My name is Michelle, and I will be your audio coordinator for today.
At this time all participates are in a listen only mode.
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I would now like to turn the presentation over.
Good afternoon or good morning, and welcome to the seminar.
My name is Jennifer, and I will be moderating today's seminar.
Today's topic is freight security.
Today we'll have two speakers.
Martin and Mike Wolfe, North River Consulting Group.
Martin serves as the American Trucking for State Fairty Security, and operations at the American Trucking Associations.
He joined ATE in 1996, as the Director for International Affairs.
Established in 1983.
His primary duties are to coordinate policies, impacts the trucking industry, focusing on making the movements of trucks throughout North America safe and secure as possible.
He works on domestic and international transportation and trade issues.
He has served as an industry representative on the subcommittee of the commercial operations advisories committee.
And a Free and Secure Trade Program, otherwise known as FASP.
He has been active in implementation of background check requirements, the implementation of the Bioterrorism Act.
In addition, his office is responsible for representing the trucking industry in this development of the automated commercial environmental international trade data system.
Prior to joining ATA, he worked since 1992 for the U.S. Mexico Chamber of Commerce, towards the implementation of NAFTA.
He holds a BA -- both from George Washington in Washington, D.C. +
Mike Wolfe has been a president for 17 years.
Earlier at the U.S. Department, National Transportation System center.
Mr. Wolfe's main interest the the interplay between freight system operations, business economics, and supply chain security.
Written a series of well-written reports, including a market forecast for container technologies through 2012.
He is active in ISO standard activities.
Mr. Wolfe is resource to government agencies, international institutions, and the private sector.
He is a frequent speaker to groups.
He is member of Security Technology, and President of -- one more thing I might add, Mr. Wolfe is calling in from Japan today which is currently 2 a.m. their time.
I would call that a dedicated speaker to these seminars.
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At this point, what we're going to do, it's currently a few minutes before 1:00 Eastern time, and we're going to hold on a few more minutes to let people join in, and we'll start with the seminar.
Michelle if you could put everybody back into hold for a few minutes and we'll start up again.
Hello everybody, and welcome back to today's seminar, and welcome for those of you who just joined us.
Today's seminar topic for those of you that did join us is freight security effects to industry.
We're going to have a switch in the order today and our first presentation will be given by Mike Wolfe of the North River consulting group.
So Mike I'm going to bring up your presentation and turn it over to you if you give me just a second.
Okay you can go ahead and get started.
Do I have control?
You should have control, now.
Well, good morning to you all and good afternoon as well for those of you who are in east coast and central time.
That's not even bright and early here in Japan, and I'm delighted to have the opportunity to share some thoughts with you about the relationships between freight security and productivity,
and technology and a little bit of standards, as well.
And the impacts on industry in several of those areas.
Little bit of background, the opportunity to do some thinking and scribbling in a number of papers and articles, and this is just to give you a sense of some of them
and for your convenience at the end of the briefing, there's a more complete list of sources and also locations of where you can get most of these papers.
So let's move on.
What I'd like to do is give you the main message bullets up front so you get a clear sense of the perspective and where I'm headed with the material.
First is that freight security is not something that exists in this sort of compound off on the side when done best and done well,
it is a central part of an effective corporate strategy, supply chain strategy of resilient, responsive capabilities.
Second, has to do with major impact or effect of security, and that's cost.
And the cost through significant, far from trivial.
And while recognizing that completely, a critical point to us is that if one is overly focussed on cost, you in effect take your eye off the ball,
you miss significant opportunities, and it's critical to address overall economics, not just cost.
The final major message is that, if you have really well thought out, well-conceived initiatives in terms of the application of new processes and freight technologies, and you implement them well,
one can, if you will it's possible to have harvest simultaneous benefits both in terms of security and or efficiency and productivity.
It's a simple outline for the time available.
I'm going to cover some issues around strategic dimension, around the costs, and around technologies and their benefits.
I think it's real important at the beginning to just do a quick refresher when we're talking about security, we're talking about a mix of two very different kinds of security threats.
Which I like to think about as the pre-9/11 and post-9/11 threats.
Significant issues around theft and contraband.
And the whole issue of vulnerability to terrorism which came so clearly over four years ago.
If we were to sit back and think about the goal of truly supply chain, operation supply chain effectiveness, the strategic goals I would suggest would have some of these characteristics.
It would be incredibly reliable that shippers and users of the system can count on the ability of the freight transportation system and related services to deliver what's promised when promised as promised.
To be able to deliver with velocity and speed to deliver great value and to be tremendously resilient.
When I suggest resiliency is an old invaluable idea, often talk about as flexibility and agility.
But well on the way to become a new buzz word.
Our friend and colleague at MIT has published the book the resilient enterprise, it's getting significant amount of press in the trade press and beyond.
And he's got wonderful ideas and it ties in very much with some of the topics we're talking about this morning.
One point that is kind of an essential foundation piece is the difference between a lean supply chain and a resilient supply chain.
Over the past two and a half decades, perhaps a little bit longer, the U.S., our major trading partners have had fabulous success in the development of lean supply chains, we focussed on efficiency and timeliness,
we've squeezed out the assets that requires to provide freight transportation and supply chain services, we've enabled the users of those systems to squeeze out and reduce the inventory that it takes to manage their operations,
and to reflect, it for example, in the dramatic reduction in the portion of the gross domestic product that goes to logistics, freight transportation, and inventory expenses.
There is, of course, a however.
Very lean supply chains can be brittle, have little reserve capacity, and then if we shift to the notion of resilient supply chain, first we're talking about tools that absolutely continue to pay attention to timeliness and efficiency.
But as well as put a premium on agility, on flexibility, and in effect on balancing alternative sources, alternative modes and routes.
So that one can come closer to optimizing efficiency and the ability to respond effectively when things happen that are not expected.
What kinds of things are now on the chart resiliency for what?
There are competitive issues that may come to the floor, shifts in the market, ability to respond to actions taken by your competitors, but there also a set of potential interruptions, wish to which flexibility to respond to.
We've had painful -- over the past month, month and a half towards the impact of natural disaster on supply chain effectiveness.
We've seen vividly what happens when there are major strikes at ocean terminals.
