Natural Gas Vehicles – Next Step in Supply Chain Sustainability?

With the price of a gallon of diesel fuel seemingly stuck above $4, it is not surprising talk is growing about options for fleet owners and managers to look beyond traditional fuel engines. Most recent, the Conference Board of Canada released a report in late April supporting the use of liquefied natural gas-(LNG) fueled trucks into that nation’s fleet.

As reported in Truck News, The Conference Board report suggests, despite the high upfront costs, trucks fueled by natural gas could generate savings of up to $150,000 per truck over a ten-year period. “Our models indicate while the capital costs are high, the savings from lower fuel costs make natural gas an economically viable fuel for the trucking sector,” said Vigay Gill, co-author of the report, entitled “Cheap Enough? Making the Switch from Diesel Fuel to Natural Gas.”

As the report notes, “nearly half of these savings are in the form of fuel tax savings, as natural gas is currently exempt from the equivalent of road diesel excise tax.” This advantage, could be wiped out should legislators decide to raise taxes on natural gas.

What is the current status of LNR powered trucks, and how prevalent are they on North American highways?

According to Bloomberg News, about 22,000 natural gas-powered heavy-duty trucks were on U.S. highways during 2010, out of an overall fleet of 700,000. Although the concept is still in its infancy, new developments and incentives are raising expectations that natural gas-powered trucks will be seen as a viable alternative to diesel. “We’re at the cusp of something growing exponentially in the industry,” Glen Kedzie, energy and environment counsel for the American Trucking Association said. “Based upon everything we’ve been witnessing not only on the infrastructure front but also on the vehicle front, these gains are increasing very rapidly.”

What are the biggest obstacles to a wider embrace of natural gas technology?

  • Cost. The cost of a LNG-powered truck is approximately $40,000 more than the $110,000 cost for a comparable diesel-powered truck.
  • Lack of Fueling Stations. The lack of natural gas filling stations along the nation’s highways is a detriment to the wide scale integration of these trucks into the nation’s fleet. According to Bloomberg, the U.S. currently has 18 stations that dispense liquefied natural gas, 14 of which are in California. However, the Department of Energy projects that an additional 70 stations will be up and running by the end of 2012.

Along with those downsides, come strong upsides:

  • Tax Credits. President Obama has been a strong supporter of natural gas technology, and has asked lawmakers to support a tax credit for as much as 80 percent of a vehicle’s cost. Although, Congress has yet to enact those tax breaks into law.
  • Fuel Savings. Liquefied natural gas averages $1.50 for an amount of LNG equivalent to a gallon of diesel, which currently sells for roughly $4.10.
  • Environmental Impact. Although LNG is still a fossil fuel, gas emissions would be reduced by as much as 50 tons per year per truck.

Several leading carriers have announced purchases of LNR-powered vehicles. The concept is catching on, and as technology improves and initial capital outlays decline, we can expect to seen even more natural gas powered trucks on the road.

Posted in Supply Chain Management | Tagged , , , , , , | Leave a comment

U.S. Clean Fleet Initiative Mirrors Purolator’s Greening the Fleet

When President Barack Obama announced a “National Clean Fleets Partnership,” he challenged the nation’s businesses to find ways to help reduce the nation’s reliance on foreign oil, and to “replace your old fleet with a clean energy fleet….”  The President called on businesses to cut petroleum use by 2.5 billion gallons by 2020, and he pledged technical assistance to help companies adopt vehicles that use alternative fuels such as electricity, natural gas, hydrogen or propane.

Several of the nation’s largest fleet operators were quick to sign on to the President’s challenge.  AT&T, Verizon, PepsiCo, UPS and FedEx  — companies that account for five of the nation’s ten largest commercial fleets – all committed to working to improve their energy sustainability.
This U.S. initiative is similar to efforts underway in Canada, where Purolator has been widely recognized as a trailblazer in changing its energy practices.  Purolator first introduced its “greening the fleet” initiative in 2002 which, among other things, introduced a “no-idling” policy, requiring vehicles to be turned off completely during stops.  The company also reconfigured all distribution routes as a way to eliminate redundancy and eliminate wasted miles.

