Gaps, Challenges and Solutions

strategic transportation

& tourism solutions

Cross-Border Flow Analysis Report 10:

Gaps, Challenges & Solutions

Prepared forIndustry Canada

Prepared byInterVISTAS Consulting Inc.

26 January 2010

Cross-Border Flow Analysis Report 10: Gaps, Challenges & Solutions

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Disclaimer

Please note that the views expressed this report are not those of the Government of Canada. The findings and recommendations found within this document were made by the authors of this report. Also, any references to corporations or figures have been made generic in order to protect the identity of the organization and to not reveal any proprietary or confidential information.


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Table of Contents

1. Introduction........................................................................................................................ 1 1.1 Overview .............................................................................................................................2 1.2 Recent Border Analyses .....................................................................................................3

Section 1: Regulatory Issues and Solutions ................................................................................ 4

2. Regulatory Barriers to Cross-Border Shipments............................................................ 5 2.1 Major Side Effects from New Requirements .......................................................................5 2.2 Duplicative Meat/Food Inspections .....................................................................................7 2.3 Different Rules for Same Regulated Substances................................................................7 2.4 Duplicative Inspections at Shared Canada/U.S. Border Crossings.....................................8 2.5 Lack of Cross Designation ..................................................................................................9 2.6 Summary of Proposed Solutions.........................................................................................9

3. Challenge with Layering of New Requirements............................................................ 11 3.1 Inconsistent Officer Training and Cross Training ..............................................................13 3.2 Insufficient Industry Training .............................................................................................13 3.3 Lack of Cooperative Research Programs .........................................................................14 3.4 Lack of CBP Port Consistency ..........................................................................................14 3.5 Summary of Proposed Solutions.......................................................................................15

Section 2: Supply Chain Management and Information Technologies.................................... 16

4. Information Technology & Communication Issues ...................................................... 17 4.1 Contingencies for ACE e-Manifest Outages......................................................................17 4.2 Consistent Entry Data Information ....................................................................................17 4.3 Universal Port Code Not Functioning ................................................................................18 4.4 Specifics of Incomplete Pre-arrival Notification .................................................................19 4.5 Tax Identification Number Requirement............................................................................20 4.6 Summary of Proposed Solutions.......................................................................................21

5. Lack of Integrated Processes......................................................................................... 22 5.1 Trade Data Overlaps & Duplication...................................................................................22 5.2 Data Gathering at the Border ............................................................................................24 5.3 Agricultural Fee Payment Required at the Border.............................................................24 5.4 Less than Truckload Processing at Primary......................................................................25 5.5 Summary of Proposed Solutions.......................................................................................26

6. Ability to Meet Supply Chain/Logistics Demands......................................................... 27 6.1 Inability to Create a Bonded Shipment..............................................................................28 6.2 Insufficient FDA and USDA Hours of Service ...................................................................28 6.3 Summary of Proposed Solutions.......................................................................................30


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Section 3: Security and Risk Management Programs............................................................... 31

7. Insufficient Partnership Program Benefits.................................................................... 32 7.1 Known Low-risk Facilitation Processes Not Delivered ......................................................32 7.2 Lack of Traffic Streaming ..................................................................................................33 7.3 Lack of Exemption from New Requirements for C-TPAT/ FAST Fully Compliant

Participants .......................................................................................................................35 7.4 Company C-TPAT Participation Revoked with Non-involved Single Driver Incident.........35 7.5 Lack of Full Integration with Partners in Protection ...........................................................36 7.6 Inability to use C-TPAT for In-transit Shipment .................................................................36 7.7 Summary of Proposed Solutions.......................................................................................39

8. Summary of Solutions..................................................................................................... 40


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1. Introduction

It has now been over 20 years since the Canada/U.S. Free Trade Agreement was signed and nearly 15 years since the NAFTA agreement came into effect. Yet what continues to challenge the Canada/U.S. relationship is the gap between a policy objective of closer economic cooperation, to the reality of non-tariff trade barriers due to border and security controls. When compared to the progressive breaking down of barriers in Europe over the past three decades, the level of progress is limited due to a fundamentally different threat environment.

As the economy continues to recover, the findings from this report will be important to set the next stage in the future possibilities of joint cooperation. The ultimate purpose of this report is to propose a number of solutions to border issues identified in Reports 1 to 7 of the Cross-Border Flow Analysis that InterVISTAS Consulting Inc has conducted on behalf of Industry Canada. These reports were based on seven different companies that documented the border crossing process for the movement of goods from Canada to the U.S. to develop a set of value stream maps, descriptions of process steps for shipping goods across the border, matrices of key findings, explanations of key findings and a quantification of the border delay impacts. The recommendations that follow propose alternative processes to enhance facilitation of trade from Canada to the United States.

Specifically, the report considers:

Issues that can potentially be addressed through alternative approaches;

Issues that can potentially be addressed through better logistics/infrastructure; and

Alternative options that can potentially address security issues.

In order to manage our border effectively, both countries must work towards removing regulatory barriers and simplification of administrative and logistics processes. This achieves a dual goal of facilitating movements while ensuring that the security and fidelity of freight is adequately dealt with. Canada and the U.S. have existing platforms to deliver alternate approaches (e.g. Shared Border Accord, Smart Border Action Plan, Security & Prosperity Partnership). However, the success of implementing new initiatives to promote alternate approaches has been limited.

The proposed solutions in this report address regulatory and process issues, infrastructure requirements (both IT-related and physical), security enhancements, and others.

““We are working in partnership to ensure we manage the border in a way that contributes to the well-being of our two countries and recognize that we can enhance our security without compromising trade.”

Canadian Public Safety Minister Van Loan & U.S. Homeland Security Secretary Napolitano May 27, 2009


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1.1 Overview

This report proposes solutions to address the issues as identified in 6 broad categories:

Issue Category Alternative Approaches

Improved logistics or

infrastructure

Alternate ways of Securing

Borders

Regulatory Issues and Solutions

Regulatory Barriers to Cross-Border Shipments

Challenge with Layering of New Requirements

Supply Chain Management and Information Technologies

Information Technology & Communication Issues

Lack of Integrated Processes

Ability to Meet Supply Chain/Logistics Demands

Security and Risk Management Programs

Insufficient Partnership Program Benefits

In total, 27 gaps are identified to address deficiencies in border management. The following six chapters describe the gaps and outline a proposal of potential options and solutions to eliminate unnecessary costs and delays at the border.


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1.2 Recent Border Analyses

The analyses conducted represents independent work undertaken for Industry Canada through an independent group that was initially funded through the Security & Prosperity Partnership. It should however be noted that the topic of the movement across the Canada/U.S. border represents a significant and continued source of research studies from academia, industry and government. Creative solutions have advanced in earnest since the 1995 Shared Border Accord and especially following the tragic events of 9/11. The resultant reports have made a number of recommendations regarding the shared Canada/U.S. border. The reports were reviewed and a number of recommendations put forth in this report are similar to those proposed by these other studies. The reviewed reports include but are not limited to:

Joint U.S. Canada Transportation Border Issues Working Group - series of reports;

Canadian International Council’s Border Issues Working Group - A New Bridge for Old Allies, 2008;

Joint U.S. and Canadian Chamber of Commerce/U.S. Chamber of Commerce – Finding the Balance: Shared Border of the Future, 2009;

Brookings Institution – Toward a New Frontier: Improving the U.S.-Canadian Border, 2009; and

Coordinated Clearance Coalition – Coordinated Clearance Strategy, 2008.


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Section 1: Regulatory Issues and Solutions

Regulatory requirements for moving goods or people across borders play a key consideration for organizations regardless of the industry. A number of concepts are proposed in the section below that are intended to reduce regulatory barriers while maintaining or enhancing health and environmental safety for companies with highly integrated supply chains across North America.

In this section:




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2. Regulatory Barriers to Cross-Border Shipments

The following section reviews a number of legislative and regulatory barriers that present a significant impediment to the flow of goods from Canada to the U.S. The analysis of each issue is accompanied by a proposed solution with the objective of removing or lessening the impact of the barrier to cross border shipments that is identified.

2.1 Major Side Effects from New Requirements

The U.S. Congress has initiated a number of rules and measures to manage trade into the United States – many of which have posed an undue and micro burden on the supply chain. Each new rule has been intended to solve specific situations but cause serious negative and costly impacts in the form they have been promulgated/ implemented whether at the Canada/U.S. border or as a barrier to trade.

