Changes to Driver Rules Likely to Cause Higher Trucking Rates

New rule changes took effect on July 1 that directly impact truckers and trucking companies.  But the effect of the rule changes are expected to reverberate throughout the economy, with analysts predicting truck rate increases of as much as ten percent.

The rule changes, which were finalized late in 2011 by the Federal Motor Carrier Safety Administration (FMCSA) will require drivers to take a break of at least 30-minutes within an eight hour shift, and will also amend the “34 –hour restart” provision, to require two periods from 1a.m. to 5 a.m. within the restart, and limit restarts to no more than one per week.

Although FMCSA officials say the changes are intended to “prevent fatigue-related truck crashed and save lives,” industry officials predict the rules will instead result in a litany of unintended consequences, including higher rates and additional strains on an already severe driver shortage.

As reported in Logistics Management, truckers and industry professionals continue to oppose the new rules, much as they mounted strong campaigns against the changes during FMCSA’s lengthy rulemaking process.  “It may not sound like much and Washington bureaucrats within the Federal Motor Carrier Safety Administration say the change is both necessary and slight, but truckers and operations personnel working the day-to-day matrix of building full truckloads with sufficient numbers of drivers say the change is meaningful – and costly,” the magazine noted.

Todd Spencer, executive vice president of the Owner-Operator Independent Driver Association (OOIDA), called the new rules “probably well-intentioned,” but said the impact would likely be a five-to-ten percent decrease in productivity.  “Most truckers believe that the rules eliminate some of the flexibility drivers need to respond to what their brains and bodies are telling them,” he said at a mid-May gathering of industry professionals hosted by Wall Street investment firm Stifel Nicolaus.  “The new 34-hour restart is the most troubling as it requires that each driver’s weekly schedules be reset once a week – and each resetting must include two consecutive nights of sleep each inclusive of the hours from 1 a.m. through 5 a.m. within the context of the relevant time-zone at their home terminal.

“That means,” he added, “that West Coast domiciled drivers cannot start out after their weekly rest while on the East Coast until 8 a.m. eastern standard time.”

Mark Rourke of Schneider National estimated that the rules could result in a rate increase of as much as four percent, adding that “It’s a big deal, it changes our work configurations.”

Richard Mikes of Transport Capital Partners echoed that sentiment, citing the impact the tightened driver hours will have on capacity.  “Whether the lost productivity costs are two or four percent, that’s a big number when you are in as close a balance as we are.”

While no one can predict with certainty what impact the rule changes will have, it is noteworthy that the trucking industry continues to present a united front in opposing the new rules.  Several groups including the American Trucking Associations filed a lawsuit to delay implementation of the rule changes.  In addition, members of the U.S. House of Representatives Transportation Committee have weighed in, by sending FMCSA a letter asking that implementation be delayed until that lawsuit is resolved.

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State of Logistics Report – Slow but Steady Rebound

More of a casual jog than an all-out sprint is one way to describe the rate at which the logistics industry has regained ground since the economic recession.  That is one takeaway from the “23rd Annual State of Logistics Report” that was released in late June.

The annual report has been prepared every year since 1988 by Rosalyn Wilson of Delcan, Inc.  The current report, which tracks logistics trends and spending during 2011 found total logistics costs increased to $1.28 trillion, an increase of 6.6 percent from the previous year, and a figure that accounted for 8.5 percent of the overall U.S. gross domestic product.

While 6.6 percent may seem like a healthy increase, consider in the decade prior to the start of the recession, costs increased by 63 percent, and accounted for more than 10 percent of GDP.

Among the report’s findings:

  • The 6.6 percent increase in costs was due more to increased rates, than to any increases in volume.
  • Trucking companies are increasingly incorporating intermodal rail options as a way to help offset the impacts of driver shortages and high equipment costs.
  • The rise in intermodal transportation helped boost railroad market share, with overall revenue up by 15.3 percent.
  • Overall, trucking rates increased by 5 to 15 percent during 2011.
  • Despite strong showing of U.S. exports, air cargo revenue actually dropped, with international revenue down by less than one percent, and domestic levels down by more than three percent.
  • Inventory carrying costs continued to rise, and overall inventories have returned to pre-recession levels.  Retail inventories, however, have remained flat, suggesting that retail management practices may have undergone a post-recession rethinking process.
  • Pending government regulations including the Federal Motor Carrier Safety Administration’s revised “Hours of Service” rules will have a measurable impact on capacity concerns and driver productivity.  Some estimates predict that the new hours of service rules will decrease driver productivity by as much as 3 to 8 percent, because of the reduced number of hours that a driver will be able to work.

