The future of CTPAT and should I get certified?

One of the frequent questions we get asked as consultants and software providers for Customs Trade Partnership Against Terrorism (“CTPAT”) is “How do we get CTPAT Certified?”  The second one is “What is the value of CTPAT – and will we lose business if we don’t have it?”  Let’s take a quick look at the how and why of CTPAT, but more importantly to see where this program is heading.

If you are new to CTPAT, it’s a voluntary trade partnership program started by the United States Customs and Border Protection (“CBP”) where CBP and trade community members work together to facilitate and secure international trade movement. The point of CTPAT is to help logistics companies strengthen the global supply chain but also streamline cargo flowing in and out of the United States. Air freight forwarders with CTPAT certification have some unique advantages.  These include:

• Reduced amount of CBP examinations
• Skipping the line for inspections
• Shorter border wait times
• An assigned supply chain security specialist
• Free and secure trade (FAST) access to lanes at the land borders
• Business continuation priority following a terrorist attack or natural disaster
• Eligibility for several U.S. Government pilot programs, like the Food and Drug Administration’s (FDA) secure supply chain program

When things are moving smoothly, the benefits of CTPAT are often overlooked.  But the first time your company has a container stuck in customs for additional examinations, the lack of CTPAT certification can suddenly loom large for you and your customer.

As a result, most large importers and publicly traded companies mandate that their logistics providers be CTPAT-approved. 

“It’s kind of become a broken record, but we continually hear stories about how not having CTPAT certification disqualified a logistics provider from business,” said Ashley Wibly, CSR Manager at Veroot,  “getting this turned around is the goal.”

Perhaps the most valuable part of CTPAT is being able to show potential clients that your company has invested in the processes necessary to obtain CTPAT certification. Losing out on a business opportunity for lack of this participation can be frustrating to sales and operations teams.

After reading the tea leaves, we believe the CBP’s plans for the CTPAT program are still in their infancy.  Let’s take a quick walk down memory lane to see where CTPAT has been and where it’s headed.   

CTPAT launched in November 2001 with seven initial participants, all large U.S. companies. By 2014, over 10,000 participants were ranging from importers to logistics providers, highway carriers, air carriers, and more.  At this point, CTPAT was somewhat easy to obtain and maintain for logistics providers – the CBP security specialist would typically have a regular conversation with each member to make sure they were updating the CTPAT web portal correctly and abiding by the principals of the program.

In 2019, the CBP announced a new Minimum Security Criteria (“MSC”) for CTPAT.  This new MSC outlined many expanded requirements including making sure companies had policies on human trafficking, money laundering, smuggling, counterfeit contraband, education, etc.   From our vantage point, there was also a step-function change in the enforcement effort.  CBP Supply Chain Security Specialists became much more focused on making sure logistics companies adhered to the CTPAT policies with a thorough audit and review of all CTPAT documentation.  And rightly so!  World Trademark Review published a report saying counterfeit goods increased by nearly 30% just during the period from 2013 to 2016.   Now in 2020, it’s estimated that 5% of world trade involves counterfeit goods.  Statista.com states that between 2008 and 2019 the number of human trafficking victims identified worldwide more than tripled from 30,961 to 105,787.   

With the threat of fraud and social compliance issues consistently on the rise, the CBP’s introduction of a more comprehensive MSC was the right thing to do.  It also means the U.S. aligns more closely with similar programs like Authorized Economic Operator (“AEO”) which are the European and Asian equivalent of CTPAT.   Another way to put it is that CTPAT is not a token certification but held in high regard in the U.S. and abroad.

Going forward the CBP has big plans for import/export security via CTPAT.  One of the recent announcements from the CBP is the start of a pilot program called the Global Business Identifier (“GBI”) initiative that will assign a unique identifier to each importer and exporter in the world.  The U.S. is partnering with 10 other countries (including Canada, Australia, France, etc.) to prototype this program in 2022 to further harmonize the movement of goods in and out of the country.  This advancement would quickly build out the database of trade companies to help the CBP identify high-risk cargo.

Pandemic delays notwithstanding, another update to the MSC is expected in 2022.  This is expected to put additional focus on enterprise challenges like cybersecurity, and social compliance issues like preventing human slavery.  In a way, CTPAT is just getting started… 

So, how can you get CTPAT certified?  The most important thing is to gather key stakeholders from upper management, human resources, and operations, and commit to implementing CTPAT.  Then ask around and look for resources on the internet to see what it takes. 

There are many resources out there on CTPAT including the CBP’s website.  Veroot has put together a substantial resource center as well.  Here, many topics are discussed such as: how to make sure you’re hiring a good consultant, more details on the new MSC, and detailed information on CTPAT policies that extend beyond the basic overview in this article.  If you are ever interested in seeing the work the CBP does daily, check out their public Twitter feed.  There you will find a treasure trove of worldwide incidents involving bad people and their contraband cargo.

In conclusion, CTPAT is a no-brainer for logistics companies looking to compete in a wider arena with larger names, educated customers, and cross-border focus.  There are distinct advantages offered by the program, and possible business to lose if you’re not part of it.  In the not-so-distant future, CTPAT will continue to expand, and the CBP has plans to catalog every company transacting in worldwide trade.  If you are currently a player in international cargo, it just might make the most sense to get involved in CTPAT now.