C-TPAT companies yawn at outsourced validations

C-TPAT companies yawn at outsourced validations

The much-hyped trial program for third-party auditors to double-check the supply chain security practices of trusted shippers in the Customs-Trade Partnership Against Terrorism has been a dud so far, the man who overseas the program said Monday.

   U.S. Customs and Border Protection picked 10 companies in July that are eligible to provide third-party security validations for importers with suppliers in China. The pilot program, which will run through May, was mandated by Congress because of concerns that CBP may lack the resources to quickly validate importers who participate in the voluntary program so that they can experience a reduction in cargo inspection levels and other benefits.

   CBP opted to run the test in China because it is the only nation that has not granted access to agency specialists to witness if suppliers are following the importer’s approved plan for securing shipments at origin and subsequent transport legs. There are about 300 importers in C-TPAT who source 75 percent or more of their products from China, but cannot experience the benefits because their supply chains cannot be validated.

   Todd Owen, executive director of cargo and conveyance security, said that interest in hiring outside parties to conduct exams on CBP’s behalf has been minimal so far.

   Less than a dozen importers have taken advantage of the third-party validation program to date, he said at the fall conference of the National Customs Brokers and Forwarders Association of America in Washington.

   “Based on what we’re seeing the trade seems to have a preference for working one-on-one with supply chain specialists rather than contract out to a third party,” he said.

      The lack of interest is largely due to the fact that CBP conducts supply chain validations for free while importers are responsible for paying for outsourced auditing services. More importantly, Owen said after his presentation, is that many importers are afraid of sharing their corporate security and business practices, as well as proprietary data, with private sector third parties.

   Owen, who has visited China three times in the past year, said CBP continues to press the Chinese government to allow U.S. inspectors to visit Chinese manufacturers and transport providers to see if their cargo security measures meet the instructions passed down by the importer. China is even resisting the idea of conducting joint validations in which Chinese officials would tag along with CBP officers during field visits, he said.

   More cooperation is coming from a handful of countries that are aligning their programs with C-TPAT. Earlier this year CBP and New Zealand Customs agreed to mutually recognize their supply chain partnership programs, opening the door for companies in each country to receive benefits from the other. New Zealand Customs is verifying the security practices of exporters to the United States using criteria that are similar to CBP’s inspection procedures. CBP’s confidence in the program has allowed it to accept those validations and thereby grant U.S. importers quicker trade facilitation benefits without having to wait an undetermined amount of time until its own teams of inspectors can visit New Zealand.

   CBP expects to extend mutual recognition status to Jordan and Australia in 2008, and possibly Canada in 2009, Owen said. CBP would gain lots of economies of scale with Canada because one-third of C-TPAT membership comes from Canadian manufacturers, highway carriers or non-resident importers. Owen said in follow-up comments that Canada is doing a good job of tightening its Partners in Protection program to go beyond paper-based audits.

   Meanwhile, CBP plans to hire 50 more C-TPAT supply chain security specialists to staff two new offices in Buffalo, N.Y., and Houston by the end of the year, Owen said. That will bring the C-TPAT audit force to 200. The new offices will focus on Canada and Mexico supply chains, respectively.

   The agency plans to publish its security criteria for air cargo carriers by Oct. 1.

   Owen told Shippers’ NewsWire that Dulles International Airport in Virginia will become the first airport in the country next year at which CBP will deploy radiation portal monitors to scan outbound cargo trucks for illegal transport of radioactive materials or weapons. CBP has hundreds of large-scale devices at land and sea ports of entry, and expects to have nearly full coverage in place by the end of the year.

   The next step is to scan international cargo entering the country at airports.

   Owen also said the Container Security Initiative will expand to 58 ports by Sept. 30 when ports in Haifa, Israel; Port Alexandria, Egypt; and Manzanillo and Colon, Panama, come on line to selectively inspect outbound cargo to the United States.