And the last two are not very pleasant to contemplate but can have immensely disruptive on supply chains and effectiveness, so we need to build in the resiliency and agility to deal with these kinds of issues.
Security problems can very much expose or rip back a scab over the lack of resiliency, this can happen in the immediate aftermath of an event.
Trying to respond to it.
Frankly, it can happen after an attack if government's rapidly and aggressively change the rules of the game.
The security guidelines and constraints that relate to freight shipments.
One thing that is very a very positive kernel here is that supply chain security, doing things well to be able to respond to security
is totally consistent with enhancing the overall resiliency of the supply chain operation and that means enhancing the overall business value of freight transportation and supply chain services.
The red box, I'm going to share with you the sense that the foundation stones, the leverage points to achieve the resiliency and the improved security are better in transit visibility.
To provide better visibility and better control.
Let's move on to looking at costs and looking at some of the technologies and their benefits.
There are a couple of different ways to address the cost of security.
And just really picked a few items on this line.
From a macro-perspective.
It is very clear that in economist speak so to say, that security costs have been significant and that they've added frictions to trade.
They've added additional costs to freight transportation domestically and to international trade.
The organization of economony cooperation and development has put a price tag on the measures that are in place as a result of the international port facility security regime.
Different perspective the Ontario Chamber of Commerce has suggested that part of the security-related part of it having to do with congestion management cost the U.S. side participates on south of the Florida $4 billion annually.
There's also a report that's been completed recently under the sponsorship of transport Canada that looks more broadly at some of the costs and impacts of the security and cross-board issues,
and I don't have a URL immediately at hand, but you can find it with google for more information in that regard.
For micro or firm costs, there are lots of general statements and relatively few examples of concrete numbers.
I had the opportunity last month to be at a European Commission seminar on logistic security and one of the speakers in a medium size chemical company did us all a service in terms of laying out their specific estimates
in terms of the cost annually for cargo documentation that 2.7 million is strictly for their international containment shipments mostly to North America.
It doesn't include their costs for inter-European land shipments.
There's annual security training costs, indicator for what's involved on that side.
As an aside, one thing that I was pleased at the same company while focusing very much on costs, also included a slide about their vision of where things are headed to provide more effective safety
and more effective security for chemical and high hazard shipments and it had to do with mobile communication platforms and what I would call smart trucks and smart trailers.
I think it is important to take a moment here and think about the different types of costs related to security.
I've certainly had the experience of colleagues and friends who when I talk about the potential to simultaneously achieve benefits on productivity and efficiency on the one hand and security on the other, tell me, Mike, come on get real.
Security costs money.
Don't be a Pollyanna.
In one context they're absolutely on target.
That's this first bullet, there's a class of security measure.
A guard's gun, cameras, what I like to talk about sometimes, the bigger dogs with bigger teeth, that are simply an additional cost on top of the system.
We're not fundamentally changes the system, just layering on more security.
We may indeed get benefits in reduced theft, but the cost is going to go up.
That is very different than the class of security measures related to changing business processes, changing the way we do business.
The sort of things that come up when we use smart trailer, smart truck, and smart container capabilities.
Those kinds of technologies and processes create if potential to improve or if you do it badly degrade the efficiency of the operation,
and that says to me it's absolutely critical to be asking questions about business impacts and about net economics and not just costs.
So the leverage point is looking at the technologies and processes to improve visibility and control and that includes looking at the goods that are being shipped the cargo
and freight at the conveyances and equipment, and at dealing with what some call a chain of possession and others call the chain of custody.
This next chart is just a visual picture of the challenge and opportunity of freight shipments.
The challenge in terms of the need to maintain transparent visibility across all of these layers of identification devices and systems and data.
And the constant shifts from origin to destination through a shipment has, for example, a palate is loaded on to a trailer and comes off at a bulk point breaks down and goes out into delivery trucks.
The challenge is to track that and maintain visibility for security.
There are multiple kinds of tools and technologies that are available to do that.
We can talk about them -- they say in terms of smart trucks, trailers, containers, -- in some areas particularly truck load long haul service,
these kinds of processes and technologies are clearly established as the dominant best practice in terms of how we do things today.
Most of that focus is, by the way, in terms of efficiency ask productivity we are learning better how to use it and apply the technologies in terms of security.
We're talking about both the long-range mobile communications and the short-range RFID radio frequency identification tools.
There are some interesting studies that have been sponsored by elements of D.O.T. and the field operational tests, and we'll talk more about that in a little bit.
Some of the data to support this.
The last point on this chart is that there is interest and excitement and a kind of appeal about the on board capabilities, the trailer tracking, for example, the visibility between cargo and trailers,
none of this is fully effective without a robust and well-developed smart network, without the information highway that enables users to manage this exponential increase in data and take effective advantage of it.
When we talk about harvesting benefits.
The bullets on this chart reflect an auto ID business benefits model we put together several years ago, and laid out reasonably well in D.O.T.'s report a couple of months ago,
that first one increasing efficiency and productivity, ties very much to or accrues to the benefits of operations folks.
Of public for hire terminal operators.
That we can more effectively assign people and equipment.
Second bullet has to do with increased quality of service that freight transportation system and the logistics network can deliver to the customers and users and stake holders.
So better reliability, better service enables our customers, for example, to be more resilient, more flexible and achieve their own in reducing costs.
Integrity relates to security, both the pre-9/11 and post-9/11 type of security.
It delivers benefits to the society in terms of national security protection against terrorism and it also can deliver very concrete and meaningful benefits to reduction to private firms.
Page 17, the quantitative is a taken of the freight technology story.
It's a paper that my colleague and I had the pleasure and the compliment of being asked to do.
It is available on the Federal Highway Website.
And it looks to do several things.
Layout some of the triggers for the barriers of deployment, it tries to pull together all of the quantitative estimates and analyses that have been related to benefits to users of what we broadly call intelligent freight technologies.
So, for example, the first tracking and mobile communications puts dollar numbers on the statement I made a few minutes ago about smart trucks being the acknowledged best practice for certain aspects of a motor carrier industry.
Where per tractor, per year ranging to $15,000, and these are figures that have been developed by independent analyses of field operational tests.
