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COSO. Enterprise Risk Management — Integrated Framework – Executive Summary. Committee of Sponsoring Organizations of the Treadway Commission. September 2004. (CORE1106)

March 6, 2016/0 Comments/in All transport modes, Analytic, CBRA, Consulting, CORE-Observatory, Global, Other-cluster, Risk management, Risk-cluster, USA /by Vladlen Tsikolenko

Summary: The Committee of Sponsoring Organizations of the Treadway Commission, COSO, defines Enterprise Risk Management, ERM, as a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives. The entity objectives are set forth in following four categories: (i) Strategic – high-level goals, aligned with and supporting its mission; (ii) Operations – effective and efficient use of its resources; (iii) Reporting – reliability of reporting; and (iv) Compliance – compliance with applicable laws and regulations. According to COSO, ERM enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value. Within the context of FP7-CORE project – and, supply chain security management in general – ERM can be seen as a useful approach particularly when it comes to aligning security risk appetite and strategy; to enhancing security risk response decisions; and to reducing security related operational surprises and losses. Some other ERM aspects such as seizing opportunities (“positive risks”) may not apply in supply chain security management context. One more interesting note, which could also be applied for supply chain security: everyone in an entity has some responsibility for ERM. This executive summary document is available for download at: http://www.coso.org/documents/coso_erm_executivesummary.pdf

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Full review:

Background: The first version of the “Internal Control – Integrated Framework” was issued by the Committee of Sponsoring Organizations of the Treadway Commission, COSO, in early 1990s, to help businesses and other entities assess and enhance their internal control systems. The change of the millennium saw heightened concern and focus on risk management, and it became clear that a need exists for a robust framework to effectively identify, assess, and manage risk. In 2001, COSO initiated a project, and engaged PricewaterhouseCoopers, to develop a framework that would be readily usable by managements to evaluate and improve their organizations’ enterprise risk management.

According to COSO (p.1), Enterprise Risk Management, ERM, encompasses:

Aligning risk appetite and strategy – Management considers the entity’s risk appetite in evaluating strategic alternatives, setting related objectives, and developing mechanisms to manage related risks.
Enhancing risk response decisions –Enterprise risk management provides the rigor to identify and select among alternative risk responses – risk avoidance, reduction, sharing, and acceptance.
Reducing operational surprises and losses – Entities gain enhanced capability to identify potential events and establish responses, reducing surprises and associated costs or losses.
Identifying and managing multiple and cross-enterprise risks – Every enterprise faces a myriad of risks affecting different parts of the organization, and enterprise risk management facilitates effective response to the interrelated impacts, and integrated responses to multiple risks.
Seizing opportunities – By considering a full range of potential events, management is positioned to identify and proactively realize opportunities.
Improving deployment of capital – Obtaining robust risk information allows management to effectively assess overall capital needs and enhance capital allocation.

COSO (pp.3-4) states that ERM consists of eight interrelated components, derived from the way management runs an enterprise and are integrated with the management process:

Internal Environment – The internal environment encompasses the tone of an organization, and sets the basis for how risk is viewed and addressed by an entity’s people, including risk management philosophy and risk appetite, integrity and ethical values, and the environment in which they operate.
Objective Setting – Objectives must exist before management can identify potential events affecting their achievement. Enterprise risk management ensures that management has in place a process to set objectives and that the chosen objectives support and align with the entity’s mission and are consistent with its risk appetite.
Event Identification – Internal and external events affecting achievement of an entity’s objectives must be identified, distinguishing between risks and opportunities. Opportunities are channeled back to management’s strategy or objective-setting processes.
Risk Assessment – Risks are analyzed, considering likelihood and impact, as a basis for determining how they should be managed. Risks are assessed on an inherent and a residual basis.
Risk Response – Management selects risk responses – avoiding, accepting, reducing, or sharing risk – developing a set of actions to align risks with the entity’s risk tolerances and risk appetite.
Control Activities – Policies and procedures are established and implemented to help ensure the risk responses are effectively carried out.
Information and Communication – Relevant information is identified, captured, and communicated in a form and timeframe that enable people to carry out their responsibilities. Effective communication also occurs in a broader sense, flowing down, across, and up the entity.
Monitoring – The entirety of enterprise risk management is monitored and modifications made as necessary. Monitoring is accomplished through ongoing management activities, separate evaluations, or both.

Lastly, as potential readers / users of this report, COSO suggests following: Board of Directors; Senior Management; Managers and other personnel; Regulators; Professional Organizations; and Educators.

CORE1106

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Supply chain security education materials

February 29, 2016/0 Comments/in All transport modes, Blog, BMT, CBRA, CLECAT, Coordinated border management, Customs, Customs risks, Cybersecurity, Data quality, Data sharing, ESC, EU, FP7, Freight forwarder, Global, INTERPOL, INTERPOL, IRU, Manufacturer, Other-cluster, Police, Resilience, Risk management, Shipper, Single window, Supply chain security, Systems based control, Trade facilitation, Transport carrier, TUD, Warehouse keeper, WCO, WP19 /by Vladlen Tsikolenko

FP7-CORE is the European flagship research and development project in supply chain security and trade facilitation, running from May 2014 to April 2018. In today´s CBRA Blog we focus on education and training material development – Work package 19, Task 19.1 – in the CORE-project.

The CORE Task 19.1 – Education and training materials development – has an impressive set of partners: INTERPOL, World Customs Organization (WCO), European Shippers Council (ESC), European association for forwarding, transport, logistics and customs services (CLECAT), International Road Union (IRU), and Technical University of Delft (TU Delft) as the established big players; ourselves Cross-border Research Association (CBRA) as the Task leader (and an enthusiastic lecturing body in supply chain security and trade facilitation); as well as the BMT Group, as the Work package 19 leader. We first started interaction with the entire Task 19.1 team during summer 2014, when the CORE-project had just been kicked off, and everything was still in it´s infancy.

Today, at the end of February 2016 – near two years into the project – we are about to launch the full scale production of the CORE education and training materials. We vision content to be produced in three parallel categories: CORE Flagship Handbook (CFH); Partner-specific materials; and Other education content. Content which is considered to be near-final can be published on-the-fly for example at CBRA´s web-portal, www.cross-border.org , where a new section is planned for the “CORE Education” (like the “CORE Observatory” which has been live since last autumn). Having just over two years left with the CORE-project, we are right on schedule to start the full production of education and training materials!

CORE Flagship Handbook (CFH) will be the main joint outcome of Task 19.1, thus we welcome INTERPOL, WCO, ESC, CLECAT, IRU, TU Delft and BMT to work closely with us in the production, review and piloting of the Handbook. In our current plans the Flagship Handbook has the following four sections, each section having multiple chapters (typically between two and six chapters per section):

Introduction to CORE innovation agenda; including explaining key CORE themes and concepts; and frameworks and models.
CORE outcomes, findings and results – written primarily in the context of the 16 CORE-Demonstrations.
Interpretation of CORE results per key stakeholder group: customs, police, cargo owners, logistics sector, security sector and academics
Future research and development roadmap – focusing on gaps and shortcomings; critical assessment on what works and what doesn’t by the end of CORE-project.

Partner specific materials typically fall into two sub-categories. First one is generic, introductory materials which would be of relevance to 1-2 stakeholder groups – for example Supply chain management 101 for police officers. Such materials can quite easily be developed within Task 19.1, using CORE supply chains and trade lanes as examples. At the same time, such basic education material would not be of relevance for supply chain companies, thus it should not be published in the CORE Flagship Handbook, CFH. Second sub-category is on detailed technical content, which again would be relevant to 1-2 stakeholder groups. An example could be technical review on risk management tools for the logistics sector.

Other education material may consist of the following content buckets, listed in a rough “simple to more complex” -order: Factsheets; Quizzes; Basic case studies; Comprehensive case studies; Videos and animations; Serious games, and so forth. It is still early days to decide what makes sense to develop – and for what we have adequate resources, skills and budgets. Maybe we will start with some simple factsheets, quizzes and basic case studies – this is still to be discussed among Task 19.1 partners.

Finally, the plans regarding the CORE Education web-portal are still in a preliminary stage. We could have a simple dropdown menu at www.cross-border.org , for example with the following selection options: Introductory materials; Technical sections; and Factsheets & quizzes. In the last category we could share first outcomes of Task 19.1 work. Here, just like in all other aspects of CORE Task 19.1, we welcome ideas and feedback from the Task 19.1 team, and from the whole CORE Consortium – and even beyond, from any interested stakeholders and potential future users of CORE Education materials!

In Lausanne on 29.2.2016 – CBRA Blog by Juha Hintsa

Border Agency Cooperation, Part 3 of 3

February 20, 2016/0 Comments/in All transport modes, Blog, CBRA, Coordinated border management, Counter-terrorism, Customs, Customs risks, Data sharing, Demo-cluster, Environmental agency, Exporter, Freight forwarder, Global, Human trafficking, Importer, IT-cluster, Manufacturer, Mutual Recognition Agreement, Phytosanitary agency, Police, Retailer, Risk management, Risk-cluster, Scanning, Screening, Shipper, Single window, Supply chain security, Tax evasion, Terrorism/destruction, Trade facilitation, Trafficking, Transport carrier, Transport security agency, WP10, WP11, WP12, WP13, WP14, WP15, WP16, WP17, WP2, WP3, WP6, WP9 /by Vladlen Tsikolenko

The last blog in our three-part series on Border Agency Cooperation introduces a conceptual framework capturing the essential dimensions of Border Agency Coordination: three levels of collaboration, four areas of integration and four objects for sharing. We hope that the framework helps the customs and other border agency communities to see all levels of Border Agency Cooperation (BAC) so that they can move from isolated coexistence towards more active cooperation at the borders. Higher levels of cooperation are likely to translate into higher levels of trade facilitation, control over cross-border cargo flows and resource efficiency, simultaneously. Compared with the previous BAC Blog Part 2, this BAC Blog Part 3 intends to present a comprehensive framework surrounding BAC ambitions, plans, implementations and monitoring activities – while the previous BAC Bloc 2 focused purely on a set of 15 key BAC actions, grouped according to the main beneficiary groups. This final BAC Blog has been written by Dr. Toni Männistö of CBRA.

Let’s start by first presenting the BAC diagram: Conceptual framework on Border Agency Cooperation (source: Männistö, T., and Hintsa J., 2015; inspired by Polner, 2011 and by Institute of Policy Studies, 2008)

Levels of cooperation

Intra-agency cooperation is about aligning goals and work within one organization, either horizontally between departments or vertically between headquarters and local branches, in particular border-crossing offices / stations. Ways to foster horizontal intra-agency cooperation include development of intranet networks, cross-training, inter-departmental rotation of staff, and establishment of joint task forces that tackle multifaceted challenges like transnational terrorism. Ideally, the vertical cooperation would be bi-directional: headquarters would define priorities and objectives and then communicate them to local branches. The branches would, reciprocally, send back status reports and suggest improvements to the general policies. Solving intra-agency cooperation lays a basis for broader cooperation: it’s hard for any organization to cooperate efficiently with external stakeholders if it struggles with internal problems. The logical first step in coordinated border management is therefore breaking departmental silos and building a culture of cooperation within boundaries of one organization.

