In response to the events of 9/11 the U.S. Department of Homeland Security (DHS) implemented new rules with the goal of insuring the safety of domestic and international air flights. The Transportation Security Administration (TSA) was made accountable for implementing these new rules and programs as well as being charged with oversight responsibility of all transportation security via truck, rail, ocean and air.

One of the programs the TSA took over, refined and implemented is the Known Shipper Management System (KSMS). Created by the Federal Aviation Administration (FAA) before the September 2001 terrorist attacks the KSMS is one of TSA’s key components in the effort to strengthen air cargo security by establishing procedures for air carriers and indirect air carriers (aka freight forwarders) to distinguish between known and unknown shippers who tender cargo for air transportation.

In the post 9/11 age, shipper’s identity’s that have been submitted by air carriers or freight forwarders to the TSA and have been properly vetted by them are considered “Known Shippers”. Shippers holding this official status are able, with some restrictions, to present their freight for shipment on both passenger and cargo only aircraft. Conversely, “Unknown Shippers” movements are limited to cargo only aircraft having limited service options and higher prices. These rules apply to both domestic and international shipments originating in the United States.

A “Known Shipper” is defined as a person or company who has an established business relationship with an indirect air carrier, an aircraft operator, or an air carrier based on such proof items as customer records, shipping contracts, business history, and either a site visit or a current Dun and Bradstreet vetting. It’s clear there are no short cuts to getting onto the known shipper list but neither is it insurmountable so shippers should not be discouraged in efforts to obtain this status; in fact we encourage shippers do so.

Shippers exporting via air who are not on the known shippers list can face delays, higher costs and longer more circuitous flights as their cargo can ship solely on cargo only aircraft. To take advantage of better costs, fewer delays, increased shipping options and more direct flights of passenger aircraft exporters should ensure their suppliers, as well as their own warehouses, offices and other supply chain facilities and vendors are known shippers of their freight forwarder.

As a shipper it’s sometimes a challenge finding a freight forwarder you’re comfortable with who is knowledgeable, can offer competitive pricing, and make sure your shipments move as you need them to with no surprises. What kind of surprise you may ask? Did you know TSA rules require, regardless of the known shipper indicated on the airway bill (AWB), that all vendors of the shipper shown on the AWB providing freight for any given shipment also be known shippers to that freight forwarder? Your freight forwarder does.

The procedure to obtain Known Shipper Status can be a quick and easy process if you have the right assistance so choose your freight forwarder carefully. The benefits are many; cost, efficiency, fewer delays due to regulatory reasons, etc., so it makes sense to work closely with your freight forwarder and let them help you. If you’re interested in the program, have questions or would just like more information, give us a call.

Take Care

Terry Grisamore
Senior Air Export Account Representative

Monica “Taty” Hamburger – May 15th – 4 Years!

Karen Johns – May 24th – 36 Years of Fun!

Erin Clancey – May 25th – 2 Years!

Upcoming Events:

International Freight Forwarders and Customs Brokers Association of New Orleans Annual Symposium
May 31st – June 3rd ~ Point Clear, Alabama.

For more information please visit the IFFCBANO website at: http://www.iffcbano.org/conference.htm

The Customs Trade Partnership Against Terrorism program, more commonly known as C-TPAT, was established in November 2001 with the goal of building collaborative relationships to strengthen and improve the international supply chain and U.S. border security.  It is a voluntary government and business program based on the concept that CBP can provide the highest level of cargo security only through close cooperation with the owners of the international supply chain; e.g.: importers, truckers, ocean carriers, consolidators, direct and 3rd party warehouses, licensed customs brokers, foreign distributors and manufacturers.

Although it’s been more than ten years since the events of 9/11 the world remains a dangerous and unpredictable place.  To remain effective in securing the supply chain against acts of terrorism the C-TPAT program must evolve and adapt itself in this ever-changing environment.  This makes perfect sense as from the beginning CBP has identified or come to recognize vulnerabilities to the supply chain and has required members compliance in addressing these concerns.

