CTPAT 15 Years Later

It has been 15 years since the CTPAT program was launched. Where is the CTPAT program today?

1) PRESSURE TO JOIN-There is greater pressure for the supplier to join the CTPAT program, as a pre-condition for doing business, by many CTPAT companies, some of which are importers and/or exporters, and especially the big retailers. No company wants to be associated with a supplier, regardless of the size, who experienced a security breach within their supply chain. The CTPAT member wants the domestic supply vendor, who either provides them services or goods, to join the CTPAT program, if eligible or if not, to meet the minimum requirements. The CTPAT member wants to reduce the risk level (no tampering or sabotage) which in turn will have a positive effect on the flow of goods to arrive on time to the store shelves or an assembly line. This is particularly important if the company operates on a 1) Just-In-Time (“JIT”) basis, where the company tries to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs) or 2) Vertical Integration, where the company relies on its company owned foreign suppliers to produce their own raw/semi-finished or finished materials. In this scenario, the company has no alternative for their foreign made materials. The CTPAT status demonstrates that the CTPAT member operates a well-organized and managed company that focuses on detail and streamlines their supply chain for both minimization of risk and costs. Since CBP is increasing the number of countries that it has mutual recognition (“MR”) with, we are seeing more foreign participants requiring their international trade partners to participate in their own country’s supply chain security program. Cargo inspection is minimal when their entire supply chain is certified in MR supply chain programs, resulting in quicker processing time of their cargo and availability of their product in the market.

Recently Norman Jaspan Associates, Inc. (“NJA”) received an e-mail from a potential client that stated the following: I recently received your contact information from my freight forwarder, who advised me that you helped them become CTPAT certified. I am a current vendor of Macy’s (MMG) and they require us to be a CTPAT member. What is required? They continued by stating the MMG made the request a year ago. After MMG learned that their vendor was still not a member, they told them that they were risking losing all current orders, if they did not join.

2) BENEFITS-Reduce the number of inspections and audits of the cargo coming into the U.S. which results in a) reduced inspection fees b) reduced custom fees and c) reduced cargo fees. In addition, CBP will place a CTPAT member in a preferential status when the CTPAT member is working with customs officials on conventional custom’s issues of origin matters and focus assessments. Additional benefits for CTPAT members include being the first companies to receive their product when the port reopens after a terrorist attack triggers a closure. Furthermore, by being a CTPAT member, the importer can protect its reputation and profits of his company by avoiding any bad press resulting from a future terrorist disaster. CBP will work with you to investigate the weak link in the supply chain if you are a member (in contrast to CBP imposing high fines for weak links when you are not a member).

I received several referrals from a customs broker, who specializes in the produce business. His customers, who had been importing produce from foreign suppliers that they had been purchasing from for many years (and in some cases the foreign supplier was a family member), were now experiencing cargo inspections. Given the length of the inspection, the product was no longer saleable, unlike other items, where there is at least secondary market. In some cases depending on the type of inspection that the container goes through, the cargo may be contaminated/destroyed and must be disposed of. The customer lost the customer and the product. When the produce customer chose to join the CTPAT program as their only recourse, they notified their customs official of their action. The customs official told the produce customer to keep him abreast of their progress in becoming a member and that it would make a significant difference on future shipments.

3) INSURANCE POLICY- 1) Freight Forwarder-Mitigate fines attributed to AMS penalty. Result: Reduce fine by 50% and in some cases, the elimination of the whole fine. When a fine is going to be mitigated  which is attributed to duties, liquidated damages, penalties, etc. the CBP officer will contact the CTPAT member’s assigned supply chain security specialist (“SCSS”) to confirm that the member is in good standing with their CTPAT SCSS. The SCSS is the closest contact that the importer physically has to CBP.

In the course of a few weeks, four freight forwarders had received $10,000 (2x $5,000.00-per penalty) in penalties, which were all attributed to violations incurred three years prior. When they provided CBP with the CTPAT account number (since the conventional 32 character SVI number does not exist), the penalties were either significantly reduced or eliminated. In another example, where the penalties were in excess of $50,000 where the shipping agent used the         CTPAT’s member AMS portal and SCAC Code without the CTPAT member’s knowledge and permission and did not file the cargo declarations 24 hours in advance, CBP reduced the penalties from $5,000.00 to $500 per penalty because the CTPAT member was Tier 2 in good standing.