Wilson says that the slow pace of spending indicates that “we have not made it through the recession yet,” since logistics spending tends to increase as businesses feel better about their futures and show more confidence about investing more in inventory and logistics.

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Nearshoring Attractive to U.S. Fashion Industry

Given the average “shelf life” of an article of clothing in some fashion retail chains is about six weeks before discounting begins, it’s easy to understand why the allure of shorter inventory lead times and distribution flexibility would be appealing.  That would explain why U.S. retailers are increasingly moving currently outsourced manufacturing processes away from China and other Asian nations, closer to home in Mexico and throughout Latin America.  Apparel retailers have a very short window of time in which an item is “hot,” and customers will simply move on if they are unable to acquire an item when they want it.

According to a new white paper by Sourcing Journal Online, Levi’s, Hanes, Carhartt, Gap, Wal-Mart, Lee, and JC Penney are among the U.S. apparel companies that have moved manufacturing back from China in recent years.  These companies join a growing list of companies from all business sectors recognizing the advantages of bringing manufacturing back to North America:

  • Lower labor costs.
  • Favorable trade agreements including:
    • North American Free Trade Agreement (NAFTA)
    • Central American Free Trade Agreement plus the Dominican Republic (CAFTA-DR)
    • U.S.-Columbia Trade Promotion Agreement
    • Caribbean Basin Trade Partnership Act
    • Hope II (offers incentives for Haitian textiles)
    • Shorter supply chains
    • Faster lead times
    • Better quality control
    • Access to trained labor force
    • Greater flexibility

Shortened lead times and added supply chain flexibility are especially important to fashion retailers in today’s age of “fast fashion,” where success depends on a manufacturer’s ability to move products to stores as quickly as possible, so as to capture current market trends.  As the Sourcing Journal paper points out, fast fashion leaders’ lead times have been reduced from 90 days to 4-6 weeks, with inventory refresh rates up to twice as fast as traditional retailers – “40 days on average, versus 80-90 days,” the paper noted.

Although China is still the outsourcing destination of choice for the vast majority of American companies, Mexico and North America are making steady in-roads.  A recent study by international business consultants AlixPartners found that 42 percent of senior executives have either already taken steps to near-shore manufacturing operations, or plan to do so within the next three years.  These findings are reinforced by a MFG.com survey, which found that 21 percent of North American manufacturers reported bringing production back to, or closer to, North America within the past three months – a nine percent increase over a similar survey conducted three months prior.

As businesses consider the feasibility of near shoring, an essential component will be an experienced and capable logistics partner.  A partner who, according to Sourcing Journal, “can meet the rigorous demands placed on brands and retailers today by consumers and global market conditions… a partner who is flexible, reliable, innovative, and able to move product on short lead times.”

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Education the Difference in Supply Chain Careers

A quick look at logistics-related employment openings on Monster.com reveals job titles including “demand planning manager,” “global supply chain manager,” and “reverse logistics manager.”  Each of these positions has at least two things in common:  (1) Each requires strong technology and analytical skills; and (2) None of these job titles existed ten years ago.

While the industry will always have a need for classic logistics/transportation workers: warehouse and distribution operators, fulfillment managers, drivers, planners, and schedulers – the nature of the business supply chain has changed the employment landscape.

Specifically, companies hiring logistics and supply chain professionals are looking for defined skill sets:

  • Strong Technical Skills. Not only an ability to operate systems, but an understanding of how to use data gleaned from those systems and apply it to business processes.
  • Global Perspective.  An understanding of today’s global supply chains, and knowledge of cultural preferences, global volatility, and geographic boundaries.
  • Intertwined Business and Supply Chain Skills.  The ability to see “the big picture,” including how a decision at one point in the supply chain affects outcomes elsewhere in the business.

The good news is increased globalization has raised the appeal of “supply chain management.”  According to Bloomberg BusinessWeek, nine schools have launched graduate and undergraduate programs since 2011, when supply-chain management started taking off, including online master’s programs. Also reported in Bloomberg BusinessWeek, the Association to Advance Collegiate Schools of Business (AACSB) reports a 25 percent increase in the number of undergraduate supply chain management programs since 2006.  Lehigh University reported record numbers of students enrolling in its undergraduate supply chain manager program.  North Carolina State University’s Poole College of Management plans to establish a supply chain concentration within its undergraduate accounting program, and Arizona State’s Carey School of Business has doubled the number of supply chain majors.