We have other data in here from other sources that relate to the potential benefits to shippers.
Largely inventory-related benefits from better visibility and this is the side of the coin of the business benefits but we've also see from a number of of different sources have some of these same technologies are used to enhance security.
It's a small and pleasant irony for example that mobile communications applications that are primarily used for productivity and efficiency north of our Canadian border are primarily used in central and South America as security devices.
I think it's also worth paying attention to how industry is looking at security standards.
And the information on this chart is taken from presentation, a couple of weeks ago by IBM at a seminar at the Massachusetts Institute of Technology and IBM's perspective is that a new framework of standards for supply chain security
offers tangible benefits to authorize an approved carriers around efficiency, around responsiveness and the about to bill and maintain customer loyalty.
So I think it's an interesting view, sort of a softer slice, but one that has -- it comes from an industry perspective of real benefits from standards related to supply chain security.
Shift along now to wrapping up the presentation.
When we talk about new processes and new technologies, I would describe myself as an optimistic skeptic when it comes to looking at new technologies.
Having worked up at the center for several decades in an organization that pays a lot of attention to engineering and new technology,
it is really clear that technology is only part of the problem and that institutional issues often dominate.
And since then, I've been working and trying to layout what are the critical success factors of renovation, and it boils down to these three areas.
It starts with a well-grounded, well-conceived design.
Not just technology theory, and isolation, but worked at together with real world operators and practitioners.
Second is that a design has to make sense in terms of economics and that is in two domains, there clearly has to be perceptions and confidence of concrete benefits for users.
And there also has to be business model that makes sense so that the vendor, suppliers, and providers can succeed and make profit in terms of providing the goods and services.
The third bullet is one that I once would suggest often gets too little attention.
And that is the ability to succeed in terms of implementation and deployment.
To look in the mirror at our teams in terms of in-house and external vendors and users and supply chain partners and say okay.
Do we have the skills and abilities to do this, do it right in terms of budget, do it right in terms of schedule, do it right in terms of capability, and if we don't, what do we need to do to fix that?
Rather than oh we'll figure it out as we go.
If we can hit all three of these bases, the process change can be fabulously successful and effective.
The final summary, the main points encourage folks to think about and look at freight security as an integral part of being resilient and flexible as an important business value,
and that security is not just a simple add-on that we need to take care of because TSA or customs or DHS says you've got to do it.
Second that that to recognize that the security costs are substantial, they make a huge difference, but it is at real cost to ourselves,
our businesses and our supply chains and our partners if we pay too much attention to the question of what does it cost, and can we afford it?
And too little attention to what is the overall net economic impact of this innovation and these sets of innovations.
Pay attention to the economics, not just to the cost.
Final point is that if you touch those buttons in terms of the key success factors, you have well-conceived innovation
and you implement it successfully and effectively that it is totally realistic and legitimate to look for and harvest simultaneous benefits both in terms of productivity
and efficiency on the one hand and in terms of security to do it in a way that enhances an overall corporate or supply chain capability in terms of being resilient, flexible, and successful.
And that there are tools available today and more coming.
So, that's the -- I think a very hopeful way to look forward and are happy to engage in e-mail conversation and dialogue with you if we don't cover everything in Q&A, and share with you a list of sources.
So thanks for your attention, thanks for taking the time for being here.
Looking forward to Martin's presentation and our dialogue as we go forward.
Thank you Mike.
And thank you for being willing to call in from Japan.
Although you'd never know it as clear as that sounded.
The slide that's showing right now, I'm going to bring it back up after the seminar and then the slides will be available for download later on and you'll be able to get that information if you weren't able to cap capture it.
We're to now going to turn over to Martin.
Yes, I am.
You can begin whenever you're ready.
Just remind me here, do I have to click on next to my name?
You can click next to where it says one or 13.
Thank you very much for the invitation to participate in this WebEx.
And I apologize for being a little bit late, but I flew in from Boston where we're having our annual convention, so there was a lot of discussion on a variety of issues that we're dealing with from various sides of the transportation --
to a variety of safety issues to obviously a variety of security issues, and we have a homeland policy committee and it was quite interesting to get an update
and some of the fuel from the carriers regarding the impact of some of the programs that have been developed in the post 9/11 environment.
What I want to do today is give you sort of an update as to what the trucking industry has gone through and both from the proactive side of the house and from a reactive side of the house.
And basically in the immediacy of 9/11 to some highway groups formed an anti-terrorism action plan.
And it was quickly put together, and it sort of developed into specific types of programs and probably the biggest one that has developed is the one listed there.
And then what I'm going to do is go into the reactive side.
And these are the issues that are related to the statutes passed by Congress, and sort of trying to further improve issues related to security throughout the supply chain.
Both at the domestic and international level.
Primarily focusing on an international level and for the purposes of a variety of issues from background checks to hazardous materials, cross-border issues.
Transportation of food and other goods.
And the impact, of course, since the nature of the industry that we participate in entering by ports, and also for transporting goods to and from airports and that sort of an issue.
So all of the security issues that have been raised for those specific types of facilities have an impact on the carriers.
Just briefly want to touch on the highway watch.
Obviously, in the immediacy of 9/11 our issue was we don't want a truck to be used as a weapon or transport a web of mass effect.
The critical goal was to protect our infrastructure, we wouldn't want a truck to blow up and create a major shutdown.
As you might be aware, there are about 525,000 trucking companies in the United States.
96% of those have 20 trucks or fewer, and if you break that down further, 86% have six trucks or fewer.
So an industry of smaller companies that is the major components of the trucking industry per se.
There are about 3 million professional truck drivers in the industry, and what we wanted to do with the highway watch which initiated back in 1997,
as a safety program, what we wanted to do was work with DHS as a partner in establishing a security component in highway watch in which motor carriers
and their drivers and other participants can report incidents and report any suspicious activity or any security concerns they might see while driving on the highways or stopping at a truck stop tor delivering cargo.
We set up a call center and there is a direct line into the transportation security operation center, which is out in Hernon, Virginia.
And processing the information.
That part of the system is really down to this bottom bullet and this slide which is an information sharing an analysis center that is housed within this security operations center.
And one of the critical issues that we are trying to really bring up for the purposes of insuring our national security and our national economy is to improve the level of information sharing that we'd have with government.