Purolator’s fleet has undergone a major transformation, with hybrid technology  now accounting for more than 10 percent of its fleet.  In fact, Purolator has the largest HEV fleet of any logistics company in North America.  In addition, Purolator is actively exploring other types of alternative-fuel vehicles, including a battery-operated “Quicksider,” which made its debut throughout the Olympic Village during the winter games in Vancouver.

As one of Canada’s largest fleet operators, Purolator’s initiatives – which have received many accolades from leading industry and government organizations – serves as a model for other businesses.  And now with the U.S. focused on greening its own fleet, we can hopefully expect a cross border transfer of good green ideas and resources.

Posted in Government Regulations | Tagged , , , , , , | Leave a comment

Pallet Industry – Are changes on the horizon?

Unless you have a direct interest in pallet design or manufacture, you probably have not followed recent trends in the industry.  Which means, you are probably unaware there are no universal standards regarding pallet sizes, design or components.  This lack of universality is surprising.  Globalization has resulted in a surge in pallets packed with exports traveling across the world, and the international community has done a good job of implementing universal codes and regulations for just about every aspect of the commerce and trade process.  So a glaring omission seems to be the lack of universal standards for pallets.

For example, the “block pallet” is the dominant type of pallet used throughout the European Union, while North American businesses tend to favor the “stringer pallet.”  Australia makes use of its own unique pallet, which fits nicely aboard Australian railcars.  In Asia, which according to Pallet Enterprise magazine is “still in its pallet infancy,” manufacturers tend to favor block pallets, although many of them are plastic.

The main difference between the two types of pallets?  The block pallet uses a perpendicular overlay of construction materials – usually wood – so that a forklift may have access to any of the pallet’s four sides.  A stringer pallet is generally not as strong as a block pallet, and uses a system of parallel construction materials, so that a forklift can only access the pallet from two sides.

While the various pallet designs have tended to coexist, a potential game changer took place when Costco announced, beginning in 2011, it would only accept merchandise from suppliers on block pallets.  According to Modern Materials Handling, the change was driven in part by the quality of some pallets Costco was receiving. 

So what impact has the Costco decision had on the rest of the industry?  An immediate reaction was the formation of a coalition of pallet manufacturers to try and offset some of the economic costs of suddenly finding themselves shut out from the lucrative Costco business.  The new coalition, the Pallet Logistic Unit-load Solutions (PLUS), is an attempt to compete with Costco’s three main block pallet suppliers:  CHEP, iGPS and PECO.  

Although Costco’s move was an eye-opener, and sparked talk about whether or not it would ignite moves by other major retailers, no one is predicting the end of stringer pallets.  One trend that has emerged is a growing tendency to rent, rather than purchase pallets.  Modern Materials Handler’s 2011 Pallet Survey, found the number of respondents managing their own pallet pools had dropped by 13 percent, and that CHEP saw “interest and/or participation” in their business jump from 22 percent to 43 percent.  Since block pallets are more expensive to manufacture, a trend could be emerging in which manufacturers are opting to rent from a third party.

While it’s an interesting time in the pallet industry, Bruce Scholnick, president of the National Wood Pallet&Container Association (NWPCA) seemed to sum up the situation by noting that:  “All pallets have a place in the market.”

Posted in Supply Chain Management | Tagged , , , , , , , | Leave a comment

Opposition to Service Changes for US and Canadian Truckers

Canadian truckers doing business in the United States will soon have to change their modus operandi, as a result of regulatory changes issued late last year by the Federal Motor Carrier Safety Administration (FMCSA).

