Compliance and CTPAT

Theresa Sekula
Presenter
Theresa Sekula Manager, BDP Corporate
Compliance Team
Joined BDP in 2005, various roles including marine
procurement, operations, and compliance roles
Customhouse broker license holder
Delivery and management of BDP internal audits, compliance
manuals, and comprehensive internal and external training
and audit programs.
Housekeeping
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Agenda

Compliance Changes
Supply Chain Challenges
Business Integration?
Summary
Compliance and CTPAT
Every single link in the supply chain must be
made more secure, in essence expanding the
perimeter of security away from the border entry
point!
Robert Bonner, US Customs
Commissioner

"The whole world will suffer if terrorists begin using the

global trade network to mount attacks," said Bonner. "The
economic repercussions of such an event would be severe.
Everyone involved in world trade has a vital interest in
protecting the channels of trade from terrorist infiltration."
Compliance A changed world
International transportation and logistics has been forever
changed in wake of the September 11th, 2001 terrorist
attacks
Broader homeland and cargo security and inspection practices
More stringent standards for regulatory compliance and cargo
security
Customs and Border Protection (CBP) has stepped up physical
inspection throughout all points of entry and arrival
CBP has added staff at multiple locations throughout the US port
locations.
CBP has expanded their reach beyond US ports
Customs even more zealous about obtaining shipment
information (ABI, AMS, AESnow ACE)
Compliance A changed world
TSA has imposed additional requirements for air cargo carriers
Additional requirements placed on knownshippers
unknown exporters must travel cargo aircraft only
Other Government Agencies have increased their presence in
the supply chain.

But help is on the way?

Compliance - Security Programs
Customs-Trade Partnership Against Terrorism CBP has expended this
security program and is working on phase 3 including foreign entities as
well as broadening the scope of the program to US exporters. Today,
there are over 11,000 C-TPAT members.

Container Security Initiative -58 operational CSI ports now prescreen over
80 percent of all maritime containerized cargo imported into the United
States

Trade Act 2002 Advance Manifest Rule - Reporting requirements to CBP

for imports and exports for air, truck, ocean, and rail carriers -
Electronically.

ISF Advance Data filing by the importer (Ocean) that completes the
security picture (Carrier & Importer)
Compliance New Security Tools
C-TPAT Supply Chain Specialist - These will be the principal advisor and
primary point of contact for industry members of C-TPAT.

Regulatory Audit - Presently has 350 auditors plus support personnel.

Focused Assessment (FA) targets include importers with over $10 million
in imports. Importers must have audit trail from purchase order, shipment,
entry, invoice, receipt of goods and payment.

Radiation Detectors - Customs has distributed over 7,000 radiation

detectors to inspectors at all major ports.

Canada, EU, Korea, China and now Japan - have studied this new
business model of the 24 hour advanced manifest rule.
Compliance New Programs

Public Health Security - all U.S. and foreign facilities that manufacture,
process, pack, or hold human or animal food for consumption in U.S.
must register with FDA. Food Bio-Terrorism ACT
CPSC Consumer Product Safety Commission implemented new
guidelines that impact articles, Toys for children

Export Census has implemented new guidelines to Trade for

implementing advance information to US Government for all exports.

AEO Authorized Economic Operator review of the financial and

global supply chain
Compliance More Penalties
New rules and regulations have been put into place based on
Security
24 hour manifest by the carrier prior to loading at foreign port, failure to
comply or misrepresentation will result in $5,000.00 for first offense,
$10,000.00 for second.
Customs can seize Cargo/Container if information is incorrect or mis-
declared. Undocumented Cargo or mis-declared Cargo will result in
intensive examination. (costs for examination and storage will be
introduced into the shipment. ($1,000.00 plus)
New regulations for transporting Hazardous Materials as well as proper
record keeping, failure to comply with result in increased fines.
24 hour manifest rule for exports

More help?
Agenda

Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
Supply Chain Challenges
Organizations are facing increased Global Supply Chain challenges
Buyers and planners layer additional weeks of inventory into the
pipeline to account for unpredictable lead time
A lack of reliable data at the proper level leads to poor planning in the
process (i.e.carrier, broker, distribution center.)
An increase of excess inventory in the import pipeline causes the need
to store or hold the merchandise prior to arrival resulting in growing per
diem storage charges.
There is little ability to identify and pinpoint the causes of service
failures in the import process (e.g. late bookings by vendor, late
documentation, delayed shipments, missing containers at ports).
Customs even more zealous about obtaining shipment information in
advance of shipment.
Supply Chain Challenges
As new source points entered into existing supply chains, complexity
can start to creep into the supply chains (part here and a part there )
Increased fuel prices
Increased expedited freight
Lack of a uniform, globally accessible, import / export system /
database
The linking of Transportation department with Customer Service
departments
Supply Chain Business Model
Todays global Supply Chain Business Model may not satisfy
the new world
Old Model New Model

Strategy Customs Customs as Customs as

Police Partner
Infrastructure Port of Entry First line of Last line of
defense defense
People Background Minimal Mandatory
Check
Process Responsibility for Minimal Full
Partners
Technology Tracking At shippers Mandatory
discretion

