First results from the WCO Cancun AEO benefit survey

/0 Comments/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

In today’s CBRA Blog we provide a sneak preview of the outcomes of the AEO Benefit survey carried out by CBRA research team at the 3rd Global WCO AEO Conference, in Cancun, Mexico, 11-13 May 2016.

We keep today’s Blog very simple. First, we would like to introduce a new test-categorization of Customs granted AEO benefits, with the following five groups:

  1. More streamlined / simplified Customs (and related) procedures
  2. Less frequent interventions by the Customs administration
  3. Increased priority over non-AEO companies (“getting to the front of the queue”)
  4. Increased (positive) attention by the Customs administration
  5. Increased number of other privileges granted by the customs administration

And second, we list the AEO benefits from our survey (only question 2 in the survey form, which focuses explicitly on Customs granted benefits to the supply chain companies, and not benefits for Customs themselves, or any kind of “side benefits” for the companies) under each of the five categories. The order of the benefits per category is based on the survey outcomes, i.e. the first bullet point benefit was the most common one in the survey, followed by the second bullet and so forth. Please note that there are no ranking indications between the five groups, neither when it comes to the groups per se, nor to the individual benefits – these will be included in our academic publications, bit later this year…

Group 1. More streamlined / simplified Customs (and related) procedures

  • Enjoying increased paperless processing of import/export shipments
  • Enjoying an access to / pre-qualification with various simplified customs procedures
  • Enjoying having a reduced number of data elements in the (final) declaration
  • Enjoying having entry/exit summary declarations with reduced data sets
  • Enjoying easier access to other governmental certification in the supply chain (e.g. in aviation security)

Group 2. Less frequent interventions by the Customs administration

  • Enjoying minimum number of cargo security inspections
  • Enjoying the option of audit-based / account-based controls (versus only transaction-based controls)
  • Enjoying access to self-audit or reduced audit programs

Group 3. Increased priority over non-AEO companies (“getting to the front of the queue”)

  • Enjoying priority use of non-intrusive inspection techniques when examination is required
  • Enjoying a priority status in Customs processing during a period of elevated threat conditions
  • Enjoying priority response to requests for ruling from Customs
  • Enjoying expedited processes to resolve post-entry or post-clearance inquiries
  • Enjoying priority treatment of consignments if selected for control
  • Enjoying preferential treatment at border crossings in post-disaster/post-attack situations
  • Enjoying a priority status in exporting to affected countries after a security incident

Group 4. Increased (positive) attention by the Customs administration

  • Privilege to deal with designated Customs contact points / assistance by Customs supply chain security experts
  • Privilege to receive training provided by Customs experts
  • Privilege to be notified of the intention to release goods prior to their arrival (“pre-clearance”)
  • Enjoying special treatment in some non-criminal legal cases
  • Privilege to exploit “extended Customs office opening hours”, during high peak / congestion times

Group 5. Increased number of other privileges granted by the Customs administration

  • Enjoying from tax privileges, such as speedier tax refunds and compensation
  • Enjoying the option to manage clearance formalities, inspections etc. at the business site
  • Enjoying from financial guarantee waivers, reductions or rebates
  • Privilege to self-manage the bonded warehouses
  • Enjoying tangible benefits due to mutual recognition agreements / arrangements (MRAs) with 3rd countries
  • Privilege to choose the place of controls (if selected for control)
  • Enjoying reductions on some Customs fees or charges
  • Privilege to conduct self-assessments when Customs automated systems are not functioning

And that’s about it! Please be reminded again that this CBRA Blog is just a first scratch on the surface to start publishing results from the WCO Cancun 2016 AEO conference… And by the way, we are also working to publish the results from the WCO Madrid 2014 AEO conference, as we have been waiting to publish the full results of the both conferences in a parallel manner / in a same paper. In the meanwhile, please email us any feedback, ideas and/or criticism regarding this Blog!