It's all good to try to set up systems in which we want to avoid having trucks being stolen or used or highjacked and certainly that's a critical initiative.
But if we can get information beforehand or provide information beforehand to a potential terrorist incident or anything of that nature, we would certainly like to do that.
So we're working very strongly, and actually this program itself has now turned itself into the second largest provider of intelligence to the department of homeland security.
And so, I think that just sort of provides a measure of how well we can share information, continue to share information so we can avoid the potential use of the truck for a terrorist purpose.
And that's a proactive side of the house.
Now moving into the reactive side of the house, and I talked about a number of statutes passed on an impact on processes.
Primary among them, of course, requiring background checks for drivers who are going to transporting hazardous materials, the security act the aviation and security act.
And all of these at some point as I mentioned before, have an impact on motor carriers, including at the bottom the trade act.
Has specific requirements related to providing information about the cargo, the vehicle, and the driver prior to arrival at ports of entry.
And I'm going to go through some of these and expand a little further on them.
The act requires the transport of hazardous material endorsed driver to go through a fingerprint based background check.
And TSA is primary for implementing this rule.
And it's taken a little while to put the program together, and to be quite honest we're not extremely happy the way TSA established it, it is a sort of a mixed bag of programs.
There are specific lists of disqualifying crimes that will basically trigger a driving seeking hazardous material endorsements, not to get one of these endorsements.
Can be felonies, treason, they are kind of open-ended crimes that might be considered that they happened in the last five or seven years, that might disallow a driver from getting hazardous material endorsement.
One of the critical issues, of course, is that for the trucking industry.
As I mentioned before, we have about 3 million drivers.
As you can see in the next bullet, there are about 2.7 million with endorsements.
That's a very large number and percentage of the population.
For the motor carriers, the critical issues is they never know when they might be transporting a hazardous material.
And therefore, they require all their drivers to have a hazardous material endorsement.
It's a requirement, primarily most of the trucking companies.
The impact that TSA has stated that this rule could have on the industry is a potential loss and this is what they stated in their final rule of about 20% of our driver population,
and that is a very big concern for the industry as you're probably aware, there is already a lack of enough drivers in the industry.
We have a very high turnover rate, and it's very tough to actually get new drivers, it's one of the problems we have.
We certainly have enough vehicles to move the economy, but trucking companies are having problems recruiting drivers and keeping drivers, and this could add another layer of keeping those drivers.
I want to skip then, basically the way that this rule was implemented.
33 States decided to use a TSA contractor in order to capture the fingerprints and biographic call information from driver.
Several states decided to develop their own systems.
And we ended up having,17 states with different types of programs, different types of fees, the TSA contractor charges $94 for performing the capture of the information and the background process itself.
Most of the states I think the entire average is about $91 at this point.
But there is no specific card that is given.
You have your CDL, that's in addition to the cost of the CDL which tends to be about $50, and then an additional cost of $94 to actually getting the endorsement.
So it's a pretty costly program, some of the facilities where you can go and provide the information, the third floor of the building with hours of operations from 1-4:00 on a Monday and Wednesday and that's about it.
So we have great concerns as to the impact on the drivers and the hassle that the drivers have to go through for this program.
And one of the things we're trying to do is really use risk-based tools.
So that we narrow down the scope of hazardous materials that should require a fingerprint-based background check in order to transport certain types of hazardous materials.
And D.O.T. recently issued a permit which is required for safety and security purposes if drivers are going to be handling high-hazard materials
which can be probably weaponized or that can be used in its own form for a weapon of mass effect.
And so that's our goal and that's our intent and we are actually working with DHS and with people up on capitol hill to try to narrow the scope of goods that will trigger the requirement for fingerprints-based background check.
So that's on the background check process for the hazardous materials.
Continuing with hazardous materials, which was of course one of the first barriers that the government was concerned about.
D.O.T. through its research and special projects administration and the motor carrier administration issued a -- what this rule requires is basically that motor carriers establish a security plan
which includes personnel security lanes, security related to the facility, the offending cameras, that sort of an issue and develop end route security plans.
It also has specific requirement of training of drivers.
This is both training for the awareness and in-depth training for drivers that are going to be handling the hazardous material to delve deeper into the communication link and to really be aware of what types of
perhaps of safe havens where they can go to if they have a concern or incident, that sort of an issue.
TSA is presently performing a security appliance reviews, they look at the content of the plan, they look at how the motor carrier implemented the plan that they developed.
The employment of all of the employees to ensure that the plans have been put together and following the plans, and if they find that they're not in compliance, they'll issue them a citation, per se.
Next, and Mike talked about a little bit about the supply chain and the world customs organization and that part of this presentation
is actually really for the WCL efforts is being based on what's called the Commercial Trade Partnership against terrorism that is a U.S. Customs and Border Protection Program that initiated no too long after 9/11, itself.
And Robert Bonner the Commissioner of Customs brought in the manner to develop this program and how we can improve the information flow and establish security plan for the carriers.
For the purpose of the motor carrier, is the free and secure trade.
And it's sometimes confusing for the carriers of what they're supposed to doing under the programming and two does what.
There are separate parts of customs.
And summary basically what it is, it looks at the security of a motor carrier itself as a corporation.
And CT deals with importers, motor carriers and looks how their security plans are put in place.
The side of the house is really the benefits and they try to improve tow the flow of commerce takes place and that we mean trying to improve the release of cargo information,
trying to perform a background check on the driver, and they establish a fast lane at the boarder.
So the fastest improvement of the cargo through border.
And looking at the security component of the companies themselves.
For the purpose of a FASP, Canada has its own processes so if you want to transport cargo under the program, you have to become a partner in their PIP program which is under the CT.
If you're going to be bringing in cargo from the United States and you want to use a fast process, you have to have to be in the process.
The critical issue here, this is a voluntary program.
However, many of the biggest shippers in the industry are becoming CT members, and when the shipper is now CT requests that a motor carrier become a member, you obviously don't want to lose that account and you're going to join.
But it's certainly a program that provides a pretty good, a pretty good way of establishing a security plan and how to improve potentially the movement of your trucks, your drivers and the cargo you're transporting across the border.
