U.S. forges common screening standard with Canada, EU to minimize impact on trusted shippers.
By Eric Kulisch
The Department of Homeland Security has recognized the screening protocols of Canada and the European Union for air cargo on passenger aircraft as meeting U.S. requirements, effectively eliminating a redundant layer of security for inbound shipments and reducing costs for airlines and their customers.
At the same time, DHS is further trying to minimize security hassles by creating a tiered system for screening international air cargo based on risk assessments of advance shipment data.
The recent cooperative agreements with two of the United States’ largest trading partners should make it easier for the freight transportation industry to comply with a law requiring 100 percent of cargo on passenger planes to be inspected at the last point of departure.
The Transportation Security Administration was able to fully implement the law on domestic and outbound flights two years ago, but getting a system in place for imports without disrupting commercial flows has proven more difficult. Carriers ultimately are responsible for inspections, but the TSA set up a voluntary certified screening program in the United States so shippers and freight forwarders could self-check cartons to reduce the potential backlog at airline facilities.
That upstream option is not available for inbound cargo because the only foreign companies the TSA has jurisdiction over are airlines flying into the United States.
Under the new national security agreements, airlines can follow the security protocols of Canada and the EU for air cargo exports without having to conduct a second round of screening prior to departure that adheres to TSA rules. Declaring other security programs as commensurate with its own also allows the TSA to accept screening by shippers that belong to certified screening programs established in those countries.
Canada and the EU similarly are extending reciprocal treatment to the TSA program for outbound shipments from the United States. The security coordination went into effect June 1 with the EU and the end of March with Canada, but airlines must first request an amendment to their TSA-approved security plan to follow another country’s security program, Douglas Britten, the TSA’s air cargo division director, said in an interview.
With these and other measures in place, the TSA now plans to require passenger airlines to inspect 100 percent of inbound air cargo by Dec. 1.
The development comes on the heels of a mutual recognition agreement in early May between CBP and the EU involving their respective supply chain security programs. CBP will treat companies that have been certified for the Authorized Economic Operator as equal to those that have qualified for the Customs-Trade Partnership Against Terrorism, and the EU will reciprocate.
“We are getting rid of duplication of security controls, while preserving high levels of security. This is a big step forward and it will have a major business impact. Air freight is by definition naturally urgent. Cutting out the duplication of security procedures will mean huge savings for cargo operators in terms of time and money,” said Siim Kallas, vice president of the European Commission responsible for transport, in a statement.
EU member states are governed by strict rules for air cargo exports and imports that include physical screening and ensuring a secure chain of custody for shipment transfers from the point of origin to the aircraft. Once security controls have been applied to a shipment it can be transferred to other flights within the EU without further scrutiny.
Prior to mutual recognition, for example, air cargo headed to the United States and physically screened in Rome, but transhipped in Frankfurt, Germany, had to be rescreened in Frankfurt.
More than 1 million tons of freight is transported between the United States and the EU by plane each year. The EU last year exported more than 107 billion euros ($135.8 billion) worth of goods to the United States via air, representing 27 percent of all outbound air cargo by value.
Up to 4 percent of the price to ship by air can be attributed to security steps taken by airlines and forwarders and redundant security measures on transatlantic flights account for a fifth of that cost. Mutual recognition will save the private sector tens of millions of euros per year in the EU alone, according to the European Commission.
The EU agreement applies to all 27 member nations and Switzerland.
The International Air Transport Association and The International Air Cargo Association applauded U.S.-EU regulators for aligning air cargo security measures and reducing an impediment to trade of high-value, time-sensitive goods.
“This agreement is a great example of what can be achieved when stakeholders cooperate as partners with a common purpose,” IATA Director General Tony Tyler said. “Regulators and industry have worked closely together throughout over seven years with a focus on harmonization and better security. We hope that this agreement is the cornerstone for further alignment, especially for passenger security. This partnership model should serve as a template for other national regulators moving towards risk-based security regimes,” he said.