Professor Jeffrey Smith of Auburn University noted in a May 2013 article in MHI Solutions that today’s perspective on the role of the supply chain has evolved due to companies like Wal-Mart and Apple. “Wal-Mart became the world’s largest retailer by leveraging the strength of its supply chain,” he said.  “Likewise, Apple took control of their supply chain to manage all aspects of their production – shipping, lead times, products, due dates – and that’s allowed them to manage the demanding complexities associated with their iPhone and iPad products.”

The Bureau of Labor Statistics projects employment of logistics professionals will grow by 26 percent between 2010 and 2020.  As noted above though, the nature of those jobs will change dramatically, requiring workers to have technology skills, global mindsets, and strong analytical capabilities.

Links of Interest

Inbound Logistics Education Resources
http://www.inboundlogistics.com/cms/logistics-supply-chain-education/

Bloomberg Business Week
http://www.businessweek.com/articles/2013-06-28/supply-chain-management-the-new-b-school-must-have

US News Grad School Rankings
http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-business-schools/logistics-rankings

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Fuel of the Future? The Growing Allure of Natural Gas

Many U.S. businesses took a “never again” attitude when diesel prices topped the $4.50 per gallon mark in the summer of 2008.  Managers looked askance as the price climbed, and wondered how high it could go, and vowed to find cheaper alternatives.  For some, that alternative has arrived – in the form of natural gas powered vehicles.  And the timing couldn’t better.

Natural gas has been an energy success story for the U.S., as innovative drilling and exploration techniques have enabled manufacturers to excavate the gas from newly discovered shale rock formations.  The result?  Natural gas is plentiful and far less expensive than diesel.  In fact, the price of natural gas has dropped by about 45 percent over the past year.  As of April 2013, the cost of a gallon of diesel was about $4.15 per gallon, while the cost of a diesel gallon equivalent of liquefied natural gas (LNG) averaged $2.90  — about a third less.  Even more appealing is the estimated 20 percent reduction in greenhouse gas emissions achieved by switching to natural gas.

Several U.S. fleet operators have introduced LNG powered vehicles and are testing them in various capacities.  The Wall Street Journal reports that Texas-based Waste Management, Inc., which was forced to pass along $169 million in fuel surcharges to customers last year, will commit 80 percent of truck purchases over the next five years to building a LNG fleet.  By 2017, the company’s fleet will be predominantly fueled by natural gas.  Other companies jumping – perhaps “wading” is a better term — into natural gas options include Ryder, AT&T, UPS, Procter&Gamble, Coca-Cola, Owens Corning, and the nation’s largest retailer, Wal-mart.

The term “wading” applies, because businesses are taking a very slow approach toward LNG vehicles.  This is primarily because of their high cost, and a lack of sufficient numbers of fueling stations.  The cost of a liquefied natural gas truck averages $40,000-$80,000 more than a diesel-powered truck.  And considering that the starting point for a heavy-duty diesel truck is around $100,000, the cost of the LNG models are prohibitive for many companies.  This is despite the likelihood that costs that will be recouped via lower fuel costs.  “We can’t make the economics work,” Randy Mullett of Con-way Inc. told Reuters.  “The upfront cost is too high.”

Fortunately, help is on the way.  For one thing, Cummins Westport is working on a 12-liter natural gas engine that has been described as a “game changer.”  The new engine is expected to be a catalyst in spurring the development of cost efficient natural gas alternatives.  And a new leasing program introduced earlier this year by truck maker Navistar and Clean Energy, allows fleet customers to avoid paying huge up-front purchase costs.  A third option is the availability of state incentives to help defray costs.

As far as alleviating the shortage of fueling stations, there is good news on that front as well.  National Geographic reports that oil and gas investor T. Boone Pickens is leading the charge to build a network of natural gas filling stations across the nation to service long-haul trucks.  And, investment by China’s ENN Group will reportedly result in construction of 50 natural gas filing stations in this country during 2013.

While no one is predicting that natural gas will replace diesel as a primary fuel source anytime soon, the trend definitely seems to favor integration of more LNG into the supply chain.  The Wall Street Journal cites an informal survey which found that “eight in 10 respondents said natural gas in its densest form, as LNG, has potential for highway use.”  Nearly a third said they were researching natural gas for possible use in their own businesses but not surprisingly, many expressed concern about upfront costs and a lack of fueling stations.

