January 2004 | Case Studies | Casebook

Cross-Border Stewardship

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A new cross-border compliance initiative helps smaller shippers become more proficient supply chain partners.

Since Sept. 11, there has been considerable pressure among legislative branches, law enforcement, transportation service providers, and shippers to develop best practices that will ensure U.S. transportation infrastructure remains safe and secure.

The U.S. Customs and the Department of Homeland Security, in cooperation with transportation and business sectors, has put into action numerous initiatives to properly inspect cargo at border crossings without sacrificing supply chain velocity.

The difficulty with these undertakings, however, is that the rules of engagement are continually changing. Navigating and understanding the rhetoric of programs such as C-TPAT, PIP, and FAST is substantially more cerebral than simply knowing that an "Orange Alert" means a heightened level of security.

Larger businesses that ship a lot of volume across borders have knowledgeable staff and appropriate technology to integrate these programs into their logistics activities. But smaller companies without sufficient volume often lack technology and expertise, and are more likely to slip through compliance cracks.

So, who is responsible for validating the importance of these programs and making sure smaller businesses participate?

John Quattrocchi, general manager of operations for H2O Plus, a multi-channel retailer of water-based skin care products headquartered in Chicago, Ill., first became aware of the intricacies of C-TPAT at a seminar sponsored by Roadway Express.

His motivation to begin the certification process was fairly straightforward: "I didn't want my goods to get caught up at the border," he recalls.

"Carriers have traditionally taken an active role in managing cross-border shipments," says Karen Lobdell, senior international account manager, Roadway Express. Therefore, it has been a natural progression for the Akron, Ohio-based LTL carrier to engage with U.S. Customs and the Department of Homeland Security to become an outreach for shippers and to help expedite border crossings for low-risk cargo.

Roadway helps customers such as H2O Plus understand the complexities of cross-border transportation and participate in these government-sponsored programs.

Benefits Not Always Clear

Unlike the 24-Hour Advance Manifest Rule, which requires carriers to present cargo manifests electronically 24 hours prior to ocean vessel lading at the foreign port overseas, programs such as C-TPAT and PIP are voluntary joint government-business partnerships designed to create synergies among shippers, transporters, and regulatory agencies.

The reward for this cooperation is faster and more seamless clearance of goods at border crossings. But for smaller companies, the benefits of these programs aren't always as clear, especially because they're not mandatory.

Shippers have natural reservations, notes Lobdell. "They may be concerned with the cost of implementation for security practices, the time it will take to go through the necessary security assessment, or the administrative paperwork needed to facilitate participation in these programs.

"Smaller and mid-size companies are not as familiar with these initiatives. The information does not filter down to them simply because they don't have a heavy volume of business," she adds.

H20 Plus is an interesting example because although it is a smaller operation, it has a global presence, moving shipments worldwide via ocean, air, and truck. The company has been partnering with Roadway for eight years to transport LTL shipments between Canada and the United States. H2O Plus manufactures and packages all its products from its Chicago facility and distributes to 100 retail outlets across the world, including 25 stand-alone stores in upscale malls in the United States and Canada.

Personal Attention

"Most of our retail outlets are located in malls and boutiques so we can't just drop shipments at a loading dock. This requires a great deal of customer attention on Roadway's part because it has to bring shipments directly to our stores," says Quattrocchi.

H2O Plus also sources raw materials from other areas of the world. "We move one to two dozen international inbound and outbound shipments per week," notes Quattrocchi. Cross-border compliance, therefore, was a major priority, and Roadway Express has helped shepherd H20 Plus through the C-TPAT process.

"One added benefit of participating in C-TPAT is that it helps us tighten up our standard operating procedures. It makes us more efficient and gives us greater economies of scale," says Quattrocchi. "C-TPAT prods us to review our security and logistics procedures, and correct any weaknesses. Any time you review and tighten procedures you inevitably receive some sort of efficiency gain.

"Since we consolidated our Canadian outbound to Roadway we have picked up a half day in transit. The half-day pick-up in time is mainly due to more efficient clearance at the border," he adds.

Because many smaller companies don't have the resources to get the information they need about cross-border compliance issues, Roadway brings it to them—in seminars, in conversations with internal account executives, and through its communication tools, such as its online Homeland Security database.

A Carrier for All Kinds

Roadway's Homeland Security portal provides detailed information about legislative updates and news to keep shippers aware of transportation security issues that might impact their business. The site similarly offers tips and advice on how to maximize efficiency and minimize security-related costs.

"Customers can work in conjunction with our account representatives to identify their specific needs," says Jim Webb, senior account representative, Roadway Express. "It's a two-way street because much of what we offer in terms of resources is customer-driven. Our role is to find out what their needs are."

Aside from the consultative approach, Roadway's web site also provides a comprehensive portfolio of tools and services that customers can tap into to facilitate the shipment process. Users can download export documentation including bills of lading, proof of delivery, NAFTA certification of origin, and E-Z EXPORT forms.

The site also allows shippers to customize tools and services—including track and trace, email alerts, invoice and status reports, and rating and routing—to match their specifications in a secure and password-protected environment.

"With Roadway's email alerts, if a problem arises we are contacted immediately and can make changes accordingly. In the past, the only time we heard about a shipment was when it didn't show up," says Quattrocchi.

Even more important, however, is the leverage Roadway gives smaller shippers that aren't as tech savvy as H2O Plus. These companies can essentially outsource to Roadway's IT tools to help integrate cross-border compliance programs into their operations.

"Smaller customers that are not tech-driven are wary about how much investment in technology may be necessary to participate in these programs," notes Lobdell. "Often it's minimal, but they don't know that."

"Our IT people are capable of tailoring technology to match the specific needs of the customer," adds Webb. "And if a customer has existing programs in place, we can integrate our combined resources to provide seamless visibility."

"Roadway was way out in front with C-TPAT and was, for us, the only LTL carrier that took technology seriously. We're pretty advanced with our technology, and Roadway integrated well with what we had," says Quattrocchi.

C-TPAT Goes Global

Roadway's flexibility is especially crucial given the nature of today's transportation demands and increasing security provisions. "We recently had a request from a customer doing business with the government, asking if we could provide a detailed report of every person that came in touch with their cargo during shipment," says Lobdell. "This type of record-keeping requirement is just another value-added service we can afford our customers."

Quattrocchi expects even greater changes and demands on supply chain partners as businesses become more familiar and comfortable working with these programs.

"As time passes and border security becomes tighter, it is becoming increasingly more important for our international vendors to take part in C-TPAT. Soon American companies will want to give preference to international vendors who are C-TPAT partners," he notes.

If that is the case, stateside companies will be even more pressured to comply with U.S. Customs and the Department of Homeland Security's voluntary initiatives.

Given the fact that 60 percent of its LTL customers are small and mid-sized companies, Roadway's advocacy campaign will continue to be an important step in the government's plan to buffer the U.S. transportation infrastructure from terrorism, crime, and supply chain mishaps.

"We're not just a trucker anymore. We're a solutions provider," says Webb.

Lobdell agrees. "Our conversations with customers incorporate a lot more than just price and transportation time," she says. "We're just trying to keep them one step ahead of the curve."

For businesses such as H2O Plus, that's a step in the right direction.

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