| About 90%¹ of the world’s trade by volume ... Almost 50%² of incoming U.S. trade by value ... At some point in its life cycle, just about every product you use at home or at work³ |
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| We know a good deal about what’s inside the
“box” or container used to transport cargo across
the oceans by ship (and, upon arrival, inland by truck or train) — including the details of when
it got on board, where it’s to end up, and whose cross-border transaction sent it on its way. In the aftermath of the September 11 terrorist attacks, much has been made of the danger of admitting the “Trojan box” into U.S. ports. Responding to the alarm, the 9/11 Commission Act of 2007 set a 2012 deadline for scanning 100% of U.S.-bound containers before they leave foreign ports.4 But, the trade and transport sector has consistently argued, attempting to scan every one of the 11 million or so containers that enter U.S. |
seaports each year would exact unacceptably
high costs, not the least of which would be to throttle global trade flows (and so hand the
terrorists a victory they have not been able to achieve by direct attack). Put another way, the ultimate aim of any trade security measure must be to facilitate trade, not shut it down. Timely information is the key to balancing security and facilitation. As then-Commissioner of Customs and Border Protection (CBP) Ralph Basham told the Journal of Commerce in 2008, “We’ve got to get smarter about what we do, because we cannot inspect, interview all of these people and things that come across the border — we can’t do it.” |
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| During Basham’s tenure, the CBP established
the National Targeting Center - Cargo (NTCC)
to consolidate intelligence, “to analyze
information, identify what is truly at risk, and
put it back on the front line so officers have a
better idea of what it is they should be looking
for. It’s one thing to have one face at the border.
It’s a whole other thing to have one mind at the
border, and that’s what we need to get to.”5 It is important to note that the digital imaging of container contents that is mandated by the 2007 Act is distinct from the scanning by radiation detectors to which 98% — soon to be 100% — of all arriving sea-borne containerized cargo is subjected.6 The U.S. Government Accountability Office (GAO) in its June 2008 report on the several challenges to 100% scanning noted such practical concerns as port congestion, space constraints, and not-ready-for-prime-time technologies. In addition, the GAO remarked: “International partners state that 100% scanning is inconsistent with accepted risk managment principles and diverts resources away from other security threats.” 7 In February 2009, newly-confirmed Homeland Security Secretary Janet Napolitano, acknowledging the complexities of negotiating agreements with America’s many trading partners, told Congress that her department will probably not be able to meet the deadline for 2012 offshore scanning. At the same time, Napolitano assured Congress that close to 100% of inbound containers are being screened, a process that requires astute analysis of information about cargo, rather than physical examination of cargo. 8 Jayson P. Ahern, Acting Commissioner of CBP, described the screening process as one of the multiple layers of strategy to “receive, process, and act upon commercial information in a timely manner so that we can target, in a |
very specific fashion, the suspect shipments without hindering the movement of commerce through our ports.” 9 [See the box, next page.] Chain of custody Where does the information come from? The importers and exporters who buy and sell cargoes, and the shippers and shipping intermediaries who carry the cargoes. Full disclosure about shipments, backed by documentation and available online, is the price of admission to a secure transport system. The CBP likens supply chain security to establishing a chain of custody for evidence.10 As a shipment changes hands, controls to ensure its integrity must be in place. Under its Customs- Trade Partnership Against Terrorism (CTPAT), the CBP has set security standards for each link in the chain, and will certify that companies adhere to these standards and are therefore “known shippers” who can count on speedy and efficient processing of their cargoes. Documenting this chain of custody is nothing new. As soon as merchants gave up traveling with their goods and began entrusting them to ships’ captains to take to market, accurate written accounts of the cargoes, their destinations and the terms of their conveyance came into use — as in this bill of lading from 1248, “...Eustace Cazal and Peter Amiel, carriers, confess and acknowledge to you, Falcon of Acre and John Confortance of Acre, that we have had and received from you twelve full loads of brazil wood and nine of pepper and seventeen and a half of ginger for the purpose of taking them from Toulouse to Provence, to the fairs of Provence to be held in the coming May, at a price or charge of four pounds and fifteen solidi in Vienne currency for each of the said loads.” 11 Today’s cross-border commerce rides on an ocean of documents — originally paper, now mostly (but not entirely) digital. Among them: |
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| The 24-hour rule requires that 15 data elements
be supplied to identify the source, content and
destination of cargoes — enough information
to distinguish low-risk cargoes from those
warranting a closer look. Most important, the rule requires a “precise description” of the cargo and its weight; for sealed containers, the shipper’s declared description and weight. Where catch-alls such as “FAK” — “freight of all kinds” — and “general cargo” had once been acceptable, a more serviceable description was needed to serve as a reference when running X-ray and radiation scans on cargoes moving through foreign ports that have joined the Container Security Initiative. In January 2009, CBP implemented an interim Importer Security Filing rule, subject to review and possible revision, that requires 10 new supply chain data elements from importers. In addition, carriers are required to file their vessel stow plans and container status messaging. This program, known as 10+2, is likely to be the last significant change to supply chain disclosure requirements, at least as a means to foil terrorists. The JoC’s Peter Tirschwell remarks: “a new, expansive and potentially protectionist interpretation of security may be emerging. With terrorism at bay, new concerns such as food and product safety are rapidly gaining prominence.” Look for other agencies, such as the Consumer Product Safety Commission, to seek information that traces the origins of supply chains to ensure the security of food, drugs and product safety. 14 Commercial value The same information that CBP uses to monitor the security of the supply chain can be used by commercial interests to track global markets and their buyers and sellers. |
