CARGO SECURITY
Customs Update: Will Steel Tariffs Make a Difference?
(Published in the Journal of Commerce on March 25, 2002)
View Article
CARGO SECURITY UPDATE
(Published in the Journal of Commerce on February 27, 2002)
View Article
Border Security and Congress
(Published in the Journal of Commerce, Dec 26, 2001)
Right now the watchwords on Capitol Hill
are "border security." Every container is a possible weapon,
the mantra goes, every ship a possible delivery vehicle and every port a
possible target!
Customs is physically able to inspect
some 2% of all the containers arriving in the United States. Therefore,
Members of Congress and Senators have become understandably focused on
the question of border security, by land, sea and air.
The legislative proposals have ranged to
the untenable. Some Members introduced a bill (H.R. 2960) requiring 100%
examination of all cargo! That approach is obviously not the answer both
from the point of view of what it would do to cargo release and, equally
importantly, for the unconscionable expense it would create for the
American taxpayer, for staffing and equipment and, in the end, consumer
goods.
Senator Hollings' port security bill
(S.1214) is considered much more likely to pass now than before the
events of Sept. 11. The objections of the labor unions to background
checks has given way to the reality that everyone who has anything to do
with cargo in any fashion should be someone who is trustworthy, and
trustworthy in this context means someone whose background has been
thoroughly checked and approved.
The Hollings bill is focused on the
nation's 50 largest ports. The first question obviously becomes, should
all ports be included? The bill allows each port to design its own
program, which raises the next question of whether a better approach
might not be to first identify best practices and then encourage
implementation of those best practices.
As mentioned, one of the provisions in
the bill requires background checks for individuals who have access to
"secure areas within a port or maritime facility." This
phrase, too, raises questions. What part of a maritime terminal is not a
secure area? What part of a port should not be considered a secure area?
The other obvious question to anyone who favors civil liberties is how
long is long enough? One principal of the American way of life is that
each person should be given a chance at rehabilitation. If someone is
convicted of a felony, serves his time and turns his life around, how
long must he be out of jail to pass his background check?
Because the Hollings bill leaves the
question of the specifics of the program to each seaport, it further
begs the question of how to reconcile conflicting requirements if not
all seaports enact compatible programs?
What does a terminal company with
operations in several ports do if each port has different requirements?
Should the federal government set the standards or should it set only
minimum standards with each location able to enact requirements to suit
its unique needs?
What none of the current proposals do is
deal with the real weak link in the process - the information provided
by the foreign seller. Hoping to address this aspect in the supply
chain, the U.S. Customs Service is evaluating security criteria it will
likely encourage the private sector to implement. Unfortunately, those
efforts seem currently focused solely on large companies rather than
recommending security measures which can realistically be implemented by
companies of all sizes.
There seems to be little dispute, wither
within the government or between the government and the private sector,
that the best way to address security concerns and still allow expedited
release of legitimate freight and people is through the pre-filing of
manifest information. Pre-filing is accomplished by the carrier filing
its manifest information with U.S. Customs electronically, but not all
modes of transportation are linked to the Customs computer; plus the
existing program needs refinement so it is able to handle all levels of
consolidation manifest information.
Even so, pre-filing still does not insure
the reliability of the information because the carrier is simply
reiterating what it received from the foreign shipper. Unless there is
some means to evaluate the reliability of the foreign shipper's
information, the loophole is not closed, and the only way to do so is in
concert with our trading partners.
Customs is understandably concerned about
"Order of Shipper" bills of lading because the name of the
actual consignee is generally not stated on the bill of lading, an
important element for pre-screening.
Similarly, goods which move on an FAK
(freight all kinds) freight rate lack a specific product description,
another important factor in making a decision as to whether to release
cargo. While both accepted and long-standing methods of shipping goods,
they may have to give way to security concerns. The need for the order
bill of lading is obvious to anyone who has ever sold goods relying on a
letter of credit.
Similarly, the FAK freight rate exists
because the U.S. still requires the use of steamship tariffs. FAK
applies when no other published tariff provision adequately describes
the goods being shipped. If shippers need to use these options for
legitimate commercial reasons, why not provide a means for carriers to
provide the consignee name or a "better" product description
right on the manifest?
