Preparing for a China Validation – Phase One

Custom and Border Protection (CBP) has recently notified C-TPAT members, who have all or a majority of their foreign business partners (FBP) in China, that they have been selected to be part of the joint validation process with CBP and the Chinese Government. CBP states that this validation will be conducted during the 2012 calendar year.

Only specific regions in China will be subjected to such foreign validation visits.

The target locations for the validations in 2012 will be the Guangdong Province, tentatively targeted to be completed during March/April, 2012.

CBP will retrieve information against the member’s IOR (Importer of Record) number(s). This will be accomplished by identifying the MID (Manufacturer Identification Code) number(s) for one or more of the member’s foreign vendors which has been designated in and/or located in or nearby the target province(s). A MID code is derived from the name and address of the entity (i.e., factory) performing the origin process.

In the e-mails that CBP has sent to members being selected for a China validation, CBP has either selected companies for validation or has requested the C-TPAT member to create a list of MID numbers for the Chinese provinces listed above.

CBP wants the member to verify that the vendor/supplier is a business partner currently being utilized /selected by the C-TPAT member’s company.

If the C-TPAT member is an importer and does not or no longer sources from the vendor, identified by the MID number, of the targeted provinces, the member must confirm and notify their assigned Supply Chain Security Specialist (SCSS). If necessary, the C-TPAT member must provide updated vendor information as requested below (if applicable).

The C-TPAT member must only provide updated information from the vendor located in either of the targeted provinces indicated above. If the company no longer sources from this particular province, they must advise accordingly. The SCSS will note such and the C-TPAT member will continue to remain on the C-TPAT internal list until another location in China is targeted.

When a SCSS selects a FBP as the validation site to be visited to complete a C-TPAT assessment, it will consist of:

  • The foreign supplier.
  • The consolidation facility, if necessary.
  • The trucking company (which will be requested to be present at the meeting).

When making a list of FBP, the C-TPAT member must provide the following information:

  1. Legal name of the factory/supplier in China.
  2. Complete factory address (complete address with city, zip code and verify province (or close proximity to targeted province).
  3. Import volume (Dollar Line Value, number of shipments, etc.) from the factory during calendar year 2011.
  4. Percentage or number of Air Shipments/Ocean Shipments from factory.
  5. Percentage of LCL (Less than full container) loads shipped versus FCL (Full container load) from factory.
  6. Importer POC (point of contact) phone contact number and e-mail address.
  7. China factory point of contact name, phone contact number and e-mail address.
  8. China factory availability for validation during the above tentative months scheduled for visit.
  9. As the Importer, the C-TPAT member must provide a brief summary of the supply chain from the selected vendor to the foreign port (official name/location of port). This must include the name(s) and addresses with the provinces of ALL parties (i.e. 3PL’s, NVOCC, Freight Forwarders, Carriers, Local Truckers, Consolidating sites where cargo/container is loaded, and /or links or sites – consolidation site, container depot, feeder vessel, rail station, etc.) where the cargo or container is moved or transported; This will enable CBP to understand the importer’s foreign supply chain from the point of origin, manufacturing, loading/stuffing and/or laden on the vessel for export.

The importer must provide ALL parties involved in this supply chain, regardless of whether or not the party is selected by the shipper, manufacturer, freight forwarders, and carrier.

The summary should describe the flow of cargo and/or movement of the container from the point of loading to the foreign port to be laden on the vessel relative to FCL’s and/or trucks (LCL’s).

In addition to the China visit, the C-TPAT member will also undergo a domestic visit which will consist of the SCSS visiting the domestic office and warehouse (importer’s or third party warehouse). This visit will most likely be conducted prior to the foreign visit.

Validation phase requirements have changed significantly since the C-TPAT member was initially or last certified. The SCSS requires the C-TPAT member to create written procedures adhering to the adage of “here today, gone tomorrow or sooner.” The C-TPAT member should assume that the same written procedures may not be implemented by the same employee every day or even every hour.

It is very important that the foreign shipper, consolidator, and trucker be prepared for the C-TPAT validation visit. If the above parties are not able to demonstrate to the C-TPAT member’s SCSS that they are meeting the minimum security requirements, the C-TPAT member may be suspended from the program even if the C-TPAT member was able to demonstrate compliance on the domestic side.

Our detailed preparation for our clients for the validation phase consists of the following steps:

  1. Create a supply chain flow chart in order to determine company exposure to risk starting with the shipper (foreign) and ending with the importer of record and the domestic consignee, regardless of who is responsible for contracting the business supply chain partner.
  2. Review the participant’s approved security profile to ensure that it is compliant with CBP’s current requirements. (The requirements may have changed and/or become more stringent since the security profile was initially submitted.)
  3. Strategize with participant’s C-TPAT team in reviewing, updating and creating written procedures in order to implement correct requirements as well as helping to implement them.
  4. Verify the security survey questionnaires have been sent and completed by the FBP, and in particular, by the companies in CHINA that will be reviewed/audited by the SCSS during the validation phase.
  5. Thoroughly review the security survey questionnaires to ascertain if the FBP is meeting the minimum security requirements and if the written procedures exist and are being implemented.
  6. Direct communication to review the FBP deficiencies that were identified in the security survey questionnaires. This will enable us to make recommendations and create written procedures.

In addition to physically visiting the C-TPAT member prior to the validation visit, we will also be present on the day of the validation to prepare the C-TPAT member.

We will assist the participant in responding to the validation report which they will receive within ninety (90) days after the validation/revalidation has been completed.

Thorough preparation for a validation visit by a SCSS is a requirement and not optional in order to maintain C-TPAT membership and to continue to receive the benefits that were the driving force behind joining the program.

CBP states “Successful completion of a joint validation will make your company eligible for increased C-TPAT benefits (Tier 2 or Tier 3).” Since a lot of work is required in order to prepare for both the foreign and domestic visit by your CBP security specialist, you should start NOW.

Remember, your CBP security specialist conducts a validation/revalidation visit to determine if you are PRESENTLY as well as PREVIOUSLY meeting the C-TPAT minimum security requirements since you became a Tier 1 Certified member and NOT since you received your last e-mail or telephone call.

Please contact Norman Jaspan Associates, Inc. so that we can help you prepare your response to CBP’s request for information relative to a China visit and then help assist you and your FBP to prepare for the validation visit.