WASHINGTON — Getting it there has become a lot more complicated and scrutinized.
This story first appeared in the March 18, 2003 issue of WWD. Subscribe Today.
Orchestrating cargo deliveries to U.S. retailers from around the world is always a feat, but the job is growing tougher and it’s not just the looming U.S.-led war with Iraq that’s causing delivery woes.
Compounding the war headache of having to reroute goods is a growing list of U.S. antiterrorism regulations for imported cargo. It’s all part of the Bush administration’s push to screen all U.S.-bound shipments before departure.
The latest is a proposal requiring air-cargo manifests to be submitted to U.S. Customs 12 hours before takeoff. An eight-hour-before-departure rule would be applied to small packages traveling with air couriers, such as those used in the fashion industry for sample deliveries, and visas accompanying apparel and textile imports.
Now, air-cargo and courier shipments can typically be dropped off at freight forwarders, acting as middlemen, with as little as two hours notice. However, the U.S. Customs Service, which last week was folded into the Department of Homeland Security, considers such last-minute drop-offs to pose a potential threat of terrorism in the form of smuggled weaponry.
A similar 24-hour manifest rule was deployed last month for all ocean-going cargo, against protests of leading importers, including U.S. retailers.
“Their focus, until now, has been to protect the ports and so the next step is airfreight,” said Dan Meylor, Los Angeles Airport branch manager for Carmichael International Services, a freight forwarder with a large apparel and textile import business.
Meylor said a 12-hour drop-off rule for air cargo “is far too long” for many just-in-time fashion deliveries, where often factories are still producing the day of departure. He said such an advanced notice requirement will add costs along the supply chain, on top of other recent price hikes of between 5 and 8 percent for fuel surcharges.
Airfreight typically costs two-to-three times more than ocean freight, resulting in about 90 percent of U.S.-bound goods being shipped by boat. However, in addition to last-minute deliveries, airfreight is still considered a viable delivery option in the fashion industry for luxury goods, international catalog orders and lightweight apparel, like bras.
“There won’t be much room for the ‘Oh my gosh, I’ve got to airfreight two more cartons,’” said Victor Batan, director of sales with Rical Logistics, based in New York.
Batan is concerned about air cargo being further hampered if there’s a war. In the last Persian Gulf war, airfreight prices surged as cargo space was limited by the U.S. pressing airplanes into war service. A new war, coupled with advance-notice manifest rules, could result “in delivery delays of days,” he said.
Meanwhile, more air-cargo regulations may be on the way.
Last week, the Senate Commerce Committee approved a bill to require all air cargo be either opened and inspected or otherwise screened. A known-shipper program would be created for airfreight, similar to the one Customs is amassing for ocean freight. Cargo from shippers that have demonstrated they have a secure supply chain will have their goods cleared faster.
An author of the air-cargo bill, Sen. Kay Bailey Hutchison (R., Tex.), pressed last year for successful passage of legislation requiring all checked air passenger luggage be inspected and creating the Transportation Safety Administration, charged with ensuring all modes of transport to and in the U.S. is secure. The bipartisan measure is co-sponsored by Sen. Dianne Feinstein (D., Calif.).
“We have made great strides in passenger security with improved screenings and checked baggage inspections, but cargo does not have the same security requirements. We can’t allow air cargo to be used as a Trojan horse by those who wish us harm,” Hutchison said after committee passage.
The flurry of air and ocean cargo regulations is being accepted as a consequence of business after the terrorist attacks of Sept. 11, 2001, however there are concerns of overreaching.
“I don’t challenge the premise” of the need for increased cargo security, said Jean-François Boittin, minister for economic and commercial affairs at the French Embassy in Washington. “The risk is that it will be done in a way to erect obstacles and hurdles and make life more difficult for companies” to export to the U.S.
In particular, Boittin expressed concern about Customs’ cargo pre-clearance program for known shippers being phased in at large foreign ports. Certain ports have joined the Container Security Initiative and others are waiting to join or are deemed too small to participate. The nonparticipating ports are being put at a disadvantage, Boittin said, citing the case of CSI member Le Havre, France, now having a competitive edge over the country’s port of Marseille, which is not a CSI participant.
Steve Lamar, vice president with the American Apparel & Footwear Association, said he has similar concerns about CSI, but relating to ports in Mexico, the Caribbean and Central America. Since no foreign ports in the Western Hemisphere have been approved for CSI participation, these leading apparel-exporting countries could be seen as having a strike against them compared to CSI-approved ports in the Far East, such as Shanghai or Hong Kong.
“There’s a competitive advantage for those ports with clearance,” Lamar said.