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Tips for Managing LTL Costs

A recent analysis by Logistics Management reported widespread expectations for a LTL rate increase this year in the range of two to four percent.  The increase is due in part to a seeming “perfect storm” of events converging within the industry:  tightened capacity, a shortage of drivers, and sustained high fuel prices.

But lest shippers think they have no alternative but to resign themselves to higher LTL costs, there are, in fact, several ways to not only control LTL cost increases, but to achieve an actual price reduction.

  • Shop Around. You are well aware of what your business pays in transportation costs, but wouldn’t it be helpful to know what a competitor would charge for the same services?  Of course there’s a lot more to a carrier/shipper relationship than bottom line costs, but if it seems that your carrier is inordinately expensive, it might be worthwhile to dig a little further to find out if those higher costs are warranted.
  • Think Before You Sign. While conventional wisdom might be to lock in a good rate for an extended period of time, current practice is showing that shorter, one-year contracts can result in significant savings.  As reported in DC Velocity, a 2012 study by researchers at Iowa State University found that “shippers who rebid their business regularly achieved rate reductions of $25.17 per load compared with shippers who rarely or never utilized this method.”  In addition, the study found the savings achieved during the initial contract rebid, tended to be “freshened” with every contract renewal.  In all, shippers reported an average savings of 4.4 percent by rebidding on an annual basis.
  • Not all Carriers Can Reach Canada. Does your carrier offer regular service to your destination, or are you being charged because “extra” service needs to be contracted in order to accommodate your needs?   This is especially important when your LTL shipment requires a border crossing, and delivery to Canada.  You want to be sure that your carrier can not only provide seamless service to the Canadian market, but that you won’t be surprised with unexpected shipping and compliance fees.
  • Build the biggest shipments possible. A basic tenet of LTL shipping is the smaller the size of the shipment, the greater the cost.  But, by working with a transportation provider to develop consolidation and distribution solutions, a business can increase shipment size, and lower per-unit costs.  A business may be able to build larger shipments by delaying pickups, for example, or a carrier may be able to convert multiple LTL shipments into a full truckload shipment.
  • Packaging Matters. Because LTL shipments are handled multiple times during the transit cycle, it is important to package materials in a way that can facilitate loading and unloaded – usually through palletization or crating.  However, in some instances packaging choices can affect pricing.  In addition, because LTL pricing is based on density, it is essential to take a “less is more” approach, when practical, to packaging.  For example, Staples is in the process of introducing an “on demand packaging,” solution, in which packaging can be customized to fit precise needs.  Staples expects to achieve a 20 percent savings on corrugated costs, and a 60 percent reduction in use of air pillows.
  • Get control of your inbound costs. Many shippers are surprised to learn that their suppliers use freight as a profit center, or that they are not particularly diligent in trying to negotiate favorable terms.  Taking charge of supplier freight costs can be a significant source of savings.  Wal-Mart made headlines in 2010 when it began requiring suppliers to transport materials on Wal-Mart trucks, and insisted on price reductions of as much as six percent to cover the new arrangement.

It’s hard to browse through a logistics or transportation newsletter or website and not read about inevitable rate increases.  But with a little legwork and strategic thinking, you can reduce your LTL costs, and improve the overall efficiency of your supply chain.

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Canadian Sites Vie for Share of Ecommerce Market

Despite signs that Canadian consumers may be losing patience with Canadian retailers’ slow progress at introducing online shopping venues, more than a few local firms are rising to the challenge, and successfully tapping into Canada’s lucrative e-commerce market.

One site that went live in August 2012, www.shop.ca, quickly climbed the charts to claim the number 28 spot on comScore’s list of top 100 Canadian e-commerce sites.  The website is an online marketplace through which brand name goods are offered across a variety of categories – everything from computers to baby gear to pet supplies.

Another popular site, www.onlineshoppers.ca offers access to more than “450 Canadian online shopping websites and international retailers that ship to Canada.”  The site claims that most of the retailers listed are Canadian, with stores located in major cities including Calgary, Montreal, Ottawa, Vancouver, and Ontario.  The site also says that all transactions take place in Canadian dollars, and most offer free shipping throughout Canada.

A third site, www.well.ca offers access to health and personal care products, and has developed a strong following since its 2007 inception.

In addition to these “shopping mall” type venues, at least one traditional brick-and-mortar department store has entered the e-commerce market.  The Hudson’s Bay Company, which traces its roots to a British royal charter issued in 1670, recently re-launched an e-commerce site, following a not-so successful previous effort.