In Lausanne, 8 June 2016, CBRA Blog Dr. Juha Hintsa

Blog-080616-1

PS. Our earlier Blog with all the WCO Cancun 2016 AEO survey questions can be read at: https://www.cross-border.org/2016/05/08/aeo-benefits-or-no-benefits-thats-the/

PPS. Related literature by the Cross-border Research Association team and key partners:

Most of these papers are available for download at ResearchGate, https://www.researchgate.net/profile/Juha_Hintsa/publications . And all of them can be naturally requested by email ( cbra@cross-border.org )

Hintsa, J., Mohanty, S., Rudzitis, N., Fossen, C. and Heijmann, F. (2014), “The role and value of customs administrations in minimization of socio-economic negative impacts related to illicit import flows in freight logistics systems- three preliminary cases in Europe – FP7-CORE”, Proceedings of the 9th WCO PICARD Conference, September 17-19, 2014, Puebla.

Hintsa, J. (2013), AEO – MRA Study for RTC- Thailand Europe Cooperation TEC-II, PDSC: Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation (Activity Code : TRA 4), Final Report, Bangkok.

Urciuoli, L. and Ekwall, D. (2012), “Possible impacts of supply chain security certifications on efficiency – a survey study about the possible impacts of AEO security certifications on supply chain efficiency”, Proceedings of Nofoma Conference, June 6-8, 2012, Naantali.

Hintsa, J., Männistö, T., Hameri, A.P., Thibedeau, C., Sahlstedt, J., Tsikolenko, V., Finger, M. and Granqvist, M. (2011), Customs Risk Management (CRiM): A Survey of 24 WCO Member Administrations, Study for World Customs Organization (WCO), February 28, 2011, Lausanne

Hintsa, J., Hameri, A.P., Männistö, T., Lazarescu, M., Ahokas, J. and Holmström, J. (2010), ”Conceptual model for measuring benefits of security in global supply chains”, Proceedings of the the 3rd International Conference on Transportation and Logistics (T-LOG), September 6-8, 2010, Fukuoka City.

Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, January 15, 2010

Gutiérrez, X., Hintsa, J., Wieser, P. and Hameri, A.P. (2007), “Voluntary supply chain security program impacts: an empirical study with BASC member companies”, World Customs Journal, Vol. 1 No. 2, pp.31-48.

Gutierrez, X. and Hintsa, J. (2006), “Voluntary supply chain security programs: a systematic comparison”, Proceedings of the International Conference on Information Systems, Logistics and Supply Chain (ILS), May 15-17, 2006, Lyon.

AEO benefits, or, no benefits, that’s the?

/0 Comments/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

“To be, or not be – that is the question”, was Prince Hamlet wondering already some 412 years ago. 400 years later, the CBRA research team started to raise the question of “AEO benefits, or no AEO benefits – that is the ?”…

 

Around year 2004, we first started to study the emerging AEO-types of programs in Europe and globally, working intensively with multinational companies (clothing, cigarettes, machinery etc.), and with multiple governments. Initially, we reviewed any data available from C-TPAT, StairSec, BASC and TAPA programs, and later we concentrated on EU AEO and all other AEO programs across the globe. After 12 years of research our intention is to publish an academic journal paper summarizing all the knowledge from the literature as well as from our own research on AEO benefits for Customs administrations and for supply chain companies – focusing on the tangible, realized benefits, instead of “paper tiger / lip service” types of benefit checklists.

As the last step of data collection, we are now launching the study: “Customs Supply Chain Security Programs (AEO, C-TPAT etc.) – Survey on Supply Chain and Government Benefits – WCO 3rd Global AEO Conference, Cancun, Mexico, 11-13 May 2016 – Research project by CBRA, ZLC, UCR, HEC UNIL and FP7-CORE”. This survey is a direct follow-up with the one CBRA did in the 2nd Global AEO Conference in Madrid two years ago. Ms. Susana Wong Chan from the University of Costa Rica and Cross-border Research Association is presenting the survey in Cancun next week, and collecting as many replies as possible, in person during the conference (and by email after).

