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Will Air Freight Screening Plans Fly?

APPROXIMATELY 300 PASSENGER AIRLINES move an average of 9 million pounds of cargo daily inside the United States, according to Transportation Security Administration (TSA) estimates. As of August 1, each of those pieces of cargo must go through security screening before being placed within the belly of a passenger plane. While the TSA is responsible for overseeing that process, Congress rested the ultimate responsibility of 100 percent cargo screening with the airlines. Simply put: If cargo is not screened, the airlines can’t move it. There are no exemptions.

Many stakeholders throughout the air cargo supply chain weren’t happy with the law, labeling it an unfunded mandate, and expressing concerns about the feasibility of carrying out 100 percent screening without causing costly delays in the supply chain. TSA believes it has found the right balance between security concerns and commerce considerations. Key to its approach is the concept of moving screening upstream to distribute the burden and address timing issues. Security Management looks at how well implementation is proceeding as the deadline approaches.

Screening Upstream

The supply chain, at its simplest, breaks down two ways. Shippers either transport their cargo directly to the airport, or they rely on approximately 4,100 indirect air carriers (IACs), also called air freight forwarders, to get their cargo to airports on time for a flight. IACs are third-party logistics providers who receive packages and deliver them to the airlines for transport.

Disruptions within the supply chain can result in a perishable commodity going bad or shipments missing their intended flight due to the tight time constraints characteristic of the air cargo industry. Screening, especially downstream at airline facilities, will create such a disruption if too much cargo arrives unscreened.

Facing the question of how every piece of cargo could be screened without creating business-crushing bottlenecks, the industry came up with the concept of moving as much of the process upstream as possible. To that end, the TSA created the Certified Cargo Screening Program (CCSP). The CCSP allows screening to occur “at the most efficient point in the supply chain,” explains Doug Brittin, the TSA’s air cargo manager.

Under the CCSP, shippers and forwarders decide which of their warehouses or distribution centers they want to become Certified Cargo Screening Facilities (CCSFs). They must then make security upgrades to those sites to meet the TSA requirements.

The cargo screening law requires the use of screening methods as good as those used to screen passenger-checked baggage. Only five screening methods are permissible—x-ray systems, explosive detection systems, explosives trace detection, bomb-sniffing canine teams certified by TSA, or a physical search. To become CCSFs, a site will have to have the equipment needed to carry out this screening. In addition, it must have appropriate physical security, such as access controls, and run background checks (and periodically repeat those checks) on all employees and contractors with access to cargo at the site.

TSA conducts an onsite security assessment to determine whether a specific facility has instituted the necessary security standards like access control and CCTV systems. If they meet the criteria, they get into the program.

Donna Sharp, president of Inspectorate Sharp Global, lauds the across-the-board application of consistent security criteria regardless of facility size or location, because it eliminates the ability of a terrorist to choose a remote screening facility somewhere in America to infiltrate. Under the CCSP, it doesn’t matter where a screening facility is located or what airport it delivers its cargo to. If a facility screens cargo, it’s TSA-regulated. As Sharp puts it, there’s no such thing as a low-risk screening facility or a low-risk airport.

Pros and cons. Like any government program, becoming a CCSF has its downsides and its upsides. Most worrisome to businesses is cost, especially among smaller companies within the supply chain. But costs will vary widely depending on the specifics. “The CCSP is a facility-based program,” says TSA spokesman James Fotenos. “The cost to join depends on the size of the facility as well as the security measures that are currently in place.”

Carlos Vélez, worldwide supply chain security director for Johnson & Johnson, agrees. “If we’re talking about a site that is already equipped with access control systems, CCTV systems, alarm systems, intrusion alarm systems, background screening, the cost may be minimal,” he says. “But if the site doesn’t have anything that I mentioned before, the cost may be high.”

Vélez, who had three Johnson & Johnson facilities CCSF-certified, would not say what it had cost to do that. But Brad Elrod, director of global conveyance security for the pharmaceutical giant Pfizer, says the cost of certifying three of its facilities was minimal, because they incorporated the physical search method of screening into the packaging process, and the extra cost of additional background screening is not that high. The company has 14 more sites in the pipeline, he says. The process for Pfizer mainly amounted to erecting a fence to segregate screening from nonscreening areas and purchasing stickers and tape to denote that cargo had been properly screened and its integrity maintained.

That’s a far cry from $150,000 to $500,000 per facility cost estimate put forth in 2008 congressional testimony by Brandon Fried, executive director of the Airforwarders Association. But the higher estimate may be apt for some companies.

Another downside of becoming a CCSF, say industry experts, is that in doing so, the business is agreeing to ongoing regulatory oversight, because the TSA is authorized to perform random, unannounced onsite inspections of CCSFs to ensure compliance with CCSP security standards.

If a CCSF violates the program requirements, TSA can revoke its certification. Businesses may worry about making an investment and then getting booted out of the program for some minor infraction. But Elrod says TSA inspectors have been team players so far, and CCSF applicants shouldn’t be shy to ask for advice.

