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C-TPAT and Cargo Security: Sea Change

In an effort to prevent terrorists from turning container and cargo ships into weapons, Customs is counting on big business to goad partners into improving security through initiatives like C-TPAT.

C-TPAT, meanwhile, is the equivalent carrot-not-stick program for American businesses. Announced in April 2002, it requires member companies to conduct a security assessment of their entire supply chain, quiz business partners about security, outline plans for improvement, and eventually let Customs come in and validate those processes. In return, Customs promises members a "fast lane" through the border, along with other benefits such as the option to set up monthly billing rather than paying duties shipment-by-shipment.

"What we're trying to do is get more detailed information [so we can] get the low-risk cargo out of the way and focus on the high-risk cargo," says C-TPAT Director Robert Perez, who before 9/11 was one of Customs' lieutenants in the war on drugs.

At first, the program was opened to importers onlythe General Motors and Targets of the world. "They had the most clout," Perez explains. Carriers, including shipping and trucking companies and airlines, were brought on nextfollowed by the brokers and freight forwarders that serve as intermediaries between carriers and importers. Most recently, U.S. marine port authorities were added to the mix.

So far, more than 3,800 companies have signed memorandums of understanding stating their intention to join C-TPAT. Of those, more than 2,400 have filled out a security questionnaire detailing how they're protecting their supply chain, and Customs has certified more than 1,400 of those applications.

Members are starting to see the benefits. When a new security alert is issued, "instead of peaks and valleys, we haven't had any slowdowns," says Randy Arnt, executive director of corporate security for paper company Kimberly-Clark. "Everybody else that's part of this process has experienced the same thing. At this point, if you're a large company and you haven't been certified, you're really at a competitive disadvantage."

Observers also note that, as Customs had hoped, the program has cascaded far beyond the companies that are directly involved. Pinkerton's Wilkins says that as part of the certification process, one client alone sent 1,200 letters to business partners asking about their security processes.

"It's the domino effect," says Agron, whose company, APL, has been on the receiving end of such letters. "They start out, 'Dear Ocean Carrier, As part of the process of becoming C-TPAT certified, we need to know if you're a member of C-TPAT. If you're not, do you do the following?' We don't have to fill out the questionnaire because we just say we're C-TPAT compliant."

DHL Danzas Air & Ocean, a freight forwarder that contracts with shipping companies such as APL to move customers' goods from one place to another, is starting to include the certification in its vendor contract negotiations. "We prefer that any company we hire as a service provider is compliant so there's less chance of delay," says Art Arway, director of security for the Americas. "We don't require that at this point, and whether we will require it is a subject of some debate."