We have three main questions in the Cancun AEO survey, each one with multiple sub-questions (all questions are presented with a five-point Likert scale, plus one option for “cannot say”):

  • Question for Customs administrations, supply chain companies, and all other experts in cross-border supply chains and Customs supply chain security programs: How often are the supply chain security program certified companies in your country benefiting from the following Customs granted incentives?
  • Question for Customs administrations only: What are the benefits for the Customs administration in your country arising from the supply chain security program?
  • Question for supply chain companies only: What are the additional benefits for the supply chain companies in your country, arising from the supply chain security program participations / certifications?

blog 08.05.20162The full list of questions and sub-questions is shared at the end of this blog. In addition, you can download the questionnaire in word-format, in English and in Spanish, at:  https://www.cross-border.org/downloads/

 

 

 

 

 

 

 

 

Why don’t (near) perfect AEO benefit -papers exist yet in the literature? One would think that the topic attracts lots of academics to carry out such research, and to publish their exciting findings, rather sooner than later… Well, it is quite challenging topic to study: where is the objective, non-biased data located, and how do you get access to it? How to deal with all the politics linked to the topic, as maybe many countries would like to be perceived as “leading edge AEO program holders, with a set of fantastic, innovative benefits delivered to the trade and logistics…”? How to differentiate between all the AEO marketing materials and incentive promises from what is actually implemented on the ground, for the real benefit of supply chain companies; and so forth..? To expand on these thoughts, one could revisit our article on the WCO News No 74 of June 2014. The table on page 45 includes a row on challenges and peculiarities with different categories of possible AEO benefits, sharing following observations and notes:

  • As some of the Customs granted benefits existed in many countries before the AEO era, companies which have enjoyed “such pre-AEO benefits” may fear a potential reduction in existing trade facilitation measures – instead of the introduction of truly new benefits.
  • Due to the dynamics in the cross-border flow of goods, outcomes might vary considerably over time – ‘seeing is believing’; in particular, the benefits linked to ‘elevated threat’ and ‘post-incident recovery’, may appear quite theoretical until such situations actually emerge (and the benefits materialize – or, not).
  • Some could also consider that the AEO system may become a technical trade barrier – the ´become an AEO or die´ scenario.
  • Some might think that an AEO program deters crime, as criminals would rather choose an easy target (i.e. a non-AEO target), for example in the case of warehouse theft; and, alternatively, other might think that an AEO program attracts criminals, as they know there are likely to be fewer Customs interventions – the smuggling of narcotics, for example.

 

Blog_080520163Dear CBRA Blog reader: although this is very challenging research topic, and one should not dream of reaching “one ultimate truth out there” – we kindly ask that if you are in Cancun 11-13 May for the 3rd Global AEO Conference, please take 10 minutes to reply the questionnaire..! Next to the good vibrations gained from participation in this highly important study, you will join a lucky drawing of a nice Costa Rican souvenir! In Lausanne, 9 May 2016, Juha Hintsa.

 

 

 

 

 

 

 

PS. List of benefit survey questions, for the CBRA Blog readers:

Customs Supply Chain Security Programs (AEO, C-TPAT etc.) – Survey on Supply Chain and Government Benefits – WCO 3rd Global AEO Conference, Cancun, Mexico, 11-13 May 2016 – Research project by CBRA, ZLC, UCR, HEC UNIL and FP7-CORE

 

Question for Customs administrations, supply chain companies, and all other experts in cross-border supply chains and Customs supply chain security programs: How often are the supply chain security program (AEO, C-TPAT etc.) certified companies in your country benefiting from the following Customs granted incentives?

Use the following scale: Very frequently – Frequently – Occasionally – Rarely – Never / Not applicable in our country (or, this is nothing specific for certified companies) – Cannot say