Physical search, x-ray and explosive detection technology are the only approved screening methods in the United States. TSA inspectors that do random checks and monitor private sector screeners also use canine explosive detectors.
The agreement to grant equivalency to each other’s air cargo security programs is one of the first manifestations of the Beyond the Border action plan issued by President Barack Obama and Canadian Prime Minister Stephen Harper last December to enhance the flow of legitimate trade by aligning perimeter security and regulations, and improving cross-border infrastructure, with the goal of strengthening the continent’s economic competitiveness. Border coordination under the principle of “screen once, accept twice” eventually will extend to ocean, rail and truck modes, officials say.
Each party reviewed the other’s national security program, including regulations, oversight and compliance mechanisms, on-site validations of carrier and shipper inspection sites, and audit capabilities, before agreeing to mutual recognition, according to DHS.
The EU said both sides also agreed to exchange information about their respective security programs, including participation in inspections, to ensure full compliance by air cargo operators.
ACAS. To further reduce the screening burden on the private sector, TSA officials say they envision incorporating trusted shipper concepts into the mandatory inspection program based on risk assessments of advance shipment data transmitted to sister agency Customs and Border Protection.
The border agency is one year into a 28-month pilot program called Air Cargo Advanced Screening designed to prevent terrorists from taking down an aircraft with a bomb. Previously, CBP scrubbed manifest data supplied by carriers while in the air and checked suspicious cargo upon arrival. But the October 2010 plot in Yemen to smuggle explosives timed to detonate on UPS and FedEx cargo planes during flight made security officials realize that potential threats had to be stopped before they reached the aircraft hold.
For the past year, express carriers in the trial program have voluntarily supplied seven pieces of manifest data about the shipment as early as possible prior to departure. CBP runs the information through its rules-based targeting system for any anomalies. The program recently entered a second phase involving passenger carriers and forwarders, which have a completely different operational model than the courier industry. Forwarders can directly file the data with CBP or give it to the airline to transmit.
A third stage will focus on all-cargo carriers.
The drawn out testing is necessary because each of those sectors operate differently and don’t have access to all the information at the same time. Identifying how and when airlines and forwarders submit data, who should ultimately be responsible for filing it, and figuring out how various parties should respond if analysts identify a high-risk shipment, are key goals of the pilot.
CBP has processed more than 25 million ACAS transactions as of July 3, spokesman Ian Phillips said. Less than one-tenth of 1 percent of shipments has been stopped for further review.
Industry participants are enthusiastic about the program because of its dual goal of speeding up movement of legitimate cargo, flexibility and inclusion of their input into the design.
Any suspicious shipments are supposed to be screened by the carrier according to TSA protocols and local authorities could also get involved, depending on the circumstances.
In the express, or all-cargo, environment, ACAS is designed to identify which shipments to inspect. The potential benefit of pre-departure screening in the scan-all passenger arena favored by forwarders is to allow tiered levels of inspection based on risk, Britten said during a panel at the annual conference of the National Customs Brokers and Forwarders Association of America in late April.
All shipments on passenger planes must be checked at the piece level (some experts say the TSA approach should be called scanning or inspection because they define screening as the analysis of data about a shipment or traveler), but cargo from a known shipper that scores low in the risk management system might only require one screening method, while a shipment from an unknown or suspicious source could be segregated for some combination of x-ray, explosive detection and physical inspection, TSA and industry officials involved in the effort say.
“We want to have protocols and lanes for how you screen and divide cargo similar to what is being rolled out in the passenger environment with PreCheck,” Brittin said.
PreCheck is a voluntary TSA demonstration program begun last October for expedited screening of pre-approved domestic passengers who provide advance information about themselves and verify their identity at airport checkpoints. The program is modeled after CBP’s Global Entry for international travelers. The idea is to tailor security exams to the potential threat rather than forcing everyone to face the same level of scrutiny.
“The more we know about you, the more we’re able to move you into that fast lane to get the cargo screened differently than those of the first timer or infrequent traveler,” Brittin said.
