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Maritime Security in Logistics

From Japanese Shippers’ point of View

Koji Hashimoto

JMC

（Japan Machinery Center for Trade and Investment）

September 29th , 2011

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Production Network (A representative case of a Cross Border Operation in East Asia)

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Facilitation and Security

Economic and Industrial activities in the Ease Asia Region are highly

integrated through many cross border supply chains.

Maritime Logistics plays the fundamental role to facilitate the supply

chain operations.

As complicated cross border Supply Chains stretch longer, it entail

various vulnerabilities;

Smuggling, Trespassing of Terrorist and WMD, Theft, and other illegal activities, etc.

How can we reconcile facilitation and Security?

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Challenges

Vulnerabilities As cross border Supply Chains stretch longer,

it entail various vulnerabilities

Theft Smuggling

Terrorism WMD

Facilitation

Finding a way to reconcile

Security

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Developments of Security Programs – US, EU, WCO, and Japan US EU WCO JAPAN

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

September 11

C-TPAT

CSI

Advance Cargo ManifestPresentation for OceanContainer(24 hour rule)

The security amendmentto the Community Customs CodeRegulation (EC) No 648/2005

The implementing provisionsCommission Regulation (EC) No 1875/2006

SAFE Framework

SAFE GuidelineSAFE Port Act

AEO

Advance Cargo Manifest Presentation(24 hour rule)

Secure Freight Init iative(10+2 rule)

AEO　for Exporters

AEO　for Importers

AEO　forManufacturers

AEO　forCustoms Brokers

AEO　for Wearhouse

Advance Cargo ManifestPresentation

IMO/ISPSIMO/ISPSIMO/ISPS

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Basic Principles of WCO SAFE Framework

Twin Pillars and Four Core Element

Customs to Customs Network Customs to Business Partnership

1. Harmonizing the advance electronic cargo

information requirements.

2. Employing a consistent risk management

approach by each customs administration.

3. Upon request of the receiving nation, the

sending nation's Customs administration

will perform an outbound inspection of

high-risk containers and cargo, preferably

using non-intrusive detection equipment

such as X-ray machines and radiation

detectors.

4. Defining benefits that Customs

will provide to businesses that

meet minimal supply chain security

standards and best practices.

AEO Mutual Recognition

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Overview of the U.S. Supply Chain Security Programs

The U.S. has introduced and implemented various supply chain security programs since 9.11 Terrorist attack. ① Advance electronic cargo information requirement

24 hour rule, 10+2 rule : Submitting cargo data 24 hours before loading aboard at ports of export.

② Automated Targeting

Targeting high risk cargo by analyzing the cargo data.

③ CSI (Container Security Initiative)

Screening dangerous Cargo by using non-intrusive detecting equipments

(X ray machines and Radiation Detectors)

④ C-TPAT (Customs-Trade Partnership Against Terrorism)

Providing benefits to the companies who meet the minimum security requirements.

Those programs were reflected in WCO’S SAFE Framework as indicated in the previous slide.

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Experiences from the U.S. Supply Chain Security Programs

on JMC member companies

“24-hour rule” brought the huge impact on exports to the U.S from Japan.

It caused the delay of Supply chain by 48 hours in average, which led to the huge amount of additional inventory .

“24-hour rule” has been applied not only to AEO certified exporters but also to exporters who are not certified as AEO.

AEO exporters, who invested in internal security management to meet AEO requirements, have been obliged to bear additional costs caused by 24-hour rule.

JMC has requested both Japanese and the U.S. government to provide favorable treatments for AEO exporters to eliminate the additional security costs.

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To pursuing the reconciliation of Security and Facilitation, redundancy

between security programs need to be eliminated.

Because a supply chain is a chain of Custody, the purpose of Security

programs is to ensure the integrity of cargo and conveyance throughout

the supply chain.

To meet this end, Visibility is the key: Who ship what, Who pack, Who

carry, Who receive and Store?

Information Technology : indispensable tools for improving visibility over cross border transaction and logistics.

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Suggestions to the governments of Korea, China, and Japan

What JMC expects the three government to consider

Adhere to common global standards

Common security standards and criteria

Mutual Recognition of AEO and developing tangible benefits from AEO status

Maximum Use of Information Technology

enhancing interoperability and connectivity

Common process and common data elements with consistent to the Global Standards.

Developing Container Security Devices equipped with electronics technology such as

RFID, which industries can introduce to their supply chain operations at low cost.

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JMC would highly appreciate it if the governments of Korea, China and Japan

could work cooperatively together not to impose excess burden on industries by

designing harmonized supply chain security arrangements, and developing new

technologies and systems applicable to container security devices.

JMC do believe industries in the three countries can have supply chain security

programs working as if it were opposite sides of a same coin in pursuing Security

and Facilitation .

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About JMC http://www.jmcti.org/jmchomepage/english/index.htm

Founded in 1952 as a non profit industry organization

Purpose To promote sound development of foreign trade and direct investment by preventing unfair trade

practices and removing barriers in foreign markets, in accordance with the Export and Import Transaction Law.

Activities ① Making Rules in International Trade and Resolving of Trade Problems

② Overseas Trade and Investment Promotion

③ International competitiveness Improvement

④ Harmonization with Environmental Protection and Product Safety

⑤ Export Control Conformity

⑥ Plant Export Promotion

⑦ Trade Insurance System Improvement

Member Companies Comprised of manufacturing, trading companies and engineering companies.

Approximately 300 companies join.

Including Japan’s representative major and medium-sized machinery exporters.

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Thank you for your attention.