Import safety action plan announced by White House

Jeff Berman, Senior Editor -- Logistics Management, 11/9/2007

WASHINGTON—In an effort to respond to the various product recalls for goods—ranging from toys to toothpaste and food—imported to the United States in recent months, President George W. Bush said this week the United States will establish new incentives for importers that follow strong safety practices and demonstrate a good track record.

These incentives are based on recommendations from an Interagency Working Group on Import Safety that was established in July on an executive order from the President. In September, this group issued a report to President Bush that recommended the U.S. change its strategies to ensure the safety of imports. The President reported earlier this week that the working group suggested the United States should adopt “a smarter and more effective approach that focuses on prevention—building safety into products from the very beginning of the supply chain.”

This approach, said Bush, will focus on stopping dangerous products from reaching the U.S. border and ensuring that food and consumer products meet U.S. standards for safety before leaving their home countries. This is not a small task as the U.S. in 2006 imported nearly $2 trillion of goods though more than 825,000 importers.

The working group, which was led by the Department of Health and Human Services Secretary Michael Leavitt, presented 14 recommendations for implementing these processes to augment import safety.

According to a White House statement, these processes include: establishing new incentives for importers that follow strong safety procedures and demonstrate a good track record; creating a stronger certification process to foster compliance with U.S. safety standards while facilitating trade (as an example, the FDA would have the authority to mandate that high-risk food producers in a particular country would have to certify that their products meet FDA standards in order to export to the U.S.); increasing transparency so that the names of certified producers and importers of record that import products only from certified producers could be made public so consumers and distributors could make more informed product safety decisions; and exchanging real-time product compliance data on each import transaction between the importing community, United States Customs and Border Protection, and other Federal agencies. Other processes cited by the Working group include increasing U.S. presence overseas, enhancing standards, and strengthening penalties (to hold foreign and domestic entities accountable and discourage the sale of unsafe products).

The Food and Drug Administration (FDA), in tandem with the Working Group, announced a three-part food protection plan that leverages a science and risk-based approach of prevention, intervention, and response to ensure the safety of domestic and imported foods consumed by Americans.

Things will change for shippers:
With various changes and certification processes on tap, it is likely that they will have a significant impact on shippers.

“It is pretty evident things are going to change..and make things more challenging for shippers,” said Rick Jordon, director of global logistics services for ICG Commerce. “This will bring more focus and more scrutiny, which will probably mean more time [spent on importing processes], which will ultimately mean more costs.”

The potential for increased costs resulting from these recommendations, noted Jordon, is likely to come from a buildup of inventory, although it may not occur initially.

“If you are an importer and your freight is delayed at a port, it could prove to be fairly significant,” he said. “Once shipments get hung up, shippers have to build up their inventory to overcome uncertainty at the port. This will force logisticians to justify why more inventories is needed internally. Companies have done a good job of streamlining inventory and taking costs out of their systems; this would take it from just-in-time to just-in-case.”

Other ways in which things may change for shippers are: that they will have to monitor and maintain certification information on their suppliers; importers will have to increase the amount of quality assurance and inspection they perform and keep proper records; shippers will need to inspect more inventory from un-certified suppliers than they will from certified suppliers, according to Tom Kozenski, vice president of marketing at RedPrairie.
“This will require shippers to change importing processes in various ways,” said Kozenski. “These additional steps will slow down the delivery goods, add manufacturing, warehousing, and transportation costs, require new systems to track compliance reporting, and require new documentation to be prepared at every node of the supply chain.”

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