Inter-agency cooperation, at the operational level, concerns relationships among a broad range of border agencies that play a role in controlling cross-border trade and travel. In many countries, primary agencies present at the borders include customs, border guards, immigration authorities and transport security agencies. However, also police organizations, health authorities, and phytosanitary and veterinary controllers, among others, take part in border management. According to a recent study, typical areas of customs- border guard inter-agency cooperation can include strategic planning, communication and information exchange, coordination of workflow of border crossing points, risk analysis, criminal investigations, joint operations, control outside border control points, mobile units, contingency/emergency, infrastructure and equipment sharing, and training and human resource management (CSD, 2011). Governmental inter-agency cooperation occurs between border control agencies and ministries and policy making bodies that are responsible for oversight and financing of border management activities.

International cooperation may take place locally at both sides of a border. One Stop Border Posts, OSBPs – border crossings managed jointly by two neighboring countries – are prime examples of such cooperation. One Stop Border Posts can involve various forms of collaboration: harmonization of documentation, shared maintenance of the infrastructure, joint or mutually recognized controls, exchange of data and information and common investments in infrastructure and so forth. Operational arrangements between the Norwegian, Finnish and Swedish customs illustrate advanced international cross-border cooperation that save time and money of border control authorities and trading companies. The cooperation builds on division of labor, where the national border authorities of each country are allowed to provide services and exercise legal powers of their home country and neighboring countries. For instance, when goods are exported from Norway, all paperwork related to both exports and imports may be attended by either Swedish, Finnish or Norwegian customs office (Norwegian Customs, 2011). At the political level, this requires international cooperation between authorities and policy makers in two or more countries. Operational cooperation (e.g., mutual recognition of controls or regional Single Window), often bringing tangible trade facilitation benefits, usually follows from political, supranational decisions (e.g., the WCO’s Revised Kyoto Convention and SAFE Framework of Standards).

Areas of integration

Technical integration often entails improving connectivity and interoperability of information and communication technology systems within and across organizations. Single Window solutions are typical outcomes of technical cooperation as they enable automatic exchange of electronic trade information among border control agencies. The UN Centre for Trade Facilitation and Electronic Business, UN/CEFACT, is an important international organization helping to build connectivity across countries and between business and governmental stakeholders. UN/CEFACT, for instance, develops and maintains globally recognized standards for EDI messages.

Operational integration is largely about coordination of inspection and auditing activities among border control agencies. Benefits of synchronized activities are evident: organizing necessary controls at one place and at the same time reduces delays and administrative burden that trading companies and travelers face at borders. A simple and powerful example of operational integration is coordination of opening hours and days of customs offices at the both sides of a border. Operational integration also covers provision of mutual administrative assistance, joint criminal investigations and prosecution, and sharing of customs intelligence and other information.

Legislative integration seeks to remove legal barriers and ambiguities that prevent border control agencies from exchanging information, sharing responsibilities or otherwise deepening their cooperation. Essentially, most forms of Border Agency Coordination require some degree of legislative harmonization and political commitment. For example, Article 8 of the WTO/TFA to the WTO Members requires that national authorities and agencies responsible for border controls and dealing with the importation, exportation and transit of goods must cooperate with one another and coordinate their activities in order to facilitate trade.

Institutional integration is about restructuring roles and responsibilities of border controls agencies. An example of a major restructuring is the annexing of US border control agencies – including the US Customs and Border Protection, Transportation Security Administration and Coast Guard – into the Depart ment of Homeland Security, DHS, a body that took over the key governmental functions involved in the US non-military counter-terrorism efforts in the aftermaths of the September 11^th, 2001, terrorist attacks.

Objects of sharing

Sharing of information – data, knowledge and intelligence – reduce duplicate work (e.g., sharing of audit findings), enable operational coordination (e.g., synchronized border controls) and facilitate development of common agenda for future border agency coordination. At the global level, the WCO’s Customs Enforcement Network CEN is an example of a trusted communication system for exchanging information and intelligence, especially seizure records, between customs officials worldwide. Another WCO initiative, the Globally Networked Customs, analyzes potential to further “rationalize, harmonize and standardize the secure and efficient exchange of information between WCO Members” (WCO 2015).

Resource sharing involves multi-agency joint investments in equipment, facilities, IT systems, databases, expertise and other common resources. The joint investment activities are likely to result in higher resource utilization and bulk purchasing discounts. For example, national and regional Single Window solutions are often outcomes of joint development and investment activities of various government agencies.

Sharing of work is mostly about rationalization of overlapping border control activities, controls and formalities. If two border control agencies, for instance, agree to recognize each other’s controls, there is no need to control the same goods more than once. Combining forces to investigate and prosecute crime also often help border control agencies to use their limited resources more efficiently.

Sharing of responsibilities is about coordinating and streamlining administrative and control tasks among border control agencies. Norway, again, sets a good example of sharing the responsibilities. The Norwegian customs represents all other border control agencies – except the veterinary office – at the frontier. Customs officers are responsible for routine border formalities, and they summon representatives of other border control agencies as and when the officers need assistance. Internationally, the Norwegian customs cooperates closely with Swedish and Finnish border control authorities at the Northern Scandinavian border posts. Bilateral agreements between its neighbors allow Norwegian customs officers authority to perform most customs checks and formalities for and on behalf of their Swedish and Finnish colleagues. The coordination decreases border-crossing times and lowers administrative costs for trading companies and the border control agencies in the three countries.

This concludes now our three-part series on Border Agency Cooperation. In Part 1, we shared an illustrative worst case example on how complex, slow and expensive a cross-border supply chain execution comes when no cooperation takes place between relevant government agencies, neither nationally nor internationally. In Part 2, we presented a conceptual BAC model with 15 key actions to improve the degree of cooperation in a given country or region – for the direct benefit of supply chain companies, or government agencies, or both. And in this Part 3, we finally presented our comprehensive BAC framework, which hopefully helps government policy makers and border agencies to design, implement and monitor their future BAC programs and initiatives in an effective and transparent manner. Toni Männistö and Juha Hintsa.

Bibliography:

Center for the Study of Democracy (CSD), 2011. “Better Management of EU Borders through Cooperation”, Study to Identify Best Practices on the Cooperation Between Border Guards and Customs Administrations Working at the External Borders of the EU.

Institute of Policy Studies 2008, Better connected services for Kiwis: a discussion document for managers and front-line staff on better joining up the horizontal and vertical, Institute of Policy Studies, Wellington, NZ.

Männistö, T., and Hintsa J., “Theory of Border Agency Cooperation”, CBRA working paper 2015, Lausanne, Switzerland.

Norwegian Customs, 2011. Case Study on Border Agency Cooperation Submitted by Norway for the November Symposium.

Polner, M. (2011). Coordinated border management: from theory to practice. World Customs Journal, 5(2), 49-61.

United Nations Conference on Trade and Development (UNCTAD), 2011 Border Agency Coordination”, UNCTAD Trust Fund for Trade Facilitation Negotiations Technical Note No. 14.

Border Agency Cooperation, Part 2 of 3

January 29, 2016/0 Comments/in Academic, Authorized Economic Operator, Blog, CBRA, Compliance management, Coordinated border management, Customs, Customs risks, Data sharing, EC, EU, Exporter, Global, Importer, Investigations, Latin America, Maritime, Other-cluster, Perishable goods, Phytosanitary agency, Police, Risk-cluster, Scanning, Sea port, Single window, Supply chain security, Trade facilitation, Trafficking, Transport security agency, WCO, WP10, WP11, WP13, WP14, WP15, WP16, WP17, WP19, WP6, WP7, WP8, WP9 /by Vladlen Tsikolenko

Our second blog on Border Agency Cooperation (BAC) focuses on a conceptual model developed by CBRA. We have crafted this “CBRA-BAC15” diagram to visualize a set of key BAC actions and primary beneficiaries, with contributions by Dr. Toni Männistö (supply chain security post-doc researcher at CBRA), Mr. Gerwin Zomer (TNO, technical manager for the FP7-CORE project) and by Ms. Susana Wong Chan (education and training materials developer at CBRA).

The diagram is cut to three sectors: on left side, the supply chain companies are the primary beneficiaries of BAC actions; on the right side, the government agencies form the primary beneficiary group; and on the bottom area, both supply chain companies as well as government agencies benefit from BAC actions. Each of these three sectors contains five examples of concrete border agency cooperation actions – 15 in total – explained in a moment by using real examples, whenever available in the literature or by expert suggestions. In the center of the diagram lies a circle with the more generic “smart cross-border improvement actions”, applicable to virtually any work in global trade facilitation.

The diagram should not be considered exhaustive, when it comes to all optional actions to improve BAC in a given country or region or globally. Some of the 15 key actions may be strongly interconnected, or, partially overlapping. Some of them may apply mainly on national multi-agency environment, and some of them mainly on international e.g. customs-to-customs environment. Also, the division of the key actions into the three beneficiary groups can and should be challenged, by the interested audiences. But, let´s start now by listing and illustrating the key 15 BAC actions:

Supply chain companies as the primary beneficiary (left sector in the diagram). The following five BAC actions can bring immediate benefits to the companies operating in supply chains, in terms of saving administrative costs and speeding up the supply chain – less work dealing with various certifications and audit visits, less variation and IT costs with import/export data filing and less waiting times at the borders.

Harmonized ´trusted trader´ & other certification programs: In the European Union, the European Commission´s implementing regulation (No. 889/2014) updates the references to the aviation security legislation in force, including recognition of the Known Consignor (KC) status and its relevance to Authorized Economic Operator (AEO), and framing the scope of recognition of the common requirements between the respective programs.
Coordinated company visits & audits: Closely linked to the previous BAC-action, in the Netherlands, the Dutch Customs executes joint audits on AEO security (customs) and known consignor/regulated agent (air cargo) with the Dutch Immigration and air-police agency – during the application phase, as well as during periodical audits.
Harmonized data filing requirements: Despite a global, harmonized data model, harmonized tariff codes and standards on clearance procedures, there are many differences in operational import, export and transit procedures and information requirements between countries. This results in additional complexity of IT systems for globally operating traders and logistic service providers. An example is the pre-arrival security declarations, where harmonization would be most useful e.g. between the Importer Security Filing, “10+2” in the US and the Entry Summary Declaration in Europe – Multiple Filing, supported by Standard Trader Interface, under development within the Union Customs Code, UCC.
Synchronized border interventions & inspections: The Article 4 of the Greater Mekong Sub-region Cross Border Transport Agreement on Facilitation of Border Crossing Formalities calls upon the contracting parties to progressively adopt measures to simplify and expedite border formalities by carrying out joint and simultaneous inspection of goods and people by respective competent authorities of agencies such as customs, immigration, trade, agriculture, and health. It further provides for single-stop inspection and urges the national authorities of adjacent countries to carry out joint and simultaneous inspections.
Harmonized operating hours: This applies particularly in the context of two neighboring country customs offices – having same opening hours across the border helps to maximize the daily throughput volumes. As the Article 8 of the World Trade Organization´s Trade Facilitation Agreement puts it, “Each Member shall, to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade. Such cooperation and coordination may include: … alignment of working days and hours … “. In the ASEAN region, the Article 7 of the ASEAN Framework Agreement on the Facilitation of Goods in Transit urges the contracting parties to “coordinate working hours of the adjacent border posts”.