These actions result in significant unintended secondary impacts including major costs to compliance and serious disruptions of normal trade patterns (e.g. Country of Origin Labelling (COOL) for meat).

2.1.1 Lacey Act Amendments

As a part of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), amendments were introduced to the existing wildlife protection law, the Lacey Act, aimed at combating illegal logging practices. Upon implementation of the final stages of amendments made in 2008, the Lacey Act, established a border declaration requirement for imported plant and plant products which requires the scientific name of the plant, value of the importation, quantity of the plant, and country of harvest. The implementation of the border declaration is being phased-in and is not applicable to all goods. However, the application of the border declaration at the point of the border crossing has increased administrative burdens that further produce delays at the time of the crossing. The Lacey Act also established a substantive prohibition on the trade of plants and plant products, (including wood products) harvested in violation of domestic or foreign laws that protects plants.

The Lacey Act’s border declaration has been implemented near the end of the trade supply chain process and requires enhanced officer involvement at the border. A similar situation arose a number of years ago in which a process was put in place to control the illegal trade of ivory and could be a lesson learned.

Regulatory barriers do not necessarily occur at the border, but may affect the compliance processes to the point of

creating a barrier to trade.


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Proposed Solution: Upstream Requirements Should be Adequate

A similar approach to that used to curb the illegal trade of ivory is being used that follows the same principles of providing certification of the wood and plant products to eliminate illegal cutting and exports. A certificate system of legal wood source issued to the original exporter or in-country manufacturer establishes a record of adherence throughout the supply chain. The certificate accompanies resulting products made from that wood in all its forms and should eliminate second and third hand misinformation or the inability to determine the wood source as the wood morphs to its final array of end uses. U.S. customers are beginning to ask their suppliers to certify that their products have been harvested by legal means. Canadian suppliers have also been asked to keep proof of certification for up to 3 years and participate in an audit if deemed necessary. Regulators should allow this much more robust assurance/certification system to meet the requirements of the Lacey Act amendments for goods shipped from Canada. Otherwise, Canadian exporters should seek input from the Department of Foreign Affairs and International Trade on step by step implementation of the requirements.

2.1.2 Country of Origin Labelling (Meat) Rule

The Country of Origin Labelling (COOL) Final Rule requires large U.S. retailers to notify their customers of the country of origin for a variety of products including muscle cuts of beef and pork, as well as ground meat (but not processed product). Although COOL is not applied at the border and is not a food safety measure, imports of Canadian live cattle are down 29% and live hogs down 39% in 2009 as a result of the legislation and rulemaking. This can be attributed to American meat packers avoiding the work and cost of tracking the imported animals. COOL was included as part of the farm bill and is intended to give consumers the “right to know” where their food ultimately comes from.

Proposed Solution: Support and Monitor Ongoing WTO Panel

A World Trade Organization panel has been established on this issue, as per Canada and Mexico’s request, as the two countries believe that the COOL legislation is not in compliance with the U.S.’ international trade obligations. The proposed solution is to continue to support the WTO process and monitor the issue as it unfolds.

2.1.3 Bioterrorism Act

The Food and Drug Administration (FDA) Bioterrorism Act resulted in the discontinuance of the long standing, cost effective process of transporting trailer loads between Eastern Canada and Western Canada through the U.S. and between Eastern U.S. and Midwest U.S. through Canada as in-transit. Since the Act, such trailer loads are required to be transported within each country at a much higher cost, longer elapsed time and increased accident incidence rate in winter on the mandatory northern cross-Canada route. The purpose of the restriction remains unclear.

Proposed Solution: In-transit Pilot

Canada Border Services Agency (CBSA) is advancing an In-transit Pilot to reactivate in-transit shipments to and from Eastern and Western Canada transiting the U.S. Industry participants have


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partnered on this initiative with a similar process to reactivate shipments from Eastern U.S. to Midwest U.S. through Canada should follow. This solution could serve as a template to advance future solutions early on for impacts similar to FDA Bioterrorism Act issues.

2.2 Duplicative Meat/Food Inspections

Meat/Food inspection is performed by the Canadian Food Inspection Agency (CFIA) in the isolated “ready to load” area by specific truckload just prior to loading, in the Canadian plant warehouse area where approved stickers are applied to all cartons. Less than 6 hours later the “sealed truckload” is again inspected immediately upon crossing into the U.S. at the USDA Inspection House by the USDA. This duplicative process exists today despite a history of cooperation, mutual respect, common definition and control of meat safety between the CFIA and USDA is extensive and effective.

Further, the lack of USDA Inspection Facilities on rail tracks entering the U.S., coupled with the current USDA Meat Inspection House requirement, precludes meat products from being transported by rail across the border.

Proposed Solution: Harmonization

Recently, an agreement was reached for inspections of meat processing plants made by one Agency to be recognized and accepted by the other so both countries could be satisfied. It is recommended that meat regulations and inspection criteria of both countries be harmonized so that stickered meat packages “approved inspection report” in either country be recognized and accepted upon entry to the other country. This would eliminate the need for the current duplicative inspections by both countries. The benefits of a one-stop process would enable a more reliable border crossing for goods with the removal of another source of current day administrative and process related delays.

2.3 Different Rules for Same Regulated Substances

The same regulated substances are governed by different rules in Canada and the U.S. for border processing. While the recognition and rules remains non-harmonized for the border, a guidebook has been developed for first responders for dangerous goods/hazardous materials transportation incident safety. Transport Canada, the U.S. Department of Transportation (Pipeline and Hazardous Materials Safety Administration) and Mexican Secretariat of Transport and Communications have jointly agreed upon and developed an identification system and guide called “Emergency Response Guidebook” that is published annually.

Proposed Solution: Improve Harmonization of Rules

Canada is already a pioneer for hazardous materials harmonization. The same model could be advanced for regulated substances. As a part of the North American Competitive Council or another forum, definitions, classifications, rules and controls of the same regulated substances should be harmonized wherever possible between Canada and the U.S.


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This process is envisioned as similar to the North American approach for the “Emergency Response Guidebook” for transportation safety purposes can be applied to a jointly-recognized classification system and set of rules for regulated substances at the border.

2.4 Duplicative Inspections at Shared Canada/U.S. Border Crossings

The internal Canada/U.S. border process results in a major global disadvantage to U.S. and Canadian companies. The most glaring example of the massive competitive disadvantage caused by the current Canada/U.S. shared border process relates to the Auto Pact and vehicle manufacture. Four thousand foreign manufactured cars entering the Canada/U.S. market require a single customs clearance, arriving on a roll-on/roll-off ship that allows automobiles to be processed and sent to dealers all across both countries very efficiently. For the same number of cars manufactured in Canada and the United States, which “cross the border up to 7 times” in various stages during their integrated production process, roughly 28,000 customs and security clearances are needed to get the vehicles to market. Each vehicle may experience multiple delays each time it crosses the border, adding costs and decreasing efficiency. The direct related cost disadvantage has been estimated to be $800 per vehicle. This one example is just the “tip of the iceberg” of issues related to manufacturers in both countries.

Proposed Solution: Coordinate Canada/US Clearance

Canada and the U.S. already have a large degree of cooperation – an estimated 70% of initiatives recommended by industry towards Coordinated Clearance have been implemented. There are a number of elements that would advance Canada/U.S. towards a coordinated clearance approach (i.e., goods are cleared into Canada/U.S. at point of departure so that minimal or no processes need to take place between the two countries):

1) Mandate that all maritime container shipments to the U.S. and Canada must depart from a Container Security Initiative (CSI) Port (currently there are 58 that handle 85%+ of all incoming containers);

2) Complete development and deploy a Conveyance Security Device (CSD) smart box that may ensure that contents are secure during transit and for transhipment purposes whether by truck, rail or sea;

3) Initiate a “green lane” facilitated offload system at marine ports for truck and rail distribution (when 1 and 2 are completed all containers on a ship are known low-risk before they load and are not tampered with during ocean transit. This will allow these goods to be released without further duplicate inspections); and

4) Provide further benefits to PIP/C-TPAT program members whose supply chains span across the Canada/U.S. border, to have all goods automatically cleared across the shared border as long as all of its component parts have been cleared into one of the countries one time. This would apply to


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organizations that are members in good standing that have demonstrated good practices regardless of industry and mode.

2.5 Lack of Cross Designation

At present, there are approximately 25,000 CBP Officers and 1,500 FDA Inspectors. The lack of cross designation and cross training of specialties severely restricts the processing capabilities of these existing resources. Post 9/11 and Bio-Terrorism initiatives have resulted in the FDA and CBP implementing a limited start of FDA cross designating inspection of Bio-Terrorism FDA regulated shipments to CBP Officers.

