Security Trends Within The Global Logistics Process

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Security Trends Within TheGlobal Logistics
Process
Don Geddy General ManagerE.J. Brooks
Industries Ltd. May 2nd, 2007
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Growth has followed Logistic Technology

• Seal use in logistics has followed transportation
  innovations, i.e. rail to motor vehicles to
  airplanes.
• Seal use followed the growth associated with
  globalization in business (expanded supply
  chain).
• Seal use follows tracking and tracibility trends.
• Seal use is following visibility with RFID.
• Seal versatility allows the user to combine
  logistics and security in one step.

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Primary Industry
Manufacturing
Logistics (Intermodal)

• Houseware / Hardware
• Food Processing
• Pharmaceuticals
• Petro Chemicals
• Security Printing
• Automotive
• Electric, Gas Water
• Electronics
• Brewing, Dist., drinks.

• Containers
• Retail Distribution
• Shipping Lines
• Rail Freight
• Road Haulage
• Courier/Postal Service
• Air Transport
• Warehouse Storage

Other
Documents/Valuables

• Valve, Pumps, and access ways
• Hazardous Chemicals
• Toxic and Medical Waste
• Fire Safety/Security
• Law Enforcement

• Cash Valuables
• Confidential Document/Waste
• ATMs
• Cash in Transit
• Evidence Bags
• Personal Effects

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How is the level of security determined?

• Depending on the value of the goods, the
  container/ truck/ warehouse/ location in the
  store determines the level of security.
• The level of pilferage/shrinkage determines the
  level of security.
• Whether the product is affected by legislation,
  i.e. tobacco, drugs security is implemented.
• If the product could pose a danger to the public,
  i.e. firearms, precautions are taken.
• The policies of the companies differ, but are
  mostly intrinsic to the product being shipped.

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Terrorism Threats Changed the Rationale

• 911 introduced into the security formula the
  logistics process forever.
• The flow of goods from supplier to end user is
  being viewed as needing protection, not just the
  product.
• The flow of goods/people crossing borders into
  the U.S. are being monitored to minimize or
  eliminate the threat of danger.
• No longer is it only value, attractiveness or
  dangers intrinsic to the product, but the
  logistics function itself is being viewed as a
  security issue.
• The conclusion that danger could accompany the
  product flow changed the rationale.

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Security Logistics

• Security Logistics is emerging as an important
  subset of the flow of goods that must be
  considered globally.
• World Class global companies recognize that
• security logistics issues among all
  continents are similar and they are planning for
  this accordingly.
• The addition of security goals within the
  logistics plan utilizing the same technology adds
  very little extra cost for the benefits gained.

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Global Authority Intervention

• We now have to deal with the mother of all
  alphabet soups.
• What is C-TPAT?
• What is FAST?
• What is ISO/PAS 17712?
• What is CSI?
• What is WCO?
• What is ISO 18185?
• How does all of this affect my logistics effort?
• Help!!!

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Key Points of Customs Partnership Against
Terrorism (C-TPAT)

• Importers and business partners voluntarily agree
  to adhere to minimum security criteria regarding
  the logistics process.
• Importers conduct a comprehensive self-assessment
  of supply chain security using the agreed upon
  guidelines.
• The guidelines encompass procedural, physical
  and procedural security education and training
  access control manifest and conveyance
  procedures.
• A supply chain security profile questionnaire is
  submitted to Customs.
• Develop and implement a program to enhance
  security throughout the supply chain in
  accordance with C-TPAT guidelines.
• Communicate the guidelines to partners in the
  supply chain ensuring that the proper processes
  and procedures are being implemented.

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C-TPAT Contd

• As part of the criteria there are requirements
  associated with container security, inspection
  and storage.
• The program will expand in logistics partners to
  include rail, air, freight forwarders- all areas
  of the supply chain.
• And there is a requirement for high security
  seals to be affixed to the containers bound for
  the U.S. at point of stuffing.
• The security seals must meet or exceed the
  ISO/PAS 17712 standard.

