CORE-Observatory

Global supply chain design considerations: Mitigating product safety and security risks (Speier et al. 2011)

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Summary

There is a broad consensus among supply chain professionals that supply chain disruptions are very bad for business: supply chain glitches commonly lower operational performance and reduce shareholder value. Regardless of this, there is surprisingly little research on supply chain design strategies that have the highest potential to mitigate the risk of disruptions. Based on interviews with 75 US-based managers, an industry survey and a case study, Speier et al. (2011) identify types of SCS strategies and examine how contextual factors influence business managers to select a set of SCS design strategies. They argue that the depth and breadth of security initiatives depend mainly on top management mindfulness, operational complexity, product risk and coupling. The abstract is available at: http://www.sciencedirect.com.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

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Full review

The paper of Speier et al. (2011) is quite theoretical and it has therefore only a limited impact on CORE work. It is useful for people for the CORE demonstrators to be aware of various supply chain design strategies and factors that support their selection. All in all, the paper introduces an interesting table that shows what supply chain factors typically affect selection of certain supply chain design strategies (see table below). The paper also includes a useful discussion about the nature of supply chain security risks. The authors point out that supply chain security covers risks of contamination, damage and destruction of products or other supply chain assets, and that these risks may arise from intentional or unintentional activities.

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Reference

Speier, C., Whipple, J. M., Closs, D. J., & Voss, M. D. (2011). Global supply chain design considerations: mitigating product safety and security risks. Journal of Operations Management, 29(7), 721-736.

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Estimating the Operational Impact of Container Inspections at International Ports (Bakshi et al. 2011)

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Summary

The US government is pushing a new 100 % screening regime for US-bound containers in foreign ports to mitigate the risk of weapons of mass destruction entering US soil. The 100 % regime, however, is a major concern for foreign port operators because the current Container Security Initiative (CSI) regime seems not to be scalable for high inspection rates. The paper of Bakshi et al. (2011) simulate impacts of two container inspection regimes (the CSI and a new one) in terms of port congestion, handling cost and dwell time. To carry out the simulation, the authors use discrete event queuing network simulation with real container movement data from two of the world’s busiest container terminals. The analysis shows that cargo inspections many times disrupt optimized logistics processes at seaports. In particular, inspections extend the transportation leadtime because shipments lose time as they (i) are moved to an inspection site, (ii) queue for inspection to start, (iii) pass inspections themselves. Download the abstract here: http://pubsonline.informs.org.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

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Full review

This paper is highly relevant for CORE demonstrations that involve screening in seaports (WP10-11 and WP13-15 and WP17). The research illustrates the impact of the security integration on speed, cost, and predictability of the seaport logistics. Bakshi et al. (2011) observe that security inspection at port entrances (quayside for ships and city-side for trucks) with drive-through inspection portals, does not delay nor divert the routine container handling process, in which a crane unloads a container from a ship or a truck and deposits it to a stack where the container waits until it is its time to leave the port. But if a container is inspected a few hours prior its scheduled departure, as is currently done under the US Container Security Initiative (CSI) regime, the routine handling process gets disrupted, (see Figure 6). Remarkably, the only value-adding security activity “non-intrusive inspection” (11) requires three preceding activities (8P10) and another three following activities (12-14), none of which add value from security or service standpoints. Other valueless activities, which do not appear in the illustration, include searching of the shipment selected for screening and verification of its documentation. The extra activities consume time and money but add no value to the shipping service. The first approach with drive-through portals eliminates the non-value adding supportive logistics activities (8-10 and 12-14) and therefore enhances logistics speed and efficiency without necessarily lowering the security level.


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Reference

Bakshi, N., Flynn, S. E., & Gans, N. (2011). Estimating the operational impact of container inspections at international ports. Management Science, 57(1), 1-20.

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Supply chain security orientation: conceptual development and a proposed framework (Autry and Bobbit 2008)

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Summary

Even though supply chain security has become an increasingly important managerial domain, there is little understanding about what security aware firms are, what enables and drives security awareness, and what are the outcomes of supply chain security (SCS) orientation. Autry and Bobbit (2008) set out conceptualize, validate and operationalize the construct of SCS orientation. Based on 31 interviews with US-based managers, they conclude that SCS orientation comprises four general categories of security solutions: security preparation and planning, security-related partnerships, organizational adaptation and security-dedicated communications and technology. The authors write that these security solutions “could result in supply chain risk management-related efficiencies, such as decreased lead times to customers, greater product reliability, waste reduction, and increased delivery reliability, due to the lessened need for operations workers to perform security-related tasks such as redundant container checking, securing shipments, or other similar tasks.” The abstract is available at: http://www.emeraldinsight.com.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

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Full review

The CORE demonstrators could a learn lesson from the research paper of Autry and Bobbit (2008) that organizational commitment to security plays a critical role in the fight against supply chain crime. Ideas and findings of the research paper also contribute to the development of the CORE educational and training material (WP19). The article shows that top management support, employee security attitudes, employee integrity/loyalty are key internal factors that strengthen the SCS orientation. External contributing factors include political political/legal factors/support, partner cooperation, and partner support. Strong SCS orientation is expected to translate into higher business performance, customer satisfaction and supply chain chain continuity.