ISF/10+2 (Importer Security Filing)-CTPAT members (Tier 2 & 3) can reduce the penalty phase by up to 50%.On July 2013, CBP instituted full enforcement of the penalty guidelines which resulted in liquidated damages. On June 2016, CBP began issuing penalties against importers at the Port level, without needing to pass the request up to their headquarters for permission. In addition, there is no longer a “three strikes” approach to penalties, so if you have your first late ISF filing, they can penalize you right away. A number of customs brokers across the U.S.A. have seen ISF penalties being issued on the West Coast and now on the East Coast.

4) 12-PORTAL 2.0 UPDATE: This update was originally scheduled to be deployed on August, 2013. Due to technical difficulties, it was not deployed until May 30, 2015 and has been revised several times along with other glitches that have frustrated both the CTPAT member and the SCSS. The new CTPAT 2.0 portal consists of the following:

Enhancement to the account management tool.
Merge several accounts, which can result in one validation, every three to four years, instead of multiple validations during that period.
Elimination of the old 32 character SVI (Status Verification Interface) number, where you had to know the SVI number in order to monitor the CTPAT partner. Now you only have to enter the first three letters of the member’s name as registered with CTPAT.
The new profile consists of 50+ to 70+ new questions, depending on the category in which you have applied. In addition, one must upload up to date documents, which meets today’s CTPAT requirements in the respective security profile section.

Many companies have not responded to the new Security Profile Portal 2.0 update because they do not know how to  answer the new questions or the employee who initially uploaded Portal 1.0 is no longer with the company or associated with a different department. Regardless, the SCSS, looks at the Anniversary Date, which is listed on the CTPAT Account page. If the Anniversary date is prior to the date that you are viewing the portal, the Security Profile Status will read “Annual Review Overdue”. If the SCSS has accepted the response to the update, then the Security Profile Status will read “Approved” in contrast to “Rejected”, which means the SCSS did not accept it.

NJA works with CTPAT members by providing the following services:

Verify existing Business Entity Information
Verify existing information in the portal, based on the member’s present supply chain and work with them in creating a response to the new security profile.
Create documentation (forms, checklists, procedures) and questionnaires, which upon being completed are uploaded in the respective security profile sections. Even though some of the documentation may have been updated within the last two years, the SCSS states that it must be updated to reflect today’s requirements.

Anniversary Date after Security Profile Portal 2.0 has been updated.-After the security profile has been updated, you have to conduct  a review of your existing profile no later than one day prior to the Anniversary date. Within 90 days of the anniversary date, a small box will appear under each of the sections in the security profile. You check the boxes if the material in that section is still up to date based upon your supply chain and the present CTPAT requirements. It is up to the discretion of the SCSS, to determine if your response, based on when you last submitted it as well as the uploaded documentation, meets the minimum requirements on the date you submitted it.

A CTPAT member upon reviewing his CTPAT Accounts page noted that he was within the 90 day period prior to his Anniversary date to conduct his annual review.  He was now conducting the annual review 10 months after he had completed the Portal 2.0 update. The member checked each of the boxes because everything remained the same in his supply chain.

The SCSS rejected 40% of the sections in the security profile because they wanted the documentation brought up to date based upon the date that he was conducting the review and not the date that he performed his initial Portal Update 2.0.

5) VALIDATION –In the majority of the cases, the initial validation will be performed only after a foreign site has been selected for a visit by a SCSS. If no foreign site is selected, the initial validation will not be performed. The validation consists of the SCSS visiting the CTPAT member’s office and/or warehouse, which could be their own or a third party warehouse. In addition, they will visit the 1) foreign vendor 2) trucking company 3) consolidation facility, if applicable and the 4) port that the container is leaving from, if it has already not been visited. If any of the four entities were previously visited on behalf of the CTPAT member scheduled for the validation or on behalf of another CTPAT member and they were not able to meet the minimum security requirements, then the SCSS can elect to visit the foreign facility(s) again. Also if the visit took place more than 2-3 years prior, it may generate another visit.