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Key Points of Free And Secure Trade (FAST)

• A bilateral initiative between the U.S. and
  Mexico for C-TPAT members to expedite clearance
  of low-risk trans-border shipments(2002).
• It was developed to streamline and integrate
  registration processes for drivers, carriers, and
  importers.
• Within the initiative high security seals are
  mandated to be used on trucks and containers from
  Mexico. Canada is now part of FAST.
• The seals must be ISO/PAS 17712 and C-TPAT
  compliant.

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Key Points of ContainerSecurity Initiative (CSI
Program)

• CSI is a CBP initiative to protect global trade
  lanes
• between fifty eight (58) designated ports and
  the U.S.
• Fifty eight ports around the world account for
  over 90 of
• the container volume destined for the U.S.
• 90 of the world cargo moves by containers. Half
  (by
• value) arrives in the U.S. by sea containers
  (9 million per annum).
• A team of CBP officers is deployed at each port
  to pre-
• screen
• and inspect the containers BEFORE they arrive
  in the U.S.
• If a container is unsealed, examined and deemed
  secure
• CBP will reseal it with CSI high security bolt
  seal.

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World Customs Organization (WCO)

• The WCO was established in 1952 as an independent
  intergovernmental body to enhance the
  effectiveness and efficiencies of customs
  administration.
• The headquarters is located in Brussels and one
  of its key goals is global harmonization on key
  customs issues.
• On June 23, 2005 the WCO representing 166
  countries unanimously approved a framework to
  implement a world wide program to secure
  container shipments.
• Within the framework, the use of high security
  barrier seals is mandatory and consistent with
  ISO/PAS 17712, C-TPAT, FAST and CSI performance
  requirements.

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Key ISO/PAS 17712 Elements

• There are four value tests required
• - Tensile strength (pull apart force).
• - Shear strength (cutting force).
• - Bending strength (back and forth
  movement)
• - Impact resistance (direct force on the
  product)
• Impact is the most difficult and must be done
  at multiple
• temperatures.
• The product must have the manufacturers name on
  the seal for
• traceability and the letter H for high
  security.
• The product must be tested by an independent lab
  that is certified
• according to the standards outlined in
  ISO/IEC 17025.
• The testing lab must not be affiliated in
• any way with the manufacturer.

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ISO/PAS 17712 Contd

• To make sure that the product is ISO/PAS 17712
  compliant procure the product from an ISMA
  (International Seal Manufacturers Association).
• ISMA members must comply and the organization
  verifies members compliance.
• Ask manufacturer for the testing report issued by
  an accredited testing lab.
• Ask your supplier for a A2LA accreditation
  document indicating they meet the ISO/IEC 17025
  requirements as a testing laboratory.

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Both CBP and ISMA are Tightening Seal Testing
Verification to Obtain Consistency.

• ISMA has just announced that Bodycote ACT
  Laboratories (Hillsdale, MI) will be the sole ISO
  certified test lab for all the members.
• ACT labs is the only ISO 17025 lab that is
  certified to test for ISO/PAS 17712.
• If ISMA members do not use submit seals for
  testing by April 30th suspension from the
  organization maybe imposed on that member.

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CBP recently issued revisions to the Cargo
Sealing Guide for C-TPAT and FAST

• FAST participants are responsible for acquiring
  seals from legitimate manufacturers. CBP does
  not endorse any particular seal manufacturer or
  product. There are organizations, however, such
  as the International Seal Manufacturers
  Association that can provide guidance for FAST
  participants searching for seal manufacturers
  offering ISO/PAS 17712 high security seals.
• Information concerning the use of every seal
  must be recorded and readily retrievable for
  possible audit or validation.

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Cargo Sealing Guide Revision- Contd.

• Seal Authentication
• Companies purchasing high security seals should
  obtain evidence that the seals indeed comply with
  the ISO/PAS 17712 Standard for Freight
  Containers-Mechanical Seals from the seal
  manufacturer and maintain the documentation for
  future reference.
• All high security seals used by a C-TPAT
  certified importer/carrier should be backed by
  the seal manufacturers test report issued by an
  independent ISO 17025 certified testing
  laboratory attesting that the seals comply with
  the strength values called for in the ISO/PAS
  17712 Standard for Freight Containers
  Mechanical Seals.

