1. Cargo Exams Tradewatch 2011 Steve Pasienski

2. Background Joint Automotive Associations Study Goal: Minimize Supply Chain Disruptions Study exam process Identify best practices Identify opportunities to improve process

3. Time Line Study Initiated Initial Visits Meeting with CBP HQ Port Visits with CBP HQ Follow-up Meeting with CBP HQ Sept. 2009 May & July 2010 Aug. 2010Nov 2010Feb 14 2011

4. Issues to address Length of time for VACIS “X-Ray” exams System limitations, manual processes Additional costs for unnecessary VACIS exams Terminals have no visibility C-TPAT status Inconsistencies among ports Paper documents Vs Electronic Turn around time at CES

5. Initial Visits Finding:Vessel discharge can take up to 3 days. CBP compliance target is scanning exam containers within 48 hour of vessel departure. Issue:If target is not met containers can be held up to 5 days or longer before VACIS is completed. Recommendation:Establish best practice of scanning containers within 48 hours of discharge from vessel.

6. Initial Visits Finding:Some terminals discharge exam flagged containers onto wheels, while non-flagged get stacked. Issue:If exam is flagged after discharge, terminal needs to “dig” container out of the stack. Recommendation:Establish best practice of identifying C-TPAT containers for a compliance exam 24 hours prior to vessel arrival.

7. Initial Visits Finding:CBP “7H” code was designed for enforcement holds but it is also used for compliance holds in AMS. Issue:CBP policy requires all containers to be scanned (VACIS) at the terminal when a 7H code is in system. Recommendation:Differentiate between compliance and enforcement holds in messaging.

8. Initial Visits Finding:Terminals do not have visibility to importer’s C-TPAT status Issue:Limits Terminal’s ability to be proactive in staging containers for VACIS and delivery to CES. Recommendation:Notify terminals when C-TPAT containers are up for exam. Establish best practice timeframe of 24 hours to complete VACIS after discharge.

9. Initial Visits Finding:CBP generally notifies terminals that it has completed VACIS by electronic message before the end of the shift. Issue:Sometimes notification takes place the following day. Recommendation:Establish best practice of notification before end of shift and where possible, encourage immediate notification by mobile device.

10. Initial Visits Finding:Exam site does not know C-TPAT status for containers unless advised. Issue:Exam site cannot prioritize staging of freight for CBP. Recommendation:Reinforce the importance of front-of- line status for C-TPAT freight.

11. November 2010 Visits CBP HQ Staff arranged and attended these port visits. Learned process from CBP perspective at each port.

12. Feb 14 th Meeting with CBP HQ Focus: 1. Use of 7H Code 2. C-TPAT Front-of-Line Privileges 3. Partial Release 4. CBP/Industry Working Group

13. Feb 14 th Meeting with CBP HQ Focus: Use of 7H code Result: CBP HQ will reissue guidance for using “Public Remarks” field in AMS. OFO is requiring additional functionality to deploy holds at the container level. ACE M1 deployment scheduled for end of 2011

14. Feb 14 th Meeting with CBP HQ Focus: C-TPAT Front-of-Line privileges Result: CBP HQ will reissue guidance on use of “Public remarks” field: C-TPAT status first Then container number to be examined

15. Feb 14 th Meeting with CBP HQ Focus: Partial Release Result: CBP committed to investigate system limitations involved with implementing partial release. Also need to investigate other government agencies issue.

16. Feb 14 th Meeting with CBP HQ Focus: CBP/Industry Working Group Result: CBP committed to meet every 6 months to discuss progress. Next meeting will be sometime this summer.