This success comes on the heels of a new survey by Forrester Research, which found growing frustration among Canadian consumers with inefficient Canadian ecommerce venues.  Among consumers’ top complaints:

  • Higher prices than costs for identical merchandise on U.S. sites
  • Shipping Costs
  • Poor product selections; and
  • Lack of cross-channel shopping venues (web, mobile, and in-store)

According to Euromonitor International, an international source of consumer market research, the Canadian sites still have a way to go before they make a dent in the solid performance of international – mostly U.S. — sites.  “The success of internet retailing in Canada is largely dependent on the readiness of retailers to invest in online shopping to ensure user-friendly site designs, product assortment, convenient shipping and return options, competitive prices and reward programs to encourage repeated purchases,” the analysis notes.

Just what are the top sites for Canadian consumers?  According to Internet Retailer, top sites for 2012 included:

  • Amazon.com Inc.
  • Apple Inc.
  • Kijiji.ca (online classified ads)
  • Best Buy co.
  • Wal-Mart Stores Inc.
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Lack of Carriers keeping US Businesses out of Export Market

A not so well kept secret – less than one percent of U.S. businesses engage in some type of export activity.  This is despite the fact more than 95 percent of the world’s consumers live outside the U.S. borders.

Then-Secretary of Commerce Gary Locke addressed the issue, in a series of speeches he made to regional business audiences.  The purpose of Secretary Locke’s tour was to (a) remind businesses of the potential of the international market, and (b) to extend the federal government’s helping hand to businesses interested in expanding their businesses to outside markets.

The Secretary also laid out a few reasons why businesses are reluctant to export:

  • Trouble getting the necessary working capital;
  • Concern about receiving timely payments from foreign customers;
  • Difficulty navigating foreign customs and regulations; and
  • Lack of networks necessary to make proper contacts and identify plausible business partners

But a concern Secretary Locke didn’t cite, and one that is of concern to businesses interested in exporting to Canada, is the lack of qualified carriers to transport goods from the U.S. into the Canadian market.

This fact surprises people, since the presumption is since Canada and the U.S. share so many cultural and geographical similarities, it would be relatively easy to transport goods into Canada.

But the fact is, there are a lot of nuances about doing business in Canada, including a complicated border compliance process, different taxing authorities, language issues, and the vastness of the Canadian landscape.

Doug Kroll, National Traffic Service’s director of consulting gave Canadian Transportation & Logistics a frank assessment:  “On the LTL side, there’s a limited amount of carriers available to US shippers who can serve Canada.  They’re actually interlining with a Canadian carrier,” he said.

A May 2012 report by the Journal of Commerce seems to support this notion.  JOC reported that, because the strong Canadian dollar is fueling a demand for U.S. imports, trucks are actually being diverted from intra-Canada shipping to help handle the need for cross border service.

And this, says Kroll, is not necessarily a good thing.  “You actually lose custodial care of the shipment,” Kroll added.  “There’s concern around tracing the shipment, loss or damage, and filing a claim.”

U.S. businesses need to choose wisely when selecting a logistics partner to handle their cross border shipments.  Many carriers claim to have expertise in the Canadian market when in fact they do not.  Take the time to find out exactly what a carrier’s qualifications are:

  • Does the carrier have a network in place to ensure delivery to Canadian addresses?
  • Is the carrier a participant in U.S./Canadian “trusted shipper” programs?
  • What is the carrier’s expertise in understanding the border compliance process?
  • How flexible is the carrier in offering pickup/delivery times that meet your needs?
  • Will the carrier maintain control of the shipment throughout the entire cycle?

As the above discussion indicates, there is a lot of opportunity beyond the U.S. border.  It’s important though, to do your due diligence and make sure you enter the export market smartly, and with the right logistics partner on your team.

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Consumers Show Little Patience for Late Deliveries

“Hell hath no fury like a consumer with a late delivery,” could be the new mantra for today’s businesses.  After all, expectations for fast, on-time and free shipping have never been greater, with more than 55 percent of consumers expecting free shipping on all orders, and roughly 65 percent of retailers offering some type of free shipping.

But heaven help the retailer who signs on with a delivery company unable to make good on promises for guaranteed service, or even worse, makes an incorrect delivery.  A new survey by Voxware voice solutions provider, found nearly 30 percent of respondents said they would abandon shopping with a retailer if they receive an incorrect or late order just one time.