Through either the validation or reevaluation process CBP has also become aware some C-TPAT members are either not performing an assessment at all, or are not carrying out an adequate assessment of their supply chain security.  With many of those who did conduct an assessment it tended to be of only their own domestic facility, with no consideration or follow through given to assessing their international partners and vendors.  The result of this has been the creation of additional processes U.S. importers must address if they wish to remain in the program.

CBP states C-TPAT members must perform at least once a year an international supply chain risk assessment from point of origin to end delivery with the goal of identifying areas within the supply chain needing improvement.

There is a CBP recommended Five Step Risk Assessment Process that will help potential new members meet the minimum security guidelines for joining C-TPAT, and for established member companies to use in aiding their ongoing assessments to maintain their memberships in the program.

The five steps importers should follow in their supply chain assessments are:

• Map Cargo and Business Partners: Identify your business partners and how cargo moves throughout the supply chain from point of origin to delivery.  Include the mode(s) of transportation; e.g.: air, sea, rail, or truck, and individual modes; e.g.: country of origin, transit through and/ or transshipment points.
• Conducting a Threat Assessment: Identify threats such as terrorism (Political, Bio, Agro, Cyber), contraband or human smuggling, organized crime, or other situations or conditions (e.g.: poverty, social unrest, political instability) within a source country which may increase the prospect of a security breach.
  A grade, or some other way to measure the threat level must be included.  CBP suggests the following grades:

a) Low Risk – No recent incidents / intelligence / information.

b) Medium Risk – No recent incidents / some intelligence / information on possible activity.

c)  High Risk – Recent incidents and intelligence / information.

• Conducting a Security Vulnerability Assessment: Based on C-TPAT minimum security standards, determine if business partners and vendors have vulnerabilities or weaknesses (e.g.: theft, pilferage, hijacking, piracy) which may lead or contribute to a security breach.
• Preparing an Action Plan to Address Vulnerabilities: Developing a written policy / procedure to address potential vulnerabilities and weaknesses.
• Documenting How the Security Risk Assessment is Conducted: Write policies / procedures on who will be responsible for conducting the assessment, what will be included in the assessment, why the assessment is necessary, how often the assessment will be performed, and where and how the assessment will be executed.

While these five steps do not define how companies could resolve any supply chain failings of their business partners, they do suggest education plays an important part.

It is also important to note not just importers but all C-TPAT members; truckers, consolidators, ocean carriers, customs brokers, freight forwarders, etc., are expected to abide by the five steps as much as possible.  Small companies are not excused from compliance and importers cannot rely on INCOTERMS to get around having to control and ensure their supply chain security.

The five steps provide some latitude for companies who have not fully met all the C-TPAT criteria, but by following these steps show they are committed to making improvements by taking, suggesting or recommending corrective actions with follow-up procedures to ensure any discovered weaknesses have been mitigated.

Participation by each of the supply chain players, alone and together gives the program its strength, just as non-participation or non-compliance lends itself to the weakening of the program. It’s important each player do their part insuring the integrity of their own security practices, as well as communicating and verifying the security guidelines of their business partners within the supply chain, both foreign and domestic.

What’s the benefit to the importer who has taken the necessary steps to ensure their supply chains are secure from point of origin to delivery?  There are many but to name a couple; a reduction in CBP examinations and priority processing when an examination is required.  Per CBP statistics certified C-TPAT members are 4-6 times less likely to be examined for security or compliance reasons, but when shipments are flagged for any reason they get front of the line status for the examination.

Another benefit, if desired, is the assignment to your company of a C-TPAT Customs Account Manager.  Such account managers work jointly with the importer to establish and/ or update jointly developed action plans to reflect C-TPAT commitments and to track progress in making security improvements, communicating C-TPAT principles and/or strategies to business partners, and establishing improved security relationships with other C-TPAT member companies.

