Curtis D. Spencer, President

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The 2005 Chicago Conference on
GLOBAL SUPPLY CHAIN SECURITY

• Curtis D. Spencer, President
• IMS Worldwide, Inc.
• Member, COAC Technology
• Task Force

WEDNESDAY, JANUARY 12, 2005
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Todays Agenda

• Prevailing Regulations Regulators
• MARSEC (Maritime Security)
• MTSA
• ISPS
• Facility Security Regulations-MTSA Requirements
• C-TPAT
• Smart Boxes
• Operation Safe Commerce (OSC)
• Conclusions

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Regulations, Regulators

• Who Has Authority Over Security At The Port
• Port Police
• State Police
• City Police
• County Police
• Rail Police
• Coast Guard
• Customs, CBP
• ACC
• API
• TSA

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Authority Over What

• Cargo, container, bulk, ships
• Cruise and passenger ships
• Ferries
• Tugs and work boats
• Barges and platforms
• Pleasure boats
• All Terminals
• Facilities to manage/support all the above

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MARSEC

• Provides three levels of security layering that
  reflect the current state of threat
• MARSEC Level 1 corresponds to the Homeland
  Security Advisory System Low-Green,
  Guarded-Blue, Elevated-Yellow, this is the new
  normal
• MARSEC Level 2 corresponds to the Homeland
  Security Advisory System High-Orange
• MARSEC Level 3 corresponds to the Homeland
  Security Advisory System Severe-Red

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Maritime Transportation Security Act of 2002
Overview
LAYERED APPROACH TO MARITIME SECURITY
OVERSEAS

• 24 Hour Advance Notice
• Operation Safe Commerce
• C-TPAT
• ISPS Code
• International Port Security Program
• CSI Teams

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Maritime Transportation Security Act of 2002
LAYERED APPROACH TO MARITIME SECURITY
IN TRANSIT

• Smart Box
• ATS
• Ship Security Alert System
• 96 Hour Advance Notice of Arrival

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Maritime Transportation Security Act of 2002
LAYERED APPROACH TO MARITIME SECURITY

• ON U.S. SHORES

• National Targeting Center
• Security Boardings
• AIS
• Security Committees
• Port Security Grants
• RAD-CHEM-BIO Screening
• Operation Dry Dock
• American Waterway Watch

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Maritime Transportation Security Act of 2002
LAYERED APPROACH TO MARITIME SECURITY

• ON U.S. SHORES (cont)

• -Intel Centers
  
  -Port Shield
  
  - MTSA
  
  - Nii Technology
  
  
  - Port Security Assessment
  
  - Maritime Safety And
  Security -
• Transportation Workers Id Card

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Maritime Transportation Security Act of 2002
Whats done July 1 , 2004

• Conduct assessments of all facilities and vessels
  on or near the water to identify those that are
  high risk.
• Once vulnerabilities are identified, implement
  interim security measures.
• Mandates a national maritime transportation
  security plan (also regional plans).
• Requires all ports, facilities and vessels have
  a comprehensive security plan.

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Maritime Transportation Security Act of 2002
(continued)

• Requires the development of a maritime
  intelligence system.
• Improves the reporting of crew members,
  passengers and imported cargo to better track
  suspicious activity.
• Compels commercial vessels to be equipped with
  and operate an Automatic Identification System
  (AIS) when in U.S. waters.
• Provides for supply-chain security and a secure
  system of trade.

