Download The port and customs processing is a node within the process, not

Supply Chain Security:
“The Virtual Border”
UNECE Trade Facilitation Conference
Honorable D. Robert Quartel
CEO and Chairman
FreightDesk Technologies
www.freightdesk.com
Proprietary and Confidential
Complex Data Flow for International Shipments
Purchasing
Export
Import
• Up to 25
Involved Parties
• 200+ data
elements
• Manual data
exchange
processes
• Multiple data
platforms
• 30+ documents
or messages
Bill of lading, Documentation
Vessel Booking Request
Confirmed Line of Credit
Importer’s
Bank
Vessel Booking Confirmation
Exporter’s
Bank
Original B/L,
Invoice, PO,
Packing List
Fund Transfer
Line of Credit
Proforma Invoice
Rated Bill of Lading
LC
Confirmation
Letter of
Instruction
Invoice, PO
Shipping & funding detail
Release/Hold
Notice
Inland
Carrier
Manifest
Dock receipt
Export Declaration
AES
Cargo
Status
Customs House
Broker
Pick-up & Delivery Order
Shipping & Funding Detail
Marine
Insurance
Company
Demurrage
guarantee &
payment
Dock receipt
Freight Forwarder /
NVOCC
Import
Terminal
Operator
Ocean Carrier
Export
Terminal
Operator
Exporter
Proforma Invoice
Arrival Notice
Dock Receipt
Purchase Order
Importer
Release/Approval
Bill of Lading
Import
Docs
Cargo
Status
Customs ( Import )
Vessel Manifest
Export Declaration
Port
Customs (Export)
Importer Notice
Private and Confidential
Converted Vessel
Manifest
Pick-up &
Delivery Order
Inland
Carrier
Information Sources and Timing
Days to
Arrival
Today’s border is “fuzzy”: data is reported at fluid times and not analyzed for threat
Process Step
Seller
• Seller and Buyer agree
40
25
21
• One or more consolidation
layers mask goods’ origins
and involved parties (40%)
Virtual Border
• Carriers accept containers
from multiple sources, with
only partial data on contents
and origins
Overseas Inland
Consolidation
Warehouse
Foreign Port of
Voyage Origin
5
Carrier Reporting
First U.S.
Destination Port
0
Buyer
Fluid Time Frame
Voyage Underway
4
Proprietary
• Earliest possible filing of U.S.
Customs entry information
(ABI)
Source of Data
•
Seller generates documents
•Shippers Letter of Instruction
• Commercial Invoice
• Forwarder/consolidator
generates documents
•House Bill of Lading
• Carrier generates documents
•Master Bill of Lading
• Customs broker and/or
shipper reporting
•Customs form 7501 and
3461
• Ship manifest information
must be filed by 4 days prior
to arrival (AMS)
• Additional carrier reporting
• U.S. Customs applies
physical and commercial
border in port zones
• Additional documents may
finally be received here
Border Today
Red documents reported to Customs
•Shipment Status
•Vessel Manifest
•Surface Bill of Lading
• Buyer generates Purchase
•Purchase Order
Aggregating Commercial Data
Leg Data
Route Data
Conveyance Data
Carrier/Party Data
Carrieres/Parties Data
Sample Data Elements and Application Data
Data Elements
Buy e r
S hipp er's/E xpo rters n ame & addre ss
S uppl ier
A gent of E xp orter/P ac ker
Inl and Ca rrier (o rigi n)
Oc ean Ca rrier Na me
cus toms brok er
Inl and Ca rrier (De stina tion )
Delive ring Ca rrier (d esti natio n)
S elle r's Ba nk n ame & a ddre ss
B uyer 's B an k na me & a ddres s
Inte rmed iate Co nsi gnee 's nam e & add ress
Ultima te Con sign ee's n ame & a ddre ss
Count ry of O rig in
P oint of O rigi n (City & S tate )
Meth od o f S hip men t to Forwa rder
Inl and carrie r rout e (orig in)
Oc ean Ca rrier Ro ute
V oyag e Num ber
V esse l Fla g
Forei gn P or t of E xp ort
Count ry W hic h S hip ped
Loa din g P ier
Tran shi pme nt P orts
P ort of Un loa ding
US P o rt of A rrival
Inl and Ca rrier Rou te (de stin atio n)
Delive ring Ca rrier Rou te (de stin atio n)
Count ry of Ul tima te Desti nati on
At time of Purchase Order
Prior to shipment
S e lle r
S upplie r
Ex port
Forw a rde r
Ca rrie r
Im port
Forw a rde r/
Brok e r
Consig ne e
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
En route to port of export
Private and Confidential
On water/after arrival US
Dual Purpose Information
•
BUSINESS: In-transit VISIBILITY for the purposes of
contract management, planning, process tracking, risk
mitigation, documentation, etc.