An affiliate of the JoC, PIERS Global Intelligence
Solutions was the first and remains the
leader in gathering, verifying, and retailing the
information from such documents as the master
B/L (for export trade data) and manifests (for
import trade data). PIERS obtains its U.S. trade
data under the Freedom of Information Act
(FOIA) which makes federal records available
to the public subject to restrictions aimed at
protecting the nation’s security, the competitively
sensitive information of businesses, and
the privacy of individuals. [Note that 10+2
filings are not subject to FOIA disclosure.] Manifest data collected from the U.S. Customs Automated Manifest System (AMS) is compiled and released (on magnetic tape) to PIERS each day. PIERS releases the data through its Web-based information products 14 days after receipt — that is, as soon as federal regulation permits: “not ... less than 10 days (exclusive of Saturdays, Sundays, and legal public holidays).” PIERS puts the mandatory hold period to good use, verifying, validating and formatting the government’s data to make it more readily accessible. PIERS also supplements the data with more detail. For example, PIERS provides estimated values of cargoes. Here’s how the estimates are calculated: 1. PIERS uses the values and weights of U.S. Foreign Waterborne Cargo in the U.S. Dept of Commerce, Census Bureau’s Waterborne Foreign Trade Data to calculate a “valueper- ton factor” for a cargo (dividing its value by its weight). 2. PIERS has built reference tables that list a “value-per-ton factor” for such variables as direction of trade (in or out), U.S. coast, country (of origin for imports, destination for exports), and Harmonized Tariff Schedule (HTS) Code for commodities. |
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Just one example: With PIERS TI, you can
select a consignee, notify or foreign shipper
profile report to aggregate all shipments as well
as a summary of shipment activity for the
searched company name at the same address,
within a specified timeframe. If its trade activities pique your interest in a company — as a potential customer, a source of supply, or a competitor — you can dig deeper with PIERS Trade Profiles, available to nonsubscribers on a pay-per-view basis. Buy a single-company Trade Profiles look-up online and you’ll get a report that identifies the company by its D&B D-U-N-S** Number. D&B’s nine-digit coding system assigns a company a unique identifier that also indicates its place in complex corporate structures. Your Trade Profiles report will also include business background information (sales, number of employees, etc.) and executive-level contacts, complete with their phone numbers, fax numbers and email addresses. Nor is PIERS trade intelligence confined to U.S. companies. PIERS was the first to provide online profile summaries of overseas shippers, including summary of metric tons, TEUs (20- foot-equivalent units, the standard container measure), and number of shipments by commodity, carrier, U.S. port, country of origin, company location, and U.S. consignee. Full circle As noted above, the CBP sees the evidentiary chain of custody as a model for supply chain security. In fact, the information generated by its disclosure requirements (and enhanced by PIERS) is used as evidence in product liability and toxic tort litigation. It has been used to support claims of dumping, diversion or violation of trade quotas; to track down trade-name and product counterfeiters; and to detect breach of contracts covering exclusive supply, distribution or joint venture arrangements with offshore partners. |
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Endnotes: 1 U.S. Customs and Border Protection, cited variously, e.g.:http://www.cbp.gov/xp/cgov/newsroom/commissioner/ speeches_statements/archives/2003/ jun192003.xml 2 Ibid. 3 From the Container Shipping Information Service at http://www.shipsandboxes.com 4 http://thomas.loc.gov/cgi-bin/bdquery/z?d110:H.R.1. For a short summary, see http://www.govtrack.us/ congress/bill.xpd?bill=h110-1&tab=summary 5 R.G. Edmonson, “Hand on the Helm,” The Journal of Commerce, 10/27/2008. 6 Testimony of Acting Commission Jayson P. Ahern, U.S. Customs and Border Protection, before the House Appropriations Committee, Subcommittee on Homeland Security, on Cargo and Container Security, 4/1/09; available online at http://www.dhs.gov/ynews/testimony/ testimony_1238603858577.shtm 7 U.S. Government Accountability Office Report, “Supply Chain Security: Challenges to Scanning 100% of U.S.-Bround Cargo Containers,” GAO-08-533T, 6/12/ 2008, available online at http://www.gao.gov/new.items/ d08533t.pdf 8 Juliana Gruenwald, “Napolitano: DHS likely to miss cargo scanning deadline,” CongressDaily, 02/25/2009, available online at http://www.nextgov.com/nextgov/ ng_20090225_7302.php 9 Ahern, op. cit. 10 Customs and Border Protection, “Maritime Cargo Security in the Age of Global Terrorism,” 1/04/2007, at http://www.cbp.gov/xp/cgov/newsroom/highlights/ trade_news/cargo_security.xml 11 Roy C. Cave & Herbert H. Coulson, eds., A Source Book for Medieval Economic History, (Milwaukee: The Bruce Publishing Co., 1936; reprint ed., New York: Biblo & Tannen, 1965), pp. 159-160; text modernized by Jerome S. Arkenberg, Cal. State Fullerton, and available online at http://www.fordham.edu/halsall/source/ 1248billoflading.html 12 Christopher Koch, President & CEO, World Shipping Council, testimony before the House Committee on Transportation and Infrastructure, 3/13/2002. 13 Final Rules RIN 1515-AD11 67 FR 66318-66333 10/ 31/2002. 14 Peter Tirschwell, “Security’s New Realm,” The Journal of Commerce, 4/13/2009. 15 For more commercial applications of PIERS trade data, go to http://www.piers.com/Piersproducts/TIatWork.asp |
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Visit our web site at www.piers.com © 2009 PIERS, a Division of UBM Global Trade |
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