvement over the 29.4 percent response rate obtained for the 2007 survey

• The response distribution by business type is fairly close to that of the 2010 C-TPAT business partner population. Specifically, 39.2 percent of respondents to the 2010 survey are importers, 29.5 percent are carriers, 19.5 percent are service providers, and 11.8 percent are foreign manufacturers. The larger absolute numbers of responses from Service Providers and Foreign Manufacturers in the 2010 Survey are particularly welcome, in that they substantially increase CBP’s confidence in the statistical inferences that can be drawn about these types of businesses.

• Respondents who completed the survey were asked to indicate their company’s annual revenue. For nearly three-quarters (74.9) of the responding companies, the annual revenue reported was less than 100 million dollars. For nearly half (44.1%) of the responding companies, the annual revenue reported wasless than 10 million dollars.

Tangible Benefits for all Businesses

• Overall, the greatest C-TPAT impacts on business have included improvements in the field of workforce security, decreased time to release cargo by CBP, reduced time in CBP inspection lines, and increased predictability in moving goods. Importers identified an additional impact related to a decrease in disruptions to the supply chain. For the majority of non-Importers, C-TPAT had a imited impact on their number of customers and sales revenues. For Highway Carriers, the major C-TPAT impact has been the decrease of their wait times at the borders.

Intangible Benefits of the C-TPAT Program

• Of all the potential intangible benefits, “increases security awareness” and “enhances security in supply chain” had the highest mean ratings (3.76 and 3.75 respectively on a 4 point scale). In each of these cases, roughly three quarters of all businesses considered them to be very important benefits. • Other intangible benefits from the C-TPAT program included “demonstrating corporate citizenship” and, “improving risk management procedures and systems”. For Importers, the most important potential benefits included “assignment of a C-TPAT Supply Chain Security Specialist to help your company validate and enhance security throughout your supply chain” and “self-policing and selfmonitoring of security activities through the Importer Self-Assessment program.”

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Highway Carriers

• A majority of Highway Carriers reported receiving a “large” or “moderate” benefit from the FAST program, but almost sixteen percent said they did not know whether they benefited from this program or not.

• Highway Carriers were asked how often they received front-of-the-line privileges. Twothirds of the respondents said they did not know whether they received this benefit or not, and another fifth said they received it “hardly ever” or less than half the time.”

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Costs to Implement the C-TPAT Program

• Across all businesses, “improving or implementing physical security costs (doors, windows, electronic access, cameras, fences, gates, lighting, etc.) received the most mentions of all the potential C-TPAT implementation costs. For Importers, additional important costs were associated with “developing a new supplier security evaluation survey process” and “educating foreign suppliers, manufacturers, or vendors about security requirements.”

• Of all the maintenance cost items, “maintaining the physical security” and “maintaining cargo security” were the most frequently mentioned by all the businesses. These two items were mentioned respectively by 67.0 percent and 61.7 percent of all businesses. Next on the list of maintenance cost items is “maintaining in-house education, training, and awareness” which is mentioned by 56.9 percent of businesses.

• The 2007 survey included questions asking for detailed information about expenditures and dollar values. In the 2010 survey, these questions were deferred to a more detailed survey conducted with a small sub-sample of C-TPAT members as part of the effort to streamline the primary survey instrument. The results of the more in-depth survey will be made available later in 2010.

Revalidation

• The vast majority (90.7) of respondents that had participated in a revalidation judged it to be either “exactly what I expected” (32.2%) or “close to what I expected” (58.5%). Only 2.0 percent of respondents judged it to be “not at all what I expected”. • Satisfaction with the recommendations received from C-TPAT during the revalidation procedure were favorable as well with 54.7 percent of respondents “very satisfied” with these recommendations, 38.7 percent “somewhat satisfied” and only 1.3 percent “very unsatisfied.”

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Risk Management

• Overall, more than one-half (52.2%) of all businesses reported that they had a formal system in place for assessing and managing supply risk before joining C-TPAT and nearly half (47.8%) of businesses did not report having one in place.

• Of the businesses that had a formal system in place for assessing and managing supply risk, 87.6 percent agreed (59.9%) or somewhat agreed (27.7%) that their businesses’ ability to assess and manage supply risk has been strengthened as a result of joining C-TPAT.

• Overall, the 2010 survey showed both a higher proportion of companies reporting pre-CTPAT risk management and contingency planning systems and a higher level of satisfaction with improvements in those systems attributed to C-TPAT membership.

Use of High-Security Seals

• Relatively new members of C-TPAT (those certified within the last three years) were also asked whether they used high-security seals (ISO 17712) prior to the implementation of CTPAT security criteria. They were split quite evenly in terms of usage of high-security seals (ISO 17712) with slightly more than half (51.4%) using them prior to C-TPAT and the remainder (48.6%) not using them prior to CTPAT.

Global Harmonization

• This section of the report analyses respondent perceptions of how C-TPAT coordinates with security programs in other parts of the world (an issue not addressed in the 2007 survey). A total of 38.6% of the sample have offices in other parts of the world.

• Among these companies with offices in other parts of the world, more than two-thirds (67.9%) are aware of other security programs operating in those foreign countries. Only 8.6 percent of these companies considered a lack of mutual recognition or harmonization to be a “serious problem,” while an additional 33.9 percent considered it “somewhat of a problem.”

