Just when operators thought they had the global logistics marketplace figured out, customs agencies around the world threw new ingredients into the mix to further muddy the waters. Security is the new buzzword in the movement of goods across international borders, which means that the days of just transporting a shipment have become a thing of the past. 

In fact, the movement of data and documents has now become nearly as important as the movement of the goods themselves. If information does not precede the arrival of goods, shipments may be turned away or denied loading onto the conveyance.

This has caused many shippers and service providers dealing with international trade to review their entire business processes relating to the clearance of shipments entering foreign countries. 

Added to that is the trade industry’s vulnerability to a wide range of security threats, from handling of hazardous materials to theft and potential terrorist threats. The onus is on the industry as a whole, and all parties involved in the shipment process, to take steps to ensure cargo security and deter terrorist and criminal threats.

An integral part of those steps is the electronic exchange of data and real-time visibility into the movement of goods, as well as standardization of data and processes.

Security initiatives driving change

A number of security initiatives are being implemented by regulatory bodies and government agencies; these include increased cargo inspections, heightened physical security of cargo facilities, security training for cargo workers, and stricter controls over access to cargo carriers, containers and operations areas. 

Today, inspection technology is also an integral part of making the cargo industry safer and more secure. We are now seeing everything from explosive detection systems (EDS) to biometric identification systems. Since 9/11, the 2002 Trade Act and similar regulations have been put in place to ensure that unsafe shipments do not cross borders.

Meeting these initiatives requires better coordination and visibility between trade community partnerships, government agencies and international regulatory bodies.

Growing compliance requirements also demand standardization. In order to manage, airfreight stakeholders now have to automate and standardize the shipment management process so that both carriers and freight forwarders around the world are not reinventing the wheel every time a shipment occurs.

The changing cross-border picture

For decades, prior to 9/11, the U.S. Customs and Border Protection (CBP) agency has accepted hand-written, single-paged shipping manifests from carriers on behalf of shippers at the point of arrival at border posts.

The 2002 Trade Act and subsequent regulations, however, mandate that any inbound shipment to the United States, regardless of mode of transport (ocean, air or truck), have manifests filed with the CBP to inform them of shipment details. Subsequently, the Canada Border Services Agency (CBSA) mandated similar regulations expected to take effect this autumn. Global security and customs filings initiatives in the future will become even more challenging with the anticipated forthcoming extension of the 10+2 regulation (requirements for ten more items of information from the shipper and two from the transport provider). 

It is evident that the processes and requirements are not going to get any easier over time. Therefore, shippers and logistics service providers need to develop a vision for the future to prepare themselves for the inevitable new regulation mandates and process requirements.

Preparing for the inevitable

To meet growing compliance requirements in this new security-focused environment, shippers must work in conjunction with global trade service providers to find new and innovative ways to move data and documents around the world quicker and more efficiently. That starts with more open communications and systems to support them.

Data requirements are higher than ever. Security systems designed by customs agencies worldwide are demanding advanced commercial information from shippers and exporters on a 24/7 basis for ‘real time’ processing. Suppliers must exchange information to let officials know if errors, omissions or no-load requests exist. As a result, companies are struggling to adapt to working in a parallel environment with customs agencies so they can react quickly and efficiently to meet security demands. They know all too well that if they do not structure their processes to meet the demanding environment, they can expect missed deadlines and disruptions in delivery schedules.

The electronic movement of information, documents, and such critical trade data as permits, certificates, invoices and bills of lading is becoming essential to ensure information is delivered to the right place and at the right time for a smooth and fast border crossing. But how can this information be moved electronically when a shipper’s trading partners have different proprietary or off-the-shelf systems? In order to facilitate timely exchange of information, systems need to talk to each other and pass relevant data between and amongst the trade chain players in a highly secure and expedited manner. Shippers and their trading partners also need to be networked together to automate and standardize business processes, share vital data for immediate and automatic integration with their business systems, and comply more easily with required regulations in order to avoid potentially costly penalties and delays.