A tiered approach bears similarities to C-TPAT, a program in which pre-vetted importers that implement approved security plans for their supply chains, along with their foreign vendors, are promised fewer cargo inspections at sea and land ports of entry, or at foreign ports where CBP has arrangements with local customs authorities.
Identifying ahead of time which shipments need what type of inspection can speed up processing rather than waiting to make a determination when the cargo shows up on the airline’s dock or after it’s on the plane, which can lead to delays and missed flights, Brittin said.
After analyzing the advance shipment data, CBP responds to the filer with one of three messages: a request for more complete or accurate data; instructions on how to screen a particular shipment; or “do not load.”
Customs eventually plans to issue a regulation mandating the pre-departure submission of advance air cargo data and adjust the rules to fit the different operating environments of express carriers, passenger airlines and all-cargo airlines. In early May, it published its strategic plan for advancing ACAS to the rulemaking stage.
Not everyone wants to wait for the process to run its course.
On June 21, the Airforwarders Association asked Sen. Susan Collins to postpone filing legislation that would codify ACAS.
“We definitely need to test the feasibility” of collecting pre-departure data across all sectors of the air cargo industry, Executive Director Brandon Fried said in an interview.
Fried questioned whether legislation is needed because transport providers would have to comply with any new regulation to enter their goods into the country.
Codifying a rule takes away some of an agency’s flexibility to quickly respond to external conditions in the future, he said.
It would not be the first time Congress has asked CBP to implement measures that the agency was studying. CBP several years ago initiated a pilot program in a half-dozen foreign seaports to test whether it was possible to scan every inbound container before loading on a vessel. Congress subsequently passed legislation requiring 100 percent scanning of all containers overseas by mid-2012. The Department of Homeland Security recently filed for a two-year waiver from the requirement and most lawmakers are not pressing the department to meet the deadline because they now realize the enormous implementation challenges involved.
CBP officials acknowledge that getting information from forwarders is a much greater challenge than getting it from express or all-cargo carriers that usually deal directly with their customers. Forwarders are middlemen that consolidate shipments for many customers before tendering loads to airlines. Express carriers and all-cargo carriers typically deal directly with the cargo owner, although some also accept shipments from forwarders.
“Forwarders hold the keys to the kingdom because they are transmitting to carriers,” Daniel Baldwin, executive director of cargo and conveyance security at CBP, said at the NCBFAA conference.
CBP has a steep learning curve to understand the air forwarder industry before drafting regulations making submission of advance data mandatory because until now it has primarily dealt with airlines, agency officials admit.
The findings of the pilot are expected to help in that regard, but only if enough forwarders of all types and sizes participate, Baldwin said.
The goal is to issue a proposed rule that is “as business friendly as possible,” he said.
Towards that end, CBP has left it up to individual companies to decide how early to submit the seven data elements.
“We want you to tell us the most efficient way to submit that data so we can perform our security work and get you a message back that we have confidence in the fidelity of that shipment as quickly as possible,” Baldwin said.
Customs’ IT systems, he added, can easily handle the volume of air security transmissions.
CBP and industry officials are pleading for more forwarders to sign up for ACAS so they can best identify IT links, filing deadlines and other criteria to include in the final rule. Outreach efforts are being channeled through trade associations and the Trade Support Network, a large group of industry experts that provides advice to Customs on implementing modernization efforts.
Their common refrain is that forwarders should “help cook the meal” or else eat what is served — a reference to the typical government practice of pre-determining the shape of a rule without fully consulting the private sector about how to effectively implement it without posing undue burdens.
Pilot participants will be invited to work sessions where they can shape the regulation to make sure it reflects what the industry can realistically do.
Small forwarders have largely ignored ACAS because they assume filing data with CBP is the overseas agent’s problem, Fried said at the NCBFAA conference.
Many of the questions and concerns raised by forwarders are the result of never having been involved in pilot programs with the TSA or CBP, Sandra Scott, senior director of international compliance for Chicago-based SEKO Worldwide, said in an interview.
SEKO is one of the first forwarders to participate in ACAS.