FMCSA’s new regulations, which have been widely criticized by U.S. trucking organizations, will impose new restrictions on drivers including:

  • Mandatory 30-minute break after eight hours of consecutive driving
  • Mandatory two consecutive nights off (including 1am to 5am) when using 34-hour reset
  • Limit of one reset within a seven-day period

Canadian Trucking Alliance CEO David Bradley was quick to criticize the new regulations as being “disappointing and unnecessary,” and said that they would have a negative effect on Canadian carriers doing business in the United States.

“The systems, routes and schedules carriers deploy in shipping US exports to Canada have been designed around current hours of service rules,” Bradley said in a statement.  “Any reduction in the current rules would have a significant negative impact on the efficiency and productivity of the North American supply chain, and would be particularly disruptive to the shipment of US exports with no appreciable benefit to driver safety.”

Bradley criticized U.S. regulators for not looking to Canada for guidance during the review process.  “Whether it’s the hours-of-service rules or truck weights and dimension standards, they need only look at Canada, their next door neighbor, to see how a more flexible set of rules can work without compromising safety,” he told Trucknews.com.

Canada allows drivers longer on-duty and driving times, and also provides flexibility with regard to use of sleeper berths and re-start provisions.

“We don’t need new rules, we need better enforcement,” he added.

The new regulations are scheduled to take effect in July 2013.  The American Trucking Association has indicated that it is considering a legal challenge as a way to prevent the new rules from taking effect.

Posted in Government Regulations | Tagged , , , , , , , , | Leave a comment

Horizonal Collaboration – Yankees and Red Sox Sharing a Plane?

In a sign of how integrated today’s business environment has become – and how “yesterday” competitive rivalries could soon be – manufacturers are increasingly teaming up to share warehousing, transportation and other logistics costs.  And sometimes, that means having products commonly perceived as bitter rivals sharing space in a warehouse or on a truck .

This trend, known as “horizontal collaboration,” is increasingly common as manufacturers look for out of the box approaches to cutting costs and finding new ways of doing things.  A recent article by Mary Siegfried in Inside Supply Management described horizontal collaboration as “manufacturers sharing supply chain assets for mutual benefits.” 

Businesses in the same industry, who often have the same customers and same logistics needs are prime candidates for horizontal collaboration.  As Siegfried notes in her article, a “high-profile” example of horizontal collaboration now underway involves two competitive chocolate manufacturers, the Hershey Co. and the Ferrero Group in North America.  “Late last year,” Siegfried writes, the two companies announced plans to collaborate on warehousing, transportation and distribution…” 

Other “competitors” sharing logistics processes include Nestle USA and Ocean Spray,  as well as Pennsylvania-based “Just Born” confectioner (best known for “Peeps” marshmallow candies) and an alliance of five other candy companies.  According to Joel Sutherland, managing director at the University of San Diego’s Supply Chain Management Institute, “Just Born increased the amount of freight shipped out of its distribution center by including other confectionery shippers to form a collaboration of ‘like’ shippers delivering product to ‘like’ customers.”  The impact?  Sutherland says that the collaboration will save the companies “about 25 percent of their total transportation costs per year.”

Businesses interested in integrating horizontal collaboration solutions into their supply chains should be forewarned though.  It’s not for everyone, and it’s hard work.  According to the North American Horizontal Collaboration in the Supply Chain Report – 2011, produced by supply chain research group Eyefortransport, top concerns for businesses include:

  • Fear of information disclosure
  • Lack of clarity over who’s in charge
  • Lack of widespread acceptance of ideas
  • Difficulty finding appropriate partners
  • Difficulty starting trusting relationships

Eyefortransport also found that legal issues and uncertainty over customer needs are the biggest concerns for carriers and 3PLs.  But, as the survey notes, “should these challenges be overcome, it is clear there is a real potential to reduce costs and drastically improve supply chain efficiency.”

Would your compnay consider a horizontal collaboration?

Posted in Supply Chain Management | Tagged , , , , , , | Leave a comment

Collaborative Outsourcing – Efficiencies & Savings

Just the phrase sounds very corporate-speakish, and readers will be excused if their eyes start to glaze over contemplating a post on this subject. But truth be told, once you get beyond the admitted geekish name, “collaborative outsourcing” is one of the most interesting trends to hit the boardroom in some time.