The questions that NJA is most frequently asked is: How do I prepare for the domestic visit and what do I tell my foreign facility? Do I have to prepare the foreign supplier if a) my Quality Control personnel and/or Salesman visit the facility once a year to review new designs, quality control and pricing, b) the factory was visited by a third party service (“TPS”) who performed a social compliance audit and/ or a CTPAT style visit and scored well on their report and/or received a certificate. We have found that during the TPS visit, the foreign facility produces documents, which the TPS representative checks off on their chart as having been viewed. They do not question them on their understanding or if it is being implemented.  The other difference between a TPS and a CBP CTPAT audit performed by the SCSS is the way that it is scored. The CBP CTPAT audit is scored using a weighted value and the TPS review is scored on an equal percentage basis. When you rescore a TPS audit based on the weighted CTPAT score, the result may be a failing score for the foreign entity.

Unfortunately, it is not so simple. Even if the TPS identifies a problem, they do not provide solutions. One of our clients, whose foreign vendors had undergone both CBP CTPAT audits and TPS reviews, stated that most foreign vendors should be able to pass a TPS review with minimal preparation. However, you cannot rely on the foreign supplier to be prepared for a CBP/CTPAT Audit, even if they had a visit by a TPS. The following story will demonstrate this, even if the majority of a consolidation facility’s customers are CTPAT members. A hat supplier located in Vietnam shipped their product to a foreign consolidator in Vietnam, which was selected by a USA freight forwarder. NJA prepared the foreign supplier by visiting them twice and being present for the validation. Prior to going overseas, NJA contacted the freight forwarder, who in this case used another CTPAT freight forwarder, who was responsible for selecting the stuffing facility. The second freight forwarder stated that the consolidation facility had two third party audits performed on behalf of well-known retailers and the majority of the other USA freight forwarders that used the consolidation facility in Vietnam were CTPAT members themselves. Based on that, the decision was made by the client that we did not have to prepare the foreign consolidation facility for the validation. The foreign supplier was well prepared for the CBP/CTPAT audit; however the consolidation facility did not fare as well. The consolidation facility did not have any written procedures nor conducted a 7 point inspection which met the CTPAT minimum requirements. However the office issued 7 Point Inspection forms completed by the main office which had the name of the supervisor on it. When the validation took place which lasted two days, the factory scored a 100% and the consolidation facility 25%. The CTPAT member was suspended from the program. In addition, one of the hat company’s other USA customers, who was also a CTPAT member had their status in jeopardy because they used the same consolidation facility.

For a domestic visit, the CTPAT members MUST have the following:

Written procedures, checklists, forms and completed questionnaires.
Knowledge of what the document means and why the CTPAT member is performing the procedure that is described in the document. For example: At a validation, the member was asked by the SCSS, how long do you keep the used seals and why do you conduct a 7 point inspection. For the first question, you could state that you read about it. For the second question, you have to know the reason.
Testing the system. How do you verify that the procedure is being implemented correctly? As an example, the SCSS recommended that the President of a company test whether his staff was really conducting a 7 point inspection, even though the form was completed. The President placed a card in the back of the container which stated, if you find this card, you are entitled to a free gift certificate to Starbucks. Nobody came to the office to collect the gift certificate. When the President met with the crew that allegedly did the inspection, he showed them the card. The following day he had a line of people outside of his office waiting to collect their gift certificate.

6) Revalidation-At this point the majority of the Revalidations are based on the foreign supplier and their business partners being able to demonstrate that they could meet the minimum security requirements. Typically this is written up in the validation report by the SCSS as follows: A visit was made to Name of CTPAT Member’s foreign supplier, located in insert city/name of country.  By phone or domestic site visit -The CBP revalidation team reviewed the importer’s security procedures and systems in place.  The group worked together to review and discuss the overall supply chain security program for Name of CTPAT member, including their interaction with business partners and review the company’s efforts to correct any gaps noted in the original validation report”.

If the foreign supplier and their business partners have not been visited by a SCSS on behalf of another CTPAT member within the past 2-3 years (timing up to the discretion of the SCSS) or a recent visit resulted in recommendations and actions required, then the foreign site will be visited. Likewise if the foreign site did well during their last visit and the timing of the visit was recent, then the SCSS will select another foreign site for the visit.