  • Are companies submitting entry/exit summary declarations with reduced data sets?
  • Are companies benefiting from reduced number of data elements in their final declaration?
  • Are companies benefiting from increased paperless processing of import/export shipments?
  • Are companies offered the option of audit-based / account-based controls (versus only transaction-based controls)?
  • Are companies having access to / pre-qualification with various simplified customs procedures?
  • Are companies self-managing their bonded warehouses?
  • Are companies benefiting from tax privileges, such as speedier tax refunds and compensation?
  • Are companies benefiting from financial guarantee waivers, reductions or rebates?
  • Are companies benefiting from reduction of any Customs fees or charges?
  • Are companies benefiting from access to self-audit or reduced audit programs?
  • Are companies allowed to conduct self-assessments when Customs automated systems are not functioning?
  • Are companies benefiting from designated Customs contact points / assistance by Customs supply chain security experts?
  • Are companies benefiting from training provided by Customs experts?
  • Are companies enjoying easier access to other governmental certification in the supply chain, e.g. in aviation security?
  • Are companies benefiting from the option to manage clearance formalities, inspections etc. at the business site?
  • Are companies benefiting from a minimum number of cargo security inspections?
  • Are companies being notified of the intention to release goods prior to their arrival? (“pre-clearance”)
  • Are companies benefiting from “extended Customs office opening hours”, during high peak / congestion times?
  • Are companies benefiting from choice of place of controls, if selected for control?
  • Are companies benefiting from priority treatment of consignments if selected for control?
  • Are companies benefiting from priority use of non-intrusive inspection techniques when examination is required?
  • Are companies guaranteed a priority Customs processing during a period of elevated threat conditions?
  • Are companies guaranteed preferential treatment at border crossings in post-disaster/post-attack situations?
  • Are companies guaranteed a priority in exporting to affected countries after a security incident?
  • Are companies benefiting from expedited processes to resolve post-entry or post-clearance inquiries?
  • Are companies benefiting from priority response to requests for ruling from Customs?
  • Are companies benefiting from privileges in any kind of non-criminal legal cases?
  • Are companies enjoying tangible benefits due to mutual recognition agreements / arrangements (MRAs) with 3rd countries?

blog 08.05.20164

 

Question for Customs administrations only: What are the benefits for the Customs administration in your country arising from the supply chain security program (AEO, C-TPAT etc.)?

Use the following scale: Strongly Agree – Agree – Neither Agree nor Disagree – Disagree – Strongly Disagree – Cannot say

  • Better overall allocation of governmental resources
  • Improved indirect tax revenue collection
  • Improved prevention of trafficking and illicit trade
  • Improved detection and/or seizures in trafficking and illicit trade
  • Improved prosecution to judgements -ratio (= higher percentage of successful prosecutions)
  • Increased confiscations of criminal assets and/or proceeds of crime
  • Improved collaboration with supply chain companies
  • Improved collaboration with other national government agencies
  • Improved international collaboration with Customs administrations in other countries

 

Question for supply chain companies only: What are the additional benefits for the supply chain companies in your country, arising from the supply chain security program participations / certifications (AEO, C-TPAT etc.)?

Use the following scale: Strongly Agree – Agree – Neither Agree nor Disagree – Disagree – Strongly Disagree – Cannot say

  • Improved customer service
  • Improved customs loyalty
  • Increased market share/ gaining more new customers
  • Improved security commitment of employees
  • Improved company image and credibility
  • Reduced overall vulnerability of the supply chain
  • Improved supply chain resiliency
  • Reduced cargo theft incidents
  • Reduced tax fraud incidents
  • Reduced illicit trade / trafficking incidents
  • Reduced insurance fees
  • Improved inventory management
  • Fewer delayed cross-border shipments
  • Reduced lead time variability in the cross-border supply chain

blog 08.05.20165

 

PPS. Related literature by the Cross-border Research Association team and key partners:

Most of these papers are available for download at ResearchGate, https://www.researchgate.net/profile/Juha_Hintsa/publications . And all of them can be naturally requested by email ( cbra@cross-border.org )

Hintsa, J., Mohanty, S., Rudzitis, N., Fossen, C. and Heijmann, F. (2014), “The role and value of customs administrations in minimization of socio-economic negative impacts related to illicit import flows in freight logistics systems- three preliminary cases in Europe – FP7-CORE”, Proceedings of the 9th WCO PICARD Conference, September 17-19, 2014, Puebla.

Hintsa, J. (2013), AEO – MRA Study for RTC- Thailand Europe Cooperation TEC-II, PDSC: Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation (Activity Code : TRA 4), Final Report, Bangkok.

Urciuoli, L. and Ekwall, D. (2012), “Possible impacts of supply chain security certifications on efficiency – a survey study about the possible impacts of AEO security certifications on supply chain efficiency”, Proceedings of Nofoma Conference, June 6-8, 2012, Naantali.

Hintsa, J., Männistö, T., Hameri, A.P., Thibedeau, C., Sahlstedt, J., Tsikolenko, V., Finger, M. and Granqvist, M. (2011), Customs Risk Management (CRiM): A Survey of 24 WCO Member Administrations, Study for World Customs Organization (WCO), February 28, 2011, Lausanne

Hintsa, J., Hameri, A.P., Männistö, T., Lazarescu, M., Ahokas, J. and Holmström, J. (2010), ”Conceptual model for measuring benefits of security in global supply chains”, Proceedings of the the 3rd International Conference on Transportation and Logistics (T-LOG), September 6-8, 2010, Fukuoka City.

Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, January 15, 2010

A Decade of GAO’s Supply Chain Security Oversight, 2015 (CORE1113)

/0 Comments/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

Summary: The US Government Accountability Office (GAO) is an independent government watchdog organization that has been publishing many reports on the US government’s supply chain security initiatives over the past ten years. This article reviews 25 most relevant GAO’s reports that discuss strengths, weaknesses and future challenges of the US policies and regulations on supply chain security. The review findings reveal interesting facts about similarities and differences of the US and the EU approaches to supply chain security. This comparison opens new venues for further Transatlantic benchmarking as well as harmonisation and mutual recognition of supply chain security programs. This review was conducted as part of European FP7-Project CORE.  The reviewed document is available for download here: https://hicl.org. Review by Toni Männistö (CBRA)

[s2If is_user_logged_in()]

Full review: The GAO reports suggest that the US administration has been struggling with effective performance monitoring and auditing of its supply chain security initiatives. The reports indicate that there is some confusion about costs of security initiatives for the government and for the business community. There is also a lack of common understanding about the actual benefits of many of these programs. The GAO reports also urge US government officials to adopt risk-based approach to supply chain security, for example to use information and intelligence to assess risk levels of specific shipments, people, trading companies, and other entities, and then employ security solutions that are commensurate to the risk level. The GAO reports also emphasize the importance of involving the industry in the process of defining new policies and regulations.

Altogether, the review team found that the GAO documents are not only highly relevant for SCS management and governance but also of high quality. The study concludes that it might be useful for the EU to establish a quality-assurance organization similar to the US GAO. This new EU body would oversee spending of the EU and its member states on supply chain security programs and projects and this way improve efficiency of such investments.

Reference: Männistö, T., and Hintsa J., (2015), “A Decade of GAO’s Supply Chain Security Oversight,” Proceedings of the Hamburg International Conference in Logistics (HICL), September 24-25, 2015, Hamburg

 

CORE1113

[/s2If]

Three calls for journal and conference papers

/0 Comments/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

This CBRA Blog advertises three important calls for papers in 2016: Special Issue for Journal of Transportation Security (to be published in 2017); the 11th WCO Customs-Academia PICARD Conference (Sep.2016); and the 7th European Intelligence and Security Informatics Conference (Aug.2016).

 

1. Journal of Transportation Security, Special Issue: Enhancing supply chain security through government-to-government and government-to-business partnerships and collaboration

Journal of Transportation Security (JTRS): The 9/11 terrorist attacks and the subsequent events have compelled stakeholders to understand transport security as more than a single element of the global networks that move people and goods. Once a routine component of modern transportation, security now represents a vital necessity and an urgent national priority. The Journal of Transportation Security probes the relevant aspects of many critical areas of study, including supply chain and logistics; information technology; public policy; international business; political science; engineering; transportation; economics; and counterterrorism, among others. This journal is the first to take a global, apolitical, and in-depth multidisciplinary look at the field. The mission of the journal is to disseminate new research, thought, and analysis for teachers, researchers, policy makers and practitioners around the world who view transportation security as a critical element in the post 9/11 world.

Partnerships and collaboration play a crucial role in the fight against crime in the global supply chains. Investments in traditional security areas such as physical security, personnel security, and IT security no longer suffice. Both government and business actors should extend their security efforts beyond their organizational boundaries, by fostering relationships with each other. Further government-to-government and government-to-business collaboration has a great potential to improve security of the supply chain and regulatory compliance of the trading community, while facilitating trade and logistics for the legitimate, security aware companies. The scope of collaboration covers a broad range of activities, including sharing of information and data; investing in common resource pools and sharing resources; and agreeing on optimum protocols for conducting inspections and audits in the supply chains. Enhancing the information exchange, for example, would help governments and companies to prevent and detect security breaches in supply chains and to recover faster once the breaches happen. In principle, both government and business actors share a common goal of mitigating crime in the global supply chains. Priorities and procedures, however, differ markedly between various business actors (e.g., shippers, carriers, freight forwarders) and government agencies (e.g., customs, police and transport security authorities).

