LIIEA Long Island Import Export Association Inc Air

LIIEA Long Island Import Export Association, Inc. Air Cargo Security &Screening Regulations Air Cargo Safety & Dangerous Goods Regulations UTi’s Journey in Becoming a Slide LIIEA - April 15 th, 2010

In the Beginning. . . Slide LIIEA - April 15 th, 2010

What’s all this screening about? • The term "screening" is defined as a "physical examination or non-intrusive method of assessing whether cargo poses a threat to transportation security. • Methods include x-ray systems, explosives detection, canine teams, or a physical search together with manifest verification. “ • Alternate methods – Pharmaceuticals – Hazardous Goods, with properly filed documentation Slide LIIEA - April 15 th, 2010

TSA Solution Allocating Screening Responsibility across the Supply Chain Slide LIIEA - April 15 th, 2010

Indirect Air Carrier Pilot • TSA conducted an IAC screening pilot with high volume forwarders at 18 airports – FF participation was limited to providers handling +200 containers annually – Two types of equipment was mandated to be used to screen cargo, (AT X-ray and ETD) • TSA’s objectives for this pilot was to: – Determine the IAC community’s ability to screen cargo volumes – Measure the effectiveness of screening technology on all commodity types – To evaluate chain-of-custody procedures for screened cargo as it moves from the IAC to the air carrier. – Gain perspectives on cargo screening flows and equipment IAC Screening pilot included: 14 entities, 63 locations and 18 cities for a diverse population sample. Slide LIIEA - April 15 th, 2010

UTi & the Pilot Program Key factors influencing our participation: • Industry image • Existing Infrastructure readiness • Competitive advantage as advisor • Influencer on outcome • Government Funding Money Compliance Prestige Tim e Slide w Gro th oj Influence LIIEA - April 15 th, 2010

Security Requirements Physical Access Controls: Procedures and mechanisms must be in place to prevent unauthorized entry to facilities where Certified cargo is screened, prepared, and stored; maintain control of employees, contractors and visitors; and protect company assets. . Personnel Security: Processes must be in place to screen prospective employees and contractors to TSA standards, and to periodically check current employees with unfettered access to passenger air cargo. Procedural Security: Security measures must be in place to ensure the integrity and security of processes relevant to the transportation, handling, and storage of cargo throughout the supply chain. Physical Security: Cargo handling and storage facilities must have physical barriers and deterrents that guard against unauthorized access. Examples include fencing, gates and gate houses, parking restrictions, building structure requirements, locking devices and key controls, adequate lighting, and alarm systems and video surveillance cameras. Information Technology Security: Processes must be in place that provide for password protection of user accounts and identify improper access or the altering of data on automated systems. Facility Validation: Allow initial and recurring validations by TSA or a TSA approved organization. Slide LIIEA - April 15 th, 2010

UTi Pilot Project – The Journey UTi applies to become a certified Cargo Screening Facility in multiple gateway cities May 2008 Facility Security Plans created and submitted to TSA for approval May 2008 UTi accepted into CCSP Technology Screening pilot June 2008 Facility Security Coordinators identified Equipment installed, employees trained Jan 2009 Feb 2009 Slide Dec 2008 Screening begins 4 sites receive certification July 2008 Received Alternative Procedures from TSA Oct 2008 Nov 2008 Site certification visits begun Cargo Characterization studies done TSA agreement received and signed Q 2 2009 Additional sites rolled out LIIEA - April 15 th, 2010 Aug 2008 Facility Security Plans and Screening Equipment proposals approved Screening equipment proposals submitted to Sep TSA 2008 Training developed and administered

Project Scope • There were eleven members on the project team contributing from 10 - 20% of their time. Additional project members were called upon as needed. • The project plan consisted of over 120 category action items, many that required redundant activities for each of the site locations being accredited. • Stakeholder positions were extended to our clients and included regularly scheduled conference calls sharing non sensitive information on the project. Slide LIIEA - April 15 th, 2010

Cost & Benefit Costs • • Slide Facility Space Demands Equipment Costs Equipment Maintenance Facility Permits & Upgrades Labor Demands Process Flow Changes TSA Reporting TSA Inspections Benefit Controlled Cargo Flows Managed Screening Costs ULD Utilization Transit Predictability Improved Security Controlled Screening on sensitive commodities • Ability to ship in bulk configurations • Avoidance of security fees • • • LIIEA - April 15 th, 2010

Reporting Obligations Monthly Reports are sent to the TSA to Monitor Productivity and Screening Costs Slide LIIEA - April 15 th, 2010

The Safety Act, creates certain liability limitations for claims arising out of, relating to, or resulting from an Act of Terrorism where Qualified Anti-Terrorism Technologies have been deployed. Slide LIIEA - April 15 th, 2010

Safety Act - Services The SAFETY Act evaluation process and criteria apply to services. To seek Designation for a service, you must define how you perform your service and provide information supporting the utility, effectiveness, and safety of the service. This will generally include establishing that your service is implemented by a well-documented and reproducible process, that this process is consistently effective, and that it can be expected to remain effective in future deployments. Forwarders who have been granted certification are: • Expeditors International of Washington • Geodis Wilson USA Incorporated • Kuehne & Nagel Incorporated • UTi United States Incorporated • World Courier Incorporated Slide LIIEA - April 15 th, 2010

Program Statistics As of March 2010: • There are 305 companies authorized to tender or transport in chain of custody screened cargo. • There currently 385 Indirect Air Carrier Certified Cargo Screening Facilities. • Facilities are currently located in 25 states, (includes Guam and Puerto Rico). • The TSA is actively seeking expansion of this program. Slide LIIEA - April 15 th, 2010

TSA Approved Equipment Slide LIIEA - April 15 th, 2010

TSA Approved Equipment Contrary to some manufacturer claims, as of this date, NO bulk screening equipment has been approved by the TSA • Manufacturers of X-Ray machines report speeds as fast as 30 seconds per carton, but contributing factors significantly reduces the flow rates. • Explosive Trace Detection rates are slightly higher, at 24 seconds per carton but carries additional costs related to consumables. • Commodities often will influence best technology to use. Slide LIIEA - April 15 th, 2010

Why not Participate? 3 PLs, manufacturing facilities, warehouse & distribution centers are all eligible if they deliver shipments directly to an airline or forwarder. Regional Compliance Coordinators Slide LIIEA - April 15 th, 2010

Air Transport Association “We have heard that many companies currently participating in programs such as C-TPAT, TAPA, USDA/FDA, Good Importer Practices and other types of initiatives are finding the CCSP certification process to be more like a small step than a giant leap. We believe that the CCSP offers our customer the best solution to meeting the 100 percent screening mandate – in a way that maintains control in the private sector and offers maximum security with minimal disruption in the supply chain. ” James C May, President & CEO Air Transportation Association Slide LIIEA - April 15 th, 2010

Closing Remarks • Consider doing your own evaluation on the Cost / Benefits of becoming a CCSF- , whether you’re a Service Provider or Manufacturer/Shipper • Be prepared for additional delays come August – 100% will have more of an impact than many think. Watch May when we go to 75% as a further indicator. • If you engage make sure your company’s resources have sufficient bandwidth in the areas of security and compliance. . . • Try to work with someone who has been engaged in the program and use the TSA as a collaborative and highly informative ally. • Prepare for more pressure on overseas origins to screen inbound shipments, screening will be going global. Slide LIIEA - April 15 th, 2010

LIIEA Long Island Import Export Association, Inc. Air Cargo Security &Screening Regulations Air Cargo Safety & Dangerous Goods Regulations UTi’s Journey in Becoming a Slide LIIEA - April 15 th, 2010