A hat tip to Nick Kukulan, President of Paramount Export Company headquartered in Oakland, California. He brought to our attention that the Transportation Security Administration (TSA) has been charged by the US Congress with the implementation of strict new rules regarding the inspection of cargo that is to be loaded on passenger airlines.
As Nick explained:
“Considering the large volumes of fresh produce and food products that load on passenger airliners every day for both domestic and international destinations, the new TSA rules will have a HUGE impact on our industry.”
In order to understand precisely what these regulations entail and the implications of these rules for the industry, we asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
General Manager, Air Cargo
Transportation Security Administration
(TSA), Department of Homeland Security
Q: The produce industry is concerned about meeting the new anti-terrorist security regulations, requiring inspection of all cargo loading on passenger airlines. Large volumes of fresh produce travel on passenger airliners every day for both domestic and international destinations. When will the legal mandates go into effect?
A: Starting February 1, 2009, 50 percent of pieces of cargo must be inspected by TSA or a Certified Cargo Screening Facility (CCSF) prior to delivery to a freight forwarder or air carrier. As of August 1, 2010, 100 percent of the pieces of cargo must be inspected.
Q: When you say pieces of cargo, is this down to the individual unit or box?
A: Yes. Each package is going to have to be screened. Those terms are interchangeable. The 9/11 law mandates that. There are no exceptions to that. Current exemptions and alternate means of screening for shrink-wrapped, strapped, and banded shipper pallets will be eliminated. The first priority is security. No one is saying this won’t be a huge undertaking. Approximately 7,500 tons of cargo is loaded onto passenger planes each day.
Q: Because fresh produce is unitized on pallets, some industry executives say this will present a serious challenge to preserving product, maintaining the cold chain, and delivering product in a timely manner. Based on the volumes of highly perishable, high-value, fresh produce and food products that are moved out on a daily basis, there is angst that the requirement to screen and inspect each package could significantly disrupt trade throughout the industry.
A: We recognize obviously produce is a time-sensitive commodity and we want to make sure we don’t interrupt the supply chain when we implement the program. We’re trying to be open-minded and catch product as early in the supply chain as possible to minimize the impact on the items before they get into palletized position.
Q: Could you clarify who will be doing the actual screening? You say each piece of cargo must be inspected by TSA or a Certified Cargo Screening Facility (CCSF). How does that work?
A: Obviously, if screening is done at the airport, there will be massive congestion and bottlenecking, and we are looking at ways to avoid that. The Certified Cargo Screening Program (CCSP) allows aviation and cargo industries to conduct screening at manufacturing facilities, warehouses, factories, and distribution centers, if the facility directly tenders cargo to a freight forwarder or air carrier. Freight forwarders are also eligible. There are stringent requirements to become certified. [Editor’s note: You can read more details about CCSP here.]
Q: Have you talked to any produce executives at this point?
A: We’ve had people out in the field since January talking to stakeholders in affected industries. We’ve spoken to almost 1,400 individuals across different sectors, holding sessions in nine cities. I haven’t personally spoken to produce executives. In Boston, I’ve worked with people who have concerns about lobsters.
I was in Seattle this week talking to Alaska Airlines about the fish they handle. We are very sensitive to the issues involving perishable product and are trying to work with our partners, the forwarders and airlines to resolve potential problems before they occur. These are preemptive, advance meetings.
We have a group in California this week for three days, spending time in Los Angeles, San Jose, and Fresno. The trip is being sponsored by Commodity Forwarders, one of the largest handlers of fresh produce. The TSA group is going to look at the produce supply chain as a whole and try to identify the best places in the system where it could be most advantageous to screen the produce boxes.
We want feedback and suggestions of where these possible places could be before product gets unitized into pallets to alleviate some of the logistical difficulties and quality issues you raise. We don’t want to single out Commodity Forwarders. We have people out in the field talking to companies across the U.S. This is only a small piece of what is happening in one sector.
Q: What do produce industry executives need to do to get prepared for these impending requirements?
A: What produce industry executives should do is work closely with forwarders to make sure they are participating in the Certified Cargo Screening Program, or they can e-mail firstname.lastname@example.org with their questions and someone will get back to them.
