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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Trade Facilitation Modernization and Supply Chain Security Douglas Browning March 2006 Sandler & Travis Trade Advisory Services
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM The Supply Chain Management Challenge Experts fear that the Marine Transportation System will be used by terrorists to attack the cargo supply chain. A single occurrence anywhere within the supply chain could require at least six months to inspect and release all cargo Container and facility security have never been concerns for the general public ► Media has locked onto risk of attack with reports that have spread fear and concern about the security of the supply chain ► The sheer volume of global maritime container trade with its inherent vulnerabilities makes it an attractive target
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Key Drivers Strengthen safety and security Improve productivity and efficiency Reduce costs
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Assumptions ► International trade is projected to at least double to $2.2 T by 2020 ► Major shippers will continue to rely on “just in time delivery” and many will move to freight in transit as a virtual warehouse, requiring greater visibility into the supply chain ► Security of the supply chain will continue to be an issue in all modes of transportation (air, sea, and land) as the threat of terrorism persists ► There will be a continuing move by companies to outsource functions and activities that are not core to their business
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Assumptions (continued) ► Regulatory efforts by governments to enhance their zones of security will continue to place responsibility on key players in global trade to take steps to secure and improve visibility into their supply chains ► It is estimated that at least 15% of the cost of global trade represents inefficiencies in the process that companies could recover ► Information facilitating supply chain logistics will flow almost exclusively in electronic form, the management of which will be critical to a company’s success
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Government Response Created Department of Homeland Security Created Transportation Security Administration Reorganized Customs, Immigration and Agriculture inspections into single Bureau Passed Maritime Transportation Security Act – 2002 Allocated more than $700 million in Port Security grants for US port authorities and terminal operators Implementing Transportation Worker ID Cards (TWIC) to improve access control at port facilities Operation Safe Commerce grants to demonstrate some technologies that will enhance supply chain security Smart Box, Smart Borders and related initiatives Executed an aggressive implementation strategy — Improving targeting systems using advance information – 24 hour rule — Partnering internationally to extend the zone of protection – Container Security Initiative — Increasing security by partnering with the private sector – Customs – Trade Partnership Against Terrorism — Deployed advanced inspection technologies and equipment – Non-intrusive inspection equipment
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Global Security Requirements that Impact Trade Facilitation & Supply Chain Management ISPS – International Ship and Port Security MTSA – Maritime Security Act of 2002 CSI – Container Security Initiative C-TPAT – Customs Trade Partnership Against Terrorism 24-Hour Advanced Notification 96-Hour Advanced Notice of Arrival
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM …are driving the need to balance security and trade modernization Trends in the Global Trade Environment Growth in Supply Chain Capabilities Proliferation of Global Trade Department of Homeland Security Secure Cargo Initiatives 11/9/01 World Events
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM So What Is on The Horizon? Security Modernization/Facilitation
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM SECURITY Standards Competitiveness issues Specific program areas C-TPAT CSI
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Modernization/Facilitation Security = Modernization WCO Framework ACE ATDI ITDS
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM The Solutions Will require an integrated approach that combines efficiency with security and regulatory compliance Will address all existing and new governmental and international standards and requirements in the international trade, ports and supply chain arena Outsourcing and managed services solutions that allow companies to focus on their core business There will continue to be a need to balance flow with security — Developing a multimodality Transport Visibility Chain — Container and cargo non-intrusive inspection and similar detection systems — Smart box, seals, intrusion detection and notification — Ship/port/logistics provider interfaces — Global data exchange on a timely basis Greater role in identifying and structuring regulatory and process requirements within the supply chain environment
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SANDLER AND TRAVIS TRADE ADVISORY SERVICES, INC. © Sandler & Travis Trade Advisory Services, Inc. All Rights Reserved WWW.STRTRADE.COM Thank You Douglas Browning Senior VP Global Modernization and Development Sandler & Travis Trade Advisory Services dbrowning@strtrade.com
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