One reason many companies give for not
wanting to state the actual consignee's name is they don't want it
published when manifest information is publicly released. As to FAK
rates (and product descriptions generally), a major consideration for
companies to avoid detailed product descriptions is cargo theft. An
equally important consideration is industrial espionage. Therefore,
solutions to these problems may lie in the government changing the way
it does business, e.g., one possibility is making the sharing of
information by an importer with Customs easier, perhaps by allowing
customs brokers the ability to input clarifying information into certain
data elements in the Automated Manifest System.
The same concerns exist for exports. One
fact we obviously have learned is that terrorists can exist unnoticed on
any country's soil for lengthy periods of time. The type of uproar they
seek to cause can be committed much more easily by exporting a shipment
than importing it, if for no other reason than the time of transport is
much shorter, thereby allowing less time for things to go wrong.
The one major component missing from the
current debate is international efforts. If we are to be satisfied the
cargo system is secure, we must work internationally with our trading
partners to agree upon the required elements for security. The same
concern for international cooperation exists in the immigration context.
A bill (S.1618) is currently making its way through Congress which
mandates that biometric information be stored on visas. However, which
standard(s) is to be used, e.g., fingerprint, retinal scan, etc., is
unclear. Whether dealing with Customs, immigration or a host of other
concerns, the bottom line is that if we are to have a reliable system,
we must reach consensus with our trading partners as to what is expected
and then enforce those rules. If there ever was an example where
unilateral action will only gum up the works, cargo security is it!
Should you have any questions, please
feel free to call us or e-mail your inquiries to info@skralaw.com.
Cargo Liability Rules To Change?
03/02
The current $500 per package limit of
liability for ocean shipments has been the subject of much scorn as
being commercially a too low rate of return in the case of damaged or
lost cargo. Therefore, not surprisingly, the amount of liability
compensation and related rules dealing with defenses have been under
review for some time.
One revision to the limit of liability took form in the Hague/Visby
rules and raised the amount to $1,000 per package. However, many
countries, including the U.S., have not adopted these changes.
Senate Passes Seaport Security Bill
03/02
In response to the mantra that every
container is a possible bomb, every carrier a possible delivery device
and every port a possible target, the U.S. Senate on December 21st
passed the Port and Maritime Security Act, S.1214. It requires the 50
largest ports to put in place security programs for cargo. Among its
more controversial provisions is one which requires background checks
for those in security sensitive areas, finally understood to be a
necessity if cargo security is to be realized.
The bill calls for the creation of local
security committees to better coordinate efforts between the federal and
local governments. Users of the ports will pay the cost through tonnage
tax payments, the current rate will now not decline in 2003 but rather
will remain at the current level until 2006.
In order to become law, S.1214 must now be approved by the House and
then signed by President Bush. The House is expected to take up the
legislation in late January, 2002. If its version varies from that
enacted by the Senate, a conference committee will have to iron out the
differences and then both houses will likely have to vote again to
approve the revised bill.
Better Container Seals Are
Possible
03/02
As the focus understandably is now on cargo security
and much of the government's efforts are directed towards large
companies, small and medium size shippers are being left out. One way
those smaller entities can play "with the big boys" is by insisting
on the use of better security seals. No longer should companies simply
accept the flimsy seals still employed by some carriers. Those plastic
or metal numbered seals must quickly become a thing of the past.
Steamship lines have long used high security seals but those should
rapidly be replaced by electronic seals which store data and can
pinpoint when a seal is broken or tampered with. Bolt seals are also a
good but old-fashioned way to secure cargo. They simply involve bolting
a metal piece bent at a particular angle to close doors. They can be
removed by a determined thief but tampering can be detected. Not every
option in security in the supply chain involves large expenditures of
money, although all involve some cash outlay at the start. Making seals
more tamper resistant is a relatively inexpensive option.
Cargo Security Update
03/02
While the various constituencies within
the Government are still trying to organize their thoughts about how to
deal with cargo security in light of the events of September 11th, the
private sector has already made some concrete recommendations. In
mid-November, Treasury Under Secretary of Enforcement Jimmy Gurule
approached COAC asking it to identify best practices in the cargo
security area. COAC is the Commercial Operations Advisory Committee and
consists of twenty (20) private sector individuals appointed for two (2)
year terms who advise Treasury about Customs issues.
