ARE WE SAFE YET ABA Spring Conference April 2005

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ARE WE SAFE YET?ABA Spring Conference
April 2005

• David Jones, CPP
• VP-Corporate Loss Prevention Security
• Tommy Hilfiger USA, Inc.
• 2004 Chairman International Cargo Security
  Council

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Like It or Not, 9/11 Changed the Way We Will
Conduct Our Business For Many Years to Come!

• Prior to 9/11, security expenditures for movement
  of cargo were predicated mainly on financial ROI
  vs. actual cost of losses due to theft.
• Post 9/11, government regulations and liability
  concerns were added as main components in
  determining security costs.

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Since 9/11, Corporate Security Executives now
have..

• More visibility (and often more responsibility
  and authority) within their corporations (moved
  up from the basement)
• Increased responsibility for the international
  supply chain and increased interaction with new
  areas within their companies, their trading
  partners, and government agencies.
• The task of chasing the correct balance of
  corporate security, cargo security, and homeland
  security (a moving target at best, impacted by
  the latest intelligence or terrorist event.)

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Nowhere is the debate over voluntary
participation vs. mandatory compliance more
visible than in the US political system.

• Impact of the 9/11 Commission Report created a
  renewed sense of urgency in the US Congress to
  adopt many of the Commissions recommendations.
• Private-sector preparedness is not a luxury it
  is a cost of doing business in the post-9/11
  world. It is ignored at a tremendous potential
  cost in lives, money and national security.
  (Quote The 9/11 Commission Report)
• Over 80 Congressional committees have
  jurisdiction over some aspect of homeland
  security. Creates funding and turf battles among
  those committees and among Federal agencies. All
  are tying to do the right thing but opinions
  vary.

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The Challenge This Poses..

• How best to balance the cost for loss prevention,
  security and safety against the need to conduct
  our day to day business?

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Cargo Security War Game
Source Booz Allen Hamilton. War game simulation
October 2-3, 2002.
Day 1 Radioactive bomb discovered in shipping
container at the Port of Los Angeles carriers
at the port halt operations for 24 hours
Day 4 Second dirty bomb found in Minneapolis
Customs Service Closes all ports and border
crossings
Day 8 Inventory shortages force plant closures
as gas prices skyrocket
Potential cumulative losses from delays at all
U.S. ports, in billions (right axis)
Day 12 Ports Reopen
Day 20 A dirty bomb explodes in Chicago, closing
all ports for another six days
60B
60B
40B
40B
Estimated container backlog in port and on
vessels at the Port of Los Angeles, in
thousands of container units (left axis)
20B
20B
0B
0B
Day 1
5
40
30
20
15
10
50
Day 60
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The International Cargo Security Council
believes this is best achieved through voluntary,
cooperative efforts between private industry and
government.
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Programs impacting both US and international
cargo security professionals

• C-TPAT Customs Trade Partnership Against
  Terrorism
• US Customs and Border Protections Container
  Security Initiative
• Customs pre-notification requirements for
  shipments to US
• Electronic advanced manifest requirements
• Operation Safe Commerce (OSC)

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Programs impacting both US and international
cargo security professionals

• C-TPAT
• A voluntary, joint government-business
  partnership to enhance supply chain and border
  security
• U.S. Customs recognized it required close
  cooperation of all segments of industry to
  provide the highest level of security voluntary,
  joint government-business partnership to enhance
  supply chain and border security
• U.S. Customs is asking business to ensure
  integrity of security practices and communicate
  security guidelines to supply chain partners

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What are the Benefits of Participation?
Opportunity to join the war against terrorism
Fast Lane processing (Reduced border crossing
times)
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US Customs and Border Protections Container
Security Initiative

• Customs initially targeting top 20 mega-ports
  for U.S. imports
• U.S. Customs officers stationed at foreign ports
  working with host country
• Target and pre-screen prescreen high-risk
  containers.
• Member ports account for 80 of inbound containers

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Operation Safe Commerce

• Proof-of-concept projects for a secure supply
  chain
• Public-private partnerships
• Multiple pilots managed by ports
• New York/New Jersey
• Seattle/Tacoma
• LA/Long Beach
• Intended to identify best practices including
  process and people solutions and test technology
  to inform policy makers
• Technology alone is not the answeronly an
  enabler!!!