Some of the issues we have presently with the CT is the fact that there are developing sector criteria, and they are going to be defining specifically for trucking what this criteria ought to be.
And those are some of the things we're trying to do presently.
Has a draft and we're trying to finalize the draft, hoping to see at some point in November.
Also the development of fast lanes as we're all well aware.
Infrastructure of the border is hard to improve.
And the validation process once they become a member, there's just relation how the supply chain specialists are going in and performing these validations processes,
we need a more uniform way of conducting these validations, because sometimes it's a bit subjective at how the inspector looks at the program.
And I think those are the biggest issues on the hazmat side and the international commerce side.
Those are the ones that impact us the most.
The Bioterrorism Act.
Imported a requirements at the information has to be provided two hours in advance prior to arrival at the border, that conflicts with what customs requires on the trade right now which is basically one hour in advance prior to arrival.
If you're transporting CT cargo, it can be a half hour.
There is no electronic information or mechanism by which the motor carrier receives from SDA or customs at a time
so that carriers don't want to be sitting at a border waiting, they want to make sure the information is sent to the border.
The registration requirements are no longer an issue really for the motor carriers, they no longer have to, and it was that way for a month.
But then SDA decided to do turn about on their carriers and the last is the record-keeping requirements.
We have to keep the bill waiting at least a year per D.O.T. regulations and FDA agreed to that, so there was some harmonization for this program at least.
The air cargo rules have an impact on how motorists have access and if they're going to be transporting cargo, basically a truck in lieu of air.
If they're going to be transporting.
And there are security plan requirements for that ment those are validated by the shipper who is going to be the airline,
and there's concerns will as to how airlines can do validations on indirect air carriers, but that is something we're working on.
The program is going to have a background check requirement which is going to cost $39, so you have an air cargo rule which you're going to have $39 cost
and a $15 cost for the background check process and the hazardous material endorsement which now has a $94 cost for the background check process.
So you can start seeing how these background checks are starting to add up.
How each one of these programs has specific security plans and also security training requirements.
The same is the case with the time transportation security act.
And this was a very broad statute that worked toward a secure system of transportation.
And that is, as Michael was mentioning, the whole issue of trying to figure out how to secure the supply chain all the way from Pakistan to its final destination to Indianapolis, Indiana.
And those are some of the plans that are being developed by a program called Greenlane and they're about 7 or 8 shipper participating.
We saw that as a God send we when first looked at it.
If we get a single background check, then perhaps we could satisfy the air requirements, we could satisfy the requirements,
perhaps even the DOD requirements because motor carriers transporting DOD cargo has security and background checks under those requirements.
It's been slow in the development, and focussed on developing a type of system that has all of these bells and whistles, rather than creating a secure identity card, and we would like to see that changed.
Trying to establish a bit more of a simple secure identity card such as the one we presently get under the FASP program.
Some of the other issues we're keeping abreast with include -- it's called an National Infrastructure Protection plan.
There is a transportation sector specific plan and TSA is in charge of gearing up support by from industry and various ways of developing communication levels with the industry.
One of the issues here are we're not quite sure what we're defending against.
We don't have much of a clue of what the risk is and what the threats are that we need to be protecting against.
And I think that's one of the first steps we need to come to terms with.
From the government side and the industry side is work on developing an understanding better what the threat is and share that information.
As Michael mentioned there are programs already the D.O.T. performed a field OPS test on tracking security; TSA has announced an 18-month project for hazardous materials and tracking certainly,
and I think Michael did a very good job in looking at this issue from logistics purposes, those have provided a benefit.
I think we're still in a stage to understand what the benefit is going to be in the security realm.
And, you know, security, security technologies can clearly be defeated.
Most of the technologies are not cheep and when you're talking about an industry comprised of small carriers, those costs can quickly add up.
And can have an impact on deciding do I want to continue transporting hazardous materials?
However, it's a lucrative part of their business.
The shippers would be very concerned if they lose a large number of carriers because of the hassles and the background checks for the drivers, etc.
So those are some of the issues we're looking into for the technologies.
The real idea requirements on driver's licenses were following that, but presently it's just going to have an impact on regular driver's license, and not necessarily CDLs,
and the international trade data system, this is very important program for us because there's development of an electronic manifest for motor carriers, which we presently do not have.
And to truly be in compliance, for example, the trade act, we need to send that information electronically,
and we need to get information back telling us the cargo and the driver have been cleared please proceed to the border, and we don't get that today.
So we're very interested in this initiative.
Another initiative looking at under the concept of the greenlane, how can they capture more information, more data that is valuable commercially for processing and for targeting purposes,
and that would be capturing information related to purchase orders, information related to who's transporting the cargo from, let's say, Islamabad to china.
That type of information is something they're looking at to fill the gaps of information that they want to do targeting.
And it's an ongoing effort and we're participating with them and following closely.
The economic cargo information program, there is a freight assessment system that is presently under development by TSA and I think that is basically trying to capture domestic data with commercial movements.
Now from our perspective, that is we're not quite sure how the undertaking is going to work, if they're trying to capture all of the data that is actually moved and the commercial transportation system that is a huge amount of data.
And what will they do with this data?
and how will they crunch the numbers for this data is beyond our understanding, but that is something that's there, that is being considered and we're certainly going to follow it closely.
And last, of course, we're following the RFID related technologies to Wal-Mart was a big from a shipper perspective, the use of RFID tags,
I think it's also sort of an early stage of development in its relationship to secure and some of these technologies being looked at for the purpose of applications in a secure environment.
And basically to really conclude is industries truly recognizes the concerns of 9/11, we have done, taken proactive measures, we certainly do not want our vehicles to be used for terrorist attacks.
But we need to be careful in a sense of what level of regulations and technologies are required for motor carriers because the impact can be,
the cost impact can be truly have a very negative impact on motor carrier operations especially from a small carrier perspective.
There's a great need for balancing national security economic security, we need to be careful that we don't hurt ourselves too much because the costs are adding up and we saw with a shutdown of the tunnels in Baltimore,
those costs start adding up and if any information is received and acting upon over and over again, we're going to have concerns with the true impact on our economic, on our economy and very sense of national outlet.