Proposed Solution: Augment Cross-Training/Designation

A training program, complete with funding allocations, should be established to provide cross-training services for CBP Officers and FDA Inspectors. Serious expansion of cross training and cross designation between and within Agencies and Departments when on-site service is “not” available by the primary party would go along way in achieving an effective 24/7 service capability to facilitate shipments at designated Commercial ports. The primary core services are: CBP Inspection Officers, CBP Ag Specialists, FDA, USDA, APHIS.

2.6 Summary of Proposed Solutions

To deal with the challenges of meeting supply chain/logistics demands, the following is a set of proposed solutions:

Issue Proposed Solution

Major Side Effects from New Requirement

Establish upstream rule adherence

Harmonize compliance requirements

Duplicative Meat/Food Inspections

Establish a harmonized system of meat regulations and inspection criteria for Canada and the U.S.

Different Rules for Same Regulated Substances

Develop a Canada-U.S. guidebook for regulated substances

Duplicative Inspections at Shared Canada/U.S. Border Crossings

Complete remaining elements for coordinated clearance (i.e., goods are cleared into Canada/U.S. at point of departure so that minimal or no processes need to take place between the two countries):

o All maritime containers to the U.S. and Canada through a CSI Port;

o Complete development and deploy a CSD smart box;


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o Initiate a “green lane” facilitated offload system at marine ports for truck and rail distribution; and

o Allow goods to automatically clear into U.S./Canada if component parts have entered into one of the countries once already.

Lack of Cross Designation A training program, complete with funding allocations, should be established to provide cross-training services for CBP Officers and FDA Inspectors


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3. Challenge with Layering of New Requirements

The so-called “thickening of the border” is an often misunderstood term. Often, it is represented as a time delay at the land border. For example, if a truck has to wait 50 minutes in queue time, this is about 80-90 km in “thickness,” representing the equivalent distance travelled.

While there is some element of delay causing greater time and distance for Canada/U.S. logistics, it is the subject of new requirements that represents an evolution of the term “thickening.” By thickening, this report contends that it is the culmination of response costs, time delay for industry to achieve full compliance, as well as risks to policy objectives for improving security.

The uncertainty that precedes proposed bills becoming law, as well as eventual U.S. Administration implementation itself causes damage to the confidence in using the Canada/U.S. supply chain (see Figure 1).

Figure 1: General Process for Supply Chain Response to New U.S. Border Measures

PresidentSigns into

Law

New Idea fromUS Congress

Impacting BordersUncertainty

AboutPassage

AdministrationResponse &Rulemaking

UncertaintyAbout

Rulemaking

ImplementationDeadline

1. Low AwarenessToo many dif ferentideas in Congress,

many with little potentialto pass

2. Increasing ConcernImpact assessmentson businesses starts

to be known

3. Implementation Analyses

Accelerated understandingof potential rules

4. Compliance IssuesIncomplete understandingof requirements including

port inconsistency

12 months - 2 years

Awareness in Supply Chain

The thickening of the border is not just about delaying a truck by 50 minutes:

it is the culmination of costs of compliance, and the layering of new requirements on the supply chain.


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As shown at the top of Figure 1, the process starts with new ideas from U.S. Congress in proposed bills that impact borders. This could be related to passage of people or goods (e.g. origins of Western Hemisphere Travel Initiative). Due to the congressional legislative process, there is uncertainty about whether bills will make it through both the House of Representatives or Senate. Often times, new measures for borders do not make it through Congress. Those that are signed into law by the President move forward to departmental rulemaking before a final implementation date.

At the bottom of Figure 1, the awareness within the supply chain is depicted in four phases. Due to the sheer volume of legislative proposals, there is low awareness of ideas until potential passage is advanced. The full analyses of implementation impact and costs follows suit before a period of growing awareness by industry to the implementation deadline. However, even after the implementation deadline, there are compliance and process issues that deal with the ability for the entire supply chain and Federal Inspections Services (FIS) officers themselves to implement rules consistently.

Figure 2: Cumulative Impacts on Supply Chain Awareness of Border Measures

PresidentSigns into

Law



AboutPassage


UncertaintyAbout

Rulemaking

PresidentSigns into

Law


Impacting Borders


UncertaintyAbout

Rulemaking

PresidentSigns into

Law



AboutPassage


Measure 1

Measure 2

Measure 3..N

Overall Awarenessof New Measures (1+2+3....N)


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3.1 Inconsistent Officer Training and Cross Training

Whether it is the Lacey Act, Country of Origin Labelling or FDA Bioterrorism, change management is needed to ensure that the U.S. Administration properly and consistency applies new rules. The lack of consistency was noted in InterVISTAS interviews with firms. For example, it was noted that identical shipments performed for a given port, product, driver, broker, etc. but a different Federal Inspection Services (FIS) officer can often result in very different processes and treatments. Additionally, officer training and knowledge can vary greatly depending on the legacy organization from which the officer was previously employed at (i.e. Customs versus Immigration).

Proposed Solution: Augmented Training/Retraining

The quality of new border measures requires improved training for line officers. Often times it may not be an issue with the law or regulation itself, as much as it is the degree of training officers have received. Refresher training or improved internal communications materials are needed. For example, communications devices used to outline approved travel documents for the Western Hemisphere Travel Initiative was quite effective. The array of new legislation and regulations all universally being applied at the border itself has imposed tremendous pressure on the training and experience of the U.S. FIS officers and representatives charged with these responsibilities. Further, these new rules complicate the communications and education of the trade community and industry to prepare them to comply most efficiently. The costs to participate in cross-border trade today, related to upgrading internal systems and technology coupled with the required efforts to comply with laws and regulations, often exceed the cost related to wait times and the actual border crossing step.

3.2 Insufficient Industry Training

Similarly, the quality of industry training on compliance is very limited whenever new measures are introduced by the U.S. Administration to respond to congressional direction. By comparison to major changes in documentation requirements (e.g. Western Hemisphere Travel Initiative), insufficient communications results in confusion within industry participants – particularly small-to-medium sized enterprises.

There are very good models of training advanced by industry associations (e.g. Canada Association of Importers/Exporters, Canadian Chamber of Commerce, CANAMBTA, Canadian Manufacturers and Exporters). Subject matter experts also exist outside of these associations which can prove to be a valuable resource to industry. Interviews with customs brokers highlight that the value-add of the broker is increasingly to educate client groups about commodity-specific changes in rules.

Proposed Solution: Greater Industry Training

Increased training and sharing best practices is important to reach industry participants and subjet matter experts to augment the capacity to understand new requirements. Whether it is a fund or additional resources for training, working with CBP on greater outreach through the Embassy and Consulates – these are all solutions that will minimize the confusion.


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In association with its role to develop a fair, efficient and competitive marketplace in Canada, Industry Canada should assume an increased role for training programs, particularly for small-to-medium sized enterprises. This initiative will enhance the efficiency of Canadian firms who engage in the movement of goods across the Canada/U.S. border.

3.3 Lack of Cooperative Research Programs

A number of industry associations have cited the inability for U.S. Congressional representatives to accurately understand effective security solutions. However, Congressional action tends to drive a lot of the new requirements, with the U.S. Administration simply responding to direction. While the politicization of security is not a subject of this report, it is important to understand mechanisms to increasing the sophistication of working within the U.S. system.

The U.S. Commercial Aviation Partnership (CAP) is one such example of an initiative that has successfully increased the level of dialogue in security as a private-public-partnership in Department of Homeland Security (DHS) risk analysis and industry econometric modelling1. U.S. CAP was started in 2003 as a joint government-industry mechanism to deal with the economic impact of new security measures in the U.S. commercial aviation system. Outputs from the U.S. CAP process have successfully informed congressional policy makers on a wide array of security topics including air cargo screening and employee security – not dissimilar to some topics covered by border security authorities.

Proposed Solution: Develop new Cooperative Research Programs

A border impact econometric model is needed to help guide the future decision making program regarding the Canada/U.S. border. This model will provide a joint platform for assessing risk, economic importance as well as regional differences with a consistent and direct understanding of the impact to industry and trade patterns/volumes.

3.4 Lack of CBP Port Consistency

Currently, in spite of the intent to deliver consistency at the U.S.’s Northern border land ports of entry, there are differing decisions, approaches and treatment on the same issues and similar shipments across ports of entry. The cause of this appears to be due to many factors; individual port directors’ differing styles and priorities, shift supervision, staffing, officer experience and training, attention to policy conformance, facility inspection capabilities and a need to improve the communication process to exchange decisions and best practices border-wide in a timely manner.