For more information on the C-TPAT benefits and an overview and review of the strategic plan of the program please visit: http://www.cbp.gov/xp/cgov/trade/cargo_security/ctpat/ctpat_program_information/what_is_ctpat/

By extending the U.S security zone out to the point of shipment origin, the C-TPAT program allows for better risk assessment and targeting, freeing CBP to assign resources to more dubious shipments. The program recognizes in order to improve, protect, and strengthen the cargo supply chain, the involvement of all members of the trading community is required.  Importers obtaining and maintaining membership in C-TPAT, following through on the assessment of their supply chain, and addressing any shortcomings contributes to a more secure and efficient supply chain for their employees, suppliers and customers.

Regards,

W.J. Yennie
V.P. Exports / NVOCC

Cathy Alvarez – April 24th

Anniversary: Please join in wishing the following J.W. Allen & Company family members a Happy Anniversary:

Jerry Becnel – April 10th – 17 Years of Good Times!

Holidays:

Our office will be closed on Friday April 06th in observence of the Good Friday holiday! Our office will re-open on Monday morning April 9th at 8:30 am.

Have a Blessed and Happy Easter!

No matter which way we turn one thing is clear, ocean freight rates are on the rise. Regardless of the trade lane, General Rate Increases (GRI’s) are being received across the board from all ocean carriers.

Although many increases took effect on March 1st, additional increases are forthcoming taking effect on April 15th. GRI’s range from $250.00 usd per 20′ container to $550.00 usd per 45′ container in many trade lanes. In general the market is seeing rates increase over 13% with some grumblings that further increases may be slated for May of this year.

Adding insult to injury, the demand for container shipping space is slowing leading many ocean carriers to increase rates as a result. While some carriers have made the decision to idle ships, many carriers are increasing rates and choosing to keep the capacity in the market expecting growth in the U.S. economy. Maersk Line CEO Soren Skou was recently quoted in a Journal of Commerce article as stating that “Container shipping lines have idled about 5% of the global fleet capacity, or 800,000 20 foot equivalent units”. Based on current economic conditions some in the industry feel this figure could rise to more than 1,000,000 TEU’s in the near future.

With estimated losses of $5.2 billion by ocean container carriers in 2011, all options are surely on the table given the uncertain economic outlook ahead for the remainder of 2012. An increase in “slow steaming”, more GRI’s, new surcharges, an increase in the number of idled vessels; nothing is off limits.

Unfortunately, given the current landscape of today’s international shipping environment, it would be wise to account for increases in your transportation costs when determining the sell price for your products in the future.

Best Regards

Jerry Becnel
President

Billy App – March 03rd

Sandra Frazier – March 20th

Karen Johns – March 24th

Anniversaries: Please join us in wishing the following J.W. Allen & Company family members a Happy Anniversary:

Heather McGlocklin – March 02nd – 1 Year!

Debbie Janusa – March 25th – 10 Years!

Kristi App & Gretchen Groom – February 09th

Twice the reason to celebrate!!!

Monica “Taty” Hamburger – January 2nd

Debbie Janusa – January 25th

Anniversaries: Please join us in wishing the following J.W. Allen & Company family members a Happy Anniversary:

Cathy Alvarez – January 05th – 16 Years!

Peggy Bordelon – December 21st

Anniversaries: The following persons celebrate their anniversary with J.W. Allen & Company this month:

Beth Raymond celebrates 33 years with J.W. Allen & Company on December 18th. Thanks Beth for your hard work and years of dedicated service!

Office Closures: J.W. Allen & Company will be closed in observence of the Christmas and New Years Holidays as follows:

Christmas Holiday – Monday December 26th, 2011

New Years holiday – Monday January 2nd, 2012

Happy Holidays from J.W. Allen & Company!

Merry Christmas & Season's Greetings

Heather McGlocklin (November 13th)

Beth Raymond (November 25th)

Anniversaries: The following persons celebrate their Anniversary with J.W. Allen & Company this month:

Bill Yennie – 5 Years (November 20th)

Office Closure: J.W. Allen & Company will be closed on Thursday November 24th and Friday November 25th in observance of the Thanksgiving holiday.