Government agencies themselves as the primary beneficiary (right sector in the diagram). The following five BAC actions can provide instant benefits for the cooperating government agencies, in terms of cost savings and improved efficiency – in other words, identifying more violations and catching more bad guys with less total spending.

Sharing of agency intelligence, information & data: Customs Mutual Assistance Agreements (CMAAS), signed bilaterally by Canada Border Services Agency (CBSA) and eight counterparties during years 1979-2010 (European Community, France, Germany, Mexico, the Netherlands, South Africa, South Korea and the United States) provide Canada with a legal basis to share customs information to prevent, investigate and combat customs offences, particularly customs fraud, and to provide reciprocal mutual assistance to ensure the proper application of customs laws. Under CMAAs Canada may share customs information pertaining to: persons, goods and means of transport; activities planned, on-going, or completed, that constitute or appear to constitute a customs offence in the territory of the country requesting the data; proven law enforcement techniques; new and emerging trends, means or methods of committing customs offences; and facilitation of risk assessment activities, within the mandate and authority of the CBSA.
Joint investments in common resource pools (equipment, facilities etc.): In Finland the Customs Administration and the Border Guard share common premises and equipment. Each authority has a designated role in the servicing and maintenance of the equipment. X-ray machines are largely the responsibility of Customs. Road-testing equipment, such as lorry brake-testing pads, is also maintained by Customs. All equipment can be shared and operated by each agency upon request. Thus, although the equipment belongs to one agency, it can be easily relocated to the other agency, enabling smoother processing of the workflow without unnecessary and lengthy administrative procedures, thereby reducing costs.
Joint teams: In the Netherlands, “HARC” – Hit and Run Cargo Rotterdam team, is a joint operation of Dutch Maritime Police, Dutch Customs, the Fiscal and Economic Crime Agency and the Ministry of Justice collaborating operationally in narcotics enforcement. Joint teams differ from Joint operations below by being a long-term / permanent set-up; while Joint operations “come and go”.
Joint operations: A joint operation Meerkat, (23-27 July 2012) involving the World Customs Organization and INTERPOL against the illicit trafficking of cigarettes, tobacco and alcohol in East and Southern Africa, resulted in the seizure of tons of illicitly traded products in seven countries. Operation Meerkat saw Customs and police authorities carry out some 40 raids at seaports, inland border crossing points, markets and shops in Angola, Kenya, Mozambique, Namibia, South Africa, Tanzania and Zimbabwe. More than 32 million cigarettes – equivalent to 1.6 million packets, 134 tons of raw tobacco and almost 3,000 liters of alcohol were seized, resulting in national authorities initiating a number of administrative investigations into tax evasion and other potential criminal offences.
Collaborative criminal investigations & prosecutions: In the United States the Border Enforcement Security Task Force (BEST) units gather officers from more than 100 different law enforcement agencies under one roof. The objective is to identify, investigate, disrupt and dismantle transnational organizations posing the greatest threat to border security, public safety and national security, by employing the full range of federal, state, local, tribal and international law enforcement resources. Over the years, the BEST has become a successful interagency law enforcement collaboration model that’s keeping the US safer.

Both supply chain companies as well as government agencies as beneficiaries (bottom sector). The five BAC actions can bring instant benefits to all parties in cross-border supply chains, in terms of lowering costs and improving performance, from supply chain company and from governmental agency perspectives.

‘Single window’ -type import/ export/ transit data submissions: In the Netherlands, the authorities have designed Digipoort, the government’s ‘electronic post office’ for businesses. It provides the communication infrastructure for the exchange of digital information between companies and government authorities. Digipoort enables companies to submit import and export information at a single entry point aimed at multiple government authorities.
Common risk indicators, risk profiles & targeting systems: In Finland, common databases are linked to the different agencies’ operational and risk management databases, leading to a common approach when a ‘signal’ is recorded. Some control and enforcement officers have access to each other’s systems on a need-to-know basis, with levels of restricted access determined by rank and functional responsibility.
Mutual recognition of supply chain inspection procedures & outcomes: As part of the European Union funded research and development project FP7-CORE ( http://www.coreproject.eu/ ), the phytosanitary and customs administrations in Kenya and the Netherlands are working towards mutual recognition of controls carried out by Kenyan authorities, as well as the exploitation of digital phytosanitary certificates and other trade documents, between the two countries. Outside of the research world, mutual recognitions (MR) of customs inspections are being explored in the context of EU MR Agreements, for example with Japan.
Cross-training and empowering manpower: In Finland, Customs officers have been trained by the Border Guard to inspect identification documents and visas, among other procedures. Border guards have, in turn, received basic Customs training, which includes the search of vehicles and the recognition of prohibited and restricted goods, such as drugs, alcohol, and counterfeit items.
Joint public-private partnership arrangements, training sessions etc.: In 2011 in Hong Kong, the Customs and Excise Department established a Joint Liaison Group with the representatives of shippers, freight forwarders and truck drivers for exchanging operational views and comments on the Road Cargo System “ROCARS”. Moreover, Customs also launched an extensive publicity program and established outreach teams to assist the industry stakeholders to get used to the ROCARS. Following other government departments are listed on the ROCARS web-site http://www.rocars.gov.hk/ : Commerce and Economic Development Bureau, Census and Statistics Department, and Transport Department.

Finally, the center circle of the CBRA-BAC15 diagram highlights the basic, classical principles of trade facilitation – naturally in the context of multiple agencies dealing with cross-border regulations, procedures, IT-systems and data requirements:

Simplification & Harmonization: agencies work together with the first aim to streamline certification requirements and procedures, to minimize the number of data elements required from traders etc.; and the second aim to unify the rules and requirements facing supply chain companies.
Interoperability & Synchronization: agencies invest in improving interoperability between their inspection technologies, IT-systems etc.; they also work together to better synchronize their supervision and control processes, particularly for the benefit of supply chain companies.
Transparency & Predictability: agencies keep each other well informed of their current regulations, procedures, operations etc., as well as planned future changes – such proactive approach helps to minimize surprises and related hassles.

This concludes the second of three parts of our Border Agency Cooperation (BAC) blog. In Part 3 – to be published sometime in February – we focus on the overarching institutional arrangements on Border Agency Cooperation, including establishment of single border agencies (e.g. in the US and Australia); creation of one-stop border posts, OSBPs (multiple examples across the world); carrying work permanently on behalf of other agencies etc. We also plan to discuss bit more on the benefits and costs of BAC, as well as the main challenges and obstacles in BAC-projects across the globe. Talk to you again in February, Juha Hintsa.

Bibliography / sources for the examples and cases attached to the 15 BAC key actions:

Harmonized ´trusted trader´ & other certification programs: Commission Implementing Regulation (EU) No 889/2014 of 14 August 2014 amending Regulation (EEC) No 2454/93, as regards recognition of the common security requirements under the regulated agent and known consignor programme and the Authorised Economic Operator programme.
Coordinated company visits & audits: Email exchange with a Dutch Customs expert
Harmonized data filing arrangements: Interview with a Dutch supply chain and trade facilitation expert (29 January 2016); and AnNa Master Plan Extended Collaboration Project Book, December 2015. Available for download at: http://www.annamsw.eu/
Synchronized border interventions & inspections: Jain, S.R. (2012), “Coordinated Border Management: The Experience of Asia and the Pacific Region”, World Customs Journal, Vol. 6 No.1. (CBM25).
Harmonized operating hours: Article 8 (Border Agency Cooperation) of the WTO Agreement on Trade Facilitation of 15 July 2014; and Jain, S.R. (2012), “Coordinated Border Management: The Experience of Asia and the Pacific Region”, World Customs Journal, Vol. 6 No.1.
Sharing of agency intelligence, information & data: “Customs Cooperation Case Study for Canada”, paper submitted by Canada (Canada Border Services Agency – CBSA) for the July 2012 WTO Symposium on Trade Facilitation.
Joint investments in common resource pools (equipment, facilities etc.): “Coordinated Border Management”, WCO News, February 2015, No. 76.
Joint teams: “Customs find cocaine buried in cocoa bean shipment”, NL Times 25.5.2015, Available online at: http://www.nltimes.nl/2015/05/25/customs-finds-cocaine-buried-in-cocoa-bean-shipment/ (accessed 28 January 2016).
Joint operations: “WCO and INTERPOL joint operation against illicit trafficking in Africa leads to tobacco and alcohol seizures”, WCO Press Release, 27 August 2012. Available online at: http://www.wcoomd.org/en/media/newsroom/2012/august/operation-meerkat.aspx (accessed 28 January 2016).
Collaborative criminal investigations & prosecutions: “Coordinated Border Management”, WCO News, February 2015, No. 76
‘Single window’ –type import/ export/ transit data submissions: “Coordinated Border Management”, WCO News, February 2015, No. 76.
Common risk indicators, risk profiles & targeting systems: “Coordinated Border Management”, WCO News, February 2015, No. 76.
Mutual recognition of supply chain inspection procedures & outcomes: The Consistently Optimised REsilient ecosystem, CORE FP7 project, EU. See online at: http://www.coreproject.eu/ (accessed 28 January 2016).
Cross-training and empowering manpower: “Coordinated Border Management”, WCO News, February 2015, No. 76.
Joint public-private partnership arrangements, training sessions etc.: “Road Cargo System (ROCARS) (Hong Kong China)”. Available online at: http://www.wcoomd.org/en/topics/wco-implementing-the-wto-atf/atf/border-agency-cooperation.aspx (accessed 28 January 2016).

Border Agency Cooperation, Part 1 of 3

January 21, 2016/0 Comments/in Academic, Authorized Economic Operator, Blog, CBRA, Compliance management, Coordinated border management, Customs, Customs risks, Data sharing, EC, EU, Exporter, Global, Importer, Investigations, Latin America, Maritime, Other-cluster, Perishable goods, Police, Risk-cluster, Scanning, Sea port, Single window, Supply chain security, Trade facilitation, Trafficking, Transport security agency, WCO, WP10, WP11, WP13, WP14, WP15, WP16, WP17, WP19, WP6, WP7, WP8, WP9 /by Vladlen Tsikolenko

“A beloved child has many names”, goes an old Finnish proverb. This saying applies quite well in the context of ´smart cooperation between multiple agencies when dealing with cross-border supply chains, goods movements and transports´. The World Customs Organization talks about Coordinated Border Management (CBM); the European Union about Integrated Border Management (IBM); the World Bank about Collaborative Border Management (CBM); and Organization for Security and Cooperation in Europe about Comprehensive Border Management (CBM). Cross-border Research Association is aligning with a fifth term: Border Agency Cooperation (BAC), a term used in the Trade Facilitation Agreement of the World Trade Organization. Despite minor differences in scope, priorities, underlying principles and philosophies among these five terms (and possibly even more), one can easily agree that the work carried out under any and all of them aims to coordinate activities across and within various border control agencies, for the benefit of both governmental agencies themselves as well as supply chain companies.