Proposed Solution: Improved Management Systems

It is recommended that U.S. Customs and Border Protection (CBP) implement a “Port of Entry Management System” that embodies technology to accurately measure wait and throughput

1 For a good description on USCAP, see Interfaces, Using USCAP's analytical models, the transportation security administration balances the impacts of aviation security policies on passengers and airlines, 2007.


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processing times, facility and manpower utilization, monitoring of process elements timing and frequency (e.g., how many trucks/cars go to Secondary and how long is each parked there). Since cameras can record specific vehicles, a post review process could determine why each truck was sent to Secondary or why each took the time it did to be released). There is a proposal/initiative to develop a system to perform automated tracking using cameras, license plate readers, approach time measurement of trucks and passenger cars utilizing GPS and Bluetooth technology that can be monitored using desktop computer workstations. This system can be viewed selectively and simultaneously by the shift supervisor, port director, regional director and authorized headquarters personnel. Colour coding on the screen for each port of entry wait times/back-ups is displayed in green (no problem), yellow (back-up forming) and red (for unacceptable wait, for example 30 minutes or that an incident has occurred such as an accident, spill, threat etc.). The system then provides a means to view the situation, steps being taken to solve it, etc. CBSA could benefit from using a same or similar solution.

The same thinking can be applied to a communication/status system that advises users on; practices, decisions, improvements and defines how specific situations are handled by port for comparisons, determining differences as well as best practices by port. It would monitor input from trade (legitimate complaints, ideas, etc.) and advise all ports on how to handle a specific situation (e.g. the use of the Universal Port Code so that each port processes goods in the same and consistent manner).


To deal with the challenge with layering of new requirements, the following is a set of proposed solutions:


Inconsistent Officer Training and Cross Training

Implement refresher training or improved communications materials

Insufficient Industry Training Agency administering new rules required to disseminate intelligence to industry subject matter experts

Lack of Cooperative Research Programs

Utilize Cooperative Research Program to develop a comprehensive border impact econometric model

Lack of CBP Port Consistency Implement a “Port of Entry Management System”


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Section 2: Supply Chain Management and Information Technologies

The previous seven case studies examined supply chain issues such as modes of transport; shipment size and nature; the locations from which intermediate goods are sourced and the locations in the US to where goods are distributed; use of Just-In-Time vs. traditional inventory-based distribution models. Technological challenges were studied including hardware/ software/ integration issues with both US and Canadian agencies with responsibilities for cross-border traffic. The following section proposes a number of solutions to address these issues.

In this section:





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4. Information Technology & Communication Issues

The lifeblood of an effective and efficient Canada/U.S. border is just as much about the quality of information technology and communication capabilities, as it is about the physical inspections that can occur to some shipments.

The U.S. Automated Commercial Environment (ACE) is $1.4 billion program that is in the midst of implementation. It will need several more revisions until the entire project is complete. While network outages and data issues will invariably be corrected, this Chapter focuses on the structural issues that remain with an increasingly data-centric border management system.

4.1 Contingencies for ACE e-Manifest Outages

As outlined in previous studies (e.g. Canadian Manufacturers and Exporters), there is a pronounced focus on ACE data issues. This was echoed by respondents to this study as well, with a more specific focus on contingencies to respond to outages. Currently, there is no way to effectively know when there is a problem with the ACE system and the contingencies for it. Although users can call the help desk to inquire, history has shown that the help desk is overwhelmed with calls during outages and it takes long periods of time before callers reach someone to ask the question. Such a solution to an interruption in the ACE service is not acceptable to ensuring an efficient border crossing process.

Proposed Solution: Contingencies and Communications

Similar to intelligent transportation systems, CBP needs to implement a “listserv” solution to notify industry of ACE service interruption. CBP should post a system status on an ACE specific website which should include, if possible, where manual presentation of documents needs to be presented due to a systems problem and provide a historical record of these incidents so port personnel are aware of the information being provided to industry and when this occurs. This solution would enable importers to be aware of the system problems and how to react accordingly to ensure that any delays to be experienced are as limited as possible.

4.2 Consistent Entry Data Information

When a driver arrives at the border and the entry is not on file within the Automated Commercial System (ACS) but Automated Customs Environment (ACE) is satisfied, the driver is always sent to go see his/her broker.

There continue to be issues with the multi-year implementation of ACE. While these will be corrected, this

report contends there are structural issues with the approach to border

data that remain un-integrated.


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If a driver has a broker entry number, CBP should facilitate release in a more timely fashion since both broker and carrier have met their requirements. Instead, this is a systems issue. Primary officers should have an entry number inquiry in ACS to verify it is a CBP problem and not delay the movement of the freight.

ACS communications to ACE are a carrier issue before release and a broker and carrier issue after release. CBP is not taking responsibility for clearing these issues nor has it designed the proper audit trails which then put the burden on the trade to provide verification that the CBP systems are not reporting correctly.

The cost to industry when unplanned downtime occurs, in addition to the incremental workload imposed on trade and CBP staff, makes it imperative that highly available applications be developed. Key to understanding both real and perceived system availability issues is the on-going measurement and reporting to the “five nines” high availability standard.

Proposed Solution: Message Transfer

Trade, brokers and carriers, need improved communications regarding ACS to ACE and ACE status. As such, CBP should implement, communicate and provide measurement against the goal of having near perfect uptime for each of the following three systems areas, as measured against unplanned downtime. These measurements should include:

ACS to ACE, ACE to ACE communications;

ACE Messaging; and

ACE EDI/Portal interfaces.

CBP needs to develop a failsafe process to acknowledge when the ACS to ACE message transfer has taken place. This will enable it to proactively manage the distribution of these messages back to industry.

CBP with the assistance of industry need to develop an ACE supply chain best practices guide which identifies those best practices which shippers/importers, carriers and brokers should aim to achieve. Such a guide would enhance trade facilitation, security, and data quality for all parties within the new ACE e-Manifest environment.

4.3 Universal Port Code Not Functioning

For several years there had been a request from the trade community and CBP personnel to allow for a universal port code functionality that would enable entry information to be transmitted to CBP for arrival at any Port of Entry. Based on system limitations and regulatory challenges CBP has been unable to fully develop this functionality.

Since May 2005, alternative programming has been developed that will allow northern border truck entries where the transmission has identified one Port of Entry to arrive at and be processed in the Automated Commercial System (ACS) at another. For example, a truck shipment intended to


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arrive in Detroit arrives in Buffalo instead. If it meets the established requirements the shipment could be “presented” and the entry record would be transferred to Buffalo. This program would help prevent a significant number of entries from remaining unresolved and requiring deletion and cancellation processes. When either one of the following conditions is realized the user will not be permitted to change the district port of entry:

The process will only be permitted for direct arrival truck shipments on the northern border; and

If the merchandise is subject to FDA regulation or if an entry summary is on file at time of release the shipment is ineligible for this processing.

Proposed Solution: Add Universal Port Code

ACE should include universal port of entry access to the importers submitted information. The ability to change port of arrival needs to be embodied in ACE implementation to include all modes of transportation (not just truck) and all types of releases.

Included within this solution is the requirement for FIS staff to be trained to adequately process the diverted shipment in a timely and accurate manner to lessen the burden on industry when these are not handled at primary. It appears that port staff is not fully trained or are not utilizing the training to process port diversions effectively, causing additional work for industry including the brokers.

4.4 Specifics of Incomplete Pre-arrival Notification

One of the most costly causes of delays for trucks is when they are advised that their shipment does not have all required documentation completed and therefore must pull over until determination and resolution of the deficiency occurs. Further complicating the process is the lack of detail provided to the truck as to which information is creating the delay. Industry needs a way of providing a positive acknowledgement from the broker to the carrier/filer regarding paperwork, both receipt of and what is missing.

Carriers are deploying technology to provide access to the broker “entry status” and ACE shipment/trip status messages to help them plan their arrival at the U.S. port of entry. This is being done in part to help drivers and carriers manage the hours of service availability to prevent running out of hours at the port of entry. When messaging is not received, dispatch, the driver, or a service provider then make a voice call to the broker or may in some cases where the information is available, will check the broker website. If information from the website is not specific to indicate the paperwork has been received or the status of the entry, or if the broker does not have a website, a call is made which at times results in elongated “on hold” wait times waiting to verify the status of the entry. There are also times when, usually during a CBP messaging failure, broker and ACE service provider phone lines ring busy, due to the lack of automated messaging being returned to the driver or carrier, resulting in further delays.

