Appendix A

Appendix A

Transportation Security and International Trade

Balancing security and international trade requirements has become a major concern of decisionmakers and private industry since the September 11, 2001, terrorist attacks. Immediately following the attacks, tightened security necessarily slowed traffic at U.S. borders, seaports, and airports. Trade flows at key transportation gateways and corridors were affected. Many private sector businesses relying on just-in-time delivery of traded goods were impacted. For example, U.S. automakers temporarily halted production at some facilities when delivery delays from Canada and Mexico disrupted their supply-chain system of maintaining low inventories (Wall Street Journal 2001).

The attacks highlighted how major transportation disruptions could affect manufacturers and the broader U.S. economy. During 2002, trade and freight activity levels started to recover. However, enhancing security and safety without hindering the efficient and cost-effective movement of goods and people into and out of the United States is still a challenge. Government and industry are now seeking to build on existing efforts and to develop new approaches to transportation and cargo security. A key component of this effort will be expanded information on crews and traded goods, such as the provision of advance and near real-time data.

Initial Responses to September 11, 2001

Immediately following the 2001 terrorist attacks, the many agencies with security missions implemented new and stricter procedures at U.S. ports and borders.1 Increased scrutiny of cargo and people entering and exiting the United States was a top focus. The U.S. Customs Service implemented intensive anti-terrorism operations under its highest alert level, particularly, providing a greater level of examination of cargo, conveyances, and passengers entering the United States. To support these efforts, additional personnel were deployed across the country and at major ports of entry. Customs also temporarily transferred about 100 inspectors from the southwestern border to the northern border (U.S Department of the Treasury 2001).

Complementing Customs focus on cargo security, the U.S. Coast Guard focused on port and vessel security. The Coast Guard called up over 2,200 reservists to help patrol over 360 seaports and reoriented a majority of its resources to security, a focus that will remain high2 (USDOT USCG 2001a). Coast Guard sea marshals began boarding vessels more frequently, and Port Security Units were deployed at four critical domestic ports to augment security forces. To improve information and risk analyses of vessels entering the United States, the Coast Guard started to require a 96-hour advance notice of vessel arrivals rather than just 24 hours, as well as crew and passenger lists in advance (USDOT USCG 2001b).

Air freight security was also an immediate focus. To better ensure the security of air cargo movements, the Federal Aviation Administration issued Emergency Amendment EA 109-01-01A, or the known shipper rule, on October 8, 2001. Under the new rule, the freight forwarder must verify the legitimacy of the shipper unless it had done business with the shipper prior to September 1, 1999, and had booked at least 24 shipments with them (BDP 2001).

The Transportation Security Administration (TSA), with security responsibility for all modes of transportation, was created through the Aviation and Transportation Security Act (Public Law 107-71), which President George W. Bush signed into law on November 19, 2001. Much of TSAs initial focus was on air security, particularly for passenger travel, as multiple deadlines were established in the Act for passenger and checked baggage screening. In addition, the Act established new provisions for air cargo, including the screening of all cargo that is not from a known shipper and the development of systems by integrated express carriers (e.g., Federal Express or United Parcel Service) for some level of screening and inspection of cargo that is transported in all-cargo aircraft. TSA also began working on enhanced cargo security initiatives for all modes of transportation.

On November 25, 2002, President George W. Bush signed into law the Homeland Security Act of 2002, creating a cabinet-level Department of Homeland Security that would integrate the governments border and security responsibilities.3 The new department, which came into being in January 2003, will fully or partially consolidate components of the following agencies: the Coast Guard, TSA, Secret Service, Immigration and Naturalization Service, Border Patrol, U.S. Customs Service, Federal Emergency Management Agency, Animal and Plant Health Inspection Service, among others. The main missions of the new department are border and transportation security; emergency preparedness and response; chemical, biological, radiological, and nuclear countermeasures; and information analysis and infrastructure protection. One of the goals of the new department is to consolidate, coordinate, and share otherwise fragmented information, in order to better target and respond to any potential terrorist threats.

Longer Term Transportation Security Initiatives

While the September 11 terrorist attacks on the United States elicited immediate responses by the U.S. government, they also underscored the need for multifaceted strategies and initiatives in transportation security. In the area of cargo security, many of these are long-term efforts that will build on activities that were already underway prior to September 11. Others are new approaches. All will require government resources and partnerships with industry. Some of these efforts will focus on one piece of the security picture while others have broader objectives covering cargo, conveyance, and crew security. Underlying all of the initiatives, however, is the recognition that enhancements and new measures are needed to improve cargo and conveyance visibility (i.e., availability of information), equipment and infrastructure monitoring, and crew and staff access to secure areas.

Cargo and Conveyance Visibility. Improving the visibility of cargo and conveyances is a critical component of improved transportation security. Visibility refers to secure access to information on goods, equipment, conveyances, and crews throughout an entire supply chain (e.g., for imports into the United States, having information about a shipment from the point of origin in a foreign country; through its loading and transport via a vessel, plane, truck, or train; to the U.S. port of entry and unlading; and finally to the U.S. point of destination). To achieve this objective, information would be required well before the foreign vessel and its goods have access to the U.S. domestic transportation system.

