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.