There are several possible situations which can exist when the broker is reached during these phone calls.


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1. Broker does not have the paperwork. This can happen in situations where a fax confirmation of a successful transmission is retained. Or, where the driver has not verified the transmission record and in fact it might not have been successfully sent. Therefore no entry has been started by the broker.

2. The paperwork was sent to the right broker but at the wrong port or the wrong broker entirely. Sending paperwork to the wrong broker can occur when the shipper uses standardized paperwork with a broker’s logo on it but for a specific shipment the broker is someone else and the driver is not told of the change, or from clerical error. Therefore no entry has been started by the broker.

3. Paperwork was sent to the correct broker at the correct port but workload volume or a broker computer system problem has arisen. Therefore the entry has not been filed and certified.

4. The broker provides the caller with the entry number and the driver is good to go. ACE has not relayed the ACS message to the e-Manifest filer, and the driver may have been delayed in crossing.

Proposed Solution: Improved Positive Acknowledgement Message

There needs to be a way to allow a broker to message the carrier when they have received the paperwork. Carriers need an automated mechanism to receive a positive acknowledgement that the paperwork has been received, and ideally it has been reviewed and appears complete. Additionally, if when reviewing the paperwork a required data field is missing, trigger a message to the carrier/filer notifying them additional paperwork is required with a notification of the missing entry.

4.5 Tax Identification Number Requirement

The CBP requirement for a U.S. Internal Revenue Service (IRS) tax identification number to be provided on commercial invoices functions appropriately with the Employer Identification Number (EIN) assigned to a business. However, when the ultimate consignees are not businesses (a large portion of their custom apparel business), a personal social security number is demanded. This is a situation that results in the majority of individuals refusing to supply this information (understandably so, with identity theft as a major concern). This results in missed deliveries causing a full refund. Thus, a company incurs not only the loss of profit but also the cost of production, shipping fees and loss of goodwill.

On surface, requiring a Tax ID number appears to be a reasonable request and is for those who have an EIN assigned. The problem arises, for example, when you have a recreational or child’s club or sports team that requires uniforms and equipment being ordered for all by an individual participant or a father. That person is required to give his personal Social Security Number to receive the order as he or the group does not have an EIN and is not eligible to be granted one. In most cases the individual refuses to give his personal Social Security number to protect against Identity Theft. Thus, the shipment is not delivered or is delayed past the event date, not paid for and the manufacturer/shipper takes the monetary loss.


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Proposed Solution: Ensure Alternate Identification

In order to placate concerns regarding identity theft of individuals responsible for shipments, a computer generated code issuing system could meet the needs of the agency with an increased compliance frequency. The code could be applied for over the internet by individuals, who do not have an Employee Identification Number (EIN) and need a number to register their name and contact info, should be initiated. That code number would be accepted to be submitted for a shipment eliminating the threat of Identity Theft related to a personal Social Security Number.


To deal with the challenge of evolving information technology/communication issues, the following is a set of proposed solutions:


Contingencies for ACE e-Manifest Outages

Implement a “listserv” solution with appropriate contingencies to notify industry of ACE service interruption

Consistent Entry Data Information

A failsafe process to acknowledge when the ACS to ACE message transfer has taken place

Universal Port Code Not Functioning

ACE should include universal port of entry access to information.

Specifics of Incomplete Pre-arrival Notification

An automated mechanism for carriers to receive a positive acknowledgement that the paperwork has been received, reviewed and the subsequent outcome.

Tax Identification Number Requirement

Introduce a computer generated code issuing system for individual shippers


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5. Lack of Integrated Processes

Among the CBP’s stated mission is to “…safeguard the American homeland at and beyond [the U.S.] borders” and “…to steadfastly enforce the laws of the United States while fostering our Nation’s economic security through lawful international trade and travel”. However, the continuing introduction of new manual process requirements, CBP resources are being dedicated to processes outside of its mission. Moreover, in the relationship between CBP and other government departments, there is a maturation of work path needed to ensure that shippers and supply chain participants have a single window to meeting border requirements.

5.1 Trade Data Overlaps & Duplication

One of the greatest sources of delay from interviews with 7 companies is issues related to data. Data entry, re-entry and duplicate transmission causes:

Errors that impact Federal Inspection Services’ ability to review shipments;

Referrals to secondary processing to fix errors; and

Additional costs to correct information.

While systems are improving to allow for reduction of clerical errors, there is a system design issue that results from a number of different agencies and departments asking for the same trade data fields (e.g. package certification number, agent name, etc.).

At present, there are 25 different government departments and agencies requiring trade data (see Figure 3 on the next page). The project team conducted an analysis based on the individual 267 fields of trade data possible. The key findings are that of the 267 fields:

The majority (257) are fields that more than one department or agency require;

A small proportion (10) are fields that are unique to one agency alone (e.g. specific U.S. Environmental Protection Agency requirements); and

The largest number of fields required is 185 from U.S. Customs and Border Protection.

While these findings are important to understanding the breadth of the trade dynamic, it is the overlap between organizations that needs to be managed. By Presidential Directive, the U.S. International Trade Data System is pushing towards a single window for more secure and efficient trade.

A key concept in this is the relationship with the group asking for the largest number of fields (CBP). As shown in Figure 3, the percentage overlap ranges from 66% to 100%.


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Figure 3: Percentage Overlap of Trade Data Fields with CBP

74%

75%

78%

88%

68%

100%

86%

85%

92%

100%

86%

82%

66%

82%

93%

70%

82%

81%

99%

71%

89%

76%

73%

72%

71%

Agricultural Marketing Serv ice

Animal and Plant Health Inspection Serv ice

Bureau of Alcohol, Tobacco, Firearms, and Ex plosiv es

Bureau of Labor Statistics

Bureau of Transportation Statistics

Customs and Border Protection

Census Bureau

U.S. Env ironmental Protection Agency

Federal Av iation Administration

Federal Communications Commission

Food and Drug Administration

Federal Motor Carrier Safety Administration

Federal Maritime Commission

Food Safety and Inspection Serv ice

U.S. Foreign-Trade Zones Board

U.S. Fish and Wildlife Serv ice

Import Administration

Internal Rev enue Serv ice

US International Trade Commission

Maritime Administration

National Highw ay Traffic Safety Administration

National Marine Fisheries Serv ice

Office of Foreign Assets Control

Alcohol and Tobacco Tax and Trade Bureau

U.S. Army Corps of Engineers

Proposed Solution: Integrated Information Systems

The desired end state is a single data input/single window interface to meet all varied requirements for a shipment to be processed, assessed and released. Successful completion of the U.S. International Trade Data System (ITDS) and the Canadian Other Government Departments (OGD)


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initiatives are the approach to achieve this priority. A further step is the consideration of a single window that satisfies shipment in both directions.

5.2 Data Gathering at the Border

The efficiency of cross-border goods processing has benefited greatly from a reduction in trade statistic information gathering, quota status and recording of trade compliance data at the border itself. However, continued dedication to eliminating these requirements at the border will generate substantial benefits for industry in time savings and enhanced government enforcement of trade rules at the border itself.

Proposed Solution: Push Data Gathering Away from the Border

Shift all required trade data collection and conformance measuring activity to “pre-arrival and post-arrival” review/audit mode eliminating all such activity at the physical border during the actual crossing process.

5.3 Agricultural Fee Payment Required at the Border

A second source of unintegrated processes is the added requirements for CBP to undertake duties outside of the stated mission. In an interim rule published on August 25, 2006, Animal and Plant Health Inspection Service (APHIS) announced that it would remove the inspection exemption for Canadian-grown fruits and vegetables and the user fee exemption for commercial vessels, trucks, railroad cars and aircraft, as well as international passengers entering the United States from Canada. Implementation of the new requirements and collection of user fees was staggered in 2007 for Air, Sea and Land to allow affected industries time to prepare for the change. The fees imposed to be collected at the Border upon entry were set to fund about 200 new inspectors.

Proposed Solution: Focus CBP Activities on Core Mission

The Canada/U.S. border is one of the last places where routine fees should be physically collected. When looking at other examples of fee collection mechanisms (e.g. Electronic System for Travel Authorization), web-based methods of submitting payment is well established for border processes.

