Supply Chain Security:

“The Virtual Border”

UNECE Trade Facilitation Conference
Honorable D. Robert Quartel
CEO and Chairman
FreightDesk Technologies
www.freightdesk.com

Proprietary and Confidential

 Complex Data Flow for International Shipments
Purchasing Export Import
• Up to 25 Involved
Bill of lading, Documentation Parties
Vessel Booking Request • 200+ data
Confirmed Line of Credit Vessel Booking Confirmation Release/Approval elements
Importer’s Exporter’s Bill of Lading
Bank Bank • Manual data
Original B/L,
Rated Bill of Lading Arrival Notice Import exchange
Fund Transfer
Invoice, PO, Dock Receipt Ocean Carrier Terminal processes
Packing List Operator
• Multiple data
Demurrage
Line of Credit guarantee & platforms
Proforma Invoice payment
LC Export
Cargo • 30+ documents or
Status
Confirmation Terminal messages
Purchase Order Operator
Customs House Broker
Importer Exporter
Dock receipt Pick-up &
Import Delivery Order
Proforma Invoice Pick-up & Delivery Order Docs
Letter of Release/Hold
Instruction Notice Cargo Status Inland
Invoice, PO Freight Forwarder / Carrier
Inland
NVOCC
Carrier
Manifest Customs ( Import )
Shipping & Funding Detail Dock receipt
Export Declaration
Marine Insurance Shipping & funding detail Vessel Manifest
Company AES Export Declaration
Port
Converted Vessel
Customs (Export)
Manifest
Importer Notice

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 Information Sources and Timing Proprietary

Today’s border is “fuzzy”: data is reported at fluid times and not analyzed for threat
Days to Process Step Source of Data
Arrival
Seller
• Seller and Buyer agree • Seller generates documents
40 •Shippers Letter of Instruction
• Commercial Invoice

• One or more consolidation • Forwarder/consolidator

Overseas Inland
25 Consolidation layers mask goods’ origins generates documents
Warehouse and involved parties (40%) •House Bill of Lading
Virtual Border
• Carriers accept containers • Carrier generates documents
21 Foreign Port of from multiple sources, with •Master Bill of Lading
Voyage Origin only partial data on contents
and origins

Voyage Underway • Earliest possible filing of U.S. • Customs broker and/or

Customs entry information shipper reporting
Fluid Time Frame

5 •Customs form 7501 and

(ABI)
3461

• Ship manifest information • Additional carrier reporting

Carrier Reporting must be filed by 4 days prior •Shipment Status
4
to arrival (AMS) •Vessel Manifest

• U.S. Customs applies • Additional documents may

First U.S.
Destination Port physical and commercial finally be received here
0 border in port zones •Surface Bill of Lading

Border Today • Buyer generates Purchase

Buyer
Red documents reported to Customs •Purchase Order
 Aggregating Commercial Data

Sample Data Elements and Application Data

arrie res /P a rtie s Da ta Im port

Ex port Forw a rde r/
Data E lem ents Buy e r S e lle r S upplie r Forw a rde r Ca rrie r Brok e r Consig ne e
S hipp er's/E xpo rters n ame & addre ss x
S uppl ier x
A gent of E xp orter/P ac ker x
Inl and Ca rrier (o rigi n) x
Carrier/Party Data Oc ean Ca rrier Na me x
cus toms brok er x
Inl and Ca rrier (De stina tion ) x
Delive ring Ca rrier (d esti natio n) x
S elle r's Ba nk n ame & a ddre ss x
B uyer 's B an k na me & a ddres s x
ata