What exactly is collaborative outsourcing? We’re all familiar with outsourcing, whereby a business offloads its manufacturing, or its transportation, or maybe even its procurement department to a third party, as a way to reduce headcount and streamline operations. In the process though, a business often gives up control – products are suddenly manufactured and delivered on someone else’s schedule.

While traditional outsourcing works well for some businesses, collaborative outsourcing is increasingly becoming the option of choice for businesses not willing to cede that control. Instead, collaborative outsourcing allows a business to take on external “partners,” who perform specific functions for the business, but as part of an overall strategy and under guidelines set by internal staff members.

With regard to managing a transportation network, this means that a shipper may outsource labor-intensive functions including contract management, route optimization, returns management, and shipment management. In a collaborative model though, shippers can then reallocate staff to more strategic assignments, while the outsourcing partners provide real-time updates and access to pertinent data. “

The collaborative approach can have positive and measurable effects on a business’ bottom-line, including:

  • Cost savings. Cutting costs is a primary objective in outsourcing business functions. Obvious areas to cut costs include headcount, physical assets and operational support. Specific to the transportation function, a business could achieve immediate savings by outsourcing the freight management function, generally due to route optimization and consolidation.
  • Greater expertise. By engaging the services of external “experts,” an organization will benefit from having greater brainpower at the table, presumably offering state of the art insights and recommendations for each subject area.
  • Best Practices: Another benefit of bringing together experts from various functional areas is to garner insights and “best practices” that can be folded into a business’ strategic plan.
  • Greater control: Unlike traditional outsourcing models, collaborative outsourcing allows internal employees to steer the discussion and serve as the project leader. This ensures that an outsourced project is synced with overall business strategies, and that all possible synergies are considered.

Not surprisingly, there can be downsides to a collaborative approach, especially if outside vendors are not managed properly:

  • Make sure all parties are on the same page. SupplyChainBrain reported recently on the need for all outsourcing relationships to be built on a common understanding that each party has a vested interested in a project’s success. “We see the most successful companies not just managing the supplier with supplier relationship management tools, but managing the business with their suppliers using an insight-vs.-oversight governance philosophy.”
  • Partner with Care. This seems like an obvious point, but many businesses have learned the hard way that transportation or logistics partners that sound good on paper, or that can “talk the talk” during the screening process, are unable to produce when the time comes to perform. Don’t assume that a potential partner has the experience or expertise that they claim to have. Take the time to do your homework and conduct a thorough screening of all potential partners.
  • Set clear, measurable objectives. Business Week reported on the most common mistakes that companies make in their outsourcing relationships: The need to clearly outline, define – and get buy in – with regard to the scope of work, assignments, and deadlines. “Without these elements in place, key project components can be delayed and the overall goal of the engagement overshadowed by missed deadlines and added expenses.”
  • Technology Compatibility – Move to the Cloud? What good is your carefully crafted network of external suppliers, if you are all operating on different technology platforms? If incompatible systems make it impossible to share data and engage in online project management. An obvious solution may be to upload pertinent data to a cloud provider, thereby giving every member of your team immediate and joint access to key materials.

The economic recession was a hard lesson for many businesses that found themselves faced with high overhead costs, little flexibility, and few options for innovation. Today though, as businesses seek to regain their economic footing, collaborative outsourcing is an increasingly attractive option for streamlining processes and improving productivity.

Posted in Supply Chain Management | Tagged , , , , , , , | Leave a comment

Hot Tips for Shipping to Canada

Surface trade between the United States and Canada jumped by more than 11 percent during December 2011, and has soared by 27 percent since 2009, according to the U.S. Department of Transportation. This in turn has fueled a spike in U.S. businesses looking to Canada for export opportunities. After all, Canada’s close proximity to the U.S., our similar cultures, and that country’s thirst for high quality U.S. goods make Canada a logical place for U.S. businesses seeking to expand their customer base. But before you build Canada into your business model, there are some important issues to take into consideration.