The required inspection personnel should be funded by a budget line item as other CBP and APHIS personnel are funded. Further, budgets enacted subsequent to the fiscal year 2007 for CBP agricultural Inspectors have added several thousand personnel that far exceed the 200 or so added by fee. Thus, the APHIS fee should have been removed. The Rule noted that illegal remarking of non Canadian products by a relatively few dishonest companies in Canada was on the increase as found by CBP blitzes. Instead of collecting fees at the border to find the problem, it is suggested that U.S.DA and CBP work with Canadian counterparts to identify and put out of business the crooked companies. The real problem is that for every illegal shipment found at the border entering the U.S. containing bugs etc. that those same bugs are in Canada and should have been caught on the way in at the first point of arrival using Coordinated Clearance - Point of Departure Determination Strategy cited further in this report. If the bugs get a toehold in Canada, they will naturally migrate to the U.S. and neither country needs or wants them in residence.


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Collecting a fee at the Border to hire the original new Inspectors alone does not deal with the essence of the problem.

Regarding C-TPAT and FAST vehicles that are not carrying agricultural products, these have passed the bar of known low-risk and conformed to requirements but were not exempted. The justification of using the original early 1990’s rule to apply to the Canadian Border exemption (that does not consider the geometric increase in requirements to meet post 9/11 low-risk designation) all fly in the face of established risk management targeting and more importantly common sense. Instead it appears to have been a bureaucratic approach that simply says “let’s do it the same way it was done 15 years ago.”

5.4 Less than Truckload Processing at Primary

Under current practices, less than truckload (LTL) trucks arriving at FIS Primary carrying more than 5 shipments are directed to Secondary for processing. This includes both FAST and Non-FAST shipments. As each shipment on a truck requires processing by an officer, this procedure enhances the ability for Primary to handle a greater volume of LTL trucks.

Proposed Solution: Batch Risk Assessments

Every truck entering the U.S. is required to provide full information for Risk Assessment 1 hour prior to arrival (2 hours for Trucks containing FDA regulated cargo). This allows CBP to complete its risk assessment electronically and internally determine if it wishes to perform any further secondary inspection steps either from a flag from the assessment or a statistical compliance check.

A process should be put in place to allow an LTL truck, who CBP’s pre-arrival risk assessment has determined may proceed without further inspection, to be processed as “arrived” at regular Primary allowing it to proceed without going to Secondary. Such a process would require CBP to create a data piece that batched all risk assessed individual shipments contained in the truck allowing the Primary Officer to “arrive” all in a single transaction in the booth, thus eliminating the need for a 5 shipment limit. The risk assessment process and decision-making of the Primary Officer would be no different than performing individual shipment assessments, but would not cause delays at the primary inspection booth. Further LTL with 2 to 5 shipments would be facilitated as they would be batched as well. This can be accomplished without the truck driver having any knowledge of whether he was risk assessed to proceed or to go to Secondary prior to being so advised by the Primary Officer in the booth. There is no reduction in security or the ability for CBP to make a decision on each truck as it does today. This solution would have a major impact on facilitation of the huge number of LTL arrivals saving major delay and Secondary wait-times currently being experienced.

A next step would be to review results and consider allowing a certified, conforming LTL FAST load to utilize a FAST lane as the batching approach would allow the primary officer to process an LTL truck with a clean risk assessment as quickly as a full truck load.


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To deal with the lack of integrated processes, the following is a set of proposed solutions:


Trade Data Overlaps and Duplication

Implement national and bi-national single window interface

Data Gathering at the Border

Shift all required trade data collection and conformance measuring activity to “pre-arrival and post-arrival”

APHIS Fee Payment Required at the Border

The required CBP inspection personnel should be funded by a budget line item rather than fee collection

Less than Truckload Processing at Primary

CBP should create a data piece that batched all risk assessed individual shipments contained in the truck


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6. Ability to Meet Supply Chain/Logistics Demands

As companies continue to rely upon global trade opportunities as part of their business model, they are facing ever evolving requirements, stipulations and supply logistical needs being imposed upon their operations. In order to ensure their continued competitiveness against international competitors, an efficient and effective supply chain must be developed to meet all requirements in a timely manner to minimize potential delays that may be realized at the border. This is increasingly important for those firms that operate under the just-in-time (JIT) business model.

Rather than a focus on speed, an emerging area is consistency of operations. In other words, time-definite operations for supply chains are as important to minimize carrying costs in warehouses.

As shown in Figure 4, challenges remain in:

Duplication of requirements;

Availability of services to meet demand periods; and

Fidelity of data requests to availability of data.

Figure 4: Ideal Process Flow & Current Challenges

Ideal Process Flow:

Single WindowData Transmission

BorderClearance

Delivery toDestination

Journey to Border Journey to Destination

Processes that Challenge Supply Chain/Logistics:

DataTransmissions

BorderClearance

Delivery toDestination

Journey to Border Journey to Destination

Wait UntilAvailable Service

AdditionalProcesses


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6.1 Inability to Create a Bonded Shipment

Bonded freight cannot currently be initiated for shipments originating and finishing in the same country (Canada or the U.S.) but travelling through the other. The inability to register such a shipment transaction in ACE and other systems prevents a trip involving two border crossings involving the same two countries.

Proposed Solution: Augment EDI Programming

The solution is relatively simple as long as bonded shipments are allowed: complete the necessary Electronic Data Interface (EDI) programming to incorporate in-bond shipments into the FAST program. Only known, low-risk carriers and drivers would be allowed to perform bonded truck shipments and would be responsible for maintaining the integrity and security of its sealed shipment.

6.2 Insufficient FDA and USDA Hours of Service

FDA regulated products are subject to extensive in-depth reporting and inspection yet FDA rarely works after day shift or on weekends. FDA limited inspection service availability was a universal finding in companies surveyed and a most serious cause of delay incurring extensive costs.

The lack of coverage by FDA and USDA officials has particularly impacted carriers hauling food or other impacted products to the U.S. More importantly, the unpredictability of weekend operations at the border has altered confidence in products shipped from Canada. The impact is changing the pattern for food haulers on both sides of the border crossing waiting for agencies to resume operations.

It is believed that staffing and service availability is the root cause of the mandate that prohibits Port change for FDA regulated products as well. The FDA is administered by Congress; therefore, it does not function in the Executive Branch as Customs and Homeland Security do. FDA has a stand alone history that has long been impacted by lack of adequate funding for computers, automated system development and staffing.

Proposed Solution: Improve Resources Not Just for CBP, but to all FIS Agencies

Adding additional resources to meet supply chain/logistics demands is needed to potentially move ports to 24/7 service. A forecast approach on an annual/quarterly basis needs to be augmented in order to help resource planning. While CBP itself has made substantial improvements in officer allocations and staffing models, it is important to consider that CBP is but one of several agencies important for clearing goods to the United States.

Changing ports is a function of the need to get service to shippers when needed. In the interim, a solution is needed to allow for easy changing of ports for FDA – whether be it through online or wireless communication methods.


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Alternately, other approaches for 24/7 service at ports include cross designation and off site availability of expertise via telecommunication and technology. The bottom line is that a shipment arriving at a designated full service commercial Port would be assured of receiving required review and service to facilitate approval to proceed without any lack of service holdover or delays that routinely occur currently. This could be accomplished with rearrangement of approach and would “not” require additional funding to start.


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Inability to Create a Bonded Shipment

Complete necessary EDI programming to incorporate in-bond shipments into the FAST program

Insufficient FDA and USDA Hours of Service

Expand existing resource levels or implement technological solutions to enable 24/7 port service capabilities

Lack of Land Pre-clearance Mutual recognition of border agency and other governmental department processing.


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Section 3: Security and Risk Management Programs

With the additional security measures that have been implemented since the events of September 11th, 2001, there has been an increased focus on transportation security in Canada and the U.S, particularly as it relates to the prevention of terrorist attacks. The effective management of these security risks allows Canada to compete for investments, for employment opportunities and overall enhanced competitiveness. The following section outlines some of the improvements required to facilitate efficient flows at the Canada/U.S. border.

In this section:



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7. Insufficient Partnership Program Benefits

Both the Governments of Canada and the United States have long realized that the complexity of the supply chain demands a partnership approach to improving security. In other words, security only at the border itself is counterintuitive to the reality that weaknesses can be pronounced throughout facilities, drivers and other parts of the system.

For shipments to U.S., C-TPAT is a voluntary government-business initiative that is aimed to build cooperative relationships that strengthen and improve overall international supply chain and U.S. border security. The idea is based on a set of principles and tiers where voluntary investments can be exchanged for improved facilitation.