COAC decided to reach further into the
private sector by forming a special working group to respond to Sec.
Gurule's request. The working group (which numbered 50) held three (3)
meetings in December and January. There were countless telephone calls
and e-mail exchanges to facilitate the work of the group which divided
itself into sub-committees to focus on Production and Manufacturing,
Transportation and Distribution and Import and Data Exchange. As things
were winding up, a fourth sub-committee was established to deal with
Technology. The work of the Technology group continues.
In a brief 40 working days, the
Subcommittee on Border Security issued its report which was adopted by
COAC as a whole in late January and quickly accepted by Treasury. For a
copy of the report in compressed format - click
here
WHAT CARGO
SECURITY MEANS FOR TRADERS
(Published in the Journal of
Commerce on January 21, 2002 )
View Article
MORE ABOUT CARGO SECURITY CONCERNS:
02/02
The threat being discussed as the
framework from which much of the Washington, D.C. discussion about cargo
security starts is - every container is a possible bomb, every
conveyance a possible delivery device and every port a possible target!
Against that backdrop, the Commercial
Operations Advisory Committee, an appointed group of twenty (20)
individuals from the private sector which advises the Dept. of Treasury
about Customs issues, was requested to identify existing best practices
by companies regarding cargo security. An organized effort at reaching
out to the private sector was undertaken. The final group of advisers
consisted of about fifty (50) individuals. The resulting report not only
identifies currently existing best practices but also makes
recommendations for changes which would heighten security even further.
Customs is about to take some of those
recommendations and post them to its web site in the context of the
recently created Customs-Trade Partnership Against Terrorism (C-TPAT).
As the COAC report is considerably more extensive than what Customs is
incorporating into C-TPAT, for anyone interest in receiving a copy,
e-mail us your request. Also check out Su's February article [January's
JOC article also dealt with this same topic] about cargo security which
will shortly be posted to the Journal of Commerce website.
Port Security Bill Amended
02/02
The version of the port security bill
passed by the U.S. Senate requires a security evaluation of all port
authorities, waterfront facilities and public or commercial structures
located within or adjacent to the marine environment. Port vulnerability
assessments are also required. The bill also empowers the Sec. of
Transportation to assess the effectiveness of foreign port security
measures. Foreign ports which are non-compliant face publicity of their
non-compliance with the likely result that cargo arriving from those
ports will be subject to closer scrutiny. If the situation were bad
enough, vessels calling those ports could be barred from arrival
in the U.S.
Air Security Increased
01/02
Customs has issued an interim rule
requiring each passenger air carrier to electronically transmit separate
manifests for passengers and crews. The manifest is to contain full
name, date of birth and citizenship, gender, passport number and country
of issuance, U.S. visa number or resident alien card number. Additional
data may be required in specific instances. The information must be
transmitted prior to departure from the last foreign port for the crew
manifest, and no later than 15 minutes after departure for the passenger
manifest. Security Considerations For Companies of All Sizes
Following the events of September 11th, everyone has become more
security conscious. The various federal inspectional agencies have been
examining the question of what sorts of security requirements will be
imposed on shippers. Understandably, much of the focus has been on large
companies. However, small companies can also exercise a few simple rules
to make their facilities safer. Customs published these tips:
Review your facility's security systems
and procedures. Are the physical security features and monitoring of
security sufficient to prevent your facility from being a target? Do
locks, fences or cameras need to be improved or added?
Know who is in your facility at all
times. Access should be restricted to persons who have passed through a
screening process. All visitors to your facility should have valid
picture identification, a legitimate purpose for being there and should
be escorted whenever possible.
Know your employees. New employees should
be chosen and screened carefully.
Know your merchandise. Merchandise should
be what you expect to receive. You should receive the same amount and
type of merchandise that is on the shipping paperwork.
PORT SECURITY STATUS REPORTED BY COAST
GUARD
11/01
The U.S. Coast Guard is providing
information to the maritime industry regarding the status of port
security around the U.S. via two Internet Web sites:
(www.hklaw.com/maritimedev.asp and www.uscg.mil/safeports).
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