We think that using wrist-based assessment tools are essential, we don't have to have fingerprint background checks for truckers and drivers for nail polish or paint from the factory to Home Depot.
We knead to look at specific types of cargo that can cause a risk.
We need to improve the communication between government and industry.
We need to share more of the intelligence information when possible.
We need to coordinate better.
Clearly the numerous requirements of security plans, training and background checks are adding up.
And each one has to be done independently of the other.
And we think we need to have a level of coordination either by the department of homeland security and the department of transportation and other partners in the government to improve that.
Because they are adding up as costs and they are, they are posing a challenge now.
And working with our international trading partners it is essential.
We can share through a single system provide data for compliance and security and release purposes and everything else.
And so that perhaps one single shipment of data, we can actually provide, we can get clearance for export and import requirements.
So that basically concludes my presentation.
I'll be happy to take any questions and I look forward to answering and thanks again for the invitation.
I hope everybody enjoyed both of these presentations, before we start off with the question and answer session.
I'm going to bring Mike Wolfe's slide back up.
And I did want to mention, rather than trying to write all of this down, like I said the presentation will be posted online.
And I believe I've set this up today so that you can print this page if you go to the file menu, there should be a print option in light to print this.
If they doesn't work, it's online for you to get it from there.
I'm going to start off with questions for Martin, since you just finished your presentation and it's fresh in everybody's minds.
So the first question I have for you Martin is the card is being discussed as a hazmat problem instead of being a stand alone.
Will this help us screen out potential thieves and terrorists.
Yes, my understanding is the TWIK card has been put together of the hazard TSA and now the same person conducting the program -- we think it is.
We need to understand what the risks are.
And we think that, first of all that TWIK can become an efficient way of using economy's scale to provide this card not just to truck drivers,
but to port workers, to others that are required to have background checks under the transportation security act or aviation security act, etc.
We think it might be a very good vehicle to reduce the cost and to insure the security of our drivers, we're all in favor of doing background checks. We're not opposed to the background checks.
Is it going to have an impact on cargo theft and other initiatives?
We don't know, but certainly screening is a clear, is a clear benefit that we need to look at.
Most of the issues are related to inside jobs, so where we can do the screen workers and that environment is certainly helpful.
But we look at the TWIK as a very positive thing.
the next question is that did you say that many drivers do not know if and when there are transporting loads and if so why is this?
No, actually the companies are not quite sure when they might be transporting a hazmat load, but they're not sure what driver, what truck they're going to be sending to pick up that load.
So in their operations, they might have a truck that is, you know, ten miles away from the location to where it it has to be picked up and they'll send that driver and rather than,
perhaps if that driver is 300 miles away, and has to do a, dehead empty load movement all the way to that facility and that doesn't make sense.
So trucking companies require all of their drivers to have hazardous material endorsements.
The next question for you is cargo theft statistics show the vast majority of incidents result from insiders, in highway watch who watches the driver?
In the highway watch program, first of all is a training program.
And what we do is -- it's not a background check process.
It's just an actual training program to improve security awareness, to provide skills and to provide an system to which they can report the system.
So, you know, the more people we actual get on the program itself and we're expanding not just the truckdrivers but training everything from school bus operators to toll collectors to others in the highway environment.
A lot more people will have eyes and ears and ways to reporting to a single system that there's some type of suspicious activity going on, so other drivers will be look at over drivers and say this guy is acting weird and go from there.
Okay, thank you.
I'm not going to move on to a question for Mike.
And the question is you discussed various types of smart technology to improve the efficiency of cargo movement, but what about dealing with transportation congestion?
What good is smart technology -- choke points for example.
There's a problem with problem as if they are separate irrelated issues.
that's a great question, thanks for asking it.
When we talked about intelligent freight technologies in the technology story, we cut across the on board technologies related to vehicles and the infrastructure kind of technologies for more effective management.
I think sort of a subtext that I was trying to get across is that security is not something that should be addressed separately in isolation,
and I talked about that in terms of perspective of individual firms absolutely hold true as much on the public sector side.
That the best public policy looks at managing congestion and enhancing security as seamlessly connected.
And to the extent that we don't do that, we fall short of what we're capable of.
I notice in terms of the postings, there's a question about improving communications between state D.O.T.s and federal agencies charged with port security,
and it seems to me that that's a question that is really related to one we're addressing here.
The challenge is, take a half step back, they're absolutely legitimate questions related to security and those concerns are not sufficient excuse for failing to take a view to dealing with mobility facilitation security at the same time,
it means federal agencies concerned with law enforcement and security need constant coaching and help both from their professional colleagues in D.O.T. who are concerned with efficient
and effective freight transportation from their supporters in industry associations such as ATA and frankly, from their appropriators and who set the standards and expectations on how to get the job done.
That the effective security, effective transportation are intimately related and need to be addressed on a coherent and complete way.
Martin, let me ask you because the question that Mike was just responding to, the sec question, directed as both presenters,
and the full question can we or both reluctance of federal agencies charged with port security to communicate with the outside world.
For those of us that are involved but not in law enforcement.
right, and actually I wanted to provide my two cents on this one, because for example the security specific requirements to how the important implement security plans
and the Coast Guard is in charge of implementing that rule, so the Coast Guard is a primary federal agency in charge of that program.
However, it's interesting because recently in the state of South Carolina, for example, their legislators have been considering how to develop or require specific plans for their state ports.
And our state trucking association representatives called and said look, they're trying to do that, and we said there's already a program in place.
Or one being put in place, so one of the things they want to do is have the coast guard talk to the legislators or the state personnel.
And the same thing happened in Florida where Florida requiring background checks for people entering all of their ports that were basically 14 deep sea water ports and there were not coordinated.
So actually a driver in Florida, who services all of the ports would have to have 14 different background checks performed because there was not a single background check.
Now Florida has developed and become part of the prototype and developed a state ID called Florida Unified Port Access Guard.
And so there are initiatives and I think it's a critical point.
It really is.
Because if we start getting at the federal level security requirements, but also the states under their own statutes start requiring that type of security plans and programs and background checks,
we're going to have a real concern and a real problem in coordinating these, so clearly I think the Federal Government needs to do a better job.
And improve the level of discussion and activity with the states.
