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Customs-Trade Partnership Against Terrorism (C-TPAT): Supply Chain Security

Did you know that U.S. importers often see reduced inspections and faster release times after becoming Customs-Trade Partnership Against Terrorism program members? This presentation covers the benefits and requirements of participation in the C-TPAT supply chain security program, including who can participate, who should participate, and the overall importance of supply chain security in today's world trade environment.

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Customs-Trade Partnership Against Terrorism (C-TPAT): Supply Chain Security

  1. 1. C-TPAT: Supply Chain Security Follow us today! @Livingston_Intl
  2. 2. Agenda ●Current Trade Environment ●C-TPAT Overview ●Program Benefits ●Minimum Security Criteria ●Security Best Practices ●Annual Validation Process ●Trade Account Management ●Summary
  3. 3. Current Trade Environment
  4. 4. Current Trade Environment Security and trade facilitation ●Known vs. unknown parties ●Partnership = Known party = low risk = trade facilitation ●Low-risk partners provided priority at all times
  5. 5. Current Trade Environment Security initiatives ●C-TPAT: Customs – Trade Partnership Against Terrorism ●Cornerstone of CBP’s layered approach to security ●CSI: Container Security Initiative ●ATS: Automated Targeting System ●FAST: Free and Secure Trade ●Importer Security Filing (“10 + 2”): Pre shipment data sets required for ocean imports
  6. 6. Current Trade Environment C-TPAT: CBP and business working together for a safer world ●Partnership to enhance cargo security ●Securing the supply chain against terrorism ●Facilitating legitimate trade ●Communication, knowledge exchange and trade best practices
  7. 7. Current Trade Environment C-TPAT: Mutual Recognition Arrangements (MRA) ●Signed document between CBP and a foreign Customs Administration ●The security requirements, validation and audit procedures of the foreign program are the same or similar to C-TPAT. ●Member of one program is afforded benefits of the other program
  8. 8. Current Trade Environment C-TPAT: Current MRAs (As of December 2014) ●New Zealand (2007) ●Canada (2008) ●Jordan (2008) ●Japan (2009) ●Korea (2010) ●European Union (2012) ●Taiwan (2012) ●Israel (2014) ●Mexico (2014) ●Singapore (2014)
  9. 9. C-TPAT Overview
  10. 10. C-TPAT – Overview Supply chain security model: Security within each segment of the supply chain  Production  Transportation  Importation  Distribution Security criteria specific to each segment  Foreign manufacturer  Forwarder/consolidator  Carrier  Importer  Broker
  11. 11. C-TPAT – Overview ●Goal –Enhance entire supply chain process for each trade relationship, from point of origin to domestic point of distribution ●Program respects that each business is unique, with different needs and resources available, and takes this into consideration as part of the certification and validation process. ●Application process - structured to assist businesses to develop a security program that considers differences, and still meets the minimum security criteria.
  12. 12. C-TPAT – Overview Eligible Trade Partners: ●Carriers ●Consolidators ●Customs Brokers ●Exporters ●Foreign Manufacturers ●Importers (including Canadian NRI) ●Port Authorities and Terminal Operators ●Third Party Logistics Providers
  13. 13. C-TPAT – Overview Tier Structure ●Tier I: Certified members of C-TPAT ●Security profile reviewed and approved by SCSS ●Tier II: Validated members of C-TPAT ●Successfully passed annual validation by SCSS team ●Tier III: Validated member of C-TPAT ●Trade Partner exceeds the minimum security criteria and has adopted best practices
  14. 14. C-TPAT – Overview Minimum security criteria in these categories: ●Business partner security requirements ●Conveyance security ●Physical Access controls ●Personnel security ●Procedural security ●Physical security ●Information Technology Security ●Security Training and Threat Awareness
  15. 15. C-TPAT – Overview Business partner risk-assessment process 1. Mapping cargo flow and identifying business partners 2. Conducting a threat assessment 3. Conducting a security vulnerability assessment 4. Preparing an action plan to address vulnerabilities 5. Document how security risk assessments are conducted
  16. 16. Program Benefits
