Economy

C-TPAT or else!

Written by Kara Aaserud

When news of a plot to bomb flights from England to the U.S. triggered an orange alert at the U.S. border in August, hundreds of southbound trucks found themselves in agonizingly long queues for inspection. Adding insult to injury was the sight of the odd colleague happily being waved through. More than a few tired truckers must have wondered aloud, “Why the discrepancy?” (although perhaps in less polite terms).

The preferential treatment was reserved for participants in the Customs-Trade Partnership Against Terrorism (C-TPAT) initiative of the U.S. Customs and Border Protection Agency. Now being aggressively promoted by government officials and commercial interests on both sides of the border, C-TPAT is one encounter with U.S. Customs that every entrepreneur should welcome — provided you can afford it.

Launched in 2001, C-TPAT was conceived to improve U.S. border security without hampering trade. To earn the badge of C-TPAT compliance, you must meet a diverse range of security requirements, such as fencing around your facilities and the use of electronic access systems. Furthermore, the upstream partners in your supply chain — from manufacturers to shippers — must do the same.

C-TPAT’s most obvious benefit is the “wave through,” which can save transportation costs and help your goods reach their destination on time — thus avoiding lawsuits for delayed goods. Moreover, some U.S. businesses are insisting their Canadian partners comply with C-TPAT. “Carriers are increasingly selective, choosing customers who are participating in these programs,” says Isabel Alexander, president of Brampton, Ont.-based Phancorp Inc., a chemicals wholesaler that is pursuing C-TPAT approval. At Cole Integrated Systems, becoming C-TPAT-certified meant the difference between keeping and losing its largest customer, General Motors. “We were forced into compliance,” says Joyce Luyckx, a vice-president at the Hamilton-based transportation firm.

Companies in the U.S.-bound supply chain might do well to act now rather than waiting for someone to force their hand, because obtaining C-TPAT compliance can be a long and expensive process. “Coming up with cash for upgrades is the biggest issue,” says Gunta Edwardson, a small-business advisor with Export Development Canada, which in April introduced a C-TPAT loan program covering up to 85% of a borrower’s compliance-related costs.

Besides, C-TPAT compliance can generate significant intangible value for your company. A recent study conducted by Stanford University’s Global Supply Chain Management Forum found that manufacturing and logistics firms that had implemented extra security measures after 9/11 enjoyed improvements in efficiency, inventory management, shipping time and customer satisfaction. It’s more shocking evidence that U.S. Customs is actually on your side.

Originally appeared on PROFITguide.com