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WASHINGTON — Before he became commissioner of the U.S. Customs Service, Robert Bonner hadn’t given much thought to retail supply chains in foreign countries.
This story first appeared in the April 21, 2003 issue of WWD. Subscribe Today.
Bonner, as a former federal judge and prosecutor in Los Angeles, as well as Drug Enforcement Administration chief in the first Bush presidency, already knew of clever ways to stash narcotics in containers ferried by truck from Mexico and Canada or unloaded at U.S. seaports.
Then Bonner, just days after the Sept. 11 terrorist attacks, took the helm of Customs and started looking at containers as potential bombs. His worst-case-scenario — a container being inspected at a U.S. port ignites as a nuclear device — quickly led to an overhaul of Customs procedures prompting companies, even major importers like Wal-Mart, to revamp their import operations.
“It would be reasonably easy to make a container itself into a terrorist weapon, either by conventional explosives or worse,” Bonner said recently in his Washington office.
His agency has just been absorbed by the new Department of Homeland Security, renamed the Bureau of Customs & Border Protection and given the duties of the former Immigration & Naturalization Service.
After the terrorist attacks, Bonner recalled reflecting on how one port attack could lead to his having to halt all cargo deliveries to the more than 300 U.S. ports, much like all air traffic was grounded in the hours and days after 9/11. The cost of such a move, he quickly concluded, would be devastating to the U.S. economy.
“I started asking questions,” Bonner said of his rapid education about all the different hands foreign-made goods pass through before being loaded on a U.S.-bound ship. He cringed at all the chances for tampering and then asked his staff, “What do we do now?”
It’s been almost 18 months since Bonner began launching his sweeping cargo security plans and importers became faced with the choice to participate or have their shipments subjected to time-consuming inspections.
Many details of Bonner’s cargo programs are still in the works, while key parts are already in place. As they stay abreast of the changes, the roughly 55,000 importers of textiles and apparel into the U.S. — with shipments last year of $80 billion — continue to clamor for Customs to be mindful of how various mandates will add to delivery times.
Moreover, importers fear Bonner’s first security program — the Container Security Initiative — may favor large, well-equipped ports, like in China, at the expense of those in smaller countries like Honduras or Bangladesh with less sophistication at the docks. This might lead to companies limiting or halting orders from smaller countries, fearing added Customs scrutiny will slow deliveries.
“There is going to be a premium for big guys everywhere: the biggest ports, the biggest shippers, the biggest consolidators,” said Julia Hughes, vice president of international trade with the U.S. Association of Importers of Textiles & Apparel.
Under CSI, U.S. Customs inspectors are being placed alongside their counterparts at the 20 largest foreign ports responsible for almost 70 percent of the 5.7 million containers shipped to the U.S. last year. Often, these ports — about half are in Asia and half in Europe — are the last relay points for shipments from other countries. The purpose of pre-screening cargo at the point of embarkation by using X-ray equipment, intelligence and, if needed, a thorough inspection, is to forestall a terrorist-tampered container arriving in the U.S.
“It’s very simple but revolutionary,” Bonner said of CSI, which, he added with apparent pride, is “almost as simple and revolutionary” as the invention of containers that can be easily stacked in the hull of a ship and hauled by trucks and trains.
CSI is now being deployed at the next 20 largest ports, which Bonner said is a logical progression. He plans to gradually phase in other ports around the world that have the proper equipment and procedures.
“You can’t do everything at once,” Bonner said of critics, including European officials, fearful CSI will encourage a shift of import business to those ports given the designation. “You’ve got to do things one step at a time.”
Bonner said concerns of CSI promoting trade distortions are overblown and said other security programs will help keep importers using non-CSI ports from having their containers needlessly inspected.
These programs include the Customs Trade Partnership Against Terrorism, or C-TPAT, which enlists importers, including charter members Target Corp. and Sara Lee Corp., to file a factory-to-port security plan with the agency. As a C-TPAT member, and there are now more than 2,000 of them including most major retailers and other fashion importers, a firm’s cargo is deemed less of a risk and most likely will receive Customs’ green light upon arriving in the U.S.
A C-TPAT-member company “will get expedited treatment,” Bonner assured, and if they use a non-CSI port, “it could be as fast,” as if they were using one of the CSI-sanctioned ports.
Bonner’s third layer of cargo security is the mandatory 24-hour rule governing importers. Since February, Customs has required all manifests accompanying U.S.-bound cargo to detail what’s inside a container to be delivered to ports 24 hours in advance of being loaded onto ships.
Previously, it wasn’t uncommon for cargo — fashion apparel was one culprit — to be dropped off with as little as two hours before departure, with ship captains only knowing a container held clothing. Importers would electronically provide details of quantities, manufacturers and the like once a carrier was under sail.
The 24-hour rule has given fashion importers the most headache. While the incidents have been few, Customs has ordered ocean carriers to “do not load” a container if a manifest is too spare on details, even if it says “women’s apparel” or “underwear” or “footwear.” Concerned about ensuring that ships don’t sail with half-empty hulls, carriers also have been requiring even longer lead times, sometimes two to three days, for delivering containers to a port.
Customs is now working on pre-clearance manifest rules for air cargo, overnight couriers and truck and rail carriers that ferry goods to foreign ports. These modes of transport will be given their own manifest deadlines.
Steve Lamar, vice president, American Apparel & Footwear Association, said overly tight manifest deadlines could in turn cause longer cargo delivery lead times and result in more chances for cargo tampering.
“The accepted orthodoxy in our industries is to keep the shoes and clothes moving,” Lamar wrote Customs in February.
“But a second concern over longer lead times and the delays associated with them is that many of the products we ship are highly perishable,” Lamar continued. “Although they do not rot like spoiled produce, garments and footwear are equally perishable because of quirky fashion trends or narrow retail delivery cycles. Delayed shipments can result in missed sales opportunities, costly charges and a reputation as an unreliable supplier.”
When drawing up new cargo security rules, Customs has given importers few concessions. One example involves the 24-hour manifest rule. While a manifest has to list the types of products, like blue jean skirts, precise descriptions like whether the skirts have five pockets and fringe aren’t required because importers are concerned about poaching by competitors.
Importers are continuing to press the agency on the CSI port issue, urging Bonner to develop a parallel program for small ports or a port initiative targeting specific sectors, like apparel and textiles. These imports should receive special treatment, if only for the fact that they account for 45 percent in U.S. Customs tariffs collected in 2002.
It’s difficult to measure how much more secure U.S.-bound cargo has become. Bonner said, so far, “we’ve done a tremendous amount toward improving the security of the United States.”
Stephen Flynn, a cargo security expert whose pre-Sept. 11 article in the journal, Foreign Affairs Quarterly, fretting about Osama bin Laden smuggling weapons in containers, gave Bonner the idea for CSI, rates the level of container safety to be three on a scale of one to 10.
“On Sept. 10, 2001, we were at one,” said Flynn, now a Bonner adviser.