• Satisfaction with the progress C-TPAT is making in strengthening harmonization and establishing mutual recognition between the security programs of different countries was good overall, with 84.1 percent of those companies for which global harmonization is a pertinent issue rating those efforts as either, “good,” “very good” or “excellent.”

Benefits versus Costs

• In addition to being asked to separately indicate which of several specific costs and benefits were associated with their participation in C-TPAT, businesses were asked to make an overall cost-benefit assessment of their experience with C-TPAT.

U.S. CUSTOMS AND BORDER PROTECTION

14 University of Virginia

The question was: How would you describe your company’s overall experience with CTPAT thus far? Overall, 42.1 percent of businesses reported that the benefits of participation in C-TPAT outweighed the costs, approximately a 10 percentage point improvement over the 2007 survey. Exactly one quarter of businesses reported that the benefits and costs of participation in C-TPAT were about the same, 14.9 percent reported that the costs of participation outweighed the benefits and 18.0 percent reported that it was too early to tell.

• Encouragingly, but perhaps not surprisingly, businesses that had been certified longer were systematically more likely to report that the benefits of participation outweighed the costs.

Perceptions of net benefits increased in a linear fashion with years in C-TPAT, ranging from 30.2 percent among companies certified less than 1 year to 47.7 percent among companies certified more than 5 years. (Note that a propensity to perceive benefits from CTPAT may be a cause as well as an effect of early certification with C-TPAT.)

• Perhaps more surprising, and in any case also very encouraging, is that larger companies are systematically more likely to perceive greater net benefits from C-TPAT membership. And this comes despite often reporting lower absolute levels of satisfaction with various aspects of the C-TPAT partnership.

Specifically, the perception that “the benefits outweigh the costs” increased in a linear fashion with company size, ranging from 36.5 percent for companies with less than $10 million in annual revenues to 55.7 percent of companies with more than $10 billion in annual revenues.

Suspension

• Among those companies aware of C-TPAT’s suspension procedures and willing and able to offer an opinion about the fairness of those procedures, the vast majority of respondents rated the procedures as either “very fair” (46.7%) or “somewhat fair” (48.9%) with only 4.4 percent rating them “not fair at all.”

Communication with C-TPAT

• Approximately four-fifths (79.2%) of respondents have been in contact with their Supply Chain Security Specialists (SCSS) in the last 12 months.

• Among those businesses having contacted their SCSS in the past 12 months, nearly four out of five (77.4%) stated they had gotten what they needed “all of the time,” with most of the remainder (18.9%) reporting that they had gotten what they needed “most of the time.”

• In addition, over 95 percent of businesses that have contacted their SCSS with questions indicated that their SCSS responded in a timely fashion “all of the time” (75.8%) or “most of the time” (20.4%)

• Finally, overall levels of trust for the SCSS were extremely high with 87.0 percent of respondents saying they trusted their SCSS “very much.”

Factors that May Lead to Leaving the Program

• When asked: “Has your company ever considered leaving the C-TPAT program?” 9 out of 10 (90.7%) of businesses said that they had never considered leaving the C-TPAT program and 7.0 percent said that they had. The remainder of the businesses (2.3%) said they did not know. On this question, businesses showed no significant differences by size or by length of C-TPAT certification period, but Carriers (8.5%) and Service Providers (8.0%) were more likely to have considered leaving than were Manufacturers (4.3%) and Importers (6.5%).

Overall Experience

• Overall, 42.1 percent of businesses reported that the benefits of participation in C-TPAT outweighed the costs, approximately a 10 percentage point improvement over the 2007 survey. Exactly one quarter of businesses reported that the benefits and costs of participation in C-TPAT were about the same.

• Encouragingly, but perhaps not surprisingly, businesses that had been certified longer were systematically more likely to report that the benefits of participation outweighed the costs.

• Slightly more than thirteen percent (13.2%) of the businesses did not know about the procedures for assessing and managing supply chain logistics their companies had put in 2010 C-TPAT PARTNER SURVEY Center for Survey Research 15 place prior to joining C-TPAT, and a similar percentage (15.9%) did not know about the formal supply chain continuity and contingency plans that were in place prior to joining C-TPAT. More than eight in ten of the respondents who said they had prior procedures in place agreed that those procedures had been strengthened as a result of joining C-TPAT. U.S. CUSTOMS AND BORDER PROTECTION 16 University of Virginia

III. Introduction
About the Report
The report is divided into three major sections:
Introduction, Survey Development, and Survey Results. The Introduction provides an overview of the complete survey process starting with contract development and works through the completion of the first two phases of the project.

The Survey Development section presents a description of the three focus groups, two which were conducted by telephone and WebEx and a description of the questionnaire development process.

The Survey Results section presents a summary of the survey findings and is divided into the following areas:
• Overview of Surveyed Companies
• Characteristics of Employees who Completed
the C-TPAT Partner Survey
• Importers
• Carriers
• Service Providers
• Foreign Manufacturers
• Costs to Implement the C-TPAT Program
• Costs to Maintain the C-TPAT Program
• Tangible Benefits of the C-TPAT Program
• Inspection Experience of Highway Carriers
• Intangible Benefits of the C-TPAT program
• Risk Management
• Revalidation
• Suspension
• Global Harmonization
• Communication with C-TPAT
• Overall Experience