Doing business in Canada is an international transaction, complete with multiple customs and regulatory issues, along with demographic and economic issues that are uniquely Canadian. Many businesses make the mistake of treating Canada almost like a 51st state, only to learn the hard way that shipping to Canada can be very technical and exacting.

Following is an overview of some of the top issues that U.S. businesses must take into consideration, before reaching out to the Canadian market:

  • Understand the Canadian Market. The number one mistake U.S. businesses make, is a failure to do their homework and take the time to understand the nuances of the Canadian market. Don’t assume, for example, because a product is “hot” in the U.S, that it will meet the same receptive audience in Canada. U.S. businesses need to do their market research, and customize their advertising and marketing. Another consideration is that Canada is officially a bi-lingual country, and one-third of the population list French as their primary language. Businesses will need to make sure that (a) they have a way to communicate with this segment of the population and that (b) all packaging/labeling will be understandable.
  • Don’t Get Hung Up at the Border. This cannot be overstated. Complying with Canadian customs/border clearance mandates is a very bureaucratic and confusing process. And this is despite the pro-trade NAFTA agreement that in place to facilitate trade. Although NAFTA eliminated tariffs on domestically produced products traveling between the U.S. and Canada, there are myriad other regulations with which to contend.

    In addition, increased security measures have further exacerbated the clearance process, adding additional paperwork and mandates. And, compliance processes and standards can change at a moment’s notice. Most businesses delegate the clearance process to an experienced customs broker. It’s important though, to make sure that a broker claiming to have expertise with the border clearance process, can back up those claims.

  • Take Advantage of Trade Incentives. Both the U.S. and Canada are committed to fostering and growing the two countries’ trade relationship. Each country has established “trusted shipper” programs designed to facilitate the clearance process for frequent shippers. In addition, programs are in place to “level the playing field,” so that U.S. exports can compete more equitably on the Canadian market, and vice versa. These programs include:

    Certified Cargo Screening Program (CCSP): Program developed by the TSA to facilitate implementation of 100 percent screening mandate for cargo travelling aboard U.S. passenger planes. CCSP allows qualified businesses and logistics and transportation providers to screen cargo off-site, thereby allowing shipments to arrive at the airport pre-cleared and ready for boarding.

    Customs-Trade Partnership Against Terrorism (C-TPAT): Voluntary program administered by U.S. Customs Border Patrol (CBP) through which businesses and shippers agree to take steps to ensure the safety of their supply chains, in exchange for expedited clearance upon arrival at the border.

    Duty Drawback program: Trade-enhancement program administered by CBP that allows U.S. businesses to be reimbursed for any duty collected on materials that are subsequently used in the manufacture of products intended for export. The duty drawback program prevents U.S. businesses from being taxed twice for the same product.

    Free and Secure Trade (FAST) program: Joint U.S./Canadian security program designed to facilitate cross border trade by allowing qualified shippers expedited processing.

    Non-Resident Importer (NRI): Canada Border Services Agency (CBSA)-administered program that allows U.S. businesses to act as “importers of record,” thereby allowing pre-payment of all taxes, duties and fees before a shipment arrives at the border. Pre-payment of fees allows U.S. businesses to charge their Canadian customers for all costs at time of purchase, and it levels the playing field for U.S. businesses interested in competing in the Canadian market.

    Partners in Protection (PIP) program: CBSA-administered program through which businesses agree to voluntarily ensure the security of their supply chains.

  • Be sure you can reach your customers. Canada is the second largest country in the world, based on land mass (Russia is first, China is second, the U.S. is fourth). And while roughly 80 percent of the population live within 100 miles of the U.S. border, it is essential to have capacity to reach Canadians located in non-urban areas. Partner with an experienced logistics provider. Businesses entering the Canadian market rely on their logistics partner to not only transport their shipments, but also to offer recommendations about how to improve performance, for insight into the “Canadian way” of doing things, and for help in developing an efficient supply chain.