Our first blog on Border Agency Cooperation, BAC, provides an illustrative worst case example on how complex, slow and expensive a cross-border supply chain execution comes when no cooperation takes place between relevant government agencies, neither nationally nor internationally. The illustration is about meat export from Latin America (Country X) to the European Union (Country Y), with maritime transport in reefer containers.

A well-known beef producer in country X– also the first Authorized Economic Operator (AEO) beef producing company in the region – has just signed an annual contract with a beef importer and distributor in country Y. As this is the producer ‘s first export deal to the EU, the producer needs to ensure that all licenses and certificates are up to the EU standard. Organizing health certificates, certificates of origin, sanitary certificates, export licenses – and what have we – takes weeks and weeks of time. There is no communication or procedures in place between the various agencies and officials to facilitate the process, no coordinated company visits or audits, no sharing of information, and no mutual recognition of inspections.

When all documents are finally in place, and regular exports can start, the beef producer and it´s forwarding agent face the burden of filing export data to customs, to sanitary agencies, and to national security agencies – with somewhat similar datasets, but with no single-window filing opportunity. And when export controls and inspections take place – which happens often – there is no synchronization of inspection times between the different agencies. One agency might come to inspect the reefer container on Monday noon, second one on Wednesday morning, and third on Friday afternoon – another week lost in the beef supply chain lead-time.

Once the consignment is happily on board towards the EU, one continues to experience lost BAC opportunities: no data is passed from country X customs or sanitary agencies to their counterparties in country Y, to enable pre-arrival compliance control and risk assessment. In case of criminal suspicions – e.g. when supply chain insiders exploit beef shipments for cocaine smuggling – no intelligence is shared between police and customs, from country X to country Y. The option of joint law enforcement operations between country X and Y police and customs agencies has never been even considered. Even on national level, both in country X and Y, the agencies are not co-operating neither on risk profiling and targeting systems, nor during criminal investigations and prosecutions – what a waste of resources when it comes to catching and convicting the bad guys…

In the meanwhile, some ten days later, the ship arrives at a major sea port in country Y. For the importer, there is no option for single-window data filing; instead, import data must be transferred separately to all different agencies in country Y. As the customs administration in country Y has no Mutual Recognition Agreement (MRA) in place with country X customs – neither when it comes to AEO certificates nor when it comes to recognizing inspections carried out at export – it treats the import as a “medium to high risk” one, calling for physical inspections. And as the sanitary agency does not share any common resources with the customs administration – particularly no joint inspection facilities and equipment, including x-ray machines – and even the daily opening hours are different from the customs hours, the sanitary agency carries out their own inspections only two days after the customs intervention. And finally, improving the situation does not seem likely, as there are no joint public-private partnerships, and no export/import compliance training sessions or similar in place, neither in country Y nor in country X.

This concludes the first of three parts of our Border Agency Cooperation (BAC) blog. In Part 2 – to be published next week – we will present CBRA´s conceptual model (Hintsa J., Dec.2015) on BAC key actions and beneficiaries: which key actions to take in order to speed up the logistics chain, to save costs with all actors, to increase overall predictability, and to improve government agency performance e.g. in terms of number of seizures and convictions. In the BAC Blog Part 2, we plan to present some preliminary experiences and real-life results from FP7-project CORE. Please stay tuned!

Chemical Security in Istanbul

January 9, 2016/0 Comments/in Academic, All transport modes, Blog, CBP, CBRA, Coordinated border management, Counter-terrorism, Counterfeiting, Customs, Customs risks, Cybersecurity, Dangerous goods, Demo-cluster, Environmental agency, Environmental crime, EU, Exporter, Hijacking, Importer, Manufacturer, Middle-East, Police, Retailer, Risk management, Risk-cluster, Safety, Supply chain, Supply chain security, Terrorism/destruction, Theft, Tracking, Trafficking, Transport carrier, Transport security agency, USA, Warehouse keeper, WCO, WP16, WP19 /by Susan Wilander

I had the most interesting week in Istanbul with the Iraqi government representatives, chemical sector companies and the US State Department Chemical Security Program, CSP.

Security in the chemical supply chain is a major challenge for government agencies and chemical supply chain companies across the globe, including those in the Middle-East and North African (MENA) region. Theft, diversion, trafficking, export violations, counterfeit chemicals, sabotage and terrorism – among other criminal threats – keep the agencies and companies constantly on their toes when considering how to best tackle the vulnerabilities and threats in their respective chemical supply chains.

This was my second time to join as an external expert in a Chemical Security Program (CSP) event in the MENA region. The first time was in Hurghada, Egypt, in March 2015 – thanks again to Professor Andrew Thomas, the Chief Editor of the Journal of Transportation Security, for hooking me up with CRDF Global and the US State Department on this. Now the four day event targeted for the relevant Iraqi government agencies as well as the Iraqi chemical sector companies was held in Istanbul, Turkey, on 14-17 December 2015.

We had a fully packed agenda: Day 1 consisted of several introductory and state-of-play speeches by the workshop facilitators and by Iraqi experts, the latter group sharing key governmental, industry and academic perspectives to the chemical security progress in Iraq. Day 2 started with a case study presentation on “Post-2001 supply chain security developments at Dow Chemicals”, followed by private-public partnership considerations in chemical supply chain security. During the afternoon of day 2, two more presentations were given on potential threats to materials of interest, as well as on site-physical security. Day 3 started with presentations on international transport of dangerous goods and security rules, followed later by presentations on export control and border security issues, as well as risk assessment methodological aspects.

Interactive sessions, group exercises and other discussions were vivid throughout the four days. On day 1, the main interactive session was about government-industry coordination. On day 2, the focus shifted to identifying key players in Iraqi chemical supply chain security, as well as exploring private sector specific chemical security issues. On day 3, a major interactive session took place to recognize existing vulnerabilities and threats in the chemical supply chain, as well as to identify appropriate countermeasures and other possible means of improvement. And finally, on day 4, a draft table of content for a potential “Iraqi chemical supply chain security master plan and implementation roadmap” was produced in a highly interactive manner, followed ultimately by drafting some actual planning content in areas including chemical transport security and raising security awareness.

The actual workshop outcomes and possible follow-up actions will be worked upon later by the organizing team and some key participants. In the meanwhile, I want to express my warmest thanks for this opportunity and great on-site collaboration in Istanbul to: Ms. Shawn Garcia from the U.S. Department of State, Chemical Security Program (DOS/CSP); Ms. Pelin Kavak and Mr. Nidal Abu Sammour from CRDF Global, US / Jordan; and Dr. Caner Zanbak and Mr. Mustafa Bagan from the Turkish Chemical Manufacturers Association (TCMA). Hope to meet you again in 2016 in Iraq, Algeria and possibly other locations in the MENA region!

Cheers, Juha Hintsa

P.S. We also tested two CBRA frameworks / models – CBRA SCS15/16, and CBRA-BAC-Actions and beneficiaries – with the audience during the Istanbul week. Both of them were well perceived, and will be topics for CBRA Blog during the coming couple of months. (SCS = Supply Chain Security, and BAC = Border Agency Cooperation).

PPS. Last but not least I would like to thank Ms. Antonella Di Fazio of Telespazio, Italy, and FP7-project CORE, for excellent inputs on transport of dangerous goods, traceability and monitoring solutions, demonstrators, and practical experiences.

CORE Information Observatory

January 4, 2016/0 Comments/in Academic, All transport modes, Analytic, Blog, CBRA, EU, FP7, Global, Other-cluster, Policy, Regulation, Scientific, Supply chain security, Trade facilitation, WP18, WP19 /by Juha Hintsa

Please visit FP7-CORE Information Observatory . If you find it useful for your work, please consider registering to become a regular CORE Observatory user and to receive the CBRA Monthly Newsletter!

On behalf of the whole CBRA-team – Sangeeta, Susana, Susan, Phan Hien, Toni, Vladlen, Duayner, Perttu, Matti, Ari-Pekka, Ninoslav, Peter, Andrew, Harri x 2, and David x 2 (https://www.cross-border.org/team/ ) – I would like to wish you the best of success for the year 2016, in your professional as well as private life. In the context of global supply chains, we are ready to work with you towards faster and more predictable global logistics, naturally combined with low crime rates and with high compliance rates. One great tool to support such “common industry-government-academia global supply chain mission” is our new media platform – the recently launched FP7-CORE Information Observatory, which you can find at: https://www.cross-border.org/core-observatory/core-observatory-full-list/

CORE Observatory gives you 10-20 regular reviews and updates per month on supply chain security and trade facilitation policies, regulations, standards, good practices, roadmaps, research papers etc. – for the benefit of FP7-CORE partners, and beyond. Our primary focus is currently on European Union and its main trading partners – global expansion is possible later, depending on user needs and priorities. Each CORE Observatory entry has a title and a summary, visible to every user. At the end of the summary we provide a URL for the source document, whenever an electronic version is available in public domain. Starting 1 January 2016, the title and summary are also translated to Spanish. New languages (e.g. French, Arabic or Russian) may be offered later in 2016 depending on user preferences. The full review text is available only for the registered users, who will also receive the CBRA Monthly Newsletter, tailored to their personal information needs and interests. The CORE Observatory entries are listed in chronological order, the latest entry appearing on the top of the list. Any user – registered or not – can search CORE Observatory entries either via pre-defined keywords and tags (most common ones listed on the right side of the web page), or via free text search.

Again, Happy New Year 2016 everyone – and looking forward to having many new visitors at the FP7-CORE Information Observatory!

Yours, Juha

Welcome back!

December 6, 2015/0 Comments/in Blog, CBRA, FP7, Supply chain security, Trade facilitation /by Juha Hintsa

CBRA blog is back on-line after a couple of months of hard work renewing our website. We have put a particular effort to establish the “CORE Information Observatory” – a new service for continuous monitoring of key policies, regulations and studies in supply chain security management and in global trade facilitation.

We have now separated CBRA Blog and CBRA Interviews into two different sections on our website. We hope you will find the new website easy to use and the information valuable to your needs! We also welcome you to register at the new website – as a benefit you will have full access to all Observatory content, and you will receive monthly emails summarizing the new content linked to your personal preferences.

As a new, much asked feature, we introduce now Spanish as our second language. We have already translated all key content on the CBRA activities, teams, partners, list of projects etc. as well as Blog and Interview titles. We also aim to translate the titles and summaries of all new entries in CORE Observatory, Blogs and Interviews. Of course all will depend on how many Spanish speaking readers we will be getting during the coming months. We will also consider introducing a third language early 2016 – again depending on the needs and preferences of our global community.

Today, 6.12.2015 – which happens to be the independence day of my home country Finland – I wish all readers a relaxing Sunday, and look forward to seeing many registrations coming through and to receiving lots of feedback on your interests and needs.

Greetings from foggy Switzerland, Juha

PS. Please check also today’s interview with Mr. Greg Schlegel, the founder of the Supply Chain Risk Management Consortium.

