Shape Up To Ship Out

Unless something totally unexpected delays them, new federal anti-terrorism cargo security rules will take effect Oct. 1. The rules could slow the movement of goods along some manufacturing supply chains, but even when fully implemented, probably during the first half of 2004, they are not likely to force most manufacturers to abandon their just-in-time inventory (JIT) management practices. Rules proposed July 23 by U.S. Customs & Border Protection (CBP), an agency of the Department of Homeland Security, would cover cargo carried by air, rail, ship and truck in or out of the U.S. and establish specific minimum periods for notifying CBP in advance about contents and recipients. The pending rules would require that CBP receive the information no later than four hours before landing for cargo coming into the U.S. by plane from Europe or Asia. For goods coming by air to the U.S. from elsewhere in North America or from Central America or South America north of the Equator, cargo information would be due by the time the plane departed for the U.S. For rail-carried cargo the minimum advance notification period would be two hours prior to U.S. entry, and for truck cargo generally one hour in advance. The existing 24-hour prenotification rule for ocean-borne cargo remains in effect, although under the pending regulations electronic filing of cargo data would become mandatory. For goods being exported from the U.S., the requirements would be similar: a minimum 24 hours' advance notice for cargo ships, two hours before scheduled departure time for air cargo; one hour before arrival at the border for truck cargo, and for rail-carried cargo four hours before the engine is attached to a train headed out of the U.S. The newly proposed rules carry "far, far less risk" of making JIT a casualty of regulation than did anti-terrorism cargo restrictions circulated earlier this year, says Larry Christensen, vice president for international trade content at Vastera Inc., a Dulles, Va.-based global trade-management firm. Citing the proposed rule requiring two hours advance notification on exports by air, he says: "That's going to hurt. It's going to require companies to prepare databases in advance. It's going to require them to automate their systems and to communicate with their carriers electronically. But that's certainly not as bad as 24 hours."