We’re working with freight forwarders and shippers. We have looked to get shippers to join us in piloting this whole program. Those 1,300 or 1,400 people I mentioned earlier were shippers in different sectors.
Q: Are produce people involved in the pilot studies? Is there still an opportunity for those interested in participating?
A: TSA has met with a number of produce executives. People are still sending in applications to take part in the pilot program. We’re focused on key cities. We have to control the pilot and limit participation to some degree. At the same time, we are not singling out certain industries, but looking at a broad range of industries because operations and logistics will vary in different sectors. Clearly pharmaceutical companies won’t be facing the same issues as produce companies.
Q: Where and when will the pilots take place?
A: We are pursuing a phased rollout with limited groups of supply chain entities in nine cities through the first half of this year. Round 1 is San Francisco, Chicago, Philadelphia; Round 2 is Los Angeles, Dallas, New York/Newark; and Round 3 is Seattle, Atlanta and Miami.
Q: How do the new requirements compare to the current policies?
A: This significantly changes what is in place now because with the passage of the 9/11 bill into law every single piece of cargo needs to be inspected. Today, it’s a classified amount that has to be screened; a combination of random screening and targeting high risk products.
Q: The Department of Homeland Security’s inspector general released an audit report last July assessing TSA’s oversight of air carrier compliance with cargo screening requirements for passenger aircrafts. The report pointed to several areas of concern, questioning TSA’s oversight effectiveness.
“Shipments are not properly accepted, or lack documentation to support whether appropriate screening occurs,” the report concluded. These new more demanding standards will put an even greater burden on TSA. Could you comment further on the challenges of implementing this ambitious program to bolster our nation’s security?
A: TSA is increasing its number of compliance inspectors nationwide from approximately 300 to over 450 inspectors exclusively dedicated to the oversight of air cargo. Along with performing daily oversight of cargo operators, inspectors also conduct covert testing of the air cargo system and participate in “cargo strike” surge activities at our nation’s largest cargo airports.
Q: What kinds of costs are involved? And will the government compensate companies in any way?
A: We’re still working on the costs. When we look at this, if you’re a produce company and do your own screening, we expect you to screen cargo before you close the box; a physical inspection to insure no foreign objects are present, and then put a tamper evident seal on that box.
Q: How would a company qualify to do its own screening? What security measures will be in place to guarantee the integrity of the system?
A: Anybody who is going to screen product requires certification. This involves background checks, security checks, a whole list of standards you have to adhere to, and onsite validations and periodic inspections. You must be certified to do your own screening. The screening doesn’t have to involve complex technology; it can just be a physical inspection, but it must be done at the piece level.
Q: Could you clarify the definition of “screening” and “physical inspection”?
A: Physical inspection is one acceptable form of screening. Other acceptable methods include x-ray, canine inspection, trace detection (ETD), and explosives detection systems (EDS). ETD and EDS are two types of explosive screening technologies.
Q: You indicate that after a physical inspection, certified screeners should put a tamper-proof seal on the box. Many produce boxes have holes in them to allow the produce to breathe — obviously someone could slip a test tube of explosives or something in one of the holes. Is it required that all items be completely sealed boxes — no holes? Is there a maximum allowable size for a hole, etc.?
A: There’s no such requirement. The Certified Shipper Program includes the employment of a secure chain of custody methods to maintain the security of the screened cargo from beginning to end. This includes vetting of key personnel to ensure those with access to the cargo have clean backgrounds.
Q: Have there been any studies or analyses done on the costs of implementation?
A: TSA is rolling out the Certified Cargo Screening Program in a phased approach beginning in three major cities to allow TSA to receive feedback from the industry, including feedback on costs. Phase 1 will allow TSA and industry to work collaboratively to develop solutions that greatly increase security while permitting legitimate commerce to flow. Lessons learned during this phase will be implemented into later phases and rule-making.
Q: This is a big change for the industry and there are more than a few anxious executives. At the same time, many in the industry could be caught off guard by these upcoming regulations.
A: We’re anxious too. We want to make sure we get it right. We’re trying to communicate this as much as we can so people know what’s coming.
The gist is this: every single case put in the belly of a passenger jet will need to be inspected by a certified inspector. What are the implications of this?
Clearly the TSA will not have even a fraction of the manpower necessary to inspect all the cargo going into passenger jets. So the inspection has to be done away from the airport.
