Transcript TSA Certified Cargo Screening Program (CCSP)

Shared Services Group
Supply Chain Security
SCRLC #6
Regulatory/Security Track
June 5, 2008
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Topics/Agenda
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 TSA Certified Cargo Screening Program
Andrew Cox, TSA
Ken Konigsmark, Boeing
 Various topic updates
Ken Konigsmark, Boeing
 GAO report on C-TPAT
 AEO Update
 Stanford/IBM/The Manufacturing Institute Study
 C-TPAT Revalidation Report
Copyright © 2007 Boeing. All rights reserved.
Why Important to SCRLC Members?
Shared Services Group | Supplier Management | Supply Chain Security
 New law mandates TSA cargo screening program:
 will impact all cargo on passenger aircraft
 will likely add cost/potential delays to shipments
 requires proactive planning by SCRLC members
 Many initiatives underway around the world may impact SCRLC members
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Regulatory/Security Track Scope
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Included:
- Understand existing supply chain security programs; track proposed changes
- Track emerging supply chain security programs (AEO, other)
- Monitor legislation/ policies related to supply chain security
- Monitor other regulatory initiatives (beyond supply chain security)
- Track supply chain security best practices
- Monitor open source intelligence reports; identify supply chain security risks
- Contingency planning/continued operations in post-incident scenarios
- Monitor latest technological solutions to supply chain security concerns
- Monitor international regulations and policies impacting supply chain security
Excluded:
- Import/export compliance regulations or policies
- Security/reliability risks to supply chains from non-human sources
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GLOBAL
WCO SAFE Framework of Standards
Mutual Recognition?
INTERNATIONAL
Sweden (Stairsec), EU (AEO), Canada (PIP), New
Zealand (SES), Japan (Asia Gateway Initiative),
BASC, Jordan, (Golden List), Singapore (Secure
Trade Partnership), Australia, China, US (C-TPAT)
US
SAFE Port Act
Congress
9/11 Commission Act
Import Safety?
TSA
-TWIC (Transportation Worker Identity Card)
CBP
- C-TPAT
FAA, FDA, Commerce, etc
-CCSP (Certified Cargo Screening Program)
- CSI (Container Security Initiative)
- FAST (Free and Secure Trade)
- SFI (Secure Freight Initiative)
- 10+2 Advance Data Filing
- OSC (Operation Safe Commerce)
FUTURE?: US Exports? Cargo carrier screening? International air cargo? Mutual
recognition? Reciprocal requirements? Risk mgt vs. 100% screening? Import safety?
5/15/08 USA Today: “Companies take on
mammoth screening duty”
Shared Services Group | Supplier Management | Supply Chain Security
 In one of the biggest and costliest expansions of aviation security since
9/11, hundreds of companies are gearing up to screen tens of millions of
boxes of merchandise before those boxes are loaded onto U.S.
passenger airplanes
 Congressional researchers estimate the screening equipment and
personnel will cost $3.75 billion over 10 years
 Screening could take so long that shipments would be delayed and
"factories could shut down."
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TSA Certified Cargo Screening Program Update
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 Boeing applied for two sites to become certified Phase 1 participants; informal security
assessments conducted at each
 Must be able to demonstrate all CCSP security standards as outlined in the “CCSP Order”:
 Facility Security Plan
 SAFETY Act application
 Defined “designated screening location (DSL)”
 Adequate access controls, badging, and physical security measures
 STA application and background check for each employee needing access to DSL
 Deploy fully functioning screening methods (manual or equipment) that can be actively
demonstrated
 Deploy acceptable packaging methods that can be shown to TSA
 Ensure shipping paperwork has the required CCSP statement and documentation by
name of who completes the screening
 Ensure chain of custody methodology is in place for all shipments and with all partners
 Complete CCSP training for all employees with STA access
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GAO Report Released on C-TPAT
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 “U.S. ports vulnerable to terrorists, probe finds “
 Issues identified:
 --Company certification based on self-reported security information but
CBP does not test the company's security practices and is "challenged
to know that security measures are reliable, accurate and effective.