Reference

Autry, C.W. & Bobbitt, L.M., 2008. Supply chain security orientation: conceptual development and a proposed framework. The International Journal of Logistics Management, 19(1), pp.42–64.

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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)

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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)

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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)

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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)

 

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

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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

 

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

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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)

 

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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)

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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

 

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

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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

 

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Interviews

Interview with Ms. Sarma on the US CSP-program

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28.6.2016: Today’s CBRA Interview with Ms. Dace Sarma from CRDF Global focuses on the U.S. Department of State’s Chemical Security Program

 

Hi Dace, and thanks for joining CBRA Interview. Can you please tell first a bit of your background and what you do today?

I work at CRDF Global, an independent nonprofit organization that promotes international scientific and technical collaboration through grants, technical resources, training and services. At CRDF Global, I work in partnership with the U.S. Department of State’s Chemical Security Program, CSP in short, on programming collaborating with government, security, academic, and industrial communities around the world to strengthen their ability to thwart chemical attacks. Prior to working with CSP, I supported and implemented the Department of State’s Office of Weapons of Mass Destruction and Terrorism, WMDT in short, projects within the scope of CRDF Global support for the WMDT.

 

Thanks for sharing that. Can you explain more about CRDF Global and the Chemical Security Program, CSP, by the US State Department?

CSP works with a number of implementing partners, including CRDF Global, to promote chemical security through sponsorship of projects designed to identify and address chemical security vulnerabilities and prevent chemical attacks.

CSP collaborates with diverse stakeholders, including partner governments, subject matter experts, and international organizations, to enhance chemical security through capacity building workshops, and trainings.

 

I had the pleasure to join twice the CRDF Global workshops in 2015: first to Hurghada, Egypt, in March 2015, and second to Istanbul, Turkey, in December 2015. The former workshop was targeted for the Egyptian government and chemical industry, and the latter one for the Iraqi government and chemical industry. Extremely interesting 3-4 days in both workshops, with great audiences and co-speakers / co-facilitators. In both workshops I gave presentations e.g. on FP7-project CORE / dangerous goods tracking, and on Dow Chemical supply chain security – thanks again to Ms. Antonella Di Fazio of Telespazio and Dr. Toni Mannisto of CBRA for co-producing these presentations. What is the current status of CSP regarding these countries today, if I may ask?

Thank you again for your participation in these workshops, Juha. We all appreciated you sharing your experience in chemical supply chain and transportation security.

We have continued work with our partners in Egypt on chemical supply chain security. CRDF Global, the Federation of Egyptian Industries’ Environmental Compliance Office (FEI-ECO) and the Federation of Egyptian Industries’ Chamber of Chemical Industries (CCI) held an event in December, also sponsored by CSP, which convened 170 government, industry and academia representatives from Egypt’s chemical sector to highlight Egypt’s achievements in securing the chemical supply chain and identify further steps required to secure their chemicals in transit.  FEI-ECO and CCI are also working to provide technical guidance and support for Egyptian chemical companies to adopt Responsible Care®, an international voluntary chemical management initiative developed by the chemical industry to help chemical companies operate safely, securely and profitably.

In Iraq, CRDF Global and CSP have continued to work closely with a variety of partners from across the chemical and security communities. Most recently in April, with sponsorship from CSP, CRDF Global implemented the 1st National Chemical and Biological Security Coordination Conference in Baghdad. The conference convened Iraqi government, security, industrial, and academic sectors to discuss national efforts, interagency coordination, and best practices to counter chemical and biological proliferation in Iraq.

 

Any plans in 2016 to organize similar workshops in the MENA region?

We will continue to work with our international partners, including in the MENA region, in 2016. As the world becomes more connected, we will continue to focus on securing the chemical supply chain.  Many of our partners have also identified chemical ground transportation security as an area of particular interest.  We look forward to working with technical experts like CBRA and leaders from chemical communities worldwide to enhance global chemical security.

 

Thanks a lot Dace for this interview – and hope to meet you soon again, at one the upcoming missions / workshops! Juha

Mr. Chris Thibedeau and the Barbados ESW

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CBRA Interview with Mr. Chris Thibedeau, on the Barbados Single Window

Hi Chris, and thanks for agreeing to join CBRA Interview. Can you first tell a bit about yourself, your background, where you work and so forth?