“Partner with your local TSA inspector, figure out what they’re trying to do, and ask them for help,” he advises. “TSA’s out there helping people do this, and they may be learning from you as much as you’re learning from them, but at least they’re working with you.”

Elrod jokes that it may be the first time someone said “We’re from the government, and we’re here to help” and it’s been true.

Although certification can be expensive and time consuming, there is a very big upside from a business perspective, says Vélez. “We like to have the chain of integrity of the products in our hands.”

By becoming TSA-certified, Johnson & Johnson, or any company, can ensure that its cargo is properly screened through its own facilities and delivered to the airlines on time without fear that a third-party may make a mistake. Pfizer’s Elrod says getting CCSF-certified is a no-brainer for shippers with delicate cargo. “Who better to inspect your stuff than the people who packaged it.”

More palatable. The major obstacle to screening cargo fast enough at the airport has to do with the requirement to screen all cargo individually. When cargo arrives at an airline, some of it comes shrink-wrapped on pallets or packed inside containers. And here’s where the value of upstream cargo screening makes all the difference. If the cargo has been screened and the airline verifies that its chain of custody hasn’t been broken, it goes on its intended flight.

“If it’s not screened before it gets there,” Brittin explains, “they have to take it all apart, screen it at the piece level, and put it all back together—very time consuming, very labor intensive, and it could cause potential delays and backlogs.”

There is also the issue of the cargo being damaged if bulk packaging has to be undone and resealed. Manufacturers and high-volume shippers—like pharmaceutical companies, food processors, and computer hardware providers—have delicate cargo they don’t want meddled with. The more times someone in the supply chain has to handle the cargo, the more likely it is that it will be damaged or spoiled. The CCSP solves this problem. As long as the chain of custody has been maintained since the cargo was screened, it gets loaded onto the passenger plane with minimal interference.

Dina Duffy—director of air operations for John S. Connor, Inc., a full cargo logistics provider—listed this as one of the reasons her facility at Washington Dulles International Airport has applied to become a CCSF. “Many of our customers have very sensitive equipment that would require a screening method that is as unobtrusive as possible.” Becoming a CCSF is the only way for Duffy’s facility to take the uncertainty out of the cargo screening process.

Johnson & Johnson had a similar motivation, says Vélez. Some of Johnson & Johnson’s more sensitive cargo must be shipped under temperature-controlled conditions and cannot be opened once sealed. “If we were moving shoes, we wouldn’t care about the way the shoes were shipped,” he says.

Elrod couldn’t agree more. “We don’t want [forwarders or airlines] opening or handling our material,” he says. “We don’t want pallets of our material broken down because you lose accountability of it.” And losing accountability isn’t acceptable when many of your products end up in the most precious place possible: inside human beings.

Achieving the Goal

In February 2009, the air cargo industry and TSA met its first congressionally mandated deadline to screen 50 percent of cargo loaded onto passenger planes, including 100 percent of all narrow-body passenger planes. These planes, which only have one aisle, make up 95 percent of all U.S. domestic flights and carry 85 percent of all passengers, according to TSA.

But narrow-body planes can only hold small, easy-to-screen freight. Larger, harder-to-screen pallets and containers get loaded onto wide-body planes, those with two aisles and large cargo holds. This means that a large part of the jump from 50 percent to 100 percent screening will have to deal with these large shipments—the type airlines will have to break down and screen individually if they don’t come in prescreened. Thus, the real test begins in August when airlines must ensure that 100 percent of cargo delivered on pallets and inside containers is screened too. Airlines will need all the help they can get.

Buy-in. Last September, James C. May, president and CEO of the Air Transport Association (ATA)—which represents large air carriers accounting for 90 percent of all cargo and passenger traffic—sent an open letter to air cargo shippers reminding them of the upcoming August 2010 deadline. His appeal was urgent: If you are a shipper, please consider becoming a CCSF and screening your own cargo.

To incentivize shippers, May reminded them that if they didn’t prescreen, their cargo could experience delays in processing at the airport. “To date, airlines have been able to screen shipments from customers who have not yet qualified for participation in the CCSF program,” the letter read. “However, as we transition from meeting last February’s requirement that 50 percent of all shipments be screened to the pending 100 percent screening deadline, screening capacity, time constraints, and other factors raise concerns that non-CCSP shipments will face delays.”

But low-volume shippers that do not have sensitive or perishable products simply do not have the incentive to take on the regulatory burdens the CCSP imposes, says Scott Case, chairman of the National Customs Brokers and Founders Association of America’s Air Freight Committee. They’re more than “willing to let [screening] happen downstream,” which means having the airlines do it.

Another factor is that many domestic shippers don’t have to move their cargo through the air; they can truck it.

Since some shippers aren’t as motivated, the airlines and the TSA must rely on freight forwarders to pick up the screening slack. The unanswered question today remains whether enough freight forwarders have bought into the CCSP framework to ease the burden on the airlines.

