Non-asset based 3PLs take big leap toward C-TPAT entry

Non-asset based third-party logistics providers (3PLs) are as close as they've ever been to joining the Customs-Trade Partnership Against Terrorism (C-TPAT), one of the nation's leading supply chain security programs.

The House Homeland Security Committee last week approved port security legislation that includes language creating a pilot program for non-asset based 3PLs to participate in C-TPAT. C-TPAT was launched in 2002 following the 9/11 terrorist attacks and is run by the U.S. Bureau of Customs and Border Protection (CBP).

If approved by Congress and signed into law, the language would end a 3.5-year ban by CBP against non-asset based 3PLs enrolling in C-TPAT.

The language in the bill, H.R. 4251, the "SMART Port Security Act," would allow at least five non-asset based 3PLs to take part in the C-TPAT program. It would be open to 3PLs arranging the international transportation of goods, would be voluntary, and would run for a minimum of one year. The Department of Homeland Security (DHS), which oversees CBP's operations, would have six months from the bill's enactment to develop the pilot program.

The legislation, introduced by Rep. Candice Miller (R-Mich.), directs DHS components with maritime security responsibilities to co-operate more closely with federal, state, and local law enforcement; develop and strengthen risk-based supply chain programs; and identify cost savings.

The bill has seven Democratic co-sponsors and passed by voice vote. The committee hopes to bring the bill to the House floor by the end of June. If passed by the House, the bill would go to the Senate. If approved, it would be signed into law by President Obama.

Under C-TPAT, businesses submit plans to CBP showing they have acceptable security measures in place throughout their supply chains. Those that pass an audit of their security standards and procedures receive expedited clearance of cargo entering U.S. commerce.

Since January 2009, however, CBP has denied entry to C-TPAT to companies that operate almost exclusively in domestic U.S. commerce and don't own assets. In addition, 3PLs must prove they are licensed or bonded by the Department of Transportation, the Federal Maritime Commission, the Transportation Security Administration, or CBP. They must also maintain a staffed office in the United States and cannot contract out a service if the contractor then plans to outsource the work to a company not enrolled in C-TPAT.

CBP has said over the years that the program's limited resources are best served focusing on companies that operate in international commerce and that control physical assets. Most international security breaches occur at the foreign origin point where containers are stuffed and during the movement of cargo to the point of export to the United States.

As such, firms that operate wholly in domestic U.S. commerce are not prime candidates for C-TPAT validation, according to the agency.

Broker and 3PL advocates argue that, as arrangers of international transportation, they are critical nodes in the security supply chain and deserve inclusion in, and full consideration under, C-TPAT.