Call for abstracts for the JTRS Special issue is open until 30 September 2016, please visit: www.springer.com …   

(CBRA / Dr. Juha Hintsa is the lead guest editor for this special issue; and abstract review panel consists of multiple experts in FP7-CORE project).

 

 

2. The 11th Annual WCO Picard Conference – Manila, Philippines – 27-29 September 2016

The World Customs Organization and the Philippine Bureau of Customs are pleased to announce the 11th annual WCO Picard Conference. You are invited to submit your research for presentation at the conference. Papers should focus on Customs or, more globally, the regulation, dynamics, and practices of international trade. Although not required, writers could consider submitting research on the following topics: Digital Customs; security; taxation and other revenue matters; and illicit trade.

blog2104162

 

 

Call for papers is open until 15 June 2016, please visit: www.wcoomd.org…

(CBRA / Dr. Juha Hintsa is part of the Scientific Board for the conference; and he also belongs to the PICARD Advisory Group).

 

 

 

3. The 7th European Intelligence and Security Informatics Conference (EISIC) – Uppsala, Sweden – 17-19 August 2016

Intelligence and Security Informatics (ISI) research is an interdisciplinary field of research that focuses on the development, use, and evaluation of advanced information technologies, including methodologies, models and algorithms, systems, and tools, for local, national and international security related applications. Over the past decade, the ISI research community has matured and delivered an impressive array of research results that are both technically innovative and practically relevant. The 2016 European ISI Conference is the seventh ISI conference to be organized by the European ISI community. The conference was first held in 2008 and has been organized annually since 2011.

blog2104163

 

Call for papers is open until 18 May 2016, please visit: http://www.eisic.eu/call.aspx

(CBRA / Dr. Toni Männistö delivers a keynote presentation on FP7-CORE, focusing on Supply chain security education and training (CORE WP19.1) ).

Revisiting the Yemen bomb plot of 2010

/0 Comments/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

blog_070316This CBRA blog revisits the Yemen bomb plot from 2010, the most decisive turning point in modern air cargo security. More than five years after the events, this blog discusses the plot’s implications to the contemporary air cargo security and outlines CBRA’s recommendations for future security work. Parts of this blog text have already been published in the doctoral thesis of CBRA researcher Toni Männistö.

Two explosive devices aboard passenger planes: The series of events, that we call the Yemen bomb plot, took place on 29 October in 2010. On that day, al-Qaeda terrorists almost destroyed two passenger airplanes with a pair of express courier parcels, each enclosing plastic explosives hidden inside a printer toner cartridge. The explosive parcels where sent to Chicago from the capital of Yemen, Sana’a, via two different express courier operators.

Both parcel bombs were eventually intercepted and defused, without fatalities or injuries. But before the interception, the bombs had already travelled onboard multiple air freighters and passenger planes. Many people flew that day with a fully functional explosive device under their seat! Though the parcels were addressed to Chicago, officials think that terrorists wanted to detonate the bombs mid-air, just before landing using cell phone timer alarms.

A Lockerbie-style mayhem was slightly avoided, largely thanks to a timely piece of intelligence. The bomb plot started to uncover when a suspected double agent tipped Saudi-Arabian intelligence that al-Qaeda terrorists had shipped two parcel bombs from Yemen to the US via the express courier service. The Saudi intelligence forwarded the tracking numbers of the suspected explosive devices to their US and German colleagues and told them to look for printer toner cartridges.

The first parcel was intercepted in Dubai, and the second one at the East Midlands airport, nearly 200 km to the northwest from London. In the UK, a bomb squad did not first recognize anything suspicious when they screened the suspected parcel. “It looked like a printer cartridge – there were no wires or anything,” one of CBRA’s contacts at World Customs Organization (WCO) recounts. “But of course, what the cartridge did contain was explosive that current technologies couldn’t detect.” Later laboratory tests revealed that each parcel contained 300 to 400 grams of PETN, military grade plastic explosive, wirings, and a detonator hidden inside a printer’s toner cartridge. The bombs were so meticulously concealed that they had not only passed the standard air cargo and safety screening but also the special screening of the bomb squad.

