Major American Companies Securing Cargo and Profits

Thousands of American companies are learning that doing the right thing for homeland security also can beef up the bottom line.

These firms -- Anheuser-Busch, Solutia, Boeing and Brown Shoe among them -- are protecting their imported goods as part of the Customs-Trade Partnership Against Terrorism, or C-TPAT. Begun in the wake of the 9/11 terrorist attacks, the voluntary program encourages companies to invest in the security of their shipping and supply systems -- or supply chains.

The goal is to prevent bombs, biological weapons and other security threats from reaching U.S. borders. The methods call for protecting cargo containers as they are loaded on foreign soil, using everything from high-tech sensors and locks, to employee education programs and background checks.

The program reduces pressure on U.S. Customs and Border Protection, which processes an average of 9 million truck-sized cargo containers arriving from overseas each year -- about 25,000 a day.

Since 9/11, Congress has increased the agency's funding by more than 700 percent, to $1.6 billion in fiscal 2005. Yet some politicians clamor for increased container inspections and say America's ports remain highly vulnerable.

Some of the country's biggest importers helped design C-TPAT and are encouraging their business partners to participate, saying this approach is better than government-imposed, mandatory measures.

"It's a positive program that came from the results of Sept. 11, that made the country more secure," said Dorsey Hunt, sales manager at Supply Chain Security Inc. of Ft. Lauderdale, Fla., which provides consulting services for companies seeking C-TPAT certification.

"It's important for where we are in the world today that companies understand who is playing with (their) supply chain," he said. "Companies have to get in the game."

To join C-TPAT, companies must submit details of their shipping activity and security measures, allow Customs to verify them and make suggested improvements. In return, their goods move faster through U.S. ports, are subject to fewer Customs inspections and get in the country first during a crisis that tightens borders, such as a natural disaster or terrorist activity.

These benefits -- plus advantages from keeping a close watch on imported supplies -- are saving companies money and improving their reliability and reputation, according to a recent Stanford University study, released by the Manufacturing Institute, the research arm of the National Association of Manufacturers.

Anheuser-Busch regards C-TPAT participation as "both good citizenship and good business," said Tim Armstrong, senior director of transportation and logistics services for the brewing company's domestic subsidiary.

"As we add imported beers like Harbin, Grolsch and Tiger to our distribution system, it's important that we avoid shipment delays and deliver fresh beer to our customers," he said. A-B also imports hops and other raw materials.

C-TPAT is leading to the development of technology to better protect cargo coming through U.S. ports. The Department of Defense website includes a 50-page "best practices" brochure that details some gizmos used by certified companies. These include "smart" seals; global positioning system tracking; radio frequency identification, or RFID, tags; and sensors that monitor and alert to changes in temperature, light, humidity and other conditions.

Boeing uses smart seals on its containers -- locks with serial numbers and manifest data that employees check when shipments arrive at the warehouse. Other adjustments include additional training for guards, but Boeing has not incurred any expenses worth mentioning since becoming C-TPAT certified in 2003, said Ken Konigsmark, the aerospace and defense giant's C-TPAT program manager.

Participating in the program gives Boeing a better grasp of its international supply chain at a "total company level," he said.

That level of transparency allows a company to reduce excess inventory, take immediate action if a crucial item is delayed in transit and meet important deadlines, said Debbie Turnbull, program manager for supply chain security in the import compliance office at Armonk, N.Y.-based IBM Corp., a C-TPAT pioneer. It helped to fund the Manufacturing Institute study.

"We see supply chain security as a competitive differentiator for IBM," Turnbull said. "At the end of the day, keeping a customer happy is really what it's about."

This fall, IBM and Maersk Logistics of Denmark will roll out tamper-resistant embedded controllers, or TREC devices, that transmit real-time data from containers located anywhere in the world -- even the middle of an ocean, said IBM spokesman Chris Sciacca.

With the TRECs, firms can take immediate action in response to unexpected circumstances, he said.

For example, a container of bananas meant for supermarket shelves that is delayed can be diverted to a baby-food company that uses more ripened fruit. Or, if flat-screen televisions are rocked and damaged by a storm at sea, the manufacturer can be alerted to order a new supply and minimize the delay to retailers during a busy holiday shopping season, Sciacca said.

Solutia Inc., based in Town and Country, found C-TPAT participation to be a logical extension of post-9/11 security measures it took as a member of the

American Chemistry Council trade group, said Cheryl Montgomery. She retired from Solutia as head of international trade, then returned as a consultant on C-TPAT compliance.

Solutia executives "all said it was the right thing to do. Plus, they have some businesses that are highly dependent on imported raw materials and they don't want to take any chances" that a delay might shut down a domestic manufacturing line, she said. "Predictability of our supply improves the confidence of our customers."

Since joining C-TPAT, Solutia has seen fewer Customs inspections, each of which can cost the company hundreds or thousands of dollars for port storage, transportation and labor. Reduced handling of goods by agents also means there is less chance for damage, Montgomery said.

Such concerns are not limited to manufacturers.

Fenton-based UniGroup Inc., parent company of UniGroup Worldwide UTS, United Van Lines and Mayflower Transit, became C-TPAT-certified last year for international household moves. Its clients include government employees and Fortune 500 executives.

Before 9/11, "we were very concerned about the security of the property we were moving. But it was primarily from theft or damage," said John Hiles, director of UniGroup Worldwide UTS Operations. The company has since shifted its standards to maintain the integrity of the U.S. supply chain.

The change has yielded mixed results in a competitive industry that represents only 10 percent of U.S. imports and exports, he said.

"What it really has cost us is additional effort and, in some cases, businesses that have chosen not to work with us because of our restrictions," Hiles said. "At the same time, we've had new businesses come to us because of our security measures."

Indeed, C-TPAT is creating a growing community of companies that prefer or will only work with others that are certified. Such is the case with Boeing, IBM and Brown Shoe Co.

The shoe company, based in Clayton, "got into C-TPAT because we thought it was the right thing to do," said James Carder, vice president of logistics.

Double-wire fencing, security cameras, guards, smart seals and satellite-enabled systems that alert police if a container goes off course all are part of the company's consolidation warehouse in Brazil, Carder said.

The spread of C-TPAT is important to any company that does international business, because the global supply chain is inextricably intertwined, IBM's Turnbull said.

"The supply chain is only as strong as its weakest link. If something happens on a boat to a particular container, it's going to affect everything on there," she said.