Logistics Management

A few weeks ago a real estate broker called me about a new TSA initiative that he heard about in a seminar that he attended about distribution and logistics.  He was concerned about the impact of the initiative and contacted me to find out if I knew about it and if there was anything that he should warn his clients about.

The TSA program is the Certified Cargo Screening Program that is an answer to the “Implementing Recommendations of the 9/11 Commission Act of 2007” which mandates 100% screening at the piece level of cargo transported on passenger aircraft by August 2010. 

My broker friend was concerned that this could have an impact on his warehousing and distribution clients and wanted to know how bad the impact would be and what level of concern should he and his clients have about the mandate.

My first answer to him was that the impact would be minimal, since the mandate applied to cargo on passenger aircraft only, not freighter aircraft.  So Fed-Ex, UPS, and the rest of the air cargo industry was would be unaffected by the new law.

Then I started to think a layer deeper and wondered if there was money to be made in the new law.  One of the unintended consequences of any law is that with increased regulation there is increased effort and cost, and an opportunity for someone to become a cost savings “expert”.  The opportunity may not be good, and then…

SO I started to look deeper into the TSA Certified Cargo Screening Program (CCSP) to learn more about the program.  The more I dug the more that I could see that there were diminishing returns for anybody that thought that they could “add value” to their offering as a 3PL or freight forwarder.  After thinking on it for a while I then turned to a topic expert, Jeff Hurt at Sustainable Aviation Logistics in Omaha for 2^nd opinion.

The mandate requires the passenger airlines to screen all cargo, like baggage, before it is loaded onto the aircraft.  Already there are measures in place that do not allow “unknown” persons to tender cargo to the airlines for transport.  Gone are the days that you could take a package down to the airport and pay big money to have it put on the next flight.  If you are not registered with the airline as a “known shipper” your cargo is grounded until you are registered.  But the airlines still can take cargo and collect big money, they don’t get as much with UPS and FED-EX offering more convenience at a lower cost for overnight service.  Still, if it has to get there same day, the airlines are the place to go, if you are a “known” shipper.

But most standard air cargo is no longer moving by air.  In many cases that domestic “air” cargo is moving via… truck.  Funny, if you need to move a pallet 1,000 miles you can do it, at a serious cost, via Fed-Ex Custom Critical, Pilot Air, LandAir, and many other forms where the cargo never gains an attitude above the local ground more than 15 ‘.

The TSA CCSF program allows a shipper, a 3PL, or a Freight Forwarder to become “Certified” as a Certified Cargo Screening Facility (CCSF) to inspect or screen the cargo, then consolidate it into a PAX for shipment.  If a 3PL or shipper wanted to become a CCSF they would need to meet 6 base standards.

·         Establish Physical Access Controls to keep unauthorized people out of the shipping areas.

·         Screen prospective employees and contractors to TSA standards.

·         Create and follow security procedures throughout the supply chain.

·         Install physical security systems, like walls, fences, alarms, video, moats, dragons and other barriers and deterrents.  (The last two are just checking to see if you are reading.)

·         Establish Information Technology security processes, including passwords, and ways to detect data tampering.

·         Finally submitting to initial and recurring validation by the TSA that the other 5 items are being done.

If a shipper, freight forwarder or 3PL is operating as a Foreign Trade Zone, or as a Bonded Warehouse, they already are doing all of the items above, but are being inspected by members of another part of the Department of Homeland Security, Customs and Border Protection (CBP).  Same stuff, just a different section of the same federal department.

But then Jeff reminded me of the third item on the list above.  The procedural security requires a tough set of standards in Chain of Custody of the cargo from the certified facility to the side of the airplane.  Not only would the cartons needs to be sealed with a tamper evident closure, but the pallet, and the truck rode on, (kind of like the “horse you rode in on”).  The carrier, if not part of the entity, would also have to meet all of the standards listed above.

The Chain of Custody standards are the back breaker.  Even if a location gets “Certified” they would have to go through even greater effort to control the transport to the plane, making the whole idea of being a certified screening center a true PITA!  (I will let you figure out that acronym on your own).  Bottom line is that the best place to screen the cargo is at the airport, just short of the belly of the aircraft.

So now there is segregation in the air.  Passengers onto airlines that will now need to charge passengers more, including the peanuts and soda that is served on board, and cargo, that does not need to be fed, that does not complain that the plane is late, and does not leave nasty things in the seat back pocket.

A tip of the hat to Jeff Hurt at Sustainable Aviation Logistics for his insight!