The survey, which asked 600 consumers about their delivery expectations for items purchased either online or by phone, found consumers are willing to cut retailers very little slack for failure to deliver as promised:

  • 62 percent of respondents are less likely to shop with a retailer in the future if an item they purchase is not delivered within two days of the date promised.
  • 59 percent said they would abandon future shopping with a retailer if they receive two to three late or incorrect deliveries.
  • 68 percent of respondents have higher expectations for correct and on-time deliveries during the holiday season.
  • 56 percent said that as much as 10 percent of the items they have ordered either over the Internet or by phone have arrived later than promised.

At least one major e-commerce retailer has recent experience with consumer ire over late packages.

Last summer the UK Guardian reported more than 5,000 angry consumers posted messages on the retailer’s website, demanding that one apparently inefficient delivery company be dropped.  Complaints ranged from inaccurate tracking information to poor customer service, to packages being left out in inclement weather, to orders that simply were not showing up as promised.

As the Vox survey – and this retail giant’s experience – make clear, consumers place a high premium on deliveries that are on time and correct.  A retailer can offer the best products in the world, or the best deals around, but if a logistics company fails to deliver those goods on time, then everything else is for naught.

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Trade Programs Expedite the US-Canada Border Process

A study of U.S./Canada border crossing delays found the average wait was 29 minutes.  But for participants in the U.S./Canada “Free and Secure Trade Program” (FAST), the wait time was only eight minutes.  The study, conducted by the International Mobility and Trade Corridor Project (IMTC) concluded trusted shipper programs are effective in reducing border congestion.  Which raises the question:  Why would any reputable logistics or transportation provider that offers service between the U.S. and Canada not take advantage of trusted trade program opportunities?

Businesses with regular U.S./Canada transactions should take a few minutes to familiarize themselves with current trusted trade programs, and to make sure their logistics provider is a member in good standing!

Joint U.S./Canada Program

  • Free and Secure Trade Program (FAST): FAST is a joint initiative between the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CBP) that offers expedited clearance for low-risk commercial shipments. Eligible carriers must complete a background check and fulfill certain eligibility requirements. Benefits of FAST include:
    • Access to dedicated lanes (where available) at border crossings for greater speed and efficiency
    • Reduced number of inspections
    • Enhanced supply chain security
    • FAST membership card can be used as proof of identification
    • Streamlined process that reduces delivery times and landed costs of imports
    • Allows border agents to focus on higher risk shipments

Canadian Programs

  • Partners in Protection (PIP): CBSA program enlists the voluntary cooperation of private industry to enhance border security and verify the safety of the supply chain.  Participating businesses agree to implement and adhere to high security standards throughout their supply chains.  In exchange, PIP members are considered “trusted traders,” and entitled to expedited clearance and additional preferential treatment.
  • Customs Self Assessment (CSA): Program administered by CBSA designed for low-risk, pre-approved importers, carriers, and registered drivers.  Membership in the CSA program simplifies the border crossing process for low-risk shipments so that border agents can allocate resources to higher risk shipments.  CSA is the foundation for the FAST program.

U.S. Programs

  • Customs-Trade Partnership Against Terrorism (C-TPAT): Joint business-government initiative, administered by CBP, that enhances U.S. border security by verifying the safety of the supply chain.  Businesses that apply to be C-TPAT members agree to conduct a self-assessment of supply chain security and to encourage their business partners to verify the security of their supply chains.  In exchange C-TPAT participants receive certain benefits including:
    • Reduced number of border inspections
    • Access to C-TPAT membership list
    • Eligibility for account-based processes (bimonthly/monthly payments, etc.)
    • Emphasis of voluntary participation, rather than government mandate
  • Importer Self Assessment (ISA): C-TPAT members are eligible to participate in CBP’s Importer Self Assessment program, which exempts importers from certain CBP audits in exchange for establishing internal compliance controls.  Through ISA, an importer will conduct an internal audit of its own compliance record, and determine and address and risk areas.
  • Certified Cargo Screening Program (CCSP): Administered by the Transportation Security Administration (TSA), CCSP allows qualified transportation carriers and logistics providers to screen air cargo away from an airport, at a certified location.  CCSP was developed as a way to address expected congestion and wait periods following a Congressional mandate that all cargo transported on passenger aircraft be pre-screened as of August 1, 2010.

If it sounds like there is a lot of overlap between these programs, you are correct.  In fact, a key tenet of the 2011 U.S.-Canada “Beyond the Border” initiative called for increased harmonization of trusted shipper programs.  Efforts are underway to improve coordination between C-TPAT and PIP, for example, so that going forward, applicants will use a single application and share processing and documentation practices.

What programs is your company utilizing and if they are not, why?

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