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Operation Safe Commerce Test Technology
and Best Practices

• Develop international supply chain security
  standards (e.g., container inspection prior to
  loading, seals, etc.)
• CSI

• Secure perimeter and control access
• Share information electronically with Customs for
  targeting

Origin (Manufacturer / Supplier)
Loading AirPort
Discharge AirPort
Destination
Total Asset Visibility and Authentication

• Certify exporters (e.g., analyze financing,
  ensure security practices)
• Inspect and Seal Containers
• Differentiate shippers based on their security
  practices
• Customs-Trade Partnership Against Terrorism
  (C-TPAT)

• Test Commercially Available Technology
• Tracking (e.g. eSeals, GPS, RFID)
• Intrusion Detection
• Non-Intrusive Inspection
• Supply Chain Event Management Systems
• Biometrics, etc.
• Develop and document best practices

• Track cargo to final destination
• Report Anomalies
• Detect Overages, Shortages

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Impact of Government Initiatives

• Focus Before C-TPAT/CSI/Operation Safe Commerce
• Trade compliance, Anti Smuggling, Cargo Security
• C-TPAT/CSI/OSC.Making Significant Impact
• Industry is Responding (Importers and
  Transportation)
• Just in time (JIT) delivery, Assist in War
  Against Terrorism
• Brand Protection, Competitive Advantage
• Security has moved to the boardroom
• Additional resources being provided for cargo
  security efforts

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Impact of Government Initiatives

• Borders are Being Pushed Back Security in
  Depth
• Importers and Transportation are enhancing
  security requirements, obligating source
  manufacturers, forwarders and carriers, providing
  education and awareness training
• Conducting assessments embarked on program of
  continued improvement
• Importers have found benefits outweigh costs
• Reduced Cargo Loss
• Leveraged Supply Chain
• Thousands of additional soldiers in war against
  terrorism

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Challenges For the Cargo Security Community1.-
Most come from trying to plan for the unknown.

• What new rules will come from the US Government
  (100 screening, new record keeping requirements,
  new background inspection requirements for
  employees handling cargo, ANSI standards, etc)
• Business continuity plans to address heightened
  threat levels or a terrorist event.

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Challenges For the Cargo Security Community Most
come from trying to plan for the unknown (Contd)

• How will other governments respond to US
  initiatives? Could be WCO, WTO, EU, or a single
  nation
• Could be retaliatory in response to US
  requirements
• Which rules will take precedence and will there
  be multiple sets of rules with which our
  companies need to comply?
• US and other governments recognize this and are
  attempting to reach international security
  standards that are both reasonable and effective.

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Challenges For the Cargo Security Community

• 2.- Balancing the sometimes-conflicting security
  requirements of our companies, the US government,
  other governments, and the law enforcement
  community.

• Importance of staying involved in the issue to
  insure we see the big picture and make informed
  decisions.
• Importance of representing company positions and
  concerns
• Importance of making our expertise available
  without being seen as a threat to other
  stakeholders.
• Importance of working together as a broad based
  cargo security community to help shape these
  debates in a way that assures security measures
  are appropriate and effective.

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Challenges For the Cargo Security Community

• 3. - Navigating the growing tendency to blend
  corporate security, cargo theft, and anti-terror
  measures.

• Though not mutually exclusive they are not the
  same.
• If we are not careful, we run the risk of
  misallocating limited resources and ignoring the
  traditional responsibility and role of cargo
  security professionals. Neither serves our
  companies or our profession well.

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ARE WE SAFE YET?
NO!
ARE WE SAFER YET?
YES!!
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International Cargo Security Council 3 Church
Circle No. 292 Annapolis, MD
21401 1.410.571.7913 Fax [phone] icsc_at_c
argosecurity.com www.cargosecurity.com