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Maritime Transportation Security Act of 2002

• Security assessments and plans
• The Act required port facilities and vessels to
  submit a security assessment and plan to the
  coast guard
• 9,500 VESSELS
• 3,500 FACILITIES
• SUBMITTED PLANS PRIOR TO JULY 1, 2004

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Facility Security Plan Outline - What Was Required

• Security Administration, organization
• Personnel training
• Drills and exercises
• Records and documentation
• Response to change in MARSEC levels
• Procedures for interfacing with vessels
• Declaration of Security
• Communications

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Facility Security Plan Outline

• Security systems, equipment maintenance
• Security measures for access control
• Security measures for restricted areas
• Security measures for handling cargo
• Security measures for delivery vehicles
• Security measures for monitoring
• Security incident procedures
• Audits and security plan amendments
• Facility Security Assessment report
• Facility Vulnerability and Measures Summary

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INTERNATIONAL SHIP AND PORT SECURITY CODE (ISPS)

• ISPS Compliance Numbers (to 7/06/04)
• 1600 foreign vessels called U.S. ports an average
  of 260/day
• Coast Guard conducted 442 security exams
• 428 dockside
• 14 at sea
• Approximately 14 vessels boarded prior to July in
  voluntary pre-inspection program.
• Of the foreign vessels calling U.S. ports after
  7/1
• 9 were denied entry
• 10 expelled from port
• 30 detained in port or restricted their
  operations

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INTERNATIONAL SHIP AND PORT SECURITY CODE (ISPS)
(continued)

• Domestically
• 33 U.S. vessels and 18 U.S. ports are restricted
  or suspended from certain operations.
• 25 of the U.S. vessels are towing, 5 offshore
  supply, 2 passenger and 1 mobile drilling.
• Of the facilities restricted, 13 are bulk or
  cargo facilities and 5 are passenger terminals or
  marinas.

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Maritime Transportation Security Act of 2002
Enforcement Actions to December, 2004

• 89 Vessels have had enforcement actions taken
• 73 Detentions
• 12 Expulsions
• 4 Denial of entries
• 30 Vessel owners/operators prohibited from
  Government cargoes
• 4 Recognized Security Organizations are targeted
  as having excessive detentions

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Maritime Transportation Security Act of 2002
Enforcement Actions to December, 2004
9 Countries/ports of call determined not in
compliance with the ISPS Code 5 Flag-state
related vessels flying these state flags are
assessed 7 points on the ISPS/MTSA Boarding
Matrix 7 Flag-state related vessels flying these
state flags are assessed 2 points
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Maritime Transportation Security Act of 2002
Enforcement Actions to December, 2004 (cont.)
7 Vessel Charterers targeted with detentions
Countries failing to provide port facility
security Information required by MTSA September
17 October 13 November 9 December 8
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Maritime Transportation Security Act of 2002
New Boarding Program

• Boarding programs have been expanded to include
  ISPS/MTSA boarding to verify compliance.
• Vessels are targeted using a new ISPS/MTSA
  matrix and the current PSC matrix.
• Vessels are grouped into three categories
  (ISPS-I, ISPS-II, ISPS-III) and (P-I, P-II,
  P-III).

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Maritime Transportation Security Act (MTSA)
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Maritime Transportation Security Act (MTSA)
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Maritime Transportation Security Act of 2002.
What is coming..

• COAST GUARD TO BEGIN INTERNATIONAL PORT SECURITY
  VISITS
• A traveling team will visit approximately 45
  countries each year.
• International port security liaison officers
  stationed around the world provide assistance to
  team.
• Meet appropriate national authorities to discuss
  nations maritime security regime, its
  interpretation and implementation of
  international code.

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Maritime Transportation Security Act of 2002

• COAST GUARD TO BEGIN INTERNATIONAL PORT SECURITY
  VISITS
• Jointly visit ports within country.
• Jointly verify with host nation the effectiveness
  of the approval process for port facility AND
  vessel security assessments and plans required
  under international code.
• Provide technical assistance.
• Share information about best practices.