Inte rmed iate Co nsi gnee 's nam e & add ress x
C onv eya nce DC

Ultima te Con sign ee's n ame & a ddre ss x

Count ry of O rig in x
P oint of O rigi n (City & S tate ) x
Leg Data Meth od o f S hip men t to Forwa rder x
Inl and carrie r rout e (orig in) x
Oc ean Ca rrier Ro ute x
V oyag e Num ber x
V esse l Fla g x
Forei gn P or t of E xp ort x
Count ry W hic h S hip ped x
Route Data Loa din g P ier x
Tran shi pme nt P orts x
P ort of Un loa ding x
US P o rt of A rrival x
Inl and Ca rrier Rou te (de stin atio n) x
Delive ring Ca rrier Rou te (de stin atio n) x
Count ry of Ul tima te Desti nati on x
At time of Purchase Order Prior to shipment En route to port of export On water/after arrival US

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Dual Purpose Information

• BUSINESS: In-transit VISIBILITY for the purposes of

contract management, planning, process tracking, risk
mitigation, documentation, etc.

• GOVERNMENT: Process and regulatory TRANSPARENCY

for the purposes of anti-corruption, counter-terrorism,
trade processing, health and safety, etc

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Commercial Data Is Critical to Security:

- Cargo – What is being transported?

- Carriers – Who is handling the cargo?
- Conveyance – What is the route, how is it moving?
- Commerce – Who are the parties to the transaction?

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 Proprietary

Commercial Data Key to the Security Schema

Ocean Law
Shipper Third Parties Intelligence
Carriers Enforcement

Commercial Government
Data-store Data-store

Data Fusion &

Profiling
Portfolio of:
Decision intercept --
Government Agency inspection
Responsible for actions
Cargo Security
Release
Data Mining for Threat and Risk Assessment

• Employs a synergistic array of data mining techniques

• Knowledge based, both specific and general

• Based on rules and known facts
• Statistical patterns and profiling
• Mathematical models for risk assessment and threat
identification

• Evolutionary algorithms to detect changes in

patterns and discover new patterns

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 Anomalies Generated from Commercial Data

Anomaly Commercial Data element for

Document Anomaly
Cargo Incongruent with Commercial Invoice, Routing, Item listing
Origin Master Bill of Lading
High value cargo and Commercial Invoice, Item values, routing
slow mode Master Bill of Lading information
Document discrepancy Any Documents do not
conform to each other
New Shipper or Commercial Invoice, Bill Shipper or Consignee
Consignee of Lading, Certificate of Sections
Origin
Violation of established Any Any – more in
shipping or commercial timing/receipt of
patterns by parties documents (ex. Once-a-
week shipper ships twice
in one week)
Suspect source area and Shippers Letter of Origin of cargo, route
transship to small ship Instruction, Bill of Lading
Point of origin Shippers Letter of Pickup location
Instruction
Illogical commercial Commercial Invoice Comparison of
transactions Consignee and Cargo
(ex. Furniture company
receiving garments)

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A Global Issue

• EC & US Customs, 22 October 2002

• “….major principles for future co-operation were stressed, most
particularly reciprocity….common standards for selection….”

• “…. agreed… to explore…. a declaration of principle to co-operate

on a mutually acceptable container security system covering the
whole EU….”

• WCO and IMO are making it a mandate: IMO Secretary-General,

William O’Neil, has strongly urged all parties concerned “to start
putting in place all the necessary legislative, administrative and
operational provisions needed…”.

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Principles of a Successful Data Effort

• This IS a transportation and logistics issue, not just a

maritime issue.

• This IS NOT a compliance issue. A legal cargo can

become a lethal cargo.

• Security should be dynamic: The port and customs

processing is a node within the process, not even the
most important focus for security.

• Profiling should and can begin in the Importing Country

at the issuance of the purchase order from the buyer.

• The shipper/importer should be responsible for the

process, not the carriers.

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Issues for Small Importers and Exporters
• Longer lead times for moving cargoes
• Delays in trans-shipped containers
• Negative impact vs. cargo originating in direct service countries
• Many exports to smaller US companies that are not C-TPAT
certified, and not in CSI ports
• Technology infrastructure to comply with big country data
requirements

Another hurdle to competitiveness

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Benefits

• Source-once, APPROPRIATELY to the process

• Flexible, intermodal, sourcing

• Profiling on demand (Dynamic, not Static)

• Business-process centric

• Goes beyond human expertise

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