CWIT & COP @ Geneva (2/2)

May 18, 2015/0 Comments/in Blog /by Juha Hintsa

This is part 2/2 blog on the FP7-CWIT organized side event with the COP to Basel, Rotterdam and Stockholm conventions, on 9 May 2015 in Geneva.

WCO T&I Forum 2015

April 24, 2015/0 Comments/in Blog, CBRA, Customs, Technologies, WCO /by Juha Hintsa

Call for papers and posters for the Research Track at the World Customs Organization Technology & Innovation Forum 2015.

CASSANDRA compendium. Standards in supply chain management (Ch. 9)

June 8, 2016/0 Comments/in All transport modes, CBRA, CORE-Observatory, Counter-terrorism, Customs, Customs risks, Data quality, Data sharing, Deliverable, EU, FP7, Freight forwarder, Global, Manufacturer, Other-cluster, Retailer, Shipper, Supply chain security, Trade facilitation, Transport carrier, WP18, WP19 /by Vladlen Tsikolenko

Summary: Chapter 9 of the CASSANDRA compendium lists and discusses various standards that set the context for international supply chain management. The chapter focuses especially on management standards (e.g., ISO28000), technical standards (e.g., RFID, electronic seals and barcodes), standards for exchange of information among supply chain stakeholders (e.g., UN/EDIFACT and XML messaging), and customs security standards (especially the World Customs Organisations’ SAFE Framework of Standards). GS1 Global Visibility Framework and other industry standards are included in the discussion, as well. The chapter points out that because a large variety of standards are already available, the challenge is not a lack of standardisation but the lack of harmonisation between different standards. The section also concludes that even if the diversity of standards was harmonised, the next step would be to ensure that the standards would be consistently implemented in different contexts.

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Full review: The chapter focuses on listing different standards that affect the modern supply chain management. There not much details to be reported in this section. However, especially people working with CORE work package 6 “SCS Reference Framework and Standards” should read the brief listing and general discussion of standards and standardisation. Other chapters of the CASSANDRA compendium provide complementary information about standardisation in the field of supply chain management (e.g., Ch. 5 & 6).

Reference

Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapter 9

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CASSANDRA compendium. Technologies for supply chain visibility and security (Ch. 8)

June 8, 2016/0 Comments/in All transport modes, CBRA, CORE-Observatory, Counter-terrorism, Customs, Customs risks, Data quality, Data sharing, Deliverable, EU, Exporter, FP7, Freight forwarder, Global, Importer, IT, Manufacturer, Police, Retailer, Risk management, Risk-cluster, Satellites, Scanning, Screening, Shipper, Supply chain security, Terrorism/destruction, Theft, Tracking, Trade facilitation, Trafficking, Transport carrier, Transport security agency, WP14, WP15, WP16, WP17, WP2, WP3, WP9 /by Vladlen Tsikolenko

Summary: Chapter 8 of the CASSANDRA compendium reviews current and future technologies that help managers to improve visibility and security over global end-to-end supply chains. The supply chain visibility technologies, in essence, provide logistics managers with a variety of information – shipment data, performance metrics, inventory levels, production / delivery schedules and sales forecast, for example – in or close to real time. The chapter’s review on supply chain security technologies focus mainly on security sensors (e.g., motion detectors), container seals, biometric user authentication devices (e.g., fingerprints), and non-intrusive inspection equipment (e.g., X-ray screening stations). The section also elaborates modern ways for sharing information among stakeholders that are concerned about security of the supply chain. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

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Full review: Chapter 8 includes some interesting details and insights about modern visibility and security technologies, many of which are relevant especially for CORE demonstrations but also for other work packages such as WP2 (SCS controls), WP7 (CORE Connectivity Infrastructure and Solutions Development Environment) and WP8 (CORE Ecosystem).

Many large logistics operators have developed own supply chain visibility systems to coordinate and organise logistics operations. A large logistics service provider, Kühne+Nagel uses its KN login visibility system that allows the company to optimise its complex global operations in terms of speed, time-certainty, security and cost-efficiency and many other relevant metrics. DHL, a German-based international express courier and logistics company, uses its LOGIS software for its operations. Previous EU projects have also developed visibility systems, for example Smart CM SICIS (Shared Intermodal Container Information System).

These visibility systems enable fast response to most operational contingencies that are about cause deviations from original plans. For instance, if a shipper got instant information about a stolen container, a new delivery could be quickly arranged and the consignee could be informed as soon as possible about the reshipment. Moreover, the visibility systems often interface ITC systems of other key stakeholders in the international supply chains. Customs, for example, receive advance cargo information (ACI) automatically from these systems.

The second part of the chapter 8 focuses exclusively on security technologies. The review starts with description of security sensors that are designed to detect tampering, unplanned detours, and other suspicious events in the supply chain. The modern sensor technologies sense at least changes in lighting, acceleration, location (geo-fencing functionality), motion and CO2 levels (used, e.g., to detect stowaways inside shipping containers). The chapter introduces modern user authentication technologies (e.g., fingerprints, face, retina, hand geometry and other unique biometric characteristics). Some information is provided regarding non-intrusive screening solutions that are often considered to be necessary for fast and secure screening operations. The rest of the chapter discusses various technical and institutional solutions for exchanging security-relevant information among supply chain operators and relevant government agencies. Especially interoperability of ICT systems seems to be crucial for effective security efforts in the global supply chains. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

Reference

Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapter 8

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CASSANDRA compendium. Private sector perspectives on risk management (Ch. 5) and crime prevention and security management in supply chains (Ch. 6)

June 8, 2016/0 Comments/in All transport modes, Authorized Economic Operator, CBRA, CORE-Observatory, Corruption, Counter-terrorism, Counterfeiting, Customs, Customs risks, Cybercrime, Deliverable, Document forgery, Environmental crime, Exporter, FP7, Fraud, Freight forwarder, Global, Hijacking, Human trafficking, Identity theft, Importer, Manufacturer, Money laundry, Other-cluster, Police, Retailer, Risk management, Risk-cluster, Shipper, Supply chain security, Tax evasion, Terrorism/destruction, Theft, Trade facilitation, Trafficking, Transport carrier, Transport security agency, Trusted Trader, Violence, Warehouse keeper, WP18, WP19, WP2, WP3, WP4 /by Vladlen Tsikolenko

Summary: Chapters 5 & 6 of the CASSANDRA compendium provide a general overview on supply chain security risk management from the private sector perspective. Explaining the essentials of supply chain risk management, Chapter 5 introduces commonly used risk management models and tools (e.g., risk matrices and risk registers), discusses various classifications of supply chain risks, and elaborates current trends of risks and risk management in the supply chain context. Chapter 6 focuses on specific challenges of supply chain security risks – the risks that arise from intentional, man-made criminal activities such as terrorism, theft, trafficking, and sabotage. The chapter explains a few early classifications of supply chain security risks (e.g., motive-based typology and taxonomies based on private sector perspectives). Following the classifications of security risks, the chapter puts forth a few models for managing security risks in the supply chain context (e.g., the 8-layer model for supply chain security management). The chapter concludes with a detailed case study on security management of an international security company and a comparison of supply chain security management and the total quality management (TQM) management philosophy. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

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Full review: Previous observatory entries have already shown the relevance of the CASSANDRA compendium to the community of supply chain management professionals. The compendium’s chapters 5 & 6 give a brief summary of risk management and security risk management in the context of international supply chains. The contents of the chapters are relevant and useful for people involved in FP7 CORE project, especially for those involved in work packages 3 (Multi-method Threat and Vulnerability Analysis Suite) and 4 (SC Situational Awareness Tools & Maps).

Chapter 5 elaborates a set of common supply chain risk management tools. The model of Waters (2007) summarises rather obvious three steps of the risk management process: identifying risks, analysing risks and responding to risks. The model proposes, for example, that managers can identify supply chain risks through analysis of past events, collection of opinions, and through operational analysis. The model also calls for managerial attention to prerequisites of successful risk management – mutual trust, cooperation and information exchange among relevant stakeholders involved in supply chain management – and highlights importance of continuous monitoring and controlling the risk management process. The chapter concludes with the four classic approaches to risk management: risk avoidance, risk reduction, risk transfer (e.g., insurance and contractual agreements), and acceptance. The classifications of supply chain risks include typologies focusing on risk sources (natural hazards operational failure and terrorism), risk consequences (e.g., risk to operations, risk to reputation and risk to profits), and objects of vulnerability (e.g., information, materials, personnel and financial flows).

The chapter on crime prevention and security management (Ch. 6) in supply chains provides a concise summary on supply chain security management from the private sector perspective. The chapter starts by describing some early classifications of supply chain security risks. A motive-based taxonomy classifies such risks into the three categories: economic crime (profit as motive), other crime types (ideological, emotional and other reasons as motive) and facilitating crime that covers activities that do not bring direct crime benefits but help committing other rewarding crime crimes later on. (e.g., document fraud, bribery and use of intimidation). The chapter’s next section elaborates ways to mitigate security risks in the global supply chains, highlighting the key ideas of the so-called 8-layer model for supply chain security management (the model incorporates multiple aspects of risk assessment, hands-on design and planning, implementation of a variety of technologies, procedures, and incentives as well as preparation for dealing with the consequences of supply chain crime). The chapter provides also a case study with an international tobacco company that runs high security risk supply chain operations. The section also contrasts, rather interestingly, principles of security management against the fundaments of the total quality management (TQM) management philosophy. The chapter continues with a brief review of regulations (e.g., EU customs security and aviation security regulations) and standards on supply chain security management (World Customs Organization’s SAFE framework of standards, and industry standards of the Transported Asset Protection Association).

Reference

Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapters 5 & 6

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MARITIME SECURITY – Vessel Tracking Systems Provide Key Information, but the Need for Duplicate Data Should Be Reviewed, GAO, March 2009 (CORE1065)

May 26, 2016/0 Comments/in Analytic, CBRA, CORE-Observatory, Counter-terrorism, Counterfeiting, Customs, Customs risks, Demo-cluster, GAO, Government, IT, Risk management, Satellites, Supply chain security, Tax evasion, Terrorism/destruction, Tracking, Trafficking, USA, WP14, WP9 /by Vladlen Tsikolenko

Summary: The US government considers identification and tracking of vessels at the US coastal areas, inland waterways and ports important for protecting the US homeland and economy from maritime terrorism. The US coastal guards use a range of identification and tracking solutions to detect any anomalies in maritime traffic that might suggest terrorist activity, such as transportation of weapons of mass destruction, use of explosive-laden boats as weapons, smuggling of weapons, drugs, people or other contraband. This GAO report reviews the US Coast Guards’ current and future solutions for monitoring the maritime traffic: long-range identification and tracking system (LRIT), long-range automatic identification system (AIS) and various radar and camera systems. The report elaborates strengths and weaknesses of these identification and tracking solutions and proposes a roadmap for further strengthening of the US coastal security. The future advancements should pay particular attention to tracking of small and non-commercial vessels and to reconsider ways to collect and analyze data that is relevant for coastal surveillance. Offering background information about vessel-level tracking and tracing of maritime cargo movements, the report is a relevant source document for those CORE demonstrations that involve shipping of containers from, through and into the US. The report is available for download at: www.gao.gov/new.items/d09337.pdf.