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Security Requirements Will Also Tighten in Air
Cargo

• The TSA will be announcing in the near future
  security guidelines for handling air freight into
  the US.
• When high security seals are needed- TSA will
  adopt C-TPAT requirements for ISO/PAS 17712
  compliant seals.
• The use of tamper evident tape and labels during
  the cargo inspection process will be highly
  recommended.

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TSA to recommend wrapping pallets with tamper
evident tape as part of the cargo inspection
process
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Padlocks are also important

• TSA requires every truck entering an
• airport facility tendering goods as air
• cargo for passenger flights to be sealed
• and also suggests the use of padlocks.

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Key C-TPAT Mechanical Seal Products
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Non-Compliance Consequences

• If Customs determines a mechanical security seal
  is C-TPAT non-compliant you maybe subjected to a
  Customs review and /or the company maybe
  suspended from the C-TPAT program during the peak
  shipping period.
• As the industry moves to E-seals
  non-compliance says less quality. You do not need
  quality issues with a product that will disturb
  your logistics system with false or no
  alarming. It just makes no financial sense.

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Market Trends

• Mechanical barrier seals will eventually be
  REQUIRED on ALL
• inbound and outbound U.S. and Canadian
  containers.
• The Customs Trade Partnership Against
  Terrorism concept
• elements will take hold around the world
  (WCO).
• On the domestic front, ISO 17712 high
  security seal products
• will have expanded usage for food, drug and
  hazmat shipment
• protection.
• Domestic seal devices used for sea, air and
  land transportation
• will be upgraded with certain logistics
  areas mandating seal
• protection for both transportation and
  storage.
• Mechanical protection will be enhanced to
  include electronics
• with seal verification accelerating the
  process.

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Status of ISO 18185 E-seal Standard

• The product must be ISO 17712 compliant.
• The product must be ACTIVE RFID.
• The product must work under the (2) accepted
  frequencies. - 433 MHZ
  - 2.45 GHZ
• Seal manufacturers best practices similar to
  mechanical seals have been added to ISO 18185
  standard.
• The goal is to have E-seal standard will be
  complete by the years end.

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RFID Seal Applications

• High security E-seals used on ocean cargo
  containers.
• High security E-seals used on trucks and rail.
• Indicative plastic seals will be used as a trace
  and track tamper evident seal (DC for totes)
  (store level as an EAS device).
• Indicative plastic seals used in conjunction
  with bar-coding as a decoration to the seal, but
  not signal if tampered.

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E-Seal Products
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How Far Away Is RFIDin Security Logistics?

• We will begin to see some commercial use of RFID
  high security seals in cargo container use in
  07 expanded implementation in 08 as the
  infrastructures are set.
• Beta tests will be conducted throughout 07 with
  ocean carriers and trucking applications.
• Indicative plastic seals with RFID feature that
  will notify when tampering occurs electronically,
  in 08.

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A portfolio of layered protection

• You have a portfolio of solutions to assist in
  protecting air cargo.
• For cross border use ISO/C-TPAT compliant high
  security seals.
• Assorted indicative seals, bolts, cables and
  padlocks for motor carrier use.
• Assorted tamper indicative security tapes and
  labels.

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Container / Trailer Tapes

• - Manufactured from Type MRS2 vinyl with
  aggressive adhesive
• - Two versions APPROX 12 X 4 9X 2
• - Tape will stretch during door movements
• - Withstands all environmental conditions
• - Dual security cuts on label
• - Sequential numbering

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Summary

• Security will enter the logistics planning cycle
  at an early
• stage.
• Worldwide initiatives (WCO) will continue
  support for high security seals in cross border
  use.
• Worldwide seal standards will drive quality
  levels higher.
• RFID will become more dominant in both high
  security and indicative seal use.
• Security tapes and labels will be providing cost
  effective tamper evident layered protection.
• Air cargo security will be mandated to protect
  passenger traffic.