The U.S. Customs Service launched the Container Security Initiative (CSI) in early 2002. Today, countries with 19 of the world's 20 largest ports-and other strategic locations-are working to enhance the security of the world's maritime trading system. In December 2003, the U.S. Bureau of Customs and Border Protection published the final rules requiring advance manifest information for screening. Those rules went into effect on January 5, 2004.

This new reality has profound implications for a wide variety of companies, including shippers, carriers, retailers, importers, and OEMs and manufacturers, along with the domestic suppliers who sell to retailers and importers. When you consider that 90 percent of the world's cargo moves by container, with 46 percent of all goods entering the U.S. arriving by ocean-going cargo containers, the CSI's advance screening requirement takes on truly staggering proportions.

Sounds like a prescription for higher transportation costs, shipment delays and decreased service levels, right? Maybe not. Because while the CSI does present some significant business challenges, companies that get compliance right could benefit from improved inventory control and reduced administration costs. And commercially available global logistics management software may hold the key.

Strictly speaking, the Container Security Initiative is the umbrella term for security initiatives such as the Customs-Trade Partnership Against Terrorism (C-TPAT), the 24-hour rule, and CSI itself. CSI proper is the specific port-to-port shipping element, and C-TPAT is the Customs-to-business element. The four key elements of CSI are: Identifying 'high-risk' containers; Pre-screening containers before they are shipped; Using technology to pre-screen high-risk containers; Using smarter more secure container.

C-TPAT, the element of CSI most relevant to business, aims to enlist companies in assessing and fixing vulnerabilities in their international supply chains. Importers are expected to develop and implement policies to enhance security within their operations and also with their business partners along the supply chain. Private-sector leaders such as General Motors, Ford, Target, Motorola, and others are working with the Customs Service to assume greater responsibility for the promotion of homeland security. U.S. Customs Commissioner Bonner has said that he hopes to enroll 1,000 U.S. companies in C-TPAT, including ocean-going sea carriers and customs brokers.

While the emphasis of C-TPAT is on self-policing and not on Customs verification, a sound C-TPAT process is a means toward the end of expediting shipments into the U.S. Fulfilling both components of the initiative-CSI and C-TPAT-depends on the visibility, management and integrity of information throughout the extended supply chain.

Advance manifest formation must be transmitted, preferably by electronic means, to Customs 24-hours before the shipment leaves the foreign port. The 24-hour requirement has sent shockwaves through companies involved in global container shipping-from shipping companies who have traditionally controlled the submission of documentation, to trading businesses who wonder how they will assemble the required information in such a tight timeframe. Once again, the integrity of the information submitted in documentation is critical. Some industry observers almost see a need for an independent party to observe the loading of each container to verify the documentation against what is actually loaded.

The pre-screening of containers at the port of departure is intended to take place during the 'down time' between arrival in port and loading onto a vessel. To enable container screening, companies must accumulate detailed information regarding each container, including the origins and details of the products. These companies must also demonstrate consistency in their reporting and they must have the ability to plan and audit back along the supply chain. This means that they will need to significantly improve and manage the flow of information.

Once the information is assembled, the means must be found to transmit it to U.S. Customs in a timely manner. Should there be inquiries regarding the contents of a container, the means must be found to resolve those questions without delaying the shipment or impeding general business systems.

These stringent new rules and ambitious goals present both challenges and opportunities. A more secure maritime trade infrastructure helps ensure the continued smooth flow of merchandise through seaports. Companies that depend on the timely movement of materials and products will find ports that have implemented increased security and pre-screening become more attractive locations. In the event of a catastrophe involving seagoing containers-and the ensuing, inevitable paralysis of maritime trade-the ports that have participated in CSI should be able to resume operations more quickly. Moreover, as C-TPAT members prove the security of their supply chains, they will be able to take the 'fast lane' through U.S. Customs clearance.

Many businesses will find it difficult to comply. Not only will such companies fail to seize the opportunity for greater efficiency, but they are also likely to be unable to maintain the status quo. Should inventory and resources be tied up at the port of departure, the costs of compliance failure could cripple the shipper, the logistics operator, and the carrier. Consider that a leading U.S. retailer with considerable sourcing from oversees estimates that one day of inventory costs $8 million.

In contrast, leading organizations have long recognized that transparent and responsive demand and supply chains help mitigate market volatility. Now, with legislative and regulatory mandates like CSI coming ever more rapidly, combined with an unpredictable global marketplace, demand and supply chain integrity and performance are more than a competitive advantage-they are an imperative.

Fortunately, there exist commercially available global logistics management software solutions that can help companies create a backbone for port CSI capabilities. These solutions can enable a robust electronic system for compiling, submitting, and managing required information consistent with the C-TPAT process. Key solution capabilities such as;

• planning, optimization and carrier selection

• order management

• execution with track and trace of transport movements

• formulation of information and communications to U.S. Customs, customer ERP systems, shipping companies and other parties requiring detailed shipment information

• a repository for planned shipments

can help organizations conform to the critical security elements of the CSI, while improving core demand and supply chain processes.

So what is the CSI-a global supply chain headache or business opportunity? Probably both. Compliance will require a significant allocation of resources and time. It is clear, however, that ports and operators that are quick to adopt a quality, auditable approach to the CSI, made possible by powerful technology solutions, will emerge as regional market leaders in exporting to the U.S. by ensuring that their customers' goods are expedited through customs with minimal delay and costs.