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Maritime Transportation Security Act of 2002

• Vessels that make port call at countries not
  participants or not in compliance could be
  delayed by such enforcement actions as
• Boarding the vessel at sea
• Controlling vessels movements with armed escorts
• Conducting a security inspection at dock or sea
• Denying entry into U.S. waters
• These measures will remain in force until country
  demonstrates compliance

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Maritime Transportation Safety Act of 2002, Next
Milestones and Ongoing Programs and Initiatives

• Next Milestone 12/31/2004 The Automatic
  Identification System (AIS)
• Ongoing Initiatives and Programs
• Transportation Security Cards TWIC
• Maritime Safety and Security Teams
  Multi-Jurisdictional Teams
• Grants
• Maritime Intelligence
• Secure Systems of Transportation
• International Seafarer Identification
• Extension of Seaward jurisdiction
• Deepwater ports
• Sea Marshals
• Maritime Security Professional Training

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CustomsTrade Partnership against Terrorism
(CTPAT)-05

• Program open to voluntary participation for
• Brokers
• Importers
• Air Carriers
• Sea Carriers
• Rail Carriers
• Shippers/ Freight Forwarders
• Terminal Operators/Port Authorities
• To date over 7300 participants.

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C-TPAT

• Changes to Importer Requirements
• Importers must hold foreign suppliers to
  standards of
• security regarding container stuffing
  (no longer says
• should).
• Importers must ensure container seals are
  attached and
• maintained on their containers
  throughout their transit
• to the United States.
• These changes raise concerns that the program
• is moving towards mandatory
  participation.

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C-TPAT
Proposed C-TPAT Importer Minimum Standards

• Business Partner Requirements
• Security Procedures
• Point of Production
• Customs Industry Partnership Program
• Other Internal requirements for selection
• Container Security
• Container Inspection Process (7 steps)
• Container Seal Process
• Seal Change Reporting and Control Process
• Container Storage Management Process

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Proposed C-TPAT Importer Minimum Standards

• Physical Access Control
• Employees
• Visitors
• Deliveries (including mail)
• Challenging and removing unauthorized persons
• Securing physical access

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Proposed C-TPAT Importer Minimum Standards

• Personnel Security
• Pre-Employment Verification
• Background Investigations
• Personnel Termination Procedures
• Procedural Security
• Documentation Processing
• Manifesting Procedures
• Shipping Receiving
• Cargo Discrepancies

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Proposed C-TPAT Importer Minimum Standards

• Security Training and Threat Awareness
• Physical Security
• Fencing, Gates and Gate Houses, Parking, Building
  Structure, Locking Devices and Key Controls,
  Lighting, Alarm Systems, Video Surveillance
  Cameras
• Information Technology Security
• Password Protection
• Accountability

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Operation Safe CommercePhase III

• 18 Month Project starting in Q1, 2005
• 3 Load Centers Grant Funding Extension
• Extensive Testing prior to field deployment
• Stress test best solutions and devices
• SCEM will be the key
• Container visibility across the supply chain
• Empty inspection controls and protocols
• Container stuffing protocols
• Known shippers, custodians
• Alarm management and response protocols
• Interaction with ODP, CBP, Ports, Terminals,
  Labor

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Additional Initiatives

• Smart Boxes
• The use of science and technology designed to
  detect tampering of containers
• Enhance the security of the supply chain
• Ensures the integrity of the container on all
  sides
• ACSD Advanced Container Security Device

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Additional Initiatives

• Smart Boxes
• Concerns
• Reliability and durability of equipment
• Cost for small shippers
• Confidentiality of data capture by system
• Equipment tested so far not reliable
• Retrofitting non-equipped older containers
• Time to produce sufficiently equipped containers

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ConclusionsGlobal Supply
Chain Security
Approaches

• Risk Assessment and Prevention Strategies
• Assets people, information, property
• Threats, Vulnerabilities, Consequences
• Tiered, risk based approach to evaluate, identify
  and prioritize potential targets, assets
• Cargo Risk Evaluation
• Prevention Strategies
• Establish rings of protection, layered approach
  to security and safety
• Not a one-size-fits-all approach, requires
  multi-disciplines, employees and third party
  security professionals

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Conclusions

• 9/11 Changed the meaning of business

• Security of the Supply Chain requires broad
  executive level support
• Importers and producers have multiple reporting
  and compliance responsibilities
• Security was.
• Security is..

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Thank You Curtis D. Spencer