Several current security initiatives aim to improve cargo and conveyance visibility. Two major U.S. Customs Service programs are the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT). These two programs are private-public partnerships designed to secure goods from their origin at a foreign manufacturing facility through transit, until the goods arrive at U.S. ports.

The aim of the CSI plan is to establish strict screening standards at designated foreign ports for U.S.-bound shipments. Launched by the U.S. Customs Service in January 2002, one of the CSI goals is to provide U.S. authorities with more information on low-risk, prescreened cargo. One element in achieving this will be the deployment of U.S. Customs personnel at key foreign seaports to identify and prescreen U.S.-bound cargo before it is shipped to the United States.4 Another CSI element is to provide advance cargo information for Customs risk analysis. To support this ability, Customs issued new regulations on October 30, 2002, requiring sea carriers to provide cargo manifests 24 hours prior to the loading of the cargo in foreign ports for shipment to the United States5 (U.S. Department of the Treasury 2002c).

Under the C-TPAT, manufacturers, shippers, and carriers that implement secure practices can apply to U.S. Customs for fast-track cargo processing. The C-TPAT is a certification process for importers to use for their supply chains. Once the supply chain is certified, a companys low-risk cargo could move through U.S. Customs more easily6 (U.S Department of the Treasury 2002a).

Both the CSI and C-TPAT programs underscore the need for accurate and near real-time information on internationally traded goods in order to secure a supply chain. For example, with real-time information gathered on an inbound container, including shipper, owner, origin, destination, transshipment points, carrier performance history, weight, value, commodity, and insurance, security staff will be better able to preselect shipments for physical inspection before the cargo arrives at a U.S. port. If the network from shipper to consignee is secure and Customs receives information about the inbound cargo far in advance, then less time could be spent inspecting these shipments and more time could be focused on higher risk freight.

An initiative on the U.S.-Canadian border, Free and Secure Trade (FAST), is also intended to improve cargo and conveyance visibility to security officials so that low-risk goods transported by truck can move efficiently between the United States and Canada. FAST is part of the Smart Border initiative between Canada and the United States begun in December 2001. Under the FAST program, motor carriers, importers, and truck drivers in both countries register with their governments and provide advance notice of the goods they intend to transport. Once Customs agents in each country have determined the safety of each shipment, the trucks can cross the border in special lanes, thereby reducing delay times at the major land ports (White House 2002).

Equipment and Infrastructure Monitoring. A key component of many security initiatives is enhanced equipment and infrastructure monitoring. Since a great deal of U.S. international trade is transported in containers, much attention is focused on the implementation of electronic, real-time tracking of containers and the creation of tamper-resistant seals. In addition, the deployment of sensors to detect potentially toxic and/or explosive cargo is another focus. A challenge is to develop technologies that are not cost prohibitive for shippers and carriers, while maintaining equipment security. Another objective in this area is to further develop and implement technologies to facilitate improved security during the container loading process. For example, a range of new software is available with the potential to aid in the development of a secure loading plan or to check the hazardous materials compatibility of various cargoes.

One initiative focused on equipment and cargo monitoring is Operation Safe Commerce (OSC), a partnership between multiple federal agencies and the private sector. Its purpose is to explore commercially viable options that support cargo management systems that keep pace with expanding trade while protecting international shipments from a variety of threats. One of the objectives of the project is to develop procedures, practices, and technologies that help secure and monitor containers and cargo from point of origin to final destination. In August 2002, a pilot test of phase one of OSC was conducted with a focus on container tracking and effective security seals. Subsequent phases of the project are under development, including implementation of a supply chain grant program for the ports of Los Angeles, Long Beach, Seattle, Tacoma, and New York-New Jersey. The focus of the grant program is to develop approaches and technologies that will demonstrate a secure supply chain for international trade transactions. Persons and entities representing components of the international trade supply chain submit grant proposals and seek funding through these ports under the OSC program (USDOT TSA 2002).

Crew and Staff Access. A major component of new security enhancement plans is limiting access to cargo and conveyances to qualified and authorized personnel. This includes the development of standards for personnel for all system participants ranging from customs officials to crewmembers and third-party forwarders, both in the United States and abroad. Information and data would again play a central role, facilitating detailed background checks and providing officials with data points for risk analyses. Once staff members and crew are screened, their access to sensitive cargo could be further controlled through identification technologies such as biometric retinal and iris scans, hand geometry, facial recognition, voice recognition, or dynamic signatures.

TSA is implementing a new Ports Security Grants Program to finance security enhancements at major seaports in the United States. The bulk of the over $90 million in grants will go to 77 seaports for increasing operational security, including facility access control and crew security. The grants also cover the development of security assessments and mitigation strategies for port and terminal security (USDOT OST 2002).