Because this approach requires a high level of collaboration, new and sometimes non-traditional alliances need to be developed to ensure that all the links are made and the responsible parties are defined according to who will provide what data and when. This demands clearly defined data elements as a means to establish accountability for participants.

Given the changes to come-and the increased demand for collaboration in the supply chain-organizations must be prepared to invest in processes that will ensure the trade chain can continue without interruption. A solid vision, good strategic planning and a communications infrastructure within a trading community will be the keys to future success.

A detailed look at third-party services

Technology and multi-modal global logistics networks are being embraced by many shippers and their logistics service providers. However, as with any initiative that involves technology, there are both great benefits to be gained and challenges to overcome. While shippers, carriers, brokers and importers are keen to take advantage of electronic delivery, many are simply not adequately prepared to make the transition because of both technological and financial limitations.

Creating, maintaining and supporting the required infrastructure in-house is expensive, complex and difficult to maintain; that is why many are turning to third-party service providers to manage their customs filing requirements. With the right information in hand, forwarders and carriers can improve compliance activities as well as customer service. The tools that are now available through third-party providers allow freight forwarders to monitor the status of shipments at any time in the process and easily communicate that information in real-time to all the required parties.

A third-party approach resolves a number of critical challenges. For one, it reduces the risk and capital cost of developing and maintaining in-house systems, while ensuring access to the appropriate functionality for the business operation. In addition, it eliminates the need for infrastructure re-engineering and provides continuous availability.

Business processes can easily and quickly be streamlined through third-party solutions and information can be consolidated, verified and transmitted automatically, eliminating the need to manually collect and re-key any information, thereby reducing the risk of errors or omissions.

Third-party services also ensure that the necessary levels of enforcement are practiced in the filing process and that shipments meet compliance requirements. This will become increasingly important as border agencies begin to impose penalties for non-compliance.

In addition, the flexibility and scalability of these types of solutions will prove useful in helping carriers address the up and coming 10+2 initiative. The 10+2 initiative requires additional data in the marine mode to be provided to CBP’s Advance Trade Data Automated Manifest System (AMS) at least 24 hours before a ship is loaded at a foreign port. As electronic filing mandates expand to other countries, it is imperative they have access to a solution that can be readily and seamlessly expanded.

Having Web-based access to real-time information also enables organizations to improve operational efficiencies since they can plan for arrivals or delays based on accurate and timely information. If, for example, a shipment is delayed by a few hours at customs, measures can be taken to adjust pick-up schedules and notify the customer of the delay. This not only improves customer service, it also helps to reduce wait times and wasted asset utilization.

When one combines this real-time visibility with performance management, reporting and alert messaging, forwarders can make great strides in increasing the security and screening of all air cargo shipments at a relatively affordable cost.

All these factors lead to the issue of accountability. With standardized processes and end-to-end visibility, there is little room left for error-or excuses. Shippers and logistics service providers know where the goods are, who is in control of those goods at that point in time and the anticipated arrival of the goods. Ultimately, this means that organizations can assume full accountability for their service commitments and communicate regularly and more effectively.

Selecting the right partners

There is no single answer to the type of supplier shippers need in order to prepare for the future. The best approach is to look for service partners that can support multiple modes of transport and truly manage more than just one function of the shipment management process. Shippers must take the time to understand the supplier’s position on how they intend to support future regulations; it is also valuable to fully understand their perspective regarding security, government and industry compliance, shipment monitoring and accountability.

Although all of these factors-security, government and industry regulatory demands, the need for greater visibility and accountability-appear to add complexity to the entire process, the underlying infrastructure to support them in fact simplifies it. Despite all the complexities shippers and carriers face today, standardization and Web-based access to (and delivery of) services can play a key role in making it all a great deal simpler and more efficient.

By leveraging Web-based technology portals and global networks, it is relatively simple to apply value-added applications to exchange available data to meet specific administrative needs and scale operations to meet demand. 

