Ridge was unveiling a new U.S. Customs program that will allow companies to move goods across borders and through ports faster. In exchange, importers and exporters agree to take on additional responsibility for security monitoring.
Speed and security: In the immediate aftermath of Nine-Eleven, it seemed that the two were mutually exclusive. As security-conscious customs officials began looking closer at goods coming across the Canadian border, a line of trucks backed up as far 17 miles at the Ambassador Bridge. There were other cautionary tales at other borders, too, where cargo languished at ports and airplanes lined up for cargo inspection. If you listened closely, you could hear the squeaking of just-in-time supply chains nearly coming to a standstill all over the world.
In the months since the terrorist attacks, importers and exporters began adjusting to new security requirements, and customs officials began to figure out ways to speed up cross-border clearances without sacrificing security. We've made progress, but tighter security is still a challenge for advocates of free-flowing global commerce.
What can we do to balance the interests of security and global trade? What can we do to ensure that just-in-time supply chains don't turn into "just-wait-a-while" commerce? For starters, we as importers and exporters shouldn't just dump the problem at the doorsteps of customs agencies. They have their hands full implementing tighter screening procedures and enforcing stricter guidelines with limited staff. As the recent clearance program unveiled by Ridge indicates, the real solution lies in importers and exporters taking greater responsibility for monitoring security themselves.
As the chairman of a company that moves some 13.5 million packages in and between 200 countries every day, I can say with confidence that improving security does not have to mean a cost-prohibitive overhaul of distribution networks. What it does require is a free exchange of information.
At UPS, we've learned that getting goods across borders quickly--especially in an environment of tight security--is a matter of what you know and what you share. We've constructed a massive information platform that includes online tools to capture detailed electronic information about packages at the point of origin as well as direct electronic links into customs agencies. It's part of an approach to international shipping that more and more importers and exporters are adopting. Under this approach, information is exchanged in two ways:
1. A secure Web. Global companies start by forging electronic connections among suppliers, business partners, manufacturers, distributors, customers and third-party freight forwarders and shippers. By sharing data via standardized platforms like XML and Web-based commerce applications, members of the global supply chain have a precise notion of who made the goods, who shipped the goods, the exact contents and value, and who received the goods. With this kind of supply-chain visibility, shipments can be tracked all the way from order entry to fulfillment, thus minimizing security risks.
2. Electronic pre-alerts. The next step involves sharing that information with government agencies. A key part of the recent U.S. Customs initiative involves extending electronic links between U.S. Customs and shippers, so that detailed information about shipments can be sent to customs agents ahead to time, before the ship even pulls into port or the plane lands. Electronic information allows for much faster clearances because it enables customs agencies to call out which packages to inspect based on profiles and pre-established criteria.
Fortunately, you don't have to be a gigantic company with an imposing IT budget to benefit from cross-border information-sharing. Kudzu--a Phenix City, Ala.-based marketer of custom caps and outerwear for clients like NASCAR and NCAA basketball--contracts with manufacturers in places like Shanghai and Quingdao, China. Kudzu partner Jeff Stillwell says his company relies on fast cross-border clearances for a competitive advantage.
"Speed is of the utmost importance," Stillwell says. "A day here or a day there can make a big difference. The faster I can get my apparel on my customers' shelves, the faster its sells through. And if my customer uses another supplier besides me, a day or two quicker is a big advantage."
UPS not only handles Kudzu's air-express shipments out of China but also collects and shares the package information needed to pre-alert U.S. Customs. Hand-written documents from the Chinese factories are keyed into UPS's online shipping and tracking system and then populated into its international customs application by UPS brokers before the planes leave Asia. Detailed information about the shipped items and associated values is transmitted to U.S. Customs via automated broker interfaces while the UPS planes are still in the air.
Ever since Kudzu shifted a portion of its shipments to air express and tapped into UPS's information platform, the company has shaved an average of 10 days off its average delivery time and has significantly reduced supply-chain costs. Better customer service is another benefit of Kudzu's information exchange. "When customers used to call to check on shipments, I would have to give them a range of dates. Now, I can go online and give them a pretty accurate arrival date--or they can check the status themselves using a tracking number," Stillwell says.
Stillwell says that because Kudzu--and customs officials--always know who sent the shipments, exactly what's in them and where they're going, "we don't spend a lot of time worrying about security."
Tom Ridge is right. When it comes to international commerce, we can be fast and safe at the same time. It's all a matter of what you know--and what you share.


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