Customs Looking to Increase C-TPAT Benefits
U.S. Customs and Border Protection (“CBP”) recently announced that it is developing procedures to provide an added benefit for trusted importers in the Customs-Trade Partnership Against Terrorism (“C-TPAT”) program. This announcement was made at the 2007 Supply Chain Security Training session held in New Orleans on April 4.
Currently, if CBP selects a container for examination, all other containers listed on the entry must be held at the terminal until the selected container is inspected. All held containers, whether targeted or not, that exceed the number of free storage days allowed by the terminal operator are assessed demurrage.
The procedures being developed would require that only the targeted container be held at the terminal, while the other containers could be removed in order to reduce demurrage fees. C-TPAT participants must, however, keep the removed containers sealed and available upon request until CBP lifts the hold on the entire shipment.
CBP has not announced an effective date for the new procedures.
As most readers are probably aware, C-TPAT is a voluntary supply-chain security program that was developed by CBP in the wake of the terrorist attacks on September 11, 2001. CBP has pointed out that this initiative recognizes the need to involve all members of the trade community if the cargo supply chain is to be protected and strengthened to its highest security levels. C-TPAT currently has over 5,800 certified participants and is available to a wide range of trade community members such as importers, carriers, customs brokers, port authorities, terminal operators and certain foreign manufacturers.
Through the C-TPAT program, CBP offers businesses the opportunity to combat terrorism and generally reap the rewards of a safe and secure supply chain for employees, suppliers and customers. The chief benefits of C-TPAT participation, as enumerated on CBP’s website, include:
- Reduced number of inspections (reduced border times);
- An assigned account manager to assist in security improvements for the supply chain;
- Priority processing for CBP inspections when feasible;
- Potential participation in other CBP programs such as:
- Importer Self-Assessment Program (“ISA”) which emphasizes self- policing instead of CBP audits;
- Free and Secure Trade (“FAST”) program on the US/Canada and US/Mexico borders; and
- Eligibility to attend C-TPAT training seminars on supply chain security.
In addition to the above “carrots”, CBP conversely wields some “sticks” for those otherwise less inclined to participate in C-TPAT, such as increased chances for reviews and audits, additional cargo examinations, and delays in processing. The program is also being driven by commercial factors, with more businesses requiring that companies operating within their supply chain become C-TPAT participants.
One of CBP’s priorities for 2007 is to increase the participation of small- and medium-sized businesses in C-TPAT, which is now the dominion of large companies. CBP hopes that recent information will show that C-TPAT does not have to involve a major investment. According to preliminary findings of a C-TPAT member survey, conducted by the University of Virginia on behalf of CBP, participants on average spend $54,000 per year on supply chain security measures to meet C-TPAT criteria. This compares to about $25,000 in the last full year before joining the initiative. It should also be pointed out that the median expenditure – i.e., the point at which half the companies spent more and half spent less – was $10,000 after joining C-TPAT. This suggests that many companies made small expenditures with the averages being boosted by a few large investments by bigger companies.
To offset these costs, the survey showed that a large majority of importers have benefited by seeing government inspection levels decrease or stay the same for their ocean containers. The survey indicated that 39% of companies have experienced a decrease in inspections while 53% report no change in the number of inspections. CBP is encouraged by these results since inspection levels have quadrupled since September 11, 2001.
The findings further show that of those responding to the survey, 95% indicated that they are likely to remain in C-TPAT. In addition, 31% of responding companies said that the benefits outweighed the costs, 25% said that the benefits and costs were equal, and 27% indicated that it was too soon to assess the costs and benefits.
C-TPAT is certainly not without its critics and is by no means a model of perfection. Rather than being abandoned, however, all signs indicate that the program will continue to evolve and expand.