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Full review: CORE demonstrations of WP9 and WP14 benefit from the background information this GAO document offers on identification and tracking of vessels because these two demos involve US seaports and shipping at the US territorial waters. Also the CORE’s risk and IT clusters might find the information of this GAO document useful. The information that the identification and tracking provide allow the coastal guards to assess risk-levels of individual vessel movements and decide when it is reasonable to intervene and check anomalies. The vessel tracking and identification involves also a great deal of IT integration because it currently involves many technical components and synthetizes data collected from many different sources.

Cross-references:

Maritime Security: Information Sharing Efforts Are Improving. GAO-06-933T. Washington, D.C.: July 10, 2006.
Maritime Security: Public Safety Consequences of a Terrorist Attack on a Tanker Carrying Liquefied Natural Gas Need Clarification. GAO-07-316. Washington, D.C.: February 22, 2007.
Maritime Security: Coast Guard Inspections Identify and Correct Facility Deficiencies, but More Analysis Needed of Program’s Staffing, Practices, and Data. GAO-08-12. Washington, D.C.: February 14, 2008.

Additional keywords: Maritime security, long-range identification and tracking system (LRIT), long-range automatic identification system (AIS), track & trace

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MARITIME SECURITY – DHS Progress and Challenges in Key Areas of Port Security, GAO, July 2010 (CORE1064)

May 26, 2016/0 Comments/in Analytic, CBRA, Coordinated border management, CORE-Observatory, Counter-terrorism, Customs, Data quality, Data sharing, Demo-cluster, GAO, Government, IT, Maritime, Other-cluster, Police, Resilience, Risk management, Satellites, Scanning, Screening, Sea port, Supply chain security, Terrorism/destruction, Tracking, Transport security agency, USA, WP10, WP11, WP13, WP14, WP15, WP19, WP9 /by Vladlen Tsikolenko

Summary: This GAO report analyses the progress the US Department of Homeland Security (DHS) has made in maritime supply chain security over the past five to ten years. The report raises problems that the DHS and its component agencies – the Coast Guard and the Customs and Border Protection (CBP) – have encountered regarding improvement of risk management, reduction of the vulnerability to threats of small vessels, implementation of security assessment in foreign ports, and the overall progress in supply chain security. The report states that so far the Coast Guard has carried out risk assessments, but their results do not allow effective comparison and prioritization of risks across ports. The Coast guard has also identified points of vulnerability related to waterside attacks by small vessels, reached out to the general public to encourage recreational sailors to report anomalies, started tracking of small vessel, tested equipment to screen small vessels for nuclear material and conducted security maneuvers such as vessel escorts. Nevertheless, resource constraints and technical problems prevent the Coast Guard to protect the US coastline and maritime infrastructure from small-vessel threats effectively. Moreover, the Coast Guard has been assessing security in foreign ports, but the lack of the agency’s resources and certain countries’ reluctance to collaborate with the US authorities have slowed down the global security assessment. Finally, as for the general supply chain security, the DHS has been running the Secure Freight Initiative (SFI) in foreign ports to test the feasibility of the 100% scanning of US-bound shipping containers with non-intrusive inspection (NII) technologies and radiation detection equipment. The findings of the SFI pilots indicate that the 100% scanning is not a feasible policy because it would disrupt port logistics, damage international trade and raise healthy concerns, among other things. The report is available for download at: www.gao.gov/assets/660/659087.pdf.

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Full review: This GAO review concentrates on the US maritime supply chain security. The document provides important information for people who are working for the CORE demonstrations of WP1 and WP14 because these demos involve maritime transportation into and from the US mainland. Those demonstrations that test tracking & tracking solutions might benefit from the document’s update on small-vessel identification and tracking systems.

Cross-references:

Coast Guard: Deployable Operations Group Achieving Organizational Benefits, but Challenges Remain. GAO-10-433R. Washington, D.C.: April 7, 2010.
Supply Chain Security: Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-Bound Containers. GAO-10-12. Washington, D.C.: October 30, 2009.
Maritime Security: The SAFE Port Act: Status and Implementation One Year Later. GAO-08-126T. Washington, D.C.: October 30, 2007.
Maritime Security: Vessel Tracking Systems Provide Key Information, but the Need for Duplicate Data Should Be Reviewed. GAO-09-337. Washington, D.C.: March 17, 2009.
Supply Chain Security: Challenges to Scanning 100 Percent of U.S.-Bound Cargo Containers. GAO-08-533T. Washington, D.C., June 12, 2008.

Additional keywords: Maritime security, supply chain security, 100% scanning and track & trace

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AVIATION SECURITY – Progress Made, but Challenges Persist in Meeting the Screening Mandate for Air Cargo, GAO, March 2011 (CORE1062)

May 26, 2016/0 Comments/in Air, Analytic, CBRA, CORE-Observatory, Counter-terrorism, Data quality, Data sharing, Demo-cluster, GAO, Global, Government, Risk management, Scanning, Screening, Supply chain security, Terrorism/destruction, Transport security agency, USA, WP12, WP17 /by Vladlen Tsikolenko

Summary: This GAO report reviews the recent progress of the US air cargo security scheme. The Transportation Security Administration (TSA), the main agency responsible for the US air cargo security, has been working towards the implementation of the 100% screening requirements of the 9/11 Commission Act of 2007. So far TSA has set up a voluntary Certified Cargo Screening Program (CCSP) to allow trusted logistics operators to screen air cargo outside congested airports, launched a program for testing technologies for air cargo screening and expanding its program for approving explosive detection dog teams. The main obstacle in meeting the 100% screening requirement is that TSA has no reliable mechanism for verifying screening data from domestic foreign screening operators, which self-report the data. TSA also struggles in finding resources to employ as many transport security inspectors as it is required to oversee the Certified Cargo Screening Program. The report also points out that the current technologies that TSA has approved for cargo screening cannot screen large cargo units – pallets or unit loading devices (ULDs) – and this incapability reduces speed and cost-efficiency of air cargo screening. Overall, this GAO document provides a general outlook on state and challenges the US air cargo security regime, and therefore those CORE demonstrations that focus on the US-bound or US-origin air transport should consider the report as a key source material. The report is available for download at: www.gao.gov/assets/130/125678.pdf.

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Full review: This document is relevant for the CORE demonstrations that involve air transportation into or through or from the US. Especially the DHL demo, that concentrates on shipping of military aircraft parts from the US to Spain, is affected by the TSA’s programs and initiatives that the report analyses. The report is very concise and informative, so it might be beneficial to the CORE’s educational and training activities.

Cross-references:

GAO, Aviation Security: Federal Coordination for Responding to In-flight Security Threats Has Matured, but Procedures Can Be Strengthened, (Washington, D.C.: July 31, 2007).
GAO, Aviation Security: Transportation Security Administration May Face Resource and other Challenges in Developing a System to Screen All Cargo Transported on Passenger Aircraft
GAO, Aviation Security: Federal Efforts to Secure U.S.-Bound Air Cargo Are in the Early Stages and Could Be Strengthened, GAO-07-660 (Washington, D.C.: April 2007).
GAO, Aviation Security: Progress Made in Systematic Planning to Guide Key Investment Decisions, but More Work Remains, GAO-07-448T (Washington, D.C.: February 13, 2007).

Additional keywords: Air cargo security, 100% screening, Certified Cargo Screening Program (CCSP)

CORE1062

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MARITIME SECURITY – Progress Made, but further actions needed to secure the maritime energy supply, GAO, August 2011 (CORE1061)

May 26, 2016/0 Comments/in Analytic, CBRA, Coordinated border management, CORE-Observatory, Counter-terrorism, GAO, Government, Maritime, Other-cluster, Police, Resilience, Risk management, Sea port, Supply chain security, Terrorism/destruction, USA, WP19 /by Vladlen Tsikolenko

Summary: The GAO report discusses actions the US Coast Guard and the Federal Bureau of Investigation (FBI) have taken to strengthen security of energy tankers and offshore energy infrastructure – that produces, transports, or receives oil and natural gas – from terrorist attacks. The report’s key recommendation is that the Coast Guard need to assess risks to all offshore facilities in the US territorial waters, to improve emergency response plans in case of oil spills and to design performance measures for emergency response activities. This GAO document focuses on a rather narrow field of critical infrastructure, the US maritime energy infrastructure, which is not in the CORE’s scope. The CORE’s risk cluster might consider useful the description how the Coast Guard has applied its Maritime Security Risk Analysis Model (MSRAM) to determine risk of the US maritime energy infrastructure. The report is available for download at: www.gao.gov/new.items/d11883t.pdf.

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Full review: This GAO document is not very relevant to CORE because of its topic (the US maritime energy infrastructure) that is not within the CORE’s scope. Even so, the risk cluster, the IT cluster and the demonstrations on maritime transport might consider useful of the insight this report offers on security risk assessment.

Cross-references:

Maritime Security: Actions Needed to Assess and Update Plan And Enhance Collaboration among Partners Involved in Countering Piracy off the Horn of Africa. GAO-10-856. Washington, D.C.: September 24, 2010.
Critical Infrastructure Protection: Update to National Infrastructure Protection Plan Includes Increased Emphasis on Risk Management and Resilience. GAO-10-296. Washington, D.C.: March 5, 2010.
Quadrennial Homeland Security Review: 2010 Reports Addressed Many Required Elements, but Budget Planning Not Yet Completed. GAO-11-153R. Washington, D.C.: December 16, 2010.

Additional keywords: Critical infrastructure protection (CIP), maritime security and security of supply

CORE1061

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PORT SECURITY GRANT PROGRAM, Risk Model, Grant Management, and Effectiveness Measures Could Be Strengthened, GAO, November 2011 (CORE1060)

May 26, 2016/0 Comments/in Analytic, CBRA, CORE-Observatory, Counter-terrorism, Demo-cluster, GAO, Global, Government, Maritime, Risk-cluster, Sea port, Supply chain security, Terrorism/destruction, USA, WP14, WP3, WP9 /by Vladlen Tsikolenko

Summary: The Department of Homeland Security (DHS) has granted almost 1.7 billion USD to port security through the Port Security Grant Program (PSGP). The program is administered by a component agency of DHS, Federal Emergency Management Agency (FEMA). This GAO reports highlights some problems that the grant program has encountered. The first issue is that the risk assessment the FEMA uses to assess risk levels and assign grants to different ports does not take into account how security improvements affect the vulnerability of the ports to terrorist attacks. The report recommends the FEMA to design a vulnerability index that accounts for security improvement and to coordinate with the Coast Guard to get access to the most accurate vulnerability and threat information. The second issue with the grant program is that much of the grant money does not get used and translate into practical port security projects. The GAO report proposes acceleration of the grant granting process with updated administrative procedures and with more administrative staff. Finally, this GAO report recommends the FEMA to develop performance metrics to assess its administration in relation to the Port Security Grant Program. The contents of this GAO report is not very relevant to CORE because no US seaports are partners in the project. The report is available for download at: www.gao.gov/assets/590/587142.pdf.

