Several times a year I have an opportunity to travel across Canada, working with transportation and procurement managers on logistics issues. This activity is without question one of the most enjoyable aspects of my profession, but it also serves as a reminder of the need to put the current framework of border-security regulations in perspective.
The security programs in effect today (and those still to come) can be complex and confusing for many importers and exporters. While awareness of these initiatives is high in the transportation service sector, the same cannot be said for the shipping community. Surprisingly, many companies are still unaware of the various programs available to the trade community. And many of those who are aware have unfortunately shied away from participating, fearful they will incur unforeseen costs or onerous administrative requirements.
The new security programs are an extension of the Smart Border Declaration signed by the Canadian and US governments in 2001. That declaration signaled the intent of both countries to address the need for improved security in four key areas at our borders: the secure flow of people, the secure flow of products, infrastructure investment and improved information sharing. Both Canada and the US have made tremendous progress in all four areas since 2001 so the question remains, why aren’t more companies aware of, or participating in, these programs?
The lack of general awareness can be explained by the fact that these topics are not regularly featured on television, radio or generic Internet news sites. They are a regular feature however in trade magazines, so logistics employees do have an opportunity to obtain information from these sources. So why aren’t logistics and supply chain professionals pushing their employers harder to participate? Perception seems largely to blame, not knowing what’s really involved and concern their organizations will be identified as non-participants (i.e. security risks) if they attempt the process then decide not to follow through.
I addressed this issue in a recent presentation to a group of procurement managers, using the Nexus program as an analogy. Nexus enables pre-approved individuals to cross the Canadian/US border quickly in designated “fast lanes”, avoiding long lineups and delays. The process of being pre-approved involves a criminal background check to ensure the traveller is “low-risk”. In other words, Customs officials can be reasonably confident that Nexus participants will not abuse the program by trying to smuggle goods into the country in an attempt to avoid paying duties and taxes. The value of speedy border crossing and infrequent inspections is that commodity valued so highly by so many…Time! You only have to be stuck on a border-crossing bridge once on a long weekend to fully appreciate the value of a program like Nexus. I joined the program for that very reason and feel strongly that the benefits outweigh the (perceived) tradeoffs.
In drawing a parallel between Nexus and commercial goods programs like Canada’s CSA (Customs Self-Assessment), PIP (Partners in Protection) and the American C-TPAT (Customs-Trade Partnership Against Terrorism) program, audience comments and questions quickly illustrated the differences in perception. One of the first responses to my analogy was “Nexus is for people, so it doesn’t apply”. But that’s exactly why it does apply. Recall two of the four key areas mentioned above, secure flow of people and secure flow of goods. Nexus has been very effective in identifying low-risk travellers and rewarding them with the ability to cross the border without delay or (frequent) inspection. This risk-management approach enables Customs to focus its resources on non-Nexus travellers. By volunteering my security-worthy status to Customs as a Nexus traveller I receive certain benefits that I value as important. For commercial goods shipments, the Nexus concept is mirrored in programs like CSA, PIP and C-TPAT. These cargo security programs afford importers and exporters the same potential benefits.
The second, and perhaps more strenuous, objection to my use of Nexus as an analogy involved the individual’s requirement to undergo a criminal background check, the perception that now “they” will know everything about me. Of course that’s the “big brother” syndrome and in fairness it occurs to all of us at one time or another. But under closer scrutiny, what have I divulged that wasn’t known already? My passport status, tax records, birth record and criminal background status are already known to some government agency. By applying for Nexus I have simply consolidated that existing information for another government agency to my benefit.
I would argue the same is true for companies. Your organization’s information with respect to business registration/incorporation, business type, industry category, taxes, goods imported and exported already exists in one government agency or another; by joining the new cargo security programs are companies simply not consolidating existing information for Customs to their benefit?
A third perception is that companies will incur significant costs by joining these programs. All of these programs are voluntary and free to join; granted, there may be IT costs related to transmitting required data elements to Customs under the CSA program. On the other hand, CSA enables importers to reduce the number of transactional transmissions by aligning financial records with Customs requirements. Another misconception surrounding PIP and C-TPAT membership is that participants will be asked to build a fence around their buildings or property. This is not necessarily true. If you manufacture or distribute common (low risk) goods it is unlikely Customs will require you to fence your property. If, on the other hand, you manufacture radioactive isotopes this may be a requirement, although if your company is in that business you hopefully have a fenced property (or equivalent level of security) already.
A certain synergy exists between all of these risk management programs, greater rewards in exchange for demonstrated higher levels of security. Perhaps the real reason more companies aren’t affording themselves the chance to receive these tangible benefits is simply a question of perception.