Regardless of whether the CTPAT member is undergoing a validation or a revalidation, they must be thoroughly prepared, even if they have already sent you written procedures.  The written procedures must still be verified by an onsite visit. NJA will perform the following services for a foreign validation:

Work with the foreign supplier and their business partners by phone and e-mail prior to the onsite visit.
Communicate with CTPAT’s USA’s freight forwarder to obtain information as well as verify the information relayed by the foreign entities. You do not want any surprises at the validation. In most cases, CBP will audit the supply chain based upon the information that the freight forwarder and the CTPAT member have filed with customs (for ex: ISF, AMS, etc.).
Visit the foreign entity(s), conduct an audit, review existing procedures to see if they are legitimate (do not belong to another company) and are being adhered to. Create written procedures, checklists, forms and questionnaires. Prepare a TO DO LIST. Please note that if English is not the native language, the SCSS will expect to see the documents both in the native language and in English for their review.
Upon return to the USA, work with the foreign entity(s) in making sure that the documents are completed and being implemented.
Revisit the foreign entity(s) in advance of the site visit by CTPAT. Make sure everything has been implemented and conduct a mock validation in order to determine if they know the answers to the questions as well as what documentation supports the answer and why and what the documentation is used for.

The SCSS appreciates the fact that the foreign entity(s) take the CTPAT program very seriously with advance preparation. An unprepared foreign entity will not only score poorly on a validation and run the risk of being suspended from the program, but it could also affect the cost to their supply chain. For example, a CTPAT member contacted NJA after they had been suspended from the program because they were not prepared for the visit to the factory and the consolidation facility, which was operated by the port. They scored so poorly on the consolidation visit that they were forced to use a consolidation facility which was located outside of the port which cost more money.

NJA has traveled extensively throughout the world (see full list) preparing foreign entities which can include the foreign factories, consolidators, trucking companies, agent and the port. Some of the countries where we have spent a significant amount of time in include: India (Delhi, Haryana, Noida, Panipat, Lucknow, Mumbai, Boisar, Maharashtra, Bengaluru, Chennai.  Some of the industries included-Textiles, Chemicals, Food Processing, Pharmaceuticals, Fabric-largest companies in the world, Rugs, Books, Garment), China (Footwear, Garments, Bicycles & Accessories, Electronics, Housewares, Food Processing, Textiles, Silicone, Apparel, Fabric) , Hong Kong, Thailand, Israel, Italy, Turkey and Brazil.

The greatest challenge is be able to determine, in a short period of time what the foreign entity actually has in place in contrast to what they claim. In some cases they put on a “Dog & Pony Show” in order not to embarrass themselves.

Prior to arriving at a foreign entity, they will frequently try to demonstrate how well prepared they are stating or showing me the following:

I never had a problem with a USA customer and thus I must be doing everything correctly.
I did well on a third party audit and here is my certificate.
Somebody gave me written procedures so I am prepared. As an example, a company in the garment business gave me a set of procedures to review while on site which he received from another company that NJA had prepared 8 months prior.
I am doing everything to the letter of the law in my country so I must be prepared. As an example, a company in El Salvador had a guard service, which carried firearms and operated on a 24 hour shift, with two 1 hour breaks. In addition, the guard who monitored the CCTV operated on a 12 hour shift. Even though it was legal in their country, this fact scenario would have resulted in an Action and/or Recommendation by CBP.
Viewed the CTPAT program on line.
Have procedures in place which are being implemented correctly. As an example, in Thailand, the employees are issued an ID badge because they have in excess of 50 employees. In addition, they are a big fan of Hello Kitty. The ID badge which had the company name, picture, employee name, etc. was covered by the Hello Kitty stickers. Furthermore when the employees entered the facility on their motorcycle, they are wearing a face covering in order to keep the fumes away from them. Upon entering, the employee would show the guard their ID badge but the guard would not ask them to remove their face covering in order to verify the picture against the face.