I now have some questions that are directed at both of you, and the first question is in the supply chain is a popular topic, but it doesn't appear to be a mainstream topic, look at the various professional associations, why not?
Mike do you want to answer that first?
I think that we came sort of at the bottom line, I think things are improving significantly and they're still a long ways to go.
Recognize that if we roll back four years ago, historically security in corporations with rare exceptions if it was a second tier activity, it was doing well,
it was not a prior career advancement, it was not on the top of the agenda for the executive committee or the board.
It had to do with often came up in issues around managing insurance costs, but it was a background of what's happened in the last four years is that has shifted significantly in some areas.
I notice there was a related question, who should be the champion for security?
and I think some of the neat examples of that that I know of are the retailers vice presidents of marketing has become the chair leaders for security.
And I mean, that's a little counterintuitive, but one of the equity and value of their brand.
And of their logos woke up to the fact and said the last thing I want to do is turn on a nightly news segment on penetration of supply chains and security and see our company's logos on on one of those stories.
Guys in security, supply chain managers, you've got my support, what kinds of resources do you need to do this well so we don't get in trouble?
You've clearly got that as an indicator of improvement.
The whole participation around CT shows an elevation in terms of interest and priority, that in most cases is very healthy.
You've got a major University in the U.S., actually two, Stanford now as well as MIT putting out materials and programs that focus on security as parts of running an effective supply chain.
So all of these are indicators of moving in the right direction and we've got a ways to go.
Okay, Martin your thoughts.
I would say that, you know, I participate in a number of groups in a support network which is normally customs,
which you'll see primarily most of the supply chain managers there, because I do think that security, actually has become that number one issue.
Clearly because there are so many programs that require through the supply chain that require the shippers and the carriers to be on top of what the requirements exactly are.
And to keep in close communication with the very government agencies that run the specific programs, I think they're quite involved and there's no escaping now,
you go to a program of the counsel logistic managers to the national industrial transportation, or whatever, they're all talking about security.
I mean, I think security permeating throughout the various sectors of industry from the shippers to the transporters, and there's no escaping it.
So everybody, I think is becoming very in tune to the programs and CT is a common phrase throughout the industry and people are talking in the hallways.
And I think it's a very telling story as far as the level and the depth on which these programs have become part of the norm of transporting goods through the supply chain.
The next question is how can planning operations at the metropolitan planning operation level best serve the free industry in terms of freight security?
Martin, if you want to go first on this one.
Clearly, we've seen certain initiatives at the city level here in D.C. and in Baltimore related to the movement of certain types of cargo primarily focusing on hazardous material
and the security issues related to that, and we need to be very careful how that takes place and how it is put into place.
And they need to really assess using risk-based assessment tools to figure out what is the actual threat and the potential threat?
And really looking at the specific types of cargo.
If you all of a sudden start banning all types of specific hazmats that might be considered a high security threat, that might include gasoline tankers and if you ban those,
well, you might have a problem supplying all of the gas stations within the city
and you're going to have a very large number of discontent citizens not antibiotic to fuel their cars, and we need to be careful about how those programs are implemented.
And I fully agree we need to look at those, and we need to look at those jointly, with government and industry at the take
and perhaps de-establishing some type of regulation or legislation that has not been thought through entirely and might have some very dire economic impact on the city.
There's my two cents.
Mike, your thoughts.
Sure, I think Martin is on target, and let me add a different perspective.
And that is a major contribution that MPOs can make in terms of freight security is internalizing
and recognizing just how intimately connected freight security issues are with mainstream meat and potato issues around congestion management.
Freight at rest is freight at risk.
Well, freight that's mired incongestion, is freight that is more susceptible to security and terrorist issues, has greater potential for aggravating the effects in the case of an event
and would encourage focus at MPOs to be thinking of issues of enhanced visibility, enhanced information access for commercial carriers as well as other users, other networks to facilitate congestion and look into things like enhance vision
and other programs that facilitate the efficient and economic movement of freight, because when you do that, you're also doing things that generate benefits that are related to security.
Okay, the next question for both of you, is how well do you feel that transportation carriers, foreigners, and government regulators collaborate?
If you feel that there's a problem that transportation is an adversarial industry which each mode resisting collaboration with the other modes, and who can lead the effort to improve collaboration?
Mike if you want to go first on this one?
Sure, actually, Martin and I haven't planned this, but I think ATA has shown great initiative and success with working with TSA in particular around some of the highway watch programs
and other areas in terms of collaboratively working together of turning the hundreds of thousands of professional drivers on the road into added eyes and ears for security management.
Historically, there have been some real challenges and there's also been some real growth.
I'm thinking of another transportation segment where I've watched in evolution that's gone from pretty strong obstruction to certain kinds of government security initiatives
to let's call it more spin-sensitive obstruction, having gone to the school of spin management.
To evolving further to be constructively engaged to going even further and taking an aggressive leadership position in terms of enhancing security.
So I think some of the old saws about communication don't hold as well as they used to.
And there is, there is unevenness, we've got some phenomenal role models in terms of industries, firms, and industry associations, and government agencies reaching out for better and more effective collaboration.
And we've got some others that have been more reluctant and saying when somebody forces us, we'll do it, but not moving much beyond that.
So I think it is incumbent on all of us to identify the leaders and models and give them public credit and endorse what they're doing and collaborating in terms of accelerating public process.
Thank you, Martin?
You know, I would say, I go to a number of meetings related to security with TSA and we get with a number of organizations AAR and the role of shipping council.
What we're trying to look at is really, concern about the issue of security.
There's no doubt about that.
I think we've all been working quite closely.
We all worked from the beginning and together in the development.
I think that was the first joint initiative we did together, which was customs.
So I think we all worked, you know, together on the issues of security of sharing information and that sort of a thing.
Our biggest concern overall, is the need for a better level of coronation at a policy level within government.
I don't think the problem is so much to, how industry works together.
We are all sharing information and we -- I think for the purposes of that, if you're gown to have going from the truck road on the railroad.
The information is the type of cargo and everything else.
Our concern is how government manages the programs so they don't become a burden in the sense of having too many programs to imply with.
