Maritime Security in Logistics From Japanese Shippers point of View

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1 Maritime Security in Logistics From Japanese Shippers point of View Koji Hashimoto JMC (Japan Machinery Center for Trade and Investment) September 29 th,

2 Production Network (A representative case of a Cross Border Operation in East Asia) JMC 2

3 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?

4 Theft WMD Challenges Vulnerabilities As cross border Supply Chains stretch longer, it entail various vulnerabilities Smuggling Terrorism Finding a way to reconcile Facilitation Security

5 Developments of Security Programs US, EU, WCO, and Japan US EU WCO JAPAN 2001 September 11 CSI 2002 C-TPAT Advance Cargo Manifest Presentation for Ocean Container (24 hour rule) IMO/ISPS IMO/ISPS IMO/ISPS 2005 The security amendment to the Community Customs Code Regulation (EC) No 648/2005 SAFE Framework 2006 SAFE Port Act The implementing provisions Commission Regulation (EC) No 1875/2006 SAFE Guideline AEO for Exporters AEO for Importers 2007 AEO for Wearhouse Advance Cargo Manifest Presentation 2008 AEO AEO for Customs Brokers 2009 AEO for Manufacturers 2010 Secure Freight Initiative (10+2 rule) 2011 Advance Cargo Manifest Presentation (24 hour rule)

6 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

7 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.

8 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.

9 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.

10 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. 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. 10

11 About JMC Founded in 1952 as a non profit industry organization Purpose Activities 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. Making Rules in International Trade and Resolving of Trade Problems Overseas Trade and Investment Promotion International competitiveness Improvement Harmonization with Environmental Protection and Product Safety Export Control Conformity Plant Export Promotion 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. 11

12 Thank you for your attention. 12

Supply Chain Security Management Systems The ISO Link

Supply Chain Security Management Systems The ISO 28000 Link Topics Security threats, risks and vulnerabilities Impact on Business Initiatives in the Region. ISO 28000 Family of Standards Who s got ISO28000