Figure 5: Partnership Program Concept

C-TPAT Tier 3

C-TPAT Tier 2

C-TPAT Tier 1

No Participation

fastest processing

faster processing

regular processing

Investmentin

BorderPartnershipPrograms

In concept, Figure 5 illustrates the intent: greater investment on partnership programs deliver improved transaction speed and the reduction of secondary examinations.

7.1 Known Low-risk Facilitation Processes Not Delivered

The originally-envisioned benefits to members in programs such as C-TPAT have never been delivered to date. The result is a negative return on investment with respect to cost of compliance relative to facilitation benefits experienced.

Attaining full C-TPAT status can cost more that $100,000 in up-front costs and can take two years to become certified. Continuing costs include staff to insure continued compliance and to implement future security upgrades. Most participants recognize the need and importance of the C-TPAT program, acknowledge the necessary security aspects have been achieved in the program and universally urge that the final critical aspect of implementing the envisioned facilitation processes become a reality. C-TPAT participation occurs in tiers: Tier 1 involves the entity undertaking and signing off on the program requirements; Tier 2 reflects the entity has received


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and passed a CBP Compliance visit/review/audit; and Tier 3 reflects an entity has participated and implemented “best practices”. Variations in privileges and benefits occur and improve as an entity reaches a higher tier.

In the vision, announcement and development of the C-TPAT/FAST concept, fully compliant participants and their shipments were to have access to, and be processed by CBP using a “Green Lane” concept. Defined as prior to arrival carrier, driver, shipper and cargo contained information, having been submitted, risk assessed and vetted (identified as known low-risk), would be processed through the actual border essentially without delay or any further checks. Exception was when a “random or statistical compliance check” was activated.

Proposed Solution: Renew Approach to C-TPAT

Improving the facilitation of C-TPAT/FAST shipments involves 4 aspects:

1) Finalize the delivery of the “Green Lane” at the CBP Primary Inspection Process for use by fully compliant C-TPAT Tier 3 participants.

2) Make selective Infrastructure additions at major volume commercial Ports to construct separate designated FAST approach road lanes to provide unimpeded access to the CBP FAST Primary Inspection Booth.

3) Address the fact that mixed FAST/Non-FAST shipments in a single truck should “not” change the status of the FAST shipment as the cargo cannot migrate from the Non-FAST into the FAST cargo in transit, as long as the carrier and driver are C-TPAT/FAST using the C-TPAT security guidelines.

4) Implement traffic management at the approaches to Ports of Entry utilizing the “Traffic Streaming” concept detailed below.

7.2 Lack of Traffic Streaming

A major infrastructure problem is the inability for traffic streaming to occur by risk. Some improvements have been made to ensure that C-TPAT/FAST participants can actually be sped through. Although busier land border crossing have some basic segregation of traffic (i.e., automobile, NEXUS, truck, and FAST), the lack of full traffic streaming still contributes to overall congestion at a number of these ports of entry.

Proposed Solution: Develop Infrastructure to Allow Traffic Streaming

Completing implementation of traffic streaming at is critical at major ports of entry (see Figure 6). At a generic level, a number of ports have 2 lanes of traffic in each direction on the approach road to the Port Plaza that traditionally have trucks in the right lane and cars in the left. Traffic streaming involves FAST designated trucks mixing in the left lane on approach to the Plaza so they are not delayed in any line-up of regular trucks. Upon entering the Plaza, vehicles are streamed by risk. There are 5 types: regular trucks; FAST trucks, NEXUS cars, Vicinity RFID cars (PASS CARD and Enhanced Driver License documents) and regular cars (Passport documents and all other). The


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pattern of approaching the Primary Inspection Booths is shown on the chart. The advent of WHTI and the introduction of Vicinity RFID documents have facilitated the processing of cars that both decrease back-ups on the approach road and substantially increase the throughput of cars in the Plaza directly increasing the access of trucks to their prescribed Primary Booth approach.

Figure 6: Traffic Streaming Concept

Source: Coordinated Clearance Strategy, 2008

Another aspect of traffic streaming is the role of transponders. Readers need to be installed at critical approach points to each major commercial crossing if not all crossings, miles back on major highways and at key side roads utilized by local trucking to approach the crossing. When a truck reaches the approach reader the transponder will be queried and matched with the risk assessment status. If the risk assessment is completed (indicates conformance with pre-arrival notice period), a proceed signal will be sent to the truck transponder or by other means. The driver may then proceed to the crossing primary booth for clearance. If the risk assessment is not completed a pull-off signal will be sent to the truck transponder or by other means. The driver is then required to exit the approach road and proceed to an area provided for this purpose (to undertake needed corrective steps) thus avoiding queuing and prohibiting approach in front of prepared trucks.

Canadaor US

USor Canada

Mixed Flows of VehiclesApproaching Land Border(as much as 60 miles back)

Truck e-ManifestAdvisory

(ResolutionBefore Proceeding)

Truck e-ManifestAdvisory

(ResolutionBefore Proceeding)

Streaming by RiskStreaming by Risk


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7.3 Lack of Exemption from New Requirements for C-TPAT/ FAST Fully Compliant Participants

C-TPAT members have invested significant dollars in order to provide the top-of-class security solutions to their supply chains. Particularly for Tier 3 members, this investment was made with the promise of improved facilitation. However, with new requirements and fees that are advanced, there is no exclusion or relief granted – thereby watering down the initial investment of voluntary measures.

Proposed Solution: Increase Awareness of Partnership Programs in Rulemaking

Exemptions and or relief should be granted for proven known low-risk shippers (i.e. added security checks for a new reason at the border that the C-TPAT program and compliance Audit have found “no risk” with the participant). Another example is exemption from the APHIS fee for C-TPAT/FAST participants that do not carry agricultural cargo. The front end expense and active compliance related to C-TPAT certainly reflects they are “not a risk” and should be rewarded as such by exemption from such fees that do not directly pertain to the cargo type they haul.

7.4 Company C-TPAT Participation Revoked with Non-involved Single Driver Incident

C-TPAT currently operates on a zero tolerance level. A Company’s privilege is immediately revoked when any incident occurs related to them including an independent act by a driver of which the company had no knowledge or complicity. In such cases, upon detection, CBP revokes “all activity” of the company in C-TPAT, undertakes a full investigation and upon completion of the investigation reinstates the company if not involved. To our knowledge for these cases, each company has been reinstated. Unfortunately, due to those immediate revocations, a company loses enormous business as its customers require C-TPAT service and immediately change carriers. After reinstatement it is often difficult to get the business back.

Proposed Solution: Develop Alternate Approach for Minor Penalties

It is suggested that CBP continue to immediately suspend a driver found involved in an incident. However, any revocation of a company’s C-TPAT privilege should not occur until the investigation is completed and only if the company was found involved. Further, if a company was found involved, the revocation be accompanied by very serious penalties and fines. The proposal avoids the current punishing of “all” until the “bad guy” is found versus identifying the “bad guy” and doling out focused serious negative consequences. It also prevents a majority of business relocation and unwarranted serious negative impacts on innocent Trade customers.


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7.5 Lack of Full Integration with Partners in Protection

The initiative between Canada Border Services Agency and Customs and Border Protection that has resulted in a mutual recognition of the Canadian Partners In Protection (PIP) program and C-TPAT is applauded as a start. However, it does not begin to fulfill the stated need of the Trade community to avoid duplication, expense and confusion.

Proposed Solution: Complete Harmonization of C-TPAT and PIP

Finish the job by achieving full cross-designation that takes the remaining steps to allow application and acceptance “in one” to result in acceptance in the other.

7.6 Inability to use C-TPAT for In-transit Shipment

In-transit shipments (i.e., from one country through another back into the original country), not permissible since 9/11, are important for the competitiveness of a number of organization’s supply chains from discussions with companies during the case studies portion of the study. The inability to make in-transit shipments has implications on both types of routings:

1. In-Transit: Toronto to Vancouver via the U.S.

The inability to make Canada-U.S.-Canada in-transit shipments are estimated to affect thousands of trailers per day and are attributed to the Bioterrorism Act of 2001 and reporting requirements. One organization estimated that it incurred approximately $500 extra per trip for transportation routes entirely through Canada and indicated that in-transit provides more efficient delivery of product to central and western Canada resulting in predictable service levels and enhanced driver safety.