And what we're seeking -- and I think that's the initiative now that's under place, because DHS as established a system secretary for policy, and I think it's going to really coward naught coordinate the security policy.
And figure out what we're doing where.
And make sure it doesn't become a burden rather than creating a benefit.
this next question is somewhat related on the collaboration issue, and the question is integrated operations have become the staple of what is being researched to help develop and et cetera.
Martin, we'll start with you.
Well, to be honest, I think each one of the ports obviously, we have specific, on the research basis, I'm not entirely sure who is doing what research,
we know, we have our own foundation that has done some research and together with some other organizations with the American transportation research institute is our own foundation and that's our research.
And they've done work with the University of Minnesota and other organizations that participate in the fuel OPS test down by D.O.T.
And it's, you know, there are all types of research going on.
from our perspective, and I can't emphasize this enough, the requirements to better improve the sharing of information and to improve providing information realtime as to if there is a well-known specific threat.
That sort of an issue, or if we, through the Highway Watch Program or other means we can NYC II that there's an issue of suspicious incident or something at that level.
That we need to be able to share that information much more quickly.
Much more quickly, and you know, it's incredible if you look at the amber alert level.
How that has worked at some levels for children that have been kidnapped and other sorts of issues.
It resulted in actions that are very positive and finding the girl or kid or whatever at some locations.
Excuse me, so, I think information is critical.
I think we really have an better understanding what the threat is.
We can create as many programs and requirements as you possibly want, but if you don't understand what we're defending against, that's a critical issue.
And if I may add a question regarding how do we define a highly hazardous material?
D.O.T. has issued a permit, it's called a 5109 permit related to the 49 code of the code of federal regulations that is required for motor carriers that are going to be transporting certain types of goods.
And it's a list of what should actually trigger any type of security for any agency for the purposes of moving hazardous materials.
Now some people have had trouble with that from a DHS perspective saying that for background purposes, perhaps that's not good enough.
And we said we'll add other goods and establish a working group.
I don't think radio active was on the list neither was gasoline, and we put those on the list for the purpose of our initiatives and background checks.
So, that is a very good question but we're willing to form a working group, but we need relief now.
And we'll establish a group to better define what cargo should be defined as a hazardous material.
Mike, did you have any thoughts on the integrated operations question?
One thought about a when that brings together academic researchers, it brings together policy and operations folks from state and federal levels.
It brings together various players from industry is the ITS America special vehicle and freight mobility framework.
And it's got special interest groups that include cargo security, include inner mobile freight and it's a useful place to, if you don't participate personally, we track on the web
and see what activities are going on and who some of the players are because the place where some of those interests around integrated planning and research come together.
There are two more questions that I'm going to get to, and I know we're running a little over time.
And if you do have additional questions, I encourage you to e-mail Martin or Mike and ask them and post them to the list serve.
So in interest of time I'm going to quickly ask these two questions.
And Martin, I think they're more directed to you, but if Mike you can jump in as well.
First question, what is the responsibility of the freight carrier when the trucks are transporting hazmat via interstate highways or large numbers of people could be affected should an incident occur.
It seems as if the only way we have of knowing is after the fact when an interstate is closed for a hazmat cleanup.
well, certainly it's a question that has been shuffled around for quite some time, and there are various organizations that work specifically on this, the Dangerous Goods Advisory council
and have improved information processing for first responders to really be able to know what type of goods are flowing through the cities or through the states.
I am -- I work particularly -- it's primarily been driven from a safety angle, I'm more focussed on the security angle.
At one point we had a discussion with the DHS if we should do away with the hazmat because we're providing information to the terrorists to what exactly was in that truck and maybe interested in blowing it up.
And we need the safety so the first responders know what's in the truck when they arrive on the scene of an accident.
If we're able to improve that information system, I don't think that would be much of a problem.
We need to figure out, and I think government is working together with industry, if we perhaps on some type of system that provides that information in a secure manner
so that we don't create secondary or negative effects that could take place by tapping into the system by people we don't want people to tap into.
We're all open to look at that type of a concept.
I'll pass on that, in the interest of time.
Martin handled it well.
The last question that I'm going to ask is also for Martin and the question is understanding that MPOs program transportation infrastructure projects using federal funds,
can you offer an example of a long-term project in the area of security?
Boy that's a mouth full right there.
You know, I just got off the plane so I'm not quite sure how well I'm going to be able to answer this one.
I think it comes back to the issue of information sharing and that sort of thing.
Processes, one of the things we've been criticized all levels is this whole process that we recently passed the highway authorization bill.
And all the money and funds that are in that legislation to improve infrastructure and the transportation system.
And I think when we go back to looking at for the next reauthorization five years down the road.
We need to work, I think, closely together with MPOs and within the industry to perhaps better assess how we can jointly work on the developing systems, communication systems,
away of facilitating, perhaps, on the infrastructure side, lane specifics, for certain types of goods and that type of thing.
But how we can improve those areas in which certain types of cargo can go through areas under the MPO design so that we can it prove the flow of cargo.
I think the critical flow, we need to make sure the flow continues to move through the cities and through the counties and other areas,
because, you know, we need to be careful that we don't create a problem without understanding exactly what the threat is.
And just trying to address something that we don't clearly understand.
And I think that's what we need to get out.
What is the route problem before we can begin addressing something.
I'm sorry we're not going to be able to open the phone lines for questions today, we've run over a little bit and I know both of our presenters one in Japan, and the other just got off a plane.
So I am going to closeout today's seminar, but again, if you do have additional questions please e-mail the presenters, their e-mail addresses are on the screen,
or feel free to post them to the list serve and the web address for that is on the screen as well.
Again, thank you everybody for attending, thanks to both of our present ers the recorded version is is on the website, and the next seminar will be held on November 16.
If you haven't done so already, I encourage you to visit the talking freight website and sign up for the seminar.
And for those of you that are still online.
Federal highway has another operation called talking operations and focusing on ITS.
Talking operations and talking freight has now combined on to one website, so you'll now see two seminars per month.
One for talking freight and one for talking operations.
You're more than welcome and definite encouraged to sign up for any in which you are interested.
Again, thank you everybody, and enjoy the rest of your day.
Thank you both.
Ladies and gentlemen, thank you your participation; you may now disconnect, have a great day.