Preparing for the Post-9/11 Supply Chain

Providers offer technologies for meeting U.S. Custom's cargo-reporting requirements

Tempe, AZ  January 7, 2003  With national security concerns placing new demands and burdens on companies bringing goods into the United States, technology providers are coming forward with solutions to meet the demands of the post-9/11 supply chain, as demonstrated by announcements today from providers FreightDesk Technologies and Covansys.

Both providers offered up solutions to help companies comply with U.S. Customs Service's Container Security Initiative (CSI), a program launched last February, in the wake of the September terrorist attacks on New York and Washington, to strengthen port and maritime security while maintaining trade flows.

Current CSI regulations are intended to improve U.S. security by tightening and expanding cargo-reporting requirements. Later stages of the CSI will establish standards for the security and integrity of containers and cargo throughout the transportation supply chain.

The impact of the first of these regulations to take effect, Customs' 24-hour Advance Cargo Manifest Declaration Rule, is limited to maritime cargo, but legislation is in place that will extend similar regulations to truck, rail and aviation no later than October 1.

The 24-hour rule requires ocean carriers and non-vessel-operating common carriers (NVOCCs) to submit detailed shipment manifest information, including 15 required data elements, 24 hours prior to loading at the foreign port. U.S. Customs is requiring the presentation of this information electronically and will use the data to screen containers for possible terrorist links. Failure to provide this information within the required time may result in penalties against the responsible parties, possible subsequent delays in unloading cargo and, potentially, vessel diversions.

The new regulation became effective on December 2, with active enforcement scheduled to begin on February 1.

Dunn Loring, Va.-based FreightDesk said its new applications will allow companies to meet the automated manifest system (AMS) filing requirements for maritime shipments and to integrate government reporting requirements into existing commercial supply chain and transportation management systems.

FreightDesk's software is already in use with new security-related initiatives at two U.S. government agencies for collecting and analyzing manifest and other logistics data. The underlying technology is being used in conjunction with several U.S. security initiatives, and is designed to facilitate Container Security Initiative data-linking requirements. The FreightDesk data model links elements, validates data and pre-populates screens to minimize data entry and reduce errors.

Meanwhile, Covansys, based in Farmington Hills, Mich., said its Secure Supply Chain Solution would enable international companies to meet the new business challenges and opportunities posed by both the Container Security Initiative and the so-called "Sunrise Date," the January 1, 2005, deadline after which the Uniform Code Council (UCC), the governing body that issues barcodes, will no longer support the standard, North American 12-digit UPC barcode that companies use to track goods.

Databases and processes that rely on the 12-digit standard will need to be altered to manage the new standards to be put in place, and companies unable to meet the new standards may incur costs in relabeling goods, finding new suppliers or being shut out of markets.

"The largest importers and barcode users view compliance with CSI and Sunrise standards as an important supply chain element in improving freight rates, creating favorable transportation logistics, attaining faster time-to market and ensuring more efficient inventory and audit capabilities," said Andrew White, research analyst at Gartner. "Companies who choose not to convert could face incremental costs in their supply chain by not complying."

Covansys said its Secure Supply Chain Solution would help clients develop customized solutions to address the coming changes through the provider's application, maintenance and development outsourcing (AMD/O) service offering using Covansys' offsite or offshore facilities.

"The CSI and the Sunrise Date have the potential to force end-to-end supply chain reengineering for those companies not adequately prepared for the long-term effects of these regulations," said Martin Clague, president and CEO of Covansys. "International companies need to address their short-term needs first to ensure that cargo keeps moving in the new CSI regulatory environment. However, they must also be aware of the Sunrise issues and the long-term CSI objectives to ensure that their solution is effective past January 1, 2005."