Sure thing.  For those that don’t know me, I’m an ex Customs official and a mediocre hockey player from Canada.  I worked at Canada Customs for about 17 years.  In 2006, I joined a firm called GreenLine Systems as a Vice President and went to work on contract as a resident subject matter expert for US Customs and Border Protection in their Office of Anti-Terrorism. In Canada I was awarded a Government of Canada Technology Award gold medal and the Canadian Public Service Award of Excellence for leading the design and development teams responsible for the TITAN automated risk assessment system.

I am a co-author – along with you, Juha, and other colleagues – of the World Customs Organization’s Customs Risk Management Study, the Inter-American Development Bank’s Knowledge and Capacity Product on Risk Management of Cargo and Passengers, and the WCO’s “Global Container Security and Identification of High Risk Indicators” that served as a core input to the General High Risk Indicator document.

GreenLine was acquired by A-TS in 2013 and then PAE in 2015. Over the last 10 years, I’ve been responsible for leading the development and providing guidance to internal and external clients and stakeholders for solutions that provide a customized risk management solution to support screening and facilitation of cargo, passengers, and conveyances. I also just completed my Master’s degree in International Customs Administration from the Charles Sturt University in Australia.

It’s great to be here Juha and nice to see you again!

Thanks Chris for the comprehensive background notes, and great to see you too again, since quite some while! In 2015, the Barbados Government initiated an Electronic Single Window project sponsored and funded by the InterAmerican Development Bank. Can you provide an overview of this project?

The Barbados Government recently initiated a major project to modernize Barbados with an Electronic Single Window, or, ESW.  Sponsored and funded by the InterAmerican Development Bank, the ESW initiative intends to optimize the management of trade facilitation and border security through the use of new border management technologies to be developed by my firm, A-T Solutions and its partner, a Canadian-based commodity classification specialist, 3CE Technologies. The ESW intends to provide a Single interface for the exchange of trade-related documents between the trading community, customs, and other government agencies with a stake hold in border processing.  The ESW will also provide a public one stop user-friendly repository for comprehensive tariff and regulatory trade information, government advisories, and training materials.

Ultimately, the ESW project intends to reduce business costs involved in the movement of goods for export and import, international trade, particularly to maximize the efficiency of Customs and trading processes and improve integration with related agencies that involve legal and business partners in the trading community.

Our ESW seeks to establish an integrated solution for commercial trade processing that addresses both the needs of the Barbados Customs mandate and those of 30 other government agencies, OGAs.  It is believed that this initiative will expand the number of OGA programs that interact with Customs commercial processing and deliver a more advanced electronic approach to the collection, consolidation and dissemination of commercial trade data for both the trade community and regulating programs.

Which other government agencies, OGAs – next to Customs – will benefit from the ESW?

At this stage we are working directly with 30 OGAs, including, but not limited to, the following ones: Ministry of Agriculture – Animal Health, Food Safety, Plant Health; Barbados Defense Force; Barbados Drug Service; Barbados Licensing Authority; Barbados Investment and Development Corporation; Barbados Police Service; Barbados Port Incorporated; Barbados Postal Service; Barbados Revenue Authority; Department of Commerce And Consumer Affairs; Department of Corporate Affairs and Intellectual Property Office; Ministry of Finance; Data Processing Department; Department of Economic Affairs – Research and Planning Unit; Immigration Department; Ministry of Health; Port Authority; and, Statistical Service.

We ‘ve learned that some OGA mandates add an additional layer of operational complexity for risk based border management methodologies.  In one example, the Ministry of Health in Barbados, MoH, requires a 100% visual or physical inspection for all their regulated commodities. The MoH does not have access to the ASYCUDA – the system developed by the United Nations Conference on Trade and Development, or, UNCTAD, used to record declarations – and therefore the Ministry doesn’t have visibility for what will be arriving until they receive a notification from the consignee or importer, usually done by fax. They also lack access to a historical repository of enforcement data in order to analyze and develop recurring profiles that could be used as a risk management resource. In this sense, the ESW project can help the MoH by giving them access to earlier and updated information of the cargo data when initially reported to begin the decision making process under their protection mandate. interview 07.04.2016

In many cases, our ESW is providing visibility into border processing that the OGAs never had in the past.  The ESW does not intend to replicate information that is already collected by the ASYCUDA. However, ESW can monitor controlled goods that enter and leave the country for permit and control purposes.