Preparing for China Validation

Custom and Border Protection (CBP) notifies CTPAT members, who have all or a majority of their foreign supply chain business partner (FSCBP) in China, when they have been selected to be part of the joint validation process with CBP and the Chinese Government. This is in contrast to a non-joint validation which takes place in any country other than China, where the foreign government only participates as an observer when they are seeking mutual recognition or the mutual recognition procedures are being validated by the CTPAT’s Supply Chain Security Specialist (“SCSS”).

When a factory has been tentatively selected by the SCSS, its name will be submitted to China Customs. This may result in China Customs visiting the facility in order to determine if they would pass an audit by the SCSS.

The Chinese Government will make the final determination if the selected location will receive a validation visit.

CBP will retrieve information from 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.

CBP has either selected companies for validation or has requested the CTPAT 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 CTPAT member’s company.

If the CTPAT member is an importer and is no longer sourcing from the vendor identified by the MID number of the targeted provinces, the member must confirm and notify its assigned SCSS. If necessary, the CTPAT member must provide updated vendor information as requested below (if applicable).

The CTPAT member must only provide updated information from the vendor located in the targeted provinces. If the company no longer sources from a particular province, they must advise the SCSS. The CTPAT member will continue to remain on the CTPAT internal list until another location in China is targeted.

When a SCSS selects a FSCBP as the validation site to be visited, it must complete a CTPAT assessment, which will consist of the following:

The foreign supplier
The consolidation facility, if necessary.
The trucking company (which will be requested to be present at the meeting).
The data for the FSCBP to be supplied must provide the following information:

Legal name of the factory/supplier in China.
Complete factory address (complete address with city, zip code and verify province or close proximity to targeted province).
Import volume (Dollar Line Value, number of shipments, etc.) from the factory during prior calendar year.
Percentage or number of Air Shipments/Ocean Shipments from factory.
Percentage of LCL (Less than full container) loads shipped versus FCL (Full container load) from factory.
Importer POC (point of contact) phone number and e-mail address.
China factory point of contact name, phone number and e-mail address.
China factory availability for validation during the above tentative months scheduled for visit.
As the Importer, the CTPAT 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 CTPAT member will also undergo a domestic visit.  The SCSS will visit the domestic office and warehouse (importer or third party warehouse). This visit will most likely be conducted prior to the foreign visit.

Validation phase requirements have undergone significant changes since the CTPAT member was initially or last certified. The SCSS requires the CTPAT member to create written procedures.

The foreign shipper, consolidator, and trucker must be prepared for the CTPAT validation visit. If they fail to demonstrate compliance with minimum security requirements, the CTPAT member may be suspended from the program, even if the CTPAT member demonstrated domestic compliance.

NJA comprehensively prepares its clients for the validation phase with the following steps:

Create a supply chain flow chart in order to analyze 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.
Review the participant’s approved security profile to ensure that it is compliant with CBP’s current and more stringent requirements. Strategize with participant’s CTPAT team in reviewing, updating and creating written procedures in order to implement correct requirements
Verify the security survey questionnaires have been sent and completed by the FSCBP, and in particular, by the companies in China.  The responses will be reviewed/audited by the SCSS during the validation phase.
Thoroughly review the security survey questionnaires to ascertain if the FSCBP is meeting the minimum security requirements and if the written procedures exist and have been implemented.
Review the FSCBP deficiencies identified in the security survey questionnaires, and make recommendations and create written procedures.
In addition to preparing the CTPAT member in advance of the validation visit, we will also be present at the validation. 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 with the SCSS is a mandatory prerequisite in order to maintain CTPAT membership and to receive the benefits that were the driving force behind joining the program.

Successful completion of a joint validation will make your company eligible for increased        CTPAT benefits (Tier 2 or Tier 3), according to CBP. 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.

Your CBP security specialist conducts a validation/revalidation visit to determine if you are presently as well as previously meeting the CTPAT minimum security requirements since you became a Tier 1 Certified member. 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 FSCBP to prepare for the validation visit.

The Urgency to Join

Custom Brokers, NVOCC’s and Freight Forwarders Urge Clients to Join

When the Customs Trade Partnership Against Terrorism program (“CTPAT”) was launched in April 16, 2002 by Customs and Border Protection (“CBP”), most companies viewed the voluntary effort to protect the import supply chain as any other CBP initiative.