 --Customs is not required to utilize third-party audits
 --Companies can get certified and reduced inspections before
implementing security improvements. Customs doesn’t follow up to
make sure requested improvements were made
 GAO: require consideration of third-party audits and to make certain
companies comply with security improvements needed. Improve
consistency and better information-gathering in Customs' security
checks thru technological means
Copyright © 2007 Boeing. All rights reserved.
AEO Update (from John Novotny, Jabil)
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 Authorised Economic Operator (AEO) took legal effect on 1 January 2008.
 Implementation in the UK
 Over 100 AEO applications in the UK; vast majority are for a combined customs
simplification and safety and security AEO certificate
 received from a wide range of businesses, including importers, exporters and freight
agents.
 Implementation in other EC member states
 EC reports 900 applications throughout the EC; majority in the Netherlands, Sweden, UK &
Germany.
 EC projects about 4600-5300 applications being submitted across the EC during the course
of 2008.
 Mutual recognition with third countries
 Greater benefits expected when mutual recognition is achieved. EC negotiating with many
countries; priorities are US, China, Norway, Sweden
 EC expects the first mutual recognition agreements in 2009
 Monitoring visits to ensure consistency across the EC
 AEO Guidelines to ensure consistency across member States.
 EC sponsoring a series of monitoring visits
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High Costs, Operational Challenges Among
Lessons Learned In Secure Freight Initiative
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 SAFE Port Act requires 100% screening of ocean containers
 Six-month old pilot program shows substantial costs and a slew of
operational and personnel challenges to maintain the effort
 SFI at three ports since last October (Port Qasim, Pakistan, Southampton
in the United Kingdom, and Puerto Cortes in Honduras)
 Small ports with limited traffic yet the cost is $30 million to establish the
scanning effort
 Scanning systems: radiation portal monitors and X-Ray inspection
 Images sent to the National Targeting Center in the US 24 hours before a
container leaves for interpretation by analysts
 Other challenges facing SFI
- sustaining the scanning equipment when it breaks down
- Customs staffing
- lack of port space for an integrated scanning system and the secondary
inspection area
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C-TPAT Revalidation
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 Held at Mitsubishi Heavy Industries, Hiroshima, Japan on April 15, 2008
 Full day at supplier
 Detailed questions
 Evidence/proof required
 Mandatory items for retaining Tier 3
 Container inspections/bolt seals
 Bolt seal control/records
 Chain of custody
 Expect results by mid-July
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“Innovators in Supply Chain Security: Better
Security Drives Business Value” (June 2006)
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 By Barchi Peleg-Gillai, Gauri Bhat, and Lesley Sept, Stanford University
 Collateral benefits that can be realized from supply chain security investments:
• Higher supply chain visibility;
• Improved supply chain efficiency;
• Better customer satisfaction;
• Improved inventory management;
• Reduced cycle and shipping time; and
• Cost reduction following the above-mentioned collateral benefits.
When properly leveraged, investments in supply chain security may not only
be offset by such benefits but, in fact, can be outweighed by such benefits,
and can overall have a positive impact on a company’s bottom line.
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Study Results
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 Results based on inputs from 11 manufacturers and 3 Logistics Service Providers
 Reported benefits include:
• Improved product safety (e.g., 38 percent reduction in theft/loss/pilferage, 37 percent
reduction in tampering);
• Improved inventory management (e.g., 14 percent reduction in excess inventory, 12
percent increase in reported on-time delivery);
• Improved supply chain visibility (e.g., 50 percent increase in access to supply chain data,
30 percent increase in timeliness of shipping information);
• Improved product handling (e.g., 43 percent increase in automated handling of goods);
• Process improvements (e.g., 30 percent reduction in process deviations);
• More efficient customs clearance process (e.g., 49 percent reduction in cargo delays, 48
percent reduction in cargo inspections/examinations);
• Speed improvements (e.g., 29 percent reduction in transit time, 28 percent reduction in
delivery time window);
• Resilience (e.g., close to 30 percent reduction in problem identification time, response
time to problems, and in problem resolution time); and
• Higher customer satisfaction (e.g., 26 percent reduction in customer attrition and 20
percent increase in number of new customers).
Copyright © 2007 Boeing. All rights reserved.