The ESW can also give an OGA a regular count of “License, Permit, Certificate, Other document”, LPCOs, by commodity or goods within identified periods of time.  We essentially are providing the core OGA/LPCO management capability where ASYCUDA does not – in other words, we are closing this gap.  However, this is not a knock at ASYCUDA.  ASYCUDA is a great system for declaration processing and accounting, but it was never designed to do all things.  ESW functions are really not part of its true capability.  This project is a great example of how ASYCUDA can work hand in hand with a parallel and complimentary system. Here’s an analogy to consider:  I see ASYCUDA as an iPhone.  We are a vendor building apps for that iPhone where the app adds large value for developing and modernizing nations.  I believe this is a framework for modernization that should be fostered internationally and replicated.  I would like to see UNCTAD agree and endorse this type of approach and methodology.  It’s time for all of us to collaborate and offer larger value.

Interesting! What do you consider as the most important lessons learned from the Barbados ESW-case, so far?

Well, there are a few I might highlight that I personally think are important:

First, in principle, information visibility for Customs and OGAs is important in order to efficiently apply risk management techniques, reduce release times, and improve physical inspections. OGAs should have access to the declarations made through ASYCUDA in order to find specific threats and create Risk Assessment modules according to the protection mandate of an institution.

Second, there should be greater coherence between different IT systems. ASYCUDA, the ESW and other IT systems of Barbados should work together without any task redundancy.  This is where the time savings are found associated with the release of goods. I can’t underestimate how important change management and business transformation is on a project of this nature.  I still struggle with this in my own company trying to convince others how important this is.  We’ve made sure to include Change Management and Business Transformation Architects on our delivery team in this instance and it has paid off in dividends.  Our Barbadian clients praise this approach.

Third, I’d certainly recommend that OGAs use a common risk assessment decision support system.  This will guide OGAs through a data exploitation framework using risk-based principles tailored to their mandate and mission.  In Barbados, Customs actually has access to an Automated Risk Management System.  I seriously think they should consider sharing access with the OGAs.  By distributing access to the other OGAs, each agency would have full visibility into all declaration filings, and an ability to scan this information and seek out inspections that could be in violation of their controls or mandate.  If this access can be provided, I see this as the greatest single step forward to having OGAs endorse and adopt risk based decisions at the border.  This would help lead to interoperability with Customs.  Until that happens, we will continue to see conflicting mandates where one agency endorses risk management and the other endorses risk aversion.  That’s a real problem.

And fourth, I’d also recommend that when two or more inspections must be done, the inspections should be executed at the same time and location with both Customs and OGAs present. This will reduce redundancy and unnecessary cost for the trade community.

Thanks Chris for sharing these insights! Any final comment or greetings you would like to send to CBRA Interview readers?

Yes, one important thing to take away.  There have been many time release studies that have taken place over the years in this region and in Barbados.  Current release times sit at approximately eight days for import and export.  Now think about that: eight days to import your goods into the country!  I believe this timeline is unacceptable in any modern nation or a country that seeks to endorse trade facilitation. Our ESW solution will ideally eliminate many of the redundant tasks that exist today and improve on the time release of import and export shipments significantly and extensively.

Here is an example: Today, an importer or their broker has to file an electronic declaration in ASYCUDA.  If the goods are controlled, commonly done for example with meat products, then the importer or the broker has to travel across Bridgetown to the Department of Agriculture and Veterinary Services to apply and pay for a paper permit.  Once approved and obtained, they then have to travel back to Customs, and submit the paper permit along with a paper copy of their declaration as a release package.  Once duties and taxes are paid, the customs officer stamps up the release and re-releases the shipment in ASYCUDA.  A paper delivery authority is provided.  The importer makes arrangements to pull their container or shipment out of the terminal or sufferance warehouse and provides the delivery authority to the terminal operator or warehouse keeper.  Only then can the goods enter the economy.
interview 07.04.2016

If you can appreciate how long that might take – that is currently eight days on average – think about what happens when you have other controlled goods in your shipment, requiring additional visits to OGAS, and possible offload inspections at the port or inland.  It’s no wonder the release time sits at around eight days!  I have a strong belief this is where all the time savings are.  We are automating much of this process in the ESW and will reduce the redundancy of tasks and visits to Customs and OGAs.

The solution to an ESW is in the workflow and approval process.  It’s not about scanning paper permits to attach to a declaration.  The solution is about interoperability.  I’m excited about this.  Just think about reducing a release time from eight days to a number of hours.  That will be quite the story to tell!

Great! Let’s be soon in touch about writing a joint journal paper on this highly topical project. Thanks Chris for the interview, Juha.

We should!  It’s an important topic for the community of WCO and WTO members, donor agencies etc.  Talk soon.

 

Updates on Customs brokers, by Ms. Carol West

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int-300116-1Hi 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.