  17. 17. C-TPAT Program Benefits ●Reduced examination rates ●Access to dedicated FAST lanes ●Exemption from stratified exams for Tier II and Tier III (Must also be an ISA participant) ●Front of the line processing
  18. 18. C-TPAT Program Benefits ●Business resumption ●In event of a significant disruption in cargo processing, CBP maintains communication and coordination with members for business resumption ●Expedited trade processing ●Trade compliance issues resolved on a priority basis. ●Assigned Supply Chain Security Specialist (SCSS) ●Eligibility for the Importer Self-Assessment Program (ISA) ●C-TPAT annual conference and seminars
  19. 19. C-TPAT Program Benefits Additional considerations ●Reduced inspections and faster release times mean greater ability to predict lead time and decreases in supply chain disruptions ●Competitive advantage - potential for increase in number of customers and revenues ●Potential for reduced insurance and transportation costs ●Improved security for workforce
  20. 20. C-TPAT Program Benefits Cost considerations ●No application or membership fee ●Potential expenses to meet/implement minimum criteria ●Costs associated with self assessment process ●CBP validation expense
  21. 21. C-TPAT Program Benefits Tangible benefits measured by: ●Improved release times ●Fewer inspections ●Reduced examination expenses ●Reduced transportation costs (rates/driver wait time) ●Better inventory turnover ●Reduced risk of loss, damage and theft in supply chain ●Satisfy supplier/customer requirements
  22. 22. C-TPAT Program Benefits Intangible benefits measured by: ●Business relationship with CBP ●Business partner relationships (customers and service providers) ●Enhanced company profile
  23. 23. Minimum Security Criteria
  24. 24. Minimum Security Criteria ●Eight security categories apply to all Trade Partners ●Specific minimum criteria within each security category ●Trade Partner must demonstrate how they satisfy all criteria
  25. 25. Minimum Security Criteria Some criteria are common to all Trade Partners ●Must have written and verifiable processes for selection of business partners ●Positive identification of all employees, visitors, vendors ●Pre-employment screening, background checks ●Buildings constructed of materials that resist unlawful entry, regularly maintained, inspected, repaired ●Restricted access to cargo handling areas ●Procedures for securing IT systems ●Employees trained in security procedures and threat awareness
  26. 26. Minimum Security Criteria Flexibility in how you may satisfy the criteria ●“Must” vs. “Should ●There may be more than one way to satisfy a “Must” criteria ●Don’t automatically assume that a “Should” criteria is optional ●For example, under “Physical Security” ●Cargo handling and storage facilities must have physical barriers and deterrents that guard against unauthorized access. ●Alarm systems and video surveillance cameras should be utilized to monitor premises
  27. 27. Best Practices
  28. 28. Best Practices ●Achieved through effective utilization of people, processes and technology. ●Incorporate a system of checks and balances, oversight, accountability, and verification of reliability. ●A single Best Practice does not constitute an effective security program
  29. 29. Best Practices ●Best Practices are defined as: ●Security measures that exceed the minimum C-TPAT security Criteria, ●incorporate management support, ●have written policies and procedures that govern their use, ●employs a system of checks and balances, and ●have measures in place to ensure continuity
  30. 30. Best Practices ●Although Customs has provided a definition of what a Best Practice is, it is the trade community who creates and implements them ●Customs has compiled a Best Practices Catalog that Contains examples of Best Practices they have identified while conducting validations of Trade Partners
  31. 31. Examples of Best Practices
  32. 32. Best Practices ●Business Partner Requirements ●Require logistics providers to comply with CTPAT or MRA program via contract or written agreement ●Container Security ●Only designated employees should distribute container seals and all seals are logged into an inventory control system
  33. 33. Best Practices ●Physical Access Controls ●Employees should only be allowed access to specific work areas necessary to perform their duties ●Personnel Security ●Periodic background checks performed based on cause, and/or the sensitivity of the employee’s position, such as management, security, packing, shipping etc.