The reality of today’s security-focused world is that electronic communications are inevitable, and shippers and logistics service providers have to deal with making the conversion happen. The question is not so much when, but rather what is the most efficient and cost-effective process available to get the job done. wt



Oryst Dydynsky is VP Cross Border and Regulatory Affairs at Descartes Systems Group, and Robert Foley is COO at Flagship Customs Services. Dydynsky is responsible for providing trade and technological solutions to streamline the international movement of freight; Foley provides customs compliance technology for electronic.

Five Surprises from a Trade Compliance Application, by Giridhar Gopal Nagarajan

You have recently implemented a trade compliance application in-house or have outsourced your needs to an Application Service Provider. You and your boss are obviously elated as you have cut down on thousands of hours of manual work and reduced the percentage of errors. This is great news! You realized that this is the first step in the right direction and that there are many more miles to go in this journey.

But, as with all system innovations, you know there will be surprises you will encounter while using the application. Here are five to be ready for:

Surprise #1: Tools for data archiving, where are you?

You are currently at the starting line. As years progress the amount of transactional data you have in your application will grow. After some years, adding more data will slow down the retrieval of data from the application.

This is the point at which the brainstorming session for improving performance will start. A good solution for this problem is to purge and archive your data. Most vendors do not have readily available tools to purge and archive your data. If you have an in-house implementation, you will have to work on a 3-month to 1-year project. The objectives of such a project would be:

•            To safely purge and archive your old transactional data

•            To be able to retrieve this data and provide it to auditors during an audit or investigation

A data purge and archive tool is a great tool to have as part of the Trade Compliance application suite. Here are some of the features that constitute the cutting edge:

•            The ability to safely purge and archive thousands of rows from a production database

•            An easy-to-use interface that will allow the selection of data to be archived

•            An interface able to show the progress of archiving, and after it is completed, display the number of rows of data that are successfully purged and archived

Surprise #2: Compliance updates may set you back

Most applications have tables where master compliance data is stored. Trade compliance data providers provide patches or data updates to update these tables. Vendors have their own database where they store the latest copy of the master data. When a change to compliance data takes place, some vendors take the easiest route and provide an update that wipes out the entire tables and reinserts the data.

This essentially means that they are cleaning your slate and writing their latest compliance data on it. This process poses risks in the following cases:

•            You have modified the master compliance data in consultation with you vendor. All these changes will be wiped out. You will have to reenter your custom compliance data.

•            The vendor has not been diligent enough to apply all updates to their database.

The clean slate approach leaves the application super-users wondering if the application master data will still enable them to be trade compliant and what level of regression testing they need to perform to check this.

Surprise #3: Has all the data been processed?

Trade compliance applications have interfaces with Order Management and Logistics applications. Data that is sent from these applications needs to be processed in a timely manner. While vendors have out-of-the-box or customized interfaces to support the processing of data, they lack tools to display the records that were not processed. Some features that would be great are:

•            A means of identifying data that was not processed in a particular time frame

•            Details on which data was successfully and unsuccessfully processed (with error reports on the latter)

Surprise #4: Automated compliance updates anyone?

The core of a trade compliance application is compliance master data. Changes to trade regulations leads to government agencies publishing the change and vendors creating updates/patches for the updates. The patches/updates are time-sensitive and need to be applied to the application within a period of several days. Many vendors post the updates/patches on a secure Web site and ask customers to apply them by using tools within the application. While this is a good approach from the perspective of vendors, it is a time consuming and frustrating process for customers.

Customers have to download and apply the patch, and this consumes substantial time and effort. Vendors must enable automatic application of updates/patches. The automated application of updates/patches must inform customers as to where they stand in terms of having the latest compliance data. Patches that were successfully or unsuccessfully applied must be logged into log files to maintain audit trails.

Surprise #5: Missing tools for product classification

Governments group information into Harmonized Schedules (HS) and Export Control categories to make imports and exports easy. Companies classify their products into these categories, a process which can be very labor intensive. Because Trade Compliance professionals are always in short supply, companies may find that there is a bottleneck created in the timely import and export classification of products across borders.