Delays can cause driver availability issues with missed schedules and freight awaiting movement without a driver. Although many of these delays are caused naturally, by snow, avalanche, rock slide, and accidents on two lane highways (from adverse weather), they typically cause 36 hour road closures that result in 1 to 2 week recovery period for operations (~12 times annually). Utilizing Canadian only routing provides no alternatives during delay situations.


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Canada

United States

Canadian Routing U.S. Routing Delay Points

Weather*(up to 36 hours + 1-2 week recovery)

Snow*, avalanche*, rock slide*(up to 36 hours + 1-2 week recovery)

Pacific Highway border(3/4 hour)

Port Huron border (3/4 hour)

~55 hour travel time

~60 hour travel timeVancouver

Toronto

Snow(2-4 hours)

Two lane highway80 km/h speed limitLimited roadside assistance

* Average 12 times per year, 36 hour road closures

Hwy 11

Hwy 17

Trans-Canada Hwy

I-94

2. In-Transit: Buffalo to Detroit via Canada

Although U.S.-Canada-U.S. in-transit routings originate in the U.S., they are relevant to this study because goods must cross the border from Canada to the U.S. One organization estimated that 800 trailers per month perform the Buffalo-Detroit or similar trip. It is estimated that the trip takes approximately 7 hours via only the U.S. or 4 hours through Canada. Further to this, the state of Ohio has placed a weight load limit per axle that results in most trailers only being filled to ¾ capacity.


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Ohio

Canadian Routing U.S. Routing Load limit

Ambassador Bridge border

~7 hour travel time

~4 hour travel time

Detroit

Buffalo

Peace Bridge border

Ohio truck low load limit

Ontario

Michigan

Pennsylvania

New YorkHwy 403/401

I-90

The lack of in-transit support in the ACE preferred manifest is causing the carriers of these goods, (when shipper, consignee, carrier, and driver are FAST certified) to be treated “as high risk” cargo. The fact these goods are technically domestic, combined with CBSA controls on the security of the shipment while in-transit, causes added delays and costs for “no perceived” increased risk that would exist for domestic freight.

Proposed Solution: Allow C-TPAT/FAST In-transit Shipments

We propose to re-instate in-transit across the U.S. truck routes (i.e., Toronto – Vancouver) for C-TPAT Tier II and above carriers with FAST drivers. Potential other measures may include the use of GPS trailer monitors, high security bolt seals, and any acceptable method of preventing the opening of trailers to (i.e., tack welding door shut).

In the ongoing development of ACE, implement in-transit support within the preferred (and standard) manifest, to automate reporting of these domestic U.S. shipments that transit through Canada between two U.S. Ports. Canada should provide support for automated reporting of domestic Canadian shipments which transit through the U.S, between two Canadian Ports. This allows taking advantage of in-Canada or in-U.S. routings for the other country domestic routes resulting in secure and efficient movement of goods in both instances. These measures should take place in addition to CBSA’s implementation of an In-transit pilot from Eastern Canada to Western Canada and the reverse through the U.S. in cooperation with CBP for its September 2009 start.


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Known Low-risk Facilitation Processes Not Delivered

Pursue augmented Green Lane capabilities, enhanced infrastructure additions and enable FAST participation for mixed FAST/non-FAST cargo shipments.

Lack of Traffic Streaming Complete full implementation of the “Traffic Streaming” Traffic Management System

Lack of Exemption from New Requirements for C-TPAT/ FAST Fully Compliant Participants

Exemptions and or relief should be granted on new requirements for existing, fully compliant C-TPAT/FAST members

Company C-TPAT Participation Revoked with Non-involved Single Driver Incident

Continue with immediate suspension of drivers C-TPAT participation but enable ongoing company participation until investigation results.

Lack of Full Integration with Partners in Protection

Continue towards full cross-designation of Canadian Partners In Protection (PIP) program and C-TPAT

Inability to use C-TPAT for In-transit Shipment

Re-instate in-transit across the U.S. truck routes for C-TPAT Tier II and above carriers with FAST drivers


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8. Summary of Solutions

The table below provides a summary of the 28 solutions produced within this report. A review of the proposed solutions indicated that:

18 solutions support alternative approaches for border clearances; 12 solutions improve borders through better logistics/infrastructure; and 9 are solutions that involve alternate ways of securing borders.

Some solutions are relevant to multiple categories.

Issue Solution Alternative Approaches

Improved Logistics/

Infrastructure

Alternate Ways of Securing Borders

REGULATORY ISSUES AND SOLUTIONS


Major Side Effects from New Requirement

Establish upstream rule adherence

Harmonize compliance requirements

Duplicative Meat/Food Inspections

Establish a harmonized system of meat regulations and inspection criteria for Canada and the U.S.

Different Rules for Same Regulated Substances

Develop a Canada-U.S. guidebook for regulated substances


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Improved Logistics/

Infrastructure


Duplicative Inspections at Shared Canada/U.S. Border Crossings

Complete remaining elements for coordinated clearance (i.e., goods are cleared into Canada/U.S. at point of departure so that minimal or no processes need to take place between the two countries):

o All maritime containers to the U.S. and Canada through a CSI Port;

o Complete development and deploy a CSD smart box; and

o Initiate a “green lane” facilitated offload system at marine ports for truck and rail distribution.

o Allow goods to automatically clear into U.S./Canada if component parts have entered into one of the countries once already.

Lack of Cross Designation

A training program, complete with funding allocations, should be established to provide cross-training services for CBP Officers and FDA Inspectors


Inconsistent Officer Training and Cross Training

Implement refresher training or improved communications materials

Insufficient Industry Training

Agency administering new rules required to disseminate intelligence to industry subject matter experts

Lack of Cooperative Research Programs

Utilize Cooperative Research Program to develop a comprehensive border impact econometric model

Lack of CBP Port Consistency

Implement a “Port of Entry Management System”


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Improved Logistics/

Infrastructure


SUPPLY CHAIN MANAGEMENT AND INFORMATION TECHNOLOGIES


Contingencies for ACE e-Manifest Outages

Implement a “listserv” solution with appropriate contingencies to notify industry of ACE service interruption

Consistent Entry Data Information

A failsafe process to acknowledge when the ACS to ACE message transfer has taken place

Universal Port Code Not Functioning

ACE should include universal port of entry access to information.

Tax Identification Number Requirement

Introduce a computer generated code issuing system for individual shippers

Specifics of Incomplete Pre-arrival Notification

An automated mechanism for carriers to receive a positive acknowledgement that the paperwork has been received, reviewed and the subsequent outcome.


Trade Data Overlaps and Duplication

Implement national and bi-national single window interface

Data Gathering at the Border

Shift all required trade data collection and conformance measuring activity to “pre-arrival and post-arrival”

APHIS Fee Payment Required at the Border

The required CBP inspection personnel should be funded by a budget line item rather than fee collection


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Improved Logistics/

Infrastructure


Less than Truckload Processing at Primary

CBP should create a data piece that batches all risk assessed individual shipments contained in the truck


Inability to Create a Bonded Shipment

Complete necessary EDI programming to incorporate in-bond shipments into the FAST program

Insufficient FDA and USDA Hours of Service

Expand existing resource levels or implement technological solutions to enable 24/7 port service capabilities

Lack of Land Pre-clearance

Mutual recognition of border agency and other governmental department processing.


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Improved Logistics/

Infrastructure


SECURITY AND RISK MANAGEMENT PROGRAMS


Known Low-risk Facilitation Processes Not Delivered

Pursue augmented Green Lane capabilities, enhanced infrastructure additions and enable FAST participation for mixed FAST/non-FAST cargo shipments.

Lack of Traffic Streaming

Complete full implementation of the “Traffic Streaming” Traffic Management System

Lack of Exemption from New Requirements for C-TPAT/ FAST Fully Compliant Participants

Exemptions and or relief should be granted on new requirements for existing, fully compliant C-TPAT/FAST members

Company C-TPAT Participation Revoked with Non-involved Single Driver Incident

Continue with immediate suspension of drivers C-TPAT participation but enable ongoing company participation until investigation results.

Lack of Full Integration with Partners in Protection

Continue towards full cross-designation of Canadian Partners In Protection (PIP) program and C-TPAT

Inability to use C-TPAT for In-transit Shipment

Re-instate in-transit across the U.S. truck routes for C-TPAT Tier II and above carriers with FAST drivers

Prepared by InterVISTAS Consulting Inc.

Airport Square – Suite 550 1200 West 73rd Avenue

Vancouver, BC Canada V6P 6G5

Telephone: 604-717-1800 Facsimile: 604-717-1818

www.intervistas.com

Documents

Gaps, Challenges and Solutions