Aftermaths: The Yemen incident was rude reminder of the vulnerability of the air cargo logistics to terrorism. Sure, the day was saved by old-school, field intelligence work and prompt government response. But before interception, the first parcel travelled aboard three different flights: Sana’a – Dubai, Dubai – Cologne, and Cologne – East Midlands Airport. The second explosive parcel flew first from Sana’a to Doha and then to Dubai where it was intercepted.

In the immediate aftermaths of the events, aviation security authorities in the US and many European countries stopped accepting freight shipments from Yemen. Germany also cancelled all passenger flights from Yemen for more than two weeks. “As often happens in these situations,” the WCO’s air cargo specialist remarks, “the first reaction was stopping anything coming from this part of the world – any plane for any reason.” The new security rules changed the air cargo operations virtually overnight, seriously disrupting the air cargo and mail service. Delays were widespread and lengthy, but the worst aspect of the disruption was that no one knew when the new apparently transient security regime was to be revoked.

Eventually, once the precautionary stoppage was ended, new unprecedentedly stringent security requirements entered into force, disrupting the air cargo and mail service further. The US Transportation Security Administration, TSA, introduced the most stringent rules: any mail originating or transiting through Somalia or Yemen was banned, as well as printers or printer toner cartridges from high-risk locations. Moreover, parcels originating from any business partners had to be screened up to high-risk screening standards, piece by piece, if such shipment did not accompany a tendering statement, a document assuring that cargo comes from a known and trusted shipper. The new regime disrupted seriously international air cargo logistics, causing air cargo shippers worldwide to accumulate huge backlogs of US-bound shipments. Annoyed and surprised about the turn of events, the air cargo industry reacted to the US rules with a barrage of criticism, calling the measures superfluous and impractical. Over the following weeks, the reactive security rules were gradually relaxed to enable clearing of the backlog of US-bound air cargo.

In the long term, the Yemen events put air cargo security into a spotlight, securing political commitment and spurring further reforms for years to come. The International Civil Aviation Organization, ICAO, for example, included advanced security, concepts such as the “secure supply chain” principle, the concept of high-risk cargo and mail, and the consignment security declaration, CSD, into the new edition of the Annex 17 of the Chicago Convention. Also the European Union expanded the EU air cargo regime to cover airlines operating into the EU aviation security area – EU-28 plus Switzerland, Norway and Iceland – from third country airports. The amendment also specified criteria for identifying and screening high-risk cargo and mail, known as HRCM.

CBRA considerations for future air cargo security: The modern air cargo security has taken major leaps since the Yemen incident, but the work towards higher air cargo security still continues. The CBRA research team considers that, like in any other area of supply chains, it is crucial both to facilitate cross-border logistics and to ensure adequate security. This classic dilemma of striking the balance between trade facilitation and supply chain security is not easy to solve, but we believe that there are some promising ways to promote logistics-friendly air cargo security.

Governments should normally consult the air cargo industry before introducing new security rules. New security rules should avoid reducing speed, on-time reliability, or cost-efficiency of the air cargo service. There are often ways to integrate new security requirements seamlessly into the sequence of day-to-day logistics activities, but this requires close government-business coordination.

One promising way forward is to improve capabilities of pre-loading risk assessment, so that the riskiest air cargo shipments can be identified early on and subjected to a more stringent screening. Many projects on this matter are under way, most notably the Air Cargo Advance Screening (ACAS) in the US and Pre-loading Consignment Information for Secure Entry
 (PRECISE) in the European Union. The CBRA team applauds these efforts of advancing risk assessment and reminds of the importance of proactive updating of risk-scoring algorithms.

EU’s decision of forcing flights from third countries into EU to comply with EU’s air cargo security regime makes also good sense. It is reasonable to secure air cargo up to an adequate standard sooner rather than later, preferably before the first flight. More global capacity building – especially training and funds for modern screening equipment – are needed in developing countries. Also, auditing activities in third countries would benefit from further resources.

Harmonization and mutual recognition is another key theme for years to come. In the EU, civil aviation and customs authorities might find some synergies if they harmonized their respective Known Consignor (KC) and Authorized Economic Operator (AEO) programs. Air cargo companies would also benefit if types and performance requirements of screening methods would be uniform across the members of the European Union.