In some circumstances consolidators, freight forwarders or special facilities set up to certify product may be used. By and large, though, the cost of bringing trailers of fully palletized product into any of these facilities so they can be broken down, inspected and reassembled may be prohibitive. In addition, maintaining the cold chain while this inspection is undergone is going to be a problem.
The logical answer is to push the inspection back to the packer and, literally, as the product is packed, also have it certified to TSA requirements. This will basically require each packing facility to become a CCSF or Certified Cargo Screening Facility.
As with many of the changes related to food safety and food security, this sounds like a small change, but is really a revolution. Perhaps a few commodities that are heavily dependent on export and air shipments will see most packing facilities certified, but that would be the exception.
In fact, the procedures to become a CCSP facility seem sufficiently rigorous to dissuade many packers from the effort. For example, personnel must be screened. Presumably illegal aliens wouldn’t pass that screen.
An expected side effect of this rule would be a move to a more aligned supply chain in which overseas importers or U.S. exporters align with specific packers who agree to win accreditation as a CCSF. Spot buying for export would become far less common.
US exports would probably become somewhat less competitive. Although some exports are highly predictable, right now many depend on the vagaries of weather, currencies, etc. When the Pundit manned an export desk, it was not uncommon to get a call from a Dutch trader with news that the proverbial rain in Spain had created an opportunity and so we could export iceberg lettuce or peppers or some other item for a few weeks.
Although the new rules don’t preclude that, the packers may not have bothered to become certified as CCSF-compliant. This means the product will have to be taken to a third-party facility for inspection, which will add cost and make US exports less competitive.
Customer service may decline a bit as well. The Pundit Poppa was proud of never missing a boat in a lifetime in business. Then, one day, when there was a car accident, the trailer missed the boat. No problem. The Pundit Poppa had the product on the van transferred to LD-3s and flown to its destination. We swallowed the extra cost to avoid disappointing a customer.
That product, though, wouldn’t have been certified to fly by air in passenger jets. So under this rule, it would have to be brought somewhere and reprocessed. That is likely to degrade the product and certain to cost money and delay the shipment.
Of course, there is one “out”. These rules only apply to cargo placed on passenger jets. This means that the new rules will tilt the playing field toward dedicated cargo services. These range from FedEx, UPS and DHL to cargo airlines and charter planes. We can expect these services to boom since they will offer a competitive advantage. If you ship with cargo-only operations, you can buy from anyone and need not spend money on extra certifications. That could be a significant advantage.
So the downside effects of these rules are clear: 1) A less flexible industry, 2) US product less competitive on exports, and 3) Cargo business drawn away from already struggling passenger airlines.
Obviously this would all be worth it if it results in a safer citizenry. It is not clear that it does. This mania to inspect everything, whether each passenger or each box of freight, is a very expensive way of avoiding profiling.
So the Jr. Pundit, Primo aka William, age 6, was pulled aside to be wanded on a randomly selected security check. You could laugh, except resources get used on such silliness that could go to really helping to make us safer. One wonders if the money used to comply with these rules also couldn’t make us safer if used in another way.
Yet it seems to be past the time for that discussion. Congress passed the law, the President signed it and now TSA is going to enforce it.
Our challenge is to get ourselves prepared so that fresh produce and other perishable air cargo keep moving.
The associations obviously have to be up on this matter so that they can represent industry interests before the TSA, but basically the path is clear: Packers, processors and consolidators need to certainly consider getting into the Certified Cargo Screening Program. The more companies that are certified, the less of a problem this issue will pose for the trade.
We do have one idea that might really help resolve this problem. Why couldn’t USDA inspectors be deputized by the Transportation Security Administration to carry out these product screenings? The USDA inspectors are generally available at both shipping point and terminal markets and could charge a fee for their time as they do to perform a USDA inspection. They could screen the product then watch it be loaded into airplane containers or a truck which they would seal.
These inspectors are already government employees, and giving them this work would have two benefits: first, it would facilitate exports by making it easier to meet the screening requirements and, second, the additional revenue would help sustain the network of USDA inspectors around the country. Surely with a little extra training, this could be made to happen and it would provide a very valuable option for the industry.
Many thanks to Nick Kukulan and Paramount Export Company for making the industry aware of this important issue.