Cargo Security Initiatives

Security focus Proposed enhancement measures
Cargo and conveyance visibility - Tag cargo with trackable, electronic seals at loading points
- Businesses create and implement processes to secure the supply chain
- Foreign and U.S. officials screen U.S.-bound containers at select foreign ports
- Provide U.S. officials with access to a multiagency information and intelligence database to identify low- and high-risk entries
- Exchange trade data among countries for national security purposes
Equipment and infrastructure monitoring - Implement electronic, real-time tracking of containers and vessels to determine which demand further attention
- Install sensors to detect potentially toxic and/or explosive cargo
Crew and staff access - Make historical data on shippers, passengers, and crew available to authorities through databases
- Deploy advance passenger and crew screening systems
- Use biometric identifiers to grant access to precleared, low-risk individuals
- Use smart seals that provide electronic notification to indicate and deter cargo tampering

Future Security and Trade Flows

Balancing security requirements with the need for efficient and effective international freight flows will be a continuing challenge for the country as a whole and for the U.S. transportation system. The United States shares a 5,525-mile border with Canada, a 1,989-mile border with Mexico, and has 95,000 miles of open shoreline and navigable waterways. The task of fully securing this physical boundary is compounded by the millions of people, hundreds of thousands of vehicles, aircraft, and vessels, and millions of containers carrying freight that enter the United States annually.

The U.S. domestic transportation network is changing in response to these evolving security and trade requirements. The exact implications of these changes for freight are, as yet, unknown. For example, if delivery times are delayed, will globally sourced companies rely more on domestic suppliers? Will companies begin to hold more inventories, thereby affecting the demand for transportation services? It is clear that initiatives focused on improved technology and information will be essential in this new trade and security environment. However, the exact balance between the flow of international goods and necessary security requirements will continue to evolve and new strategies seeking to improve this balance will continue to be sought.


1 Multiple federal agencies have responsibilities for U.S. border control and security. These include the following agencies, which will be consolidated under the new Department of Homeland Security: 1) the U.S. Customs Service, which checks cargo, vehicles, and passenger baggage at all U.S. ports of entry; 2) the U.S. Coast Guard, which polices seaports, coastlines, and waterways; 3) the Immigration and Naturalization Service, which is responsible for checking immigration documents at U.S. points of entry; and 4) the Transportation Security Administration, created in November 2001, which is in charge of security for all modes of transportation.

2 In addition to homeland security focusing on ports and vessels, the U.S. Coast Guard also has missions in other areas, including maritime safety and mobility, national defense, and protection of natural resources.

3 These responsibilities and missions are currently distributed across multiple agencies in several departments, including the Departments of Justice, Transportation, Agriculture, and Treasury, among others.

4 On September 25, 2002, the Customs agencies of the United States and Japan signed a declaration of principle to participate in the CSI (U.S. Department of the Treasury 2002b). As of October 2002, the United States already had CSI declarations with Canada, the Netherlands, Belgium, Germany, France, Singapore, and Hong Kong. U.S. Customs is currently in discussions with several other nations.

5 The new regulation applies to sea carriers only. Vessels carrying bulk cargo are exempt. In January 2003, Customs began holding public meetings with the trade community to discuss options for advance manifest filings for truck, rail, and air modes.

6 As of July 9, 2002, more than 230 importers had agreed to participate in the program, and by August 26, 2002, the U.S. Customs Service had begun accepting applications for C-TPAT certification. Applications are currently accepted from importers, brokers, freight forwarders, and nonvessel-operating common carriers. In January 2003, U.S. Customs began to expand C-TPAT to include port authorities, terminal and warehouse operators, and manufacturers.


BDP International. 2001. BDP Advisory: FAA Issues New Guidelines for Known Shippers. Available at, as of October 2001.

U.S. Department of Transportation (USDOT), Office of the Secretary (OST). 2002. U.S. Department of Transportation Establishes Port Security Grants for Critical National Seaports. Available at, as of Sept. 16, 2002.

U.S. Department of Transportation (USDOT), Transportation Security Administration (TSA), Maritime and Land Security. 2002. Personal communication. October.

U.S. Department of Transportation (USDOT), U.S. Coast Guard (USCG). 2001a. Media Advisory: New Reporting Requirements for Ships Entering, Leaving U.S. Available at, as of Sept. 16, 2002.

_____. 2001b. Statement by USCG Commandant on Port and Maritime Security, December 2001. Available at, as of Sept. 6, 2002.

U.S. Department of the Treasury, U.S. Customs Service. 2001. Testimony of Commissioner Robert C. Bonner. Northern Border Security: Hearing Before the U.S. Senate Committee on Appropriations, October 3. Available at, as of Oct. 28, 2002.

_____. 2002a. Customs-Trade Partnership Against Terrorism (C-TPAT). Available at, as of Aug. 12, 2002.

_____. 2002b. Japan Joins Container Security Initiative. Available at, as of Oct. 24, 2002.

_____. 2002c. U.S. Customs Publishes Final Regulations To Require Advance Shipping Information. Available at, as of Oct. 30, 2002.

Wall Street Journal. 2001. As Security Worries Intensify, Companies See Efficiencies Erode. Sept. 24, 2001. p. 1.

White House. 2002. United States-Canada Free and Secure Trade Program: The Fast Program, September 2002. Available at, as of Oct. 24, 2002.