Bibliography:

BBC, Q&A: Air freight bomb plot, 2 November 2010

European Commission, Regulation 173/2012, amending 185/2010

International Civil Aviation Organization, Chicago convention, Annex 17, 9th edition

Koolloos M.F.J., Männistö T., van der Jagt O.C., Jezierska M.M., Hintsa J., Kähäri P. and Tsikolenko V. (2015), Security Screening for the Air Express Cargo Industry, Final Report, Brussels, Belgium.

Männistö, T., 2015. Mitigating Crime and Security Risks in the International Logistics Network: the Case of Swiss Post. Doctoral thesis, École Polytechnique Fédérale de Lausanne (EPFL).

CBRA Blog by Dr. Toni Männistö

CEN Supply Chain Security — Good Practice Guide for Small and Medium Sized Operators, 2012 (CORE1030)

/0 Comments/in , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , /by

Summary: This is a guidance document for small and medium sized enterprises, SMEs. on how to apply a supply chain security approach to their operations in order to mitigate the risk of criminal activities. It gives an overview of the main crime types occurring in the supply chain along with some countermeasures, as well as the supply chain security initiatives, and the compliance requirements thereof. The document is available for purchase e.g. at:   http://shop.bsigroup.com/ProductDetail/?pid=000000000030258778  (link tested on 3 March 2016)

[s2If is_user_logged_in()]

Full review: The recommended supply chain strategy rests on a six-step approach. The first step is to define a context for the supply chain, crime prevention and security management activities taking into consideration the security sensitiveness, the geography and transport modes, and the main stakeholders involved in the supply chain operation. The second step is to make a threat and vulnerability analysis with regard to terrorist and other criminal threats in the supply chain. The main criteria included are the gaps existing in enhanced security, the high-risk crime types, and the potential consequences of crime occurrences. The third step covers the regulatory framework, the major aspects being the regulations and programs required for successful business operations, expectations of customers and suppliers, requirements laid down by insurance providers, and relevant government authorities. The fourth step refers to an overall security plan, taking into account the physical security, data security, human resources security (including selection, training, and exit procedures), business partner security (including selection, and auditing), and process control and monitoring of deviations. The fifth step involves implementing into practice concrete security measures, investment in technologies, procurement of services, in-house solutions and so forth. The final step is to monitor and measure the security performance and take appropriate corrective actions.

Five supply chain crime types have been elucidated in this guide. These include:  Property theft (cargo theft, intellectual property breaches); targeted damage (terrorism, sabotage); cross-border duty and tax fraud; illegitimate transporting, exporting and/or importing (smuggling of prohibited and restricted goods, people smuggling); and crime facilitation (document forgery, bogus companies, cybercrime). For each crime type, the main focus should be on the issue (main features and typical sectors/products involved), scope of the problem and actions to mitigate risks.

This guidebook has chosen eight security initiatives for illustration purposes. It explains the context of each initiative, whom it is meant for, and some basic requirements and the implications. These are as follows:

  • Import Control System (ICS) in the EU (a systems tool meant for the lodging and processing of Entry Summary Declarations, and for the exchange of messages across national customs agencies, economic operators and the European Commission).
  • Export Control System (ECS) in the EU (introduces EU procedures to computerize and control indirect exports and to implement the EU safety and security regulations);
  • Maritime Security Legislation, International Ship and Port Facility Security (ISPS) Code in the EU (International regulations to ensure the security of maritime transportation are being issued by the International Maritime Organization, IMO, in the International Ship and Port Facility Security Code);
  • Aviation Security Legislation, Air Cargo Supply Chains in the EU (three categories of aviation security legislation exist in the EU- Framework regulation, supplementing regulations, and implementing regulations-all targeted towards civil aviation security).
  • European Union Authorized Economic Operator, EU AEO (operators involved in international trade of goods certified as complying with WCO or equivalent supply chain security standards);
  • Regulated agent, Known consignor and Account consignor in the EU (Specific “trusted trader” status existing in the European air cargo supply chains);
  • ISO 28000 Series of Standards on Supply Chain Security Management Systems (address potential security issues at all stages of the supply process, e.g. terrorism, fraud and piracy);
  • Transported Asset Protection Association (TAPA) in Europe (fighting cargo crime using real-time intelligence and the latest preventative measures).

CORE1030

[/s2If]