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Full review: This document has only a limited relevance for CORE because the consortium does not involve any US seaport operators. The demonstrations of WP9 and WP14 that cover shipping of goods from and into the US through local seaports might find it useful to learn about how US ports can apply for funds to improve the security. Otherwise, other demonstrations do not benefit much of this information. However, the CORE’s risk cluster can benefit from the rather detailed description of the risk analysis model in the report’s Appendix II.

Cross-references:

Maritime Security: Actions Needed to Assess and Update Plan And Enhance Collaboration among Partners Involved in Countering Piracy off the Horn of Africa. GAO-10-856. Washington, D.C.: September 24, 2010.
Critical Infrastructure Protection: Update to National Infrastructure Protection Plan Includes Increased Emphasis on Risk Management and Resilience. GAO-10-296. Washington, D.C.: March 5, 2010.
Quadrennial Homeland Security Review: 2010 Reports Addressed Many Required Elements, but Budget Planning Not Yet Completed. GAO-11-153R. Washington, D.C.: December 16, 2010.

Additional keywords: Critical infrastructure protection (CIP), maritime security and security of supply, Port Security Grant Program (PSGP)

CORE1060

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SUPPLY CHAIN SECURITY – CBP Needs to Enhance Its Guidance and Oversight of High-Risk Maritime Cargo Shipments, GAO, January 2015 (CORE1059)

May 26, 2016/0 Comments/in Analytic, CBRA, Coordinated border management, CORE-Observatory, Counter-terrorism, Customs, Customs risks, Data quality, Data sharing, GAO, Global, Government, IT-cluster, Maritime, Risk management, Scanning, Screening, Sea port, Supply chain security, Terrorism/destruction, Trade facilitation, USA, WP10, WP11, WP19, WP3, WP4, WP9 /by Vladlen Tsikolenko

Summary: The report reviews the US Customs and Border Protection’s (CPB) approach to risk assessment and targeting of maritime shipping containers. The report’s highlights that CPB does not have clear decision rules and reporting procedures to monitor percentage of containers that the risk assessment system flags high-risk and that get eventually examined. The source of this problem is that the CPB’s officials (targeters) may waive examination of the high-risk containers if the container (i) falls within a predetermined category (standard exception), or (ii) the targeters can articulate why the shipment should not be considered high risk. The targeting units have currently differing definitions of “standard exceptions” and differing views on what constitutes the “articulate reasons.” The GAO report recommends the CPB to clarify, harmonize and enforce the rules and the procedures for waiving the high-risk containers from examination. As for CORE, this report provides a detailed and recent outlook on the US maritime risk assessment and targeting scheme, and this information is going to support work of the CORE’s risk cluster and the demonstrations that involve shipping of sea containers into the US. The report is available for download at: www.gao.gov/assets/670/668098.pdf.

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Full review: This GAO reports contains crucial information about the US risk assessment and container targeting systems that benefit the CORE’s risk cluster. The report outlines principles, procedures, datasets and scanning methods that constitute the world’s most advanced risk assessment system for maritime shipping containers. The CORE’s IT cluster might also benefit from the report’s description of the CPB’s Automated Targeting System (ATS) that is used to compute risk scores for shipping containers and flag the ones with the highest score as high-risk. Regarding the CORE demonstrations, the GM demon (WP19) must comply with data requirements (24-hour rule and the “10+2” rule) that enable the US risk assessment and targeting system. Also the demos involving customs controls, especially WP11.2 and WP10.1, may learn something from the ways how the US border control authorities are assessing risk levels of incoming containers.

Cross-references:

Supply Chain Security: CBP Needs to Conduct Regular Assessments of Its Cargo Targeting System. GAO-13-9. Washington, D.C.: October 25, 2012.
Maritime Security: Progress and Challenges in Key DHS Programs to Secure the Maritime Borders. GAO-14-196T. Washington, D.C.: November 19, 2013.
Supply Chain Security: Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-Bound Containers. GAO-10-12. Washington, D.C.: October 30, 2009.

Additional keywords: Security Filing and Additional Carrier Requirements (known as the 10+2 rule), 24-hour rule, risk assessment

CORE1059

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TRANSPORTATION SECURITY INFORMATION SHARING – Stakeholder Satisfaction Varies; TSA Could Take Additional Actions to Strengthen Efforts, GAO, June 2014 (CORE1020)

May 26, 2016/0 Comments/in All transport modes, Analytic, CBRA, CORE-Observatory, Counter-terrorism, Customs, GAO, Global, Government, Other-cluster, Police, Supply chain security, Terrorism/destruction, Transport security agency, USA, WP19 /by Vladlen Tsikolenko

Summary: This report presents and discuses findings of a survey on stakeholders’ satisfaction to the US Transportation Security Administration’s security-related activities and to the way the TSA disseminates information about its activities. The survey’s scope is the overall US transportation system, covering aviation, rail, and highway modalities and transport of passengers and freight. Given the broad scope and the US-centricity of the survey, this report is not very relevant for CORE. The education and training cluster could anyhow learn how security-related user satisfaction surveys are done and how to establish a mechanism for collecting regular user feedback. The report is available for download at: http://gao.gov/assets/670/664350.pdf.

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Full review: The scope of the report is very broad and the information about cargo security is limited, so the CORE project cannot much benefit from this report. However, the project’s educational and training cluster might use the report’s information to design ways administer end-user surveys: what questions to ask, which stakeholders to survey and how to report the findings. Some demonstrations adopt some of the report’s ideas and methods to collect high-quality user requirements.

Additional keywords: Transportation security, aviation security

CORE1020

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Interviews

Updates on Customs brokers, by Ms. Carol West

January 30, 2016/0 Comments/in All transport modes, CBRA, Compliance management, Coordinated border management, Customs, Customs risks, Demo-cluster, EU, Exporter, Freight forwarder, Global, Importer, Interviews, Other-cluster, Shipper, Supply chain security, Trade facilitation, USA, WP1, WP10, WP11, WP12, WP13, WP14, WP15, WP16, WP17, WP19, WP6, WP9 /by Vladlen Tsikolenko

Hi Carol, and thanks for joining a CBRA Interview – can you first tell a bit who are you and what you do?

I am the President of the Canadian Society of Customs Brokers and the Secretary of the International Federation of Customs Brokers Associations, IFCBA. My office is in Ottawa, Canada. I have spent my professional life in the world of Customs, border management and trade facilitation. I am an advocate for the value and importance of customs brokers and I am passionate about the possibilities of Customs-business partnership, in Canada and worldwide. I believe strongly that building knowledge, investing in technology and managing relationships are critical to effective border management.

IFCBA and CBRA produced jointly the first survey study on future roles of customs brokers around 2004-2005. Looking now, in 2016, at the study outcomes: do you see that anything has changed or evolved in the “world of customs brokers” the way we anticipated a decade ago?

It is difficult to generalize as the role of a customs broker still differs so much between countries. The regulatory framework for licensing customs brokers and their scope of practice may be different, and the level of automation of a country’s Customs administration may influence the role of customs brokers in effective border management. Having said that, I believe that in the last decade the role of a customs broker as a trade facilitator has been even more effective than we had anticipated. Both importers and Customs recognize that knowledgeable, regulated customs brokers not only provide expedited navigation through and compliance with complex Customs requirements, they are widely used by businesses looking to reach new markets, with a minimum of cost and delay.

With Customs administrations automating their systems for risk management and implementing coordinated border management processes, there is also more focus on gathering information on the goods being imported prior to arrival, for admissibility and security purposes. In this context, the automation of carrier and cargo information is more important than it was ten years ago. With that in mind, the role of a customs broker is even more crucial today as the broker acts as a hub for all the data relating to a client’s transaction, ensuring its accuracy and compliance with Customs requirements.

Ten years ago, we thought that, by now, we would have made more progress with consistency of data requirements globally. There has been great work done by the World Customs Organization with its data model, but we still find that data requirements are not as harmonized or standardized as they could or should be.

From a business process standpoint, where licensed customs brokers exist they are used by the majority of importers – large multinational companies as well as small to medium enterprises. In a competitive marketplace, customs brokers are seeing more emphasis on performance measurement and key performance indications during the procurement process as well as in standard operations. Today, there is greater uncertainty in the business environment and increased complexity of the global supply chain. We think this also reflects the maturation of the brokerage industry where business managers focus on continuing improvements to their processes to reach maximum efficiencies in delivering value to clients.

By the way, are you aware of any recent research focusing on customs brokers, either on global or on national level?

The World Customs Organization, WCO conducted a survey of its members in 2015 on the subject of customs broker regulation and had an outstanding response rate. With many models of customs broker regulatory regimes among the WCO members, from no regulation to the mandatory use of a licensed customs broker, the results of the survey point to some opportunities for cooperation between Customs administrations and customs brokers, and, based on existing best practices, suggests considerations for a model for establishing a broker licensing system, particularly valuable where none exists today. It also offers ideas on engagement with customs brokers and other private sector players to enhance compliance and trade facilitation. We see this as a positive indicator of interest in issues that are of critical importance to the international customs broker community, and a sign that there is value in doing some additional work in this area.

From a customs broker’s perspective, which areas of global trade facilitation and supply chain security do you see as most important in 2016? What about the most difficult or challenging ones?

A very important development that might impact global trade is the Trans-Pacific Partnership, TTP. I say might because coming into force depends on the US Congress ratification of the agreement, and currently the rhetoric coming from Washington shows little support for it. I guess we’ll have to wait and see what happens. But assuming the TPP is ratified by the 12 signatories, even though it means elimination of tariffs and tariff barriers, it also means a more complex environment to navigate the multiple free trade agreements for the multi-national importers. Customs brokers as experts in rules of origin and compliance, in general will continue playing a very important role in the trade chain.

Looking a bit further out, one of the most challenging issues of the next 5 years will be the immense growth in e-commerce globally, and the pressure put on governments world-wide by online retailers to increase the de-minimis thresholds. It is projected that the online sales will reach US $3.5 trillion by 2020. That represents a lot of import duties that may not be collected and remitted if the de-minimis thresholds are increased or standardized. We expect that the impact of this will be seen differently depending on positions taken by national administrations given their own economic situations and pressures for competitiveness. Customs brokers will no doubt integrate any such changes into their compliance models and service offerings, keeping their clients’ interests and obligations foremost.

We can’t speak of challenges without mentioning the global trade slowdown we’ve experienced since the 2008 global financial crisis. Many factors seem to be contributing to the continued sluggishness which some consider cyclical others structural in nature. Regardless, governments have to remember that trade can be a powerful tool in their policy toolkit and customs brokers are natural allies in promoting its growth.

Any other greetings you would like to send to the CBRA Interview and Blog readers?

IFCBA will be holding its next World Conference in Shanghai 17-21 May, 2016, and the theme is “Facilitating Trade Through the Customs-Business Connection”. Hundreds of delegates from all regions of the world will be in attendance representing national customs brokers associations, international customs organizations such as the WCO, freight forwarding firms, shipping companies, cross-border e-commerce associations, world logistics enterprises, and many more. Our conferences are held only every two years, and we are very excited about sharing ideas and strategies for success with business and government colleagues from around the world.