Today, the importer joins the CTPAT program because it is receiving pressure from U.S. Customs, his customer or has been recommended to join by the customs broker, NVOCC or the freight forwarder (“Service Provider”).

As the CTPAT program evolved, companies realized that in order to submit a security profile that reflects their total operation, they needed to create CTPAT teams consisting of employees with knowledge of the company operations, human resources, information technology and logistics.

Eventually, both the importers and service providers recognized that the benefits of CTPAT membership far outweighed the efforts necessary to join the program. These efforts include diversion of staff resources and creating new company procedures which never existed prior to 9-11.

It has become the norm rather than the exception for a Service Provider to join the CTPAT program. The Service Provider will join if its customers are CTPAT members, its competitors are CTPAT members, it wants to bid for the importer’s business (when the importer is a CTPAT member), or its CTPAT customers are approved for the Tier 2 validation phase. It is common for a CTPAT compliant importer to only engage a CTPAT compliant service provider.

Regardless of whether the importer is a member of the CTPAT program, the service provider has an obligation, (according to the minimum security criteria which was issued by CBP on December 31, 2006) to determine the importer’s status in the program. For those importers who are not members of the CTPAT program, the service provider encourages its customers to join CTPAT. Norman Jaspan Associates, Inc. (“NJA”) assists the service provider in meeting this requirement.

NJA prepares a letter for them to send to their clients introducing the CTPAT program, along with information explaining the added benefits. NJA provides a CTPAT Customer Response Form which the customer completes and returns. This enables the service provider to meet the CBP requirement of keeping track of which customers have been notified of the program and their CTPAT status.

In addition to CBP’s requirement where the service provider contacts the client to educate him about the program, the service provider also encourages its clients to join CTPAT to maintain its market share. There are service providers that solicit CTPAT services, through an affiliate company, from importers that are not their clients. In most cases, the association between the service provider and the affiliate are generally not known.

Many of our Service Provider clients have experienced loss of their importer clientele to other Service Providers. When the affiliate firm assists the importer in joining the CTPAT program, it not only develops the information that is needed to conduct the CTPAT security review, but it also determines the rates that the importer’s own Service Providers are charging.

When the importer becomes a member of the CTPAT program, the affiliate firm then approaches the importer and makes an introduction to its affiliated Service Provider. Since the Service Provider, not previously associated with the importer, is knowledgeable of the existing rate schedule, the original Service Provider runs the risk of losing the importer’s business.

In order to prevent the potential loss of business, NJA trains the Service Provider (management and sales staff) to take a pro-active approach by contacting their clients and speaking to them by telephone or in person. The client is then sent information about the CTPAT program. If the client expresses an interest in the CTPAT program, NJA will follow up with the client in conjunction with the Service Provider through a phone call, meeting, or CTPAT seminar.

In summary, the Service Provider should actively contact its clients about the CTPAT program. Today, joining the CTPAT program is the norm rather than the exception. Therefore, if the Service Provider’s client is going to join the CTPAT program, it is preferable that the client join under the direction of his own Service Provider, rather than its competitor.

Container Seal Regulation

IMPORTERS FACE PENALTIES IF THEY FAIL TO MEET NEW CONTAINER SEAL REQUIREMENTS

Effective October 15, 2008, a new seal requirement was instituted by U.S. Customs & Border Protection (CBP), specifying that all ocean containers entering the United States be secured with a high-security seal meeting ISO/ PAS 17712 standards (International Organization for Standardization Publicly Available Specification 17712).

The ISO/PAS 17712 standards require seals to meet or exceed certain standards for strength and durability so as to prevent accidental breakage, early deterioration (due to weather conditions, chemical action, etc.) or undetectable tampering under normal usage. ISO/PAS 17712 also requires that each seal be clearly and legibly marked with a unique identification number. For access to the full text of the Federal Register notice, please utilize the following links:

http://edocket.access.gpo.gov/2008/E8-18174.htm (html version) or http://edocket.access.gpo.gov/2008/pdf/E8-18174.pdf (pdf version).

This new seal rule, which now applies to all importers, regardless of CTPAT (Customs-Trade Partnership Against Terrorism) status or membership, has been a requirement for CTPAT members since its inception in 2001. (This is found under the Container Security, General section of the CTPAT Security Profile).