    The problem though, is that not every logistics provider can deliver as advertised. Quite simply, they do not have the expertise in the Canadian market that they claim. It’s very important to research a potential logistics partner. Ask a lot of questions, demand documentation and check with other businesses. You don’t want to find out the hard way that your self-described “Canadian expert” is not who they claimed to be.

  • Don’t Forget about Returns. Last year U.S. consumers returned more than 8 percent of their purchases – a figure that exceeded $200 billion. Businesses shipping to Canada can expect to see a similar returns volume, and need to be prepared. International returns, however, can be tricky because a second trip across the border is involved. Make certain that your logistics partner has options available for an efficient returns process that can satisfy your business demands and your customers’ expectations.
Posted in North American Trade | Tagged , , , , , , | Leave a comment

EU Green Tax Sparks International Outrage

As many as 30 different countries, including the United States, China and Russia, have joined forces to oppose a European Union edict to impose fines on international air carriers using its airspace.  Opposition has become so strident, that the issue has the potential to escalate into a full-blown trade crisis.

Effective January 1, 2012, the EU began subjecting international flights to its controversial “emissions trading scheme (ETS),” which imposes fines for carbon emissions that exceed a predetermined, government-authorized allocation.  ETS is similar to the “cap and trade program,” which has been a source of great debate in the United States.

The EU first announced its intention in 2009, and that announcement drew immediate and harsh rebukes from across the globe.   In the U.S., the Air Transport Association of America filed suit to challenge the EU’s legitimacy to exercise such power under international law.  That lawsuit was denied, in December 2011 by the Court of Justice of the European Union.  The U.S. Congress is expected to formally express its opposition to the carbon tax in the coming weeks.

In China, that country’s Civil Aviation Administration issued a directive banning domestic airlines from complying with ETS, and ordered that no fines be paid.  China estimates that it will be assessed as much as $125 million in annual ETS fines. 

“We hope that the EU understands the global negative response to its scheme and cancels or revises its plan,” Chai Haibo, deputy secretary-general of the China Air Transport Association told ChinaDaily.com

According to Reuters, China, India and other countries have called the EU law a violation of their sovereignty.  To consolidate their opposition, a meeting took place in Moscow in late February that included representatives from 26 nations opposed to ETS.  Participants reportedly agreed to a list of retaliatory measures, which include “barring national carriers from participating in the ETS and lodging formal complaints with the International Civil Aviation Organisation (ICO).”

For its part, the EU affirmed that any congressional action could “harden diplomacy” and result in an all out trade war.  Do you agree with the EU’s effort to minimize emissions by imposing fines?

Posted in International Standards | Tagged , , , , , , | Leave a comment

Does Your Supply Chain Include a “Plan B”?

At one point last winter, Florida was the only one of the 50 states that did not have snow on the ground.  The. Only. One.  That meant that winter weather was a factor in places that don’t even own snow removal equipment – places like Mauna Loa, Southern California and Dallas.

But what do you do when you’ve got a shipment of goods that need to be delivered by a drop dead date, and simply cannot be sidetracked by an unexpected snowstorm or other unexpected malady?  Last year, for example, Purolator received a call from a Chicago business that absolutely had to have a package delivered to Vancouver by the following morning.  Why the urgency?  The package to be delivered was a plaque that was needed for the opening ceremonies of the Vancouver Special Olympics.  

Fortunately for this particular business, Purolator was able to help, and the package arrived in Vancouver in time for the ceremony.  But what if it’s not as lucky next time?  And what if it’s your business, and your reputation on the line if a package does not arrive in time.  In fact, a study conducted by Accenture consulting found that while 73 percent of respondents experienced supply chain disruptions in the past five years, 94 percent said the disruption impacted profitability and affected their ability to meet customer expectations.  And 36 percent said it took more than a month to recover.  A month!  Does your business have the luxury of that much time?