  34. 34. Best Practices ●Procedural Security ●Ensure documentation is available in languages besides English if workforce is multi-lingual ●Security Training and Threat Awareness ●Incentives or recognition should be given to encourage employee participation in reporting security issues and recommending improvements
  35. 35. Best Practices ●Physical Security ●Conduct periodic inspections of security measures and keep written records of inspections, repairs, and improvements ●Information Technology Security ●Data access should be assigned per job function ●Data should be backed up to ensure that records still exist even if the main IT system is disabled
  36. 36. Annual Validation Process
  37. 37. Annual Validation Process Validation Purpose ● Verify supply chain security processes and ensure they are followed ● Ensure the information entered in the CTPAT Portal is accurate ● Further the cooperative relationship between CBP and Trade Partners ● Share best practices ● Develop solutions to specific issues or vulnerabilities ● Comply with the SAFE Port Act
  38. 38. Annual Validation Process Annual Risk Assessment ●Five-Step Risk Assessment of Supply Chain ●Performed annually ●Results uploaded to Trade Account ●Major talking point during a validation ●Valuable information before a foreign validation of a factory ●Global compliance or internal audit is often involved in factory inspections (for issues such as safety and human rights), leverage this team for security as well
  39. 39. Annual Validation Process Step One – Map Cargo Flow - Identifying Business Partners ●Factories, suppliers ●Warehouses, consolidation facilities ●Freight forwarders ●International carriers ●Terminals, shipyards and deconsolidation facilities ●Inland carriers ●Customs brokers ●Distribution centers
  40. 40. Annual Validation Process Step Two – Conduct a Threat Assessment ●Using reliable, authoritative sources, identify country and region specific threats in these key areas: ●Terrorism (political, bio, agro, cyber) ●Smuggling (Human, Contraband) ●Organized Crime ●Conditions that fostering the above situations ●Rate level of risk – Low – Medium - High
  41. 41. Annual Validation Process Step Three – Conduct a Vulnerability Assessment ●Based on the minimum security criteria, identify weaknesses in business partner procedures that would allow a terrorist or criminal access to cargo, data, information. ●Send security questionnaires to business partners ●Conduct on-site audits when practicable ●Rate their level of compliance and vulnerability
  42. 42. Annual Validation Process Step Four – Prepare an Action Plan ●Address vulnerabilities found in business partner’s security programs. ●Record identified weaknesses ●Who is responsible for action items ●Due dates for action items ●Progress reports to company management
  43. 43. Annual Validation Process Step Five – Document Risk Assessments Procedures ●How often are risk assessments normally conducted ●Identify when risk assessments must be conducted out of cycle (e.g. new supplier or service provider overseas) ●Process must be reviewed at least annually ●Identify process owners ●Methods used for conducting Threat and Vulnerability Assessments ●Process for “action items” ●Management oversight and accountability
  44. 44. Annual Validation Process Domestic Validation Goals and Outcomes ●A domestic validation will take place at a U.S. facility (an office, factory, distribution center, etc.) ●30 days notice before a validation ●Review security profile and risk assessment ●Review any vulnerabilities and suggest corrective actions ●Focus on business partners and documentation ●Follow up actions or corrective action plans ●Validation Report will be written by the SCSS
  45. 45. Annual Validation Process Foreign Validation Goals and Outcomes ●A foreign validation will usually take place at an overseas factory (either a related-party facility or an unrelated vendor’s facility) ●30 days notice before a validation ●Review of security measures with an emphasis on conveyance, physical, and personnel security ●Focus on the minimum security criteria and implementation ●Often the SCSS will visit venues in high-risk countries ●Validation Report will be written by the SCSS
  46. 46. Trade Account Management
  47. 47. Trade Account Management Secure Web Portal ●Redesigned user interface ●Enhanced functionality ●Easier to navigate
  48. 48. Trade Account Management ●Portal 2.0 – Phase 1 (November 2014) ●Complete redesign of user interface ●Single Trade Account, multiple C-TPAT Accounts ●Document Libraries ●Messages ●SVI monitoring
  49. 49. Trade Account Management ●Portal 2.0 – Phase 2 (May 2015) ●Enhanced account management tools ●Combine multiple Trade accounts (single Trade Organization) ●Merge multiple C-TPAT Accounts (single Security Model) ●Reformatting of the Security Profile ●Corrected error messages, glitches in Phase 1
  50. 50. Trade Account Management ●Security Profile – Annual Review ●Automated email sent 90 days prior to anniversary date ●Must be completed within the 90 day window ●Conduct 5-Step Risk Assessment ●Update/revise supply chain security procedures if necessary
  51. 51. Summary
  52. 52. Summary and wrap-up ●What is your current business activity in /with the United States? ●What is your role in the supply chain process? ●Are you working with C-TPAT business partners? ●Not eligible? Consider participation in a security program administered by government where you operate ●Security continues to be a primary focus for CBP
  53. 53. Summary and wrap-up ●C-TPAT program will continue to evolve ●Business partner requirement – driving market toward mandatory participation ●Perform risk assessment for tighter security of business activity ●Be proactive in your approach to trade security
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