Companies are looking for hard-and-fast rules for how they should interact with the government when the reality is “that the things they do in a pilot may change 10 times before becoming regulation,” she said.
The agencies are experimenting with various models, but may not be aware of the unique circumstances associated with small forwarders unless they are in the pilot.
“What we don’t want is this to go down as a regulation without testing it in its entirety as much as possible,” Scott said.
It takes awhile for a forwarder to be certified for the pilot and set up the necessary systems for exchanging data, she added.
SEKO opted to program its own interfaces with CBP rather than use a software vendor because it already has experience filing documents through established pipelines such as the Automated Broker Interface, the Automated Commercial Environment and the Census Bureau’s Automated Export System.
Another option for forwarders is to use a Web-based application from Descartes Systems to file data from house air waybills to Customs. The product collects house bill information directly from the forwarders’ enterprise systems to file to CBP without manual intervention, and includes tools that allow users to update the data and run it through other compliance screens.
As soon as SEKO gets the go ahead to move beyond system testing it will have all its foreign locations submit the seven data elements for each shipment, Scott said.
CBP officials say they eventually hope to tie together the advance security filing with the entry process currently being tested under which a handful of air forwarders can file a truncated version of the entry far before arrival in the United States and receive conditional approval to pick up an importer’s goods, followed by a final release once the airline files the manifest and all matches check out. In fact, the new simplified entry is modeled on the ACAS process.
Combining advance security and compliance data will enable CBP to give importers full early release, eliminating potential delays at the airport to resolve documentation or security issues, Baldwin said. If the pilots prove a success, they will be expanded to other transportation modes.
Customs will enter any updates through its targeting system as a precaution, but previous releases will remain valid unless the resubmitted data involves a material change, he added.
CBP officials hope that if the pilot delivers an effective, risk-based method of pre-screening air cargo that ACAS will be adopted as an international security standard. The European Union, at CBP’s recommendation, has held off issuing a rule that would have moved up the deadline for airlines to file their manifests, until the results of the ACAS demonstration are clear. EU Customs personnel have had tours of duty at CBP’s National Targeting Center to see up close how the data streams help sift out shipments for inspection and the EU is running some related pilots itself, Brittin said.
The Global Air Cargo Advisory Group, a coalition of four large shipper and forwarder groups, expressed concern July 6 that some countries are issuing security regulations for advance electronic information without coordinating with others on a common approach.
It urged national regulators to adhere to the World Customs Organization’s SAFE Framework for international supply chain security, which is designed to spread uniform enforcement practices to make goods movement more predictable. One of the standard’s four core elements seeks to harmonize advance electronic cargo information.
“In this environment, Customs administrations should not burden the international trade community with different sets of requirements to secure and facilitate commerce, and there should be recognition of other international standards. There should be one set of international Customs standards developed by the WCO that do not duplicate or contradict other intergovernmental requirements,” the SAFE Framework states.
Related Magazine Content
The GACAG called on governments to work with the air cargo industry to develop rules and to consider the results of the ACAS pilot in the United States in developing global standards.
“We are a global industry and it is critical that we work with regulators to develop a global, harmonized approach in this area,” GACAG Chairman Michael Steen said in a statement.
Steen is also chairman of The International Air Cargo Association.
By not following international standards, some countries are “creating confusion and additional costs to the aviation sector. In their respective efforts to further secure the air cargo supply chain, some countries have been releasing ad hoc directives — including consideration of advance electronic information prior to loading — without adequate time for discussion, resulting in regulations that the industry may be unable to fulfill,” he said.
GACAG also endorsed the U.S. plan to structure rules for each segment of the air cargo industry rather than using a one-size-fits-all approach.
The group favors allowing multiple parties to originate filings based on availability of the information while limiting multiple submissions of the same information, businesses submitting accurate declarations as early as possible for risk assessment, and authorities issuing electronic notification of security concerns to detain suspicious shipments.
(Forwarders interested in participating in the ACAS pilot can call Chris Kennally, CBP’s director of cargo control, at 202-344-2476; or James McLaughlin, director of cargo targeting, at 571-468-2540.)