•
GOVERNMENT: Process and regulatory TRANSPARENCY
for the purposes of anti-corruption, counter-terrorism,
trade processing, health and safety, etc
Private and Confidential
Commercial Data Is Critical to Security:
-
Cargo – What is being transported?
Carriers – Who is handling the cargo?
Conveyance – What is the route, how is it moving?
Commerce – Who are the parties to the transaction?
Private and Confidential
Proprietary
Commercial Data Key to the Security Schema
Ocean
Carriers
Shipper
Third Parties
Intelligence
Commercial
Data-store
Law
Enforcement
Government
Data-store
Data Fusion &
Profiling
Government Agency
Responsible for
Cargo Security
Decision
Release
Portfolio of:
intercept -inspection
actions
Data Mining for Threat and Risk Assessment
•
Employs a synergistic array of data mining techniques
• Knowledge based, both specific and general
• Based on rules and known facts
• Statistical patterns and profiling
• Mathematical models for risk assessment and threat
identification
• Evolutionary algorithms to detect changes in
patterns and discover new patterns
Private and Confidential
Anomalies Generated from Commercial Data
Anomaly
Commercial
Document
Data element for
Anomaly
Cargo Incongruent with
Origin
Commercial Invoice,
Master Bill of Lading
Routing, Item listing
High value cargo and
slow mode
Commercial Invoice,
Master Bill of Lading
Item values, routing
information
Document discrepancy
Any
Documents do not
conform to each other
New Shipper or
Consignee
Commercial Invoice, Bill
of Lading, Certificate of
Origin
Any
Shipper or Consignee
Sections
Violation of established
shipping or commercial
patterns by parties
Any – more in
timing/receipt of
documents (ex. Once-aweek shipper ships twice
in one week)
Origin of cargo, route
Suspect source area and
transship to small ship
Shippers Letter of
Instruction, Bill of Lading
Point of origin
Shippers Letter of
Instruction
Pickup location
Illogical commercial
transactions
Commercial Invoice
Comparison of
Consignee and Cargo
(ex. Furniture company
receiving garments)
Private and Confidential
A Global Issue
•
EC & US Customs, 22 October 2002
•
“….major principles for future co-operation were stressed, most
particularly reciprocity….common standards for selection….”
•
“…. agreed… to explore…. a declaration of principle to co-operate
on a mutually acceptable container security system covering the
whole EU….”
•
WCO and IMO are making it a mandate: IMO Secretary-General,
William O’Neil, has strongly urged all parties concerned “to start
putting in place all the necessary legislative, administrative and
operational provisions needed…”.
Private and Confidential
Principles of a Successful Data Effort
•
This IS a transportation and logistics issue, not just a
maritime issue.
•
This IS NOT a compliance issue. A legal cargo can
become a lethal cargo.
•
Security should be dynamic: The port and customs
processing is a node within the process, not even the
most important focus for security.
•
Profiling should and can begin in the Importing Country
at the issuance of the purchase order from the buyer.
•
The shipper/importer should be responsible for the
process, not the carriers.
Private and Confidential
Issues for Small Importers and Exporters
• Longer lead times for moving cargoes
• Delays in trans-shipped containers
• Negative impact vs. cargo originating in direct service
countries
• Many exports to smaller US companies that are not C-TPAT
certified, and not in CSI ports
• Technology infrastructure to comply with big country data
requirements
Another hurdle to competitiveness
Private and Confidential
Benefits
•
•
•
•
•
Source-once, APPROPRIATELY to the process
Flexible, intermodal, sourcing
Profiling on demand (Dynamic, not Static)
Business-process centric
Goes beyond human expertise
Private and Confidential