Some air cargo stakeholders said smaller mom-and-pop forwarders do not have the resources to become CCSFs. It is simple economics, says Yuval Bezherano, vice president of New Age Security Solutions, a security consultancy located at Dulles International Airport. Small and medium-size forwarders do not have the money to buy screening equipment, train personnel, and maintain certification, he says.

But there may be a group willing to fill in—independent cargo screening facilities (ICSFs)—boutique shops that charge shippers and forwarders for security screening. “ICSFs,” a TSA press release states, “have the additional benefit of providing a cost-effective avenue for small and medium-sized freight forwarders to meet the law’s screening requirement.” Currently there are approximately 45 of these facilities, says Sharp of Inspectorate Sharp Global. Whether that’s enough, no one knows.

TSA’s Brittin, however, seems optimistic about the number of forwarders. “We have had a solid, strong, and probably better than anticipated buy-in from the freight forwarding community from all sizes and stripes.”

Moreover, he said, “the amount of cargo they screen, in both shipments and weight, is a significant percentage of what is screened and uplifted on passenger aircraft currently.”

TSA has certified more than 400 IACs and 149 shipper facilities, according to TSA spokesman Fotenos. While these numbers may seem small these particular facilities are responsible for screening significant amounts of cargo tendered to airlines, Sharp says. Major shippers and IACs were the first groups TSA targeted for CCSP certification.

Duffy says other forwarders that had adopted a “wait and see” attitude are more likely to get on board with the program as more of their questions are answered by the government. For example, they wanted to see whether any other options developed and whether TSA would release a comprehensive list of approved screening technologies. And in early February, TSA helped those on the fence by releasing its list of qualified and approved air cargo screening technologies.

Remaining Concerns

Two areas of concern that fall outside of the industry’s control loom ahead and could affect the program’s overall success.

Volume. The recession has hit the air cargo industry hard. Last year was its roughest, as cargo traffic declined 11 percent. “The decline in cargo traffic from 2008 to 2009 was the largest on record, eclipsing the decline observed from 2000 to 2001,” according to the ATA’s numbers. But it’s not the downturn that’s worrisome—it’s the resurgence to come. The problem is that the cargo slump makes it harder to forecast whether the supply chain can handle higher screening volumes when the economy picks up.

As the TSA warned in June 2009, “Screening 100 percent of 15 million pounds per day in 2010 vs. screening 50 percent of 9 million pounds per day now represents a 300 percent increase in cargo requiring screening.” This makes it especially critical for TSA to persuade as many shippers and forwarders as possible to certify their facilities to screen before the surge occurs.

Surprises. Many within the air cargo supply chain eagerly awaited the TSA’s list of qualified and approved technologies, because they didn’t want to invest in anything that wasn’t going to pass muster. Publication of the list in February should have taken the guesswork out of what screening technology to purchase, but stakeholders within the supply chain fear a new method of attack could instantly make this list obsolete and their security investments null and void.

“The concern that we’ve had as far as the technology goes is that we don’t want to [pay] for a type of technology that costs five or six figures,” says Case, “then all of a sudden TSA discovers another threat vector and requires us to make a new investment in an emergent type of technology.” He points to DHS’s rush to buy full body scanners after the Christmas day attack as industry’s nightmare. Private business simply cannot afford to respond to threats like the government does, he says, noting that the costs of the CCSP are entirely borne by participants.

Concerns surrounding screening technologies aren’t unfounded. Tony Degani, terminal manager for Franklin Park, Illinois-based R&M Trucking, is in the process of becoming TSA-certified. He says he’s waiting as long as possible to purchase screening technology before the deadline, because he’s heard that the TSA is about to qualify a new, superior technology. He’s also heard that some CCSFs have already purchased TSA-qualified screening technologies that are now considered inferior.

TSA’s ability to adequately assess and approve screening technology has long been viewed as a weakness by the Government Accountability Office (GAO). “TSA has taken some steps to develop and test technologies for screening air cargo, but the agency has not yet completed assessments of these technologies and cannot be assured that they are effective in the cargo environment,” Stephen M. Lord, the GAO’s director for homeland security and justice issues, told Congress in March 2009.

With two months to go before the deadline, TSA believes it sold the CCSP well enough to air cargo stakeholders to avoid a nightmare come August. The agency’s persuasiveness relied on two tried and true social glues: enlightened self-interest and fear. “We built this program in close cooperation with the entire supply chain community,” says TSA’s Brittin.

It helped that many stakeholders recognized they had to come together, given the seriousness of the risk—even one mistake could be their last. “We all just want to make sure that at the end of the day, that the aircraft is safe and the supply chain is safe and that we’re all doing the right thing,” Case says. “We realize that there really is a zero-error policy here. There is no acceptable percentage of ‘Whoops, we missed one.’”

Matthew Harwood is an associate editor at Security Management.