Thanks a lot Carol for this concluding note – we just added the IFCBA World Conference to CBRA´s Events calendar – and thanks for the whole interview; maybe we can explore bit later this year on joint research, training or other project opportunities…!

Web-resources:

http://ifcba.org/

http://www.wcoomd.org/en/topics/facilitation/resources/~/~/media/234D5143B2344B918496C93F24B48586.ashx

https://www.internetretailer.com/2015/07/29/global-e-commerce-set-grow-25-2015

http://bruegel.org/2015/08/the-global-trade-slowdown-puzzle/

https://www.wto.org/english/news_e/pres15_e/pr752_e.htm

https://globalconnections.hsbc.com/global/en/tools-data/trade-forecasts/global

https://www.imf.org/external/pubs/ft/weo/2016/update/01/pdf/0116.pdf

Related CBRA studies:

Gutierrez, X., Hintsa, J., Wieser, P. and Hameri, A.P. (2005), “New roles for customs brokers in international supply chain”, Proceedings of First International Conference on Transportation Logistics (T-LOG), July 27-29, 2005, Singapore.

Hintsa, J., Mohanty, S., Tsikolenko, V., Ivens, B., Leischnig, A., Kähäri, P., Hameri, A.P., and Cadot, O. (2014), The import VAT and duty de-minimis in the European Union – Where should they be and what will be the impact? Final Report, Brussels, Belgium.

Dr. Federico Magalini on waste logistics crime

January 13, 2016/0 Comments/in Academic, All transport modes, BMT, CBRA, Customs, Document forgery, Environmental crime, Exporter, FP7, Fraud, Global, Importer, Interviews, No-cluster, Organized crime groups, Trafficking /by Vladlen Tsikolenko

Hi Federico, and thanks for agreeing to join a CBRA Interview, as the first expert in year 2016 – can you first tell a bit who are you and what you do?

Thank you for the opportunity of sharing some of the past experiences and projects done, including those with CBRA and looking ahead into the next years. I’m a mechanical engineer as background, with a PhD in Management, Economical and Industrial Engineers and I am working as Associate Programme Officer at United Nations University – Vice-Rectorate in Europe. I’m in particular working for SCYCLE, SCYCLE operating unit of the UN University Institute for the Advanced Study of Sustainability.

Can you explain more on what is the United Nations University, UNU?

UNU is, despite the name, not a classical university as many might think. The United Nations University (UNU) is a global think tank and postgraduate teaching organization headquartered in Japan. The mission of the UN University is to contribute, through collaborative research and education, to efforts to resolve the pressing global problems of human survival, development and welfare that are the concern of the United Nations, its Peoples and Member States. We work a lot with leading universities and research institutes in various countries, functioning as a bridge between the international academic community and the United Nations system. Our operating unit SYCLE is particularly devoted to research in the field of electronic waste.

UNU, INTERPOL, CBRA and other partners finished few months ago a 2-year research project on electronic waste crime and non-compliance, the FP7-CWIT –project. From your perspective, what were the most important outcomes of that project?

The CWIT project contributed in my opinion to increase the general understanding of volumes of electronic waste annually arising in different EU Member States and the fate of the disposed equipment. Knowing the baseline of products annually discarded by EU citizens is a first, fundamental step to allow policymakers and stakeholders at large to develop a strategy to ensure proper collection and treatment. In addition to that the project described the main drivers behind the flows diverted from the actual take back and recycling systems across the EU.

A second important outcome of the project is the analysis and identification of the main crime patterns that are typical of such an Industry: in the illegal trade of WEEE, there is a varying degree of compliance and criminality that spans across a continuum ranging from minor unintentional violations or non-compliance by individuals to deliberate illegal activities following a criminal business model. The organisational structure differs by country and region, from individual traders to structured criminal groups.

The combination of those two elements – knowledge of the market and understanding of criminal behaviours – allowed drawing a roadmap for future improvement in compliance and enforcement.

Do you believe that some of the CWIT outcomes will have practical positive impacts to reduce future crime and non-compliance, in the broader context of e-waste handling and management?

I sincerely hope so. And I am sure this will happen. To which extent is hard to predict but in the second part of the project we really focused on how to derive practical recommendations for the various actors involved along the entire value chain. And we broadly discussed the ideas, in many cases deriving from real cases and best practices, with various stakeholders; I hope this will increase the likelihood of having some of the recommendations actually implemented.

We committed ourselves to disseminate the recommendations beyond the project duration and we have seen already some results, with the project findings being discussed in various fora, conferences and public events, including some internal meeting with EC officials. And we have seen official request from some Members of the EU Parliament, who quizzed the EC on the consequences of the CWIT project, challenging here to take concrete actions.

Now we are launching a new project called DOT.COM WASTE – with several CWIT partners, and few new partners. You are the project manager for this “CWIT follow-up” –project, congratulations on that. Can you please explain what this new project aims to achieve?

I am really happy of the DOT.COM waste project as combines some of the results of the CWIT project, particularly the recommendation on the need of better training of enforcement and prosecutors in one of the main areas of my personal interest and work at UNU: capacity building. The DOT.COM WASTE project seeks to increase the capabilities of law enforcement agencies, customs and port authorities, environmental agencies and prosecutors to fight cross-border waste crime more cost-effectively. To achieve this objective, the project aims to increase the stakeholders’ understanding of current waste crime trends and to identify and share good practices for detecting, investigating and prosecuting waste crime activities.

Which aspect of the DOT.COM WASTE project you see as the most challenging one?

I see two main challenges ahead for the DOT.COM WASTE project. The first one is related to the scope of the project itself: there are many waste streams and the challenges of different streams are different. As a consequence also the tools to tackle illegal activities might vary: we will have to identify the priorities in order to be effective.

The second one is related to the duration of the project; the project will translate the knowledge gained into training material and tools and will promote training sessions to help key stakeholders integrate good practices into their day-to-day operations. The project’s underlying objective is to intensify international collaboration through development and implementation of new mechanisms for information exchange, technology transfer and operational coordination. But I really hope that all those efforts will produce effects that will last longer than the two years of the project itself.

I sincerely hope that we will be able to make the difference here!

Thanks a lot Federico for this interview – and talk to you soon at the DOT.COM WASTE kick-off meeting.

New approaches to border management

December 18, 2015/in Academic, All transport modes, CBRA, Coordinated border management, Customs, Customs risks, Exporter, Fraud, Freight forwarder, Global, Importer, Interviews, Risk-cluster, Shipper, Supply chain security, Terrorism/destruction, Trade facilitation, Trafficking, Transport carrier, Transport security agency, WP1, WP19 /by Juha Hintsa

Today we discuss with Mr. Anthony Barone how to modernize border management techniques. Mr. Barone is a writer and adjunct professor. He has served at the WCO and American Federal Advisory bodies and held senior positions in both the industrial and logistics industries most recently at Pfizer.

Tony, it seems that we are living in a fairly dangerous world today. Threats to society arise from globalized terrorism, organized crime and individual criminal acts, such as the commission of fraud. How do border management techniques address these threats?

Not very well, I’m afraid. Border management techniques that are used today to identify and interdict criminal activities are based on technologies and concepts that are out of date. They cause unpredictability in supply chains, discriminate against smaller companies and opportune official corruption.

The absence of real time information exchange between countries, and even within countries among different departments of border management, is complicating the inherent challenges faced by border management authorities. Unfortunately crime has globalized, but law enforcement has not.

The supply chains are internationalizing rapidly, so all nations need to find ways that facilitate legitimate trade and simultaneously disrupt criminal activity hidden in commercial supply chains. Can emerging technologies be the solution?

Newly emerging technologies present both new threats and new opportunities. Threats arise from the criminal use of new technologies such as the use of social media by terror organizations and bitcoin money exchange by drug cartels. Opportunities to leverage technology arise from the ubiquitous use of integrated supply chain technology within the private sector, relatively inexpensive cloud based processing capabilities and a variety of hardware developments, such as Machine to Machine data processing or Internet of Things.

Emerging technologies may make it possible to accomplish the dual goals of facilitation and security, but certain prerequisites must be addressed in order for such solutions to succeed. The innovations must benefit both the private sector and governments in several different ways. There must be real economic value in transformative strategies. Political leadership must see a match to public policy goals and developers must see profit opportunity in the development of tools.

As you said, various public and private stakeholders may have different interests and priorities, and on top of this private citizens have increasing and legitimate privacy concerns. What should we do that real issues are accommodated despite these potentially contradictory goals?

The importance of engaging the private sector as agents of change cannot be understated. Both goods shippers and logistics service providers must find benefit through significantly reduced costs. And those savings must outweigh out-of-pocket investments that are needed to achieve them.

Articulating possible solutions faces significant headwinds. Among these are the investments made in current practices on both the private and public side. Reluctance to change is further bolstered by financial considerations including possible costs of transformation and the loss of revenue derived from existing systems.

Additionally, authorities charged with these responsibilities may feel threatened by criticism of programs they administer. Importers and exporters may fear reprisal from authorities. Trade associations may be too dependent on access to authorities to seriously challenge extant programs. Without a political constituency and given these challenges, introducing and implementing game changing ideas will be difficult.

So, what would you propose to modernize border management techniques? It seems to require radically transformative ideas.

I propose that we get together a group of independent experts who are willing to explore radically new approaches to border management. They would be tasked to investigate how supply chain facilitation as an open source capability could simultaneously block criminal activity and reduce the costs of border administration. They should consider both private and public sector effects and have a global focus so that all nations can benefit from their work.

Thank you, Tony, for the interview. CBRA team is interested to join the group of independent experts you suggested – hopefully we can get together on this, already during the first couple of months in 2016!

Posts

COSO. Enterprise Risk Management — Integrated Framework – Executive Summary. Committee of Sponsoring Organizations of the Treadway Commission. September 2004. (CORE1106)

Chemical Security in Istanbul

CORE Information Observatory

Welcome back!

CWIT & COP @ Geneva (2/2)

WCO T&I Forum 2015

CORE-Observatory

CASSANDRA compendium. Private sector perspectives on risk management (Ch. 5) and crime prevention and security management in supply chains (Ch. 6)

MARITIME SECURITY – Vessel Tracking Systems Provide Key Information, but the Need for Duplicate Data Should Be Reviewed, GAO, March 2009 (CORE1065)

MARITIME SECURITY – Progress Made, but further actions needed to secure the maritime energy supply, GAO, August 2011 (CORE1061)

PORT SECURITY GRANT PROGRAM, Risk Model, Grant Management, and Effectiveness Measures Could Be Strengthened, GAO, November 2011 (CORE1060)

TRANSPORTATION SECURITY INFORMATION SHARING – Stakeholder Satisfaction Varies; TSA Could Take Additional Actions to Strengthen Efforts, GAO, June 2014 (CORE1020)

Interviews

Updates on Customs brokers, by Ms. Carol West

Dr. Federico Magalini on waste logistics crime

New approaches to border management

Academia de la OMA

WCO’s Knowledge Academy for Customs & Trade

Postal security

Desplazamiento del crimen 2/2

Crime displacement 2/2

Desplazamiento del crimen 1/2

Crime displacement 1/2

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