The key to a solid “Plan B,” lies with your logistics provider.  A good provider will be able to work with you to develop contingency plans in case something goes wrong.  But you’ll need to be proactive in making sure that your carrier has the capability to offer a Plan B.  A few questions to ask:

  • What is the carrier’s modus operandi for when a truck breaks down?
  • Does the carrier have flexibility to re-route shipments that have been delayed, either due to equipment problems, infrastructure delays or processing errors?
  • How deep is the carrier’s distribution network?  Can it accommodate late-breaking changes and urgent shipping needs?
  • If a shipment involves a border crossing, can the carrier ensure that all paperwork will be completed, and no unnecessary delays will be incurred?
  • While no one can predict the weather, does the carrier have resources to ensure a rapid recovery and alternate routing should inclement weather be a factor?  Does the carrier have access to multiple modes?

And the list goes on.  If your carrier cannot satisfy your concerns about being able to offer a viable Plan B – time to look for a new carrier.   Like it or not, the unexpected will happen!

Posted in Supply Chain Management | Tagged , , , , , , | Leave a comment

TSA missed Deadline to Screen International Cargo

Maybe it wasn’t such a big deal when Transportation Security Administration head John Pistole announced that his agency would miss a December 31 deadline to begin screening 100 percent of all cargo arriving via international flights, but that the agency was pursuing a risk-based strategy that would focus resources on “high risk” shipments.

The mandate to screen 100 percent of arriving international cargo came from Congress, in the wake of last year’s attempt by al Qaeda operatives to send bomb-laden printer cartridges into the U.S., on board a flight that had originated in Yemen.  While Congress’ intent may have been laudable, a closer analysis shows that the mandate is neither feasible nor warranted.

For one thing, treating every piece of cargo the same, and demanding across the board screening ignores the simple reality that some cargo poses a greater threat.  Forcing airport personnel to screen obviously low-risk shipments from known shippers diverts precious resources from focusing on riskier shipments from unknown or flagged sources.  Instead, the TSA should be allowed to explore options for a “trusted shipper program.”  Business groups including the International Air Transport Association and the U.S. Chamber of Commerce support a process, whereby companies would be certified as trustworthy – and emphasis would be given to suspicious packages and shipments from unknown businesses.

And worth noting is the fact that the U.S. is not the first country to think about screening international cargo.  For example, the United Kingdom has maintained an international screening program for many years that incorporates a trusted shipper component.  Other countries, including Israel, have had success at implementing screening programs, albeit on a much smaller scale.

The 100 percent mandate also ignores political reality.  TSA Administrator Pistole has spoken out about the difficulty of reaching agreements with foreign nations, basically asking them to agree to implement U.S. standards in their airport practices.  Pistole says that agreements have been reached with countries that account for roughly 80 percent of all incoming cargo, but the remaining have so far eluded him.

In a recent blog post, security industry expert Chris Battle wrote that Congress was “arrogant” in thinking it could dictate policy to the nearly 100 countries from which it imports air cargo.   “Certain members of Congress continue to demand that the U.S. government, via TSA, somehow force other governments to follow U.S. regulations.”  Battle adds: “TSA Administrator John Pistole skirts having to state the obvious – that mandating other governments to do what the U.S. Congress says to do isn’t practical.”

Congress’ mandate to screen 100 percent of all international cargo was a knee jerk reaction to al Qaeda’s attempt to send contraband into the U.S.   Congress clearly over-reached in attempting to legislate – in a year’s time – the creation and implementation of a screening system that would be accepted across the globe. While all parties certainly share Congress’ goal of border security, a more strategic, risk-based approach that drew upon current “best practices” clearly could have provided a more expeditious route.  Hopefully the TSA’s missed deadline will allow the agency some breathing room to develop such a system, with the support of international partners and key domestic audiences.

Posted in Government Regulations | Tagged , , , , , , , , , | Leave a comment