Companies that do not change may see a customs clearance process that will
reduce velocity, and increase variability which will translate into increased costs.
Supply Chain Increased Costs
The costs will creep into all aspects of the Global Supply
Chain

Transportation delays
Lane reductions as carriers exit lanes
Revisiting supply chain strategies from Just-In-Time to Just-
In-Case
Port security fees
Background checks

However U.S. Customs has developed CTPAT to

help minimize the impacts to your supply chain.
Supply Chain C-TPAT What is it?
Customs-Trade Partnership Against Terrorism (C-TPAT)
Voluntary security program developed by Customs to partner
with industry in developing and managing secure supply chains
Mandates enhanced security measures across the entire supply
chain
A program that continues to expand to multiple parties in the
supply chain
A 13 year program that has changed over time to keep security
concerns at the forefront
Facilitates legitimate trade
Understand your Risks in the Supply Chain

Built on existing programs to enhance and facilitate

legitimate trade.
US: Securing the Global Supply Chain
Govt./Trade - jointly developed security criteria, best
practices and implementation procedures
Goal - protect their supply chains from concealment of
terrorist weapons, including weapons of mass
destruction
For its C-TPAT partners, CBP provides reduced
inspections at ports of arrival and expedited processing
at borders
Supply Chain CTPAT Benefits
Partner CBP
Reduce threat assessment
Access to FAST Lane
Increased supply chain
Front of the line inspections
visibility
Access to SVI Redirection of people and
Seminars and training resources
Assigned SCSS MRAs
Reduced no. of exams
Shorter border wait times
Eligibility for ISA
Priority consideration at CEEs
As a participant in CTPAT you will benefit from some or all of these.
On C-TPAT:
Despite its nature as a voluntary program, this
Government to business partnership continues to
grow and to remain viablea leading supply chain
security partnership program here in the U.S. and
across the globe. Now in its twelfth year, what started
soon after 9/11 with seven importer Partners is now
an initiative that has more than 10,650 certified
members in over 12 business sectors of the supply
chain.
Thomas S. Winkowski, Acting Commissioner
U.S. Customs and Border Protection
Agenda

Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
Business integration CTPAT

A structured business approach to

CTPAT, and compliance, will be the
foundation to minimize costs
while maintaining velocity and minimizing variability.
Business Integration Evolutionary
New compliance requirements will be evolutionary.

Managing

Implementation

Development

Design

Assessment
Value

Security and compliance Requirements

Time
Business Integration Assessment Activities
The objective of the Assessment Phase is to get a snapshot of
the current process and a high level view of risks and complete the
U.S. Customs survey.
Interviews
Surveys
Data collection
Cross functional meetings
Documentation review

Where am I and how far do I have to go?

Business Integration - Risk Profile

Where are my risks?

Business Integration - Value Profile

What do I work on?

Business Integration Assessment Results
Complete US Customs requirement for acceptance into
CTPAT

Define the potential for cost reduction opportunities

associated with improved product and information flow

More fully understand the level of supply chain risk

Where am I and how far do I have to go?

Business Integration Our Observations
Most companies have very good security programs for
Procedural
Physical Security
Access Control
Container Security
Security procedures
Business Partner

Some work might be needed in

Personnel Security
Education and Training
Risk Assessment
Business Integration Our Observations
Challenges for this industry
Contractors
High visibility of facilities to the public
Goods are hazardous in nature
Technology is not a key ingredient for these products
Suppliers while limited have not changed much
Agenda

Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
Summary Get Started
Some key questions:

Do you do background checks for non employee personnel?

Are all employees trained in security?
Are procedures written?
Do you have self-audits?
Do your suppliers have minimum security requirements?
Do you control access to your facilities?
Are records accurate?
Are your systems protected?
Summary Understand your risks
Activities Deliverables

Interviews Security
Profile
Information
Surveys
Survey

Value
Documentation
matrix
review
Risk matrix

Cross functional Self -

Assessment
Meetings
Summary Understand your Supply Chain
Importers have shared some interesting stories
Client commented that they hired a Chemical Engineer through a
temporary agency. Later that person was convicted of the first WTC
bombing.
Manufacturer of components was told by one of their customers that
vendors who were CTPAT compliant would receive preferred status
A multi-national stated they never knew their supply chain was so
complex. At the end of the project they were going to look at reducing
the number of LSPs
A Law firm at a security conference in Washington stated, that a
company that chose not to join could subject themselves to a large claim
against themselves for failure to secure their supply chain, while a client
that does join the program, could use that stated action in their favor.

Each shipper and service provider should develop a road map and set of action
plans which balances value of participation against risk management.
Last Word
CBP encourages all companies to take an active role
in promoting security throughout your supply chain
Take the time to evaluate the program its fits all size
companies and all commodities
C-TPAT has been expanded to the export side of the
business. Importers that also export
Some trade benefits exists however the real benefit is
having a secure and safe supply chain that moves your
goods around the world
Agenda

Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
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A copy of this presentation will be available at the end
of this webinar when leaving youll be redirected to
BDP website where you can click and download the
slides.
Contact information
Theresa Sekula
Phone: 215-629-8210
Email : theresa.sekula@bdpint.com
510 Walnut Street, Philadelphia, Pa. 19106
 Compliance and CTPAT
Theresa Sekula
"Copyright 2014 BDP International, Inc. All rights reserved."