The burden of ensuring that high-security seals are utilized on import containers now falls on the importer, even if the importer is a CTPAT member. The importer is the party that CBP will hold responsible, should an import container be found lacking a high-security seal. (CBP may assess civil penalties for violations of the container seal requirements.)

Understanding which party is responsible for affixing the high-security seal to the container will enable the importer to confirm the use of high-security seals.

IMPORTER: The importer supplies seals to its foreign suppliers and/or foreign consolidators.
OCEAN CONTAINER LINE: The ocean container line provides one seal with every empty container.
It is the responsibility of the importer to confirm that high-security seals are utilized. If the ocean container line is a CTPAT member, you can have a high degree of confidence that high-security seals are utilized. If the ocean container line is not a CTPAT member, a clause should be included in the contractual agreement when rates are negotiated.
FOREIGN SUPPLIER: The foreign supplier selects the consolidator and/or ocean container line.
It is the responsibility of the importer to confirm with the foreign supplier how seals are obtained. The importer should require that the foreign supplier provide written documentation as to how the seals are obtained, along with seal specifications and/or a sample seal.
FOREIGN CONSOLIDATOR: The foreign consolidator picks the ocean container line.
It is the responsibility of the importer to confirm with the foreign consolidator how seals are obtained. The importer should require that the foreign consolidator provide written documentation as to how the seals are obtained, along with seal specifications and/or a sample seal.
FREIGHT-FORWARDER: The freight-forwarder picks the consolidator and/or ocean container line.

It is the responsibility of the importer to confirm with the freight-forwarder, how seals are obtained. The importer should require that the freight-forwarder provide written documentation as to how the seals are obtained, along with seal specifications and/or a sample seal.

When an import ocean container is received (opened) in the U.S., it is the responsibility of the importer to ensure that a high-security seal was utilized. If the importer is not receiving the cargo directly (e.g.: it is sent directly to a customer or to a third-party warehouse), the importer must communicate the steps listed below to the party that physically receives the container.

The employee responsible for cutting/removing the seal from an ocean container must verify the physical seal number against an anticipated seal number (e.g.: manifest, BOL, internal document, etc.). The anticipated seal number should be obtained in advance of the container’s arrival. The anticipated seal number should not be obtained from the paperwork that the driver presents upon delivering the container.

Before cutting/removing the seal from the ocean container, the employee should visually inspect the seal, and then physically pull/tug on the seal to ensure that it has not been tampered with (glued or welded back together).

Under no circumstances should the driver be the person responsible for physically cutting/removing the seal or verifying the seal number.

If the seal is low-grade (not a high-security seal), a designated employee should be responsible for contacting the party responsible for loading the ocean container (foreign supplier or consolidator) and informing them of this transgression. We recommend that you contact the seal manufacturer if you are unsure if a seal meets the ISO/ PAS 17712 standards.

If the seal number does not match or the seal and/or container appears to have been compromised, a designated employee should be responsible for contacting CBP.

In the event that there is a problem with the shipment, CBP will want to inspect the seal. Therefore, CBP highly recommends that cut/removed seals be saved, along with the corresponding paperwork, for 6 months.

Most importantly; if an ocean container arrives without a seal or without a high-security seal, CBP may not only assess civil penalties against the importer, but will also hold up the container. The latter may be more detrimental to an importer than a possible fine, since it may result in cancelled orders due to the failure to meet delivery dates.

For access to CBP’s Container and Seal Inspection Workshop booklet, please utilize the following link: http://normanjaspanassociates.com/seals.html. -**PLEASE CONNECT THIS TO LINKS BELOW** This booklet is an excellent educational tool. We recommend that you print it and keep a copy in your receiving department.

For more information regarding the new seal requirements or how the CTPAT program incorporates the seal requirements, please contact us.

Seal Security & Best Practices-Containers (7 Point Inspection) & Tractor Trailers (17 Point Inspection):

https://www.cbp.gov/sites/default/files/documents/container_inspection_3.pdf

Refrigerated Container Inspection Process:

http://www.delacruz-chb.com/files/2007_CTPAT_Seminar_Refrigerated_Container_Inspection_Workshop.pdf