Technology can alleviate the problem by the use of mass classification utilities. These utilities identify products with similar descriptions and enable their classification in a mass fashion, while at the same time maintaining audit trails. The tools must be able to recommend a list of HS and export license categories based on a word match between the product description and the description of products that have already been classified. After classification has been selected, the tool must be able to update the classification details for a large number of products at the same time.

These surprises will give you a good understanding of potential gaps in any trade compliance application. Good luck in your journey!



Giridhar Gopal Nagarajan is and experienced supply chain IT professional. He can be reached at giri_us@yahoo.com.

Into Thin Air: The Growing Risk of Cargo Theft, by Barry Tarnef

With rising fuel and food prices and a weakened U.S. dollar, the cost of other goods and services has also risen in the past year. More economic pressures have been created by a mortgage crisis and job cuts that have led to an increase in unemployment. It is no coincidence that in these tough times cargo theft has been on the rise.

Estimates suggest that cargo crime in the United States may amount to several billion dollars of losses per year. While there is no complete record of cargo thefts, data compiled from various sources can provide valuable information regarding what types of goods are being stolen and when, where and how the thefts occur.

A more complete picture of cargo thefts may come into view because the USA Patriot Improvement and Reauthorization Act of 2005 has improved the collection of incident data under a Uniform Crime Reporting System. In addition, a few forward-thinking organizations such as the International Cargo Security Council (ICSC) and Transported Asset Protection Association (TAPA) started disseminating information to their memberships on cargo crimes mostly as a method to broadcast these events in the hope that someone would be able to spot a stolen tractor-trailer or assist law enforcement in identifying the affected cargo.

Chubb Marine Underwriters decided that this information would be far more effective if it was aggregated and analyzed in a meaningful way. By doing so, we could anticipate certain trends as well as develop actionable recommendations for our clients, whether they were importers, exporters, warehouse operators, transportation providers, third-party logistics providers or other intermediaries.

Between January 2005 and June 2008, we compiled 42 months of thefts from the aforementioned ICSC and TAPA reports and other information, including Internet-based local news articles. While this data does not represent the full universe of all cargo thefts, we believe that the information is substantial enough to enable users to make more informed logistics decisions.

Our analysis provides us with a better understanding of the:

•            most targeted commodities;

•            most frequent locations of thefts;

•            time (days of the week) of the thefts; and

•            modus operandi of the thieves.

Consumer goods, food and clothing are top targets

The goods listed below account for about 70% of the total number of goods stolen in cargo thefts.

•            Consumer electronics, principally televisions, DVD players and other electronics (15.1%)

•            Food/food products (14.2%)

•            Apparel (clothing and footwear) (9.9%)

•            Computers and related equipment (7.6%)

•            Metals (5.2%)

•            Pharmaceuticals (both prescription and over-the-counter) (4.9%)

•            Tires (4.2%)

•            Wine, spirits & beer (3.6%)

•            Appliances (2.4%)

•            Cell phones (2.4%)

Cargo theft is a nationwide problem, but the 12 states listed below have had the highest number of thefts. It should be noted that some of these states may unfairly rank high on this list because they have more robust cargo theft reporting protocols. However, we have determined that this ranking is consistent with the general consensus among the shipping and transportation industries.

1.            California

2.            Georgia

3.            Florida

4.            Texas

5.            Tennessee

6.            New Jersey

7.            North Carolina

8.            South Carolina

9.            Pennsylvania

10.            Mississippi

11.            Kentucky

12.            Illinois

Beware the weekend

The compiled data also demonstrates that certain days of the week are more likely targeted for cargo thefts than others. Weekends are the busiest time for cargo theft. In fact, 52% of the thefts occur between Friday evening and Monday morning. Cargo is most at risk for theft when the loads are at restóduring the weekend.

•            Monday - 202 occurrences

•            Tuesday - 133 occurrences

•            Wednesday - 164 occurrences

•            Thursday - 134 occurrences

•            Friday - 203 occurrences

•            Saturday - 223 occurrences

•            Sunday - 257 occurrences

Logistics matter

Our data revealed that the most likely place for thefts to occur were established truck stops and rest areas, accounting for 39% of the thefts. Modal yards, owned, operated or managed by trucking companies, railroads or steamship lines were next with 27%. Unsecured locationsódrop lots, motel, restaurant and mall parking lots and on-street sitesówere the locations for one-fourth of the thefts. Warehouse burglaries, which were on the rise during the first two quarters of 2007, accounted for 6%. Hijackings represented 3%.

Because the majority of cargo-laden trucks are parked for long periods of time at inadequately secured facilities, cargo thieves do not have to resort to violence in most cases. If they just wait long enough, their prey will stop, making them exceedingly vulnerable.

Given that most of the thefts take place during the weekends and at largely unsecured locations, it may be the time to rethink conventional logistics wisdom. Many customers want their goods delivered first thing, even on Monday mornings. That one decision triggers a series of events that often starts with a trucking company picking up a load late Friday afternoon since it would be very difficult to queue up in marine and rail facilities and still make an early morning appointment.

To date, there has been no concerted effort to establish safe havens for drivers and their cargo. However, there is hope. The European Commission just launched a pilot project to develop secure parking sites for trucks using the trans-European network of highways. Another novel idea, in use by a few transportation companies, is to enter into cooperatives with other firms whereby their drivers can take advantage of each otherís terminals. This is certainly far better than the other alternatives in play.

Other techniques in vogue, because of their purported operational advantage, include preloaded trucks and drop-and-hook. They may make sense, but staging loaded trucks without the requisite protection is fundamentally problematic.

Manufacturers should reconsider using packaging, security seals, shipping documentation and even their trailers as branding opportunities, because displaying the corporate name, logo or the actual contents of the shipment can provide notice to criminals of a desirable target.

Finally, storage facilities and cargo terminals might want to invest more in traditional security, such as trained guards, to augment their technology solutions. There have been a number of large thefts at locations primarily dependent on closed-circuit television cameras as their first and only line of defense. Not only was no one monitoring the feed, but when viewed after the fact, it was impossible to identify the people who entered through their gate or over their fence to steal loaded trailers or containers. wt



Barry Tarnef is a Marine Loss Control Specialist for Chubb Marine Underwriters.

Sidebar: Theft-prevention Tips

Here are some tips that may help mitigate the risk of cargo theft:



•            Thoroughly screen prospective employees. Some cargo security experts estimate that a high percentage of cargo thefts involve inside information or complicity, which is why we recommend doing background and credit/financial checks on potential employees.



•            Carefully select transportation partners and intermediaries. This may be the most critical decision a shipper may make regarding cargo security. Remember that these companies have care, custody and control of your goods from the time they leave your premises until they reach their destination. You should expect the same level of security awareness as you do from your own employees.



•            Establish a security culture within your company. This means training employees so that you achieve a force multiplier effect when they become ad hoc members of your corporate security staff. Also, truck drivers should receive hijack awareness and prevention training.



•            Factor in security when determining shipment routing. It has become common knowledge that cargo thieves are ìcasingî known shipping points (plants, warehouses and distribution centers) and following trucks as they depart, waiting for the drivers to stop so that they can pounce on the loads. Drivers should not be allowed to stop in the “red zone” (the first 200 miles/4 hours from their starting point) as well as known hot spots.



•            Incorporate counter surveillance into the duties of your security guards. As previously mentioned, thieves are parking outside cargo facilities to tail trailers once they leave but also so they can understand the way you do business. Warehouse robberies are also taking place. Have your guards patrol away from your perimeter and look for people looking at you.



•            Take advantage of technology. Vehicle and shipment tracking, vehicle immobilization and advanced, high-security seals are now available at lower cost. However, be sure to add a human touch. Tracking devices are becoming far more sophisticated; some covert units are now placed inside a shipment that is loaded within a truck but they quickly lose their effectiveness if an alarm is not triggered in a timely fashion (usually a phone call from the driver that his rig has been stolen) or there is no effective response mechanism when a remote alarm is set off.



•            Conduct periodic security audits. Things never stay the same. Your operations and personnel change, and the criminal mind is always harvesting fresh ideas and modifying previous techniques.