Real Cost Benefits Of C-TPAT Membership

There has been debate on whether the Dollar investment in C-TPAT membership exceeds the Dollar benefits of US importers and exporters, as well as those businesses who serve in their supply chains. The benefits, as this piece will show are not just feel-good, help-save-America types but real benefits that boost profitability and save your business from disaster. Those who were and are complaining are missing the point. Structured Security Measures to protect against terrorism and illegal goods are like pulling out an insurance cover, albeit a different one that pays a claim on each shipment. Here is a good blog to read on this subject.

Launched in 2001, C-TPAT program has grown and a lot of teeth added to its security risk assessment guidelines and minimum security criteria.

C-TPAT Membership – Better Than Insurance Cover!

Normal insurance policies pay back when something bad happens, a claim is filed and paid on by the insurance company. C-TPAT membership pays back a part of investment on every shipment, except that only the wiser can see this pay-back, while others will keep complaining about the C-TPAT membership costs. They will also be a reluctant partner of CBP that the latter does not want in the program in the first place. Let’s see how this works.

Cost Savings – Both Over & Underlying

First, the exporters to and importers in the United States need to know that C-TPAT is about the change in the mindset embedded in what we call “tone at the top”. Smart Boardrooms and CEO’s know well about the three types of C-TPAT related Dollar returns; evident to the front line managers, not so evident and the latent ones.

Evident to the front line managers are the benefits linked with comparatively faster CBP clearance of the ocean, air and road shipments in and out of USA. Other clear benefits is they get top of the line service providers in their supply chains at better rates than others. Not-so-evident benefits of C-TPAT partnership are those known to the marketing and sales people, who know large and reputable customers prefer C-TPAT members for doing business with. And the simplest of the latent benefits of C-TPAT memberships relate with avoiding the opportunity cost of the consignments getting stuck deep in the line waiting for CBP inspections. This opportunity cost is actually the cost of capital stuck in the waiting shipments, daily costs of the waiting employees and equipment, the lost business opportunities for non C-TPAT partners.

The single biggest latent benefit of C-TPAT membership is associated with the disasters that the businesses were and are able to largely avoid simply because they were trustworthy C-TPAT partners. This is about the various vulnerabilities to avoid something as small as theft
and as large as conveyance of illegal goods inside the shipments.

At TEU Global, we are in the frontline, witnessing a significant number of US importers having adopted the C-TPAT mindset, and they are truly interested in getting all C-TPAT membership benefits. Many of them are now Tier 3 partner, and like to keep most, if not all, of their supply chain service providers as partners of C-TPAT and C-TPAT comparable programs. We can clearly see how important their security management systems and procedures, and CBP recognizes their efforts loud and clear in terms of benefits. Needless to mention, they get
preferred rates all along their supply chains.

The Reluctant & The Credulous

But then, there are those reluctant C-TPAT partners who are gunning for the benefits from CBP by masquerading as lower risk components of the international supply chain of US based importers and exporters. For them, C-TPAT program compliance is a mere unwelcome cost, which would rather be avoided. They seldom advance from their C-TPAT program applicant status as they fail to see that their CBP assigned Supply Chain Security Specialists can see their infra-par interest in making C-TPAT program a part of their organizational souls.

And there are a few among members within the international trade community in the USA who complain about having made a big investment in C-TPAT membership but not getting the desired benefits from CBP. Quite a few of these complainers have been actually a victim of not paying enough attention to Participating Government Agencies (there are 41 of them, including Food and Drug Administration and Department of Agriculture), which have their own safety checks. Not following their procedures can hold up the release of imports, even for the most compliant importer of the C-TPAT program.

Utilize Your Free Expert

While there are many outfits providing consulting on C-TPAT measures, the best and free resource by a clear margin is the CBP Assigned Supply Chain Specialist to (SCSS) every C-TPAT program’s applicant. This guy has in-depth C-TPAT program knowledge about the particular business type, which includes the program’s Minimum Security Criteria and how it can be best adopted and governed through procedures and regular risk audits.

Voluntary Yet Compulsory

There is one area, however, where the C-TPAT program complainers may have a point. These are the thousands of Freight Forwarders, Customs Brokers, consolidators, carriers, trucking companies, warehouses, suppliers, etc. for whom the C-TPAT program compliance is no more voluntary as mentioned in the C-TPAT program’s source documents. That’s because most of the large exporters and importers have become C-TPAT program Tier II and III members and to reduce their own program compliance costs and supply chain risks, they demand that their service providers in the supply chain, become compliant of the C-TPAT and comparable programs of their host countries. They have even encouraged their foreign manufacturers and suppliers to adopt best security practices.

Please Take Note

In the end, it merits to be mentioned that from the start of 2019, all C-TPAT members are expected to comply with the updated Minimum Security Criteria. However, because many C-TPAT partners in their 4-year validation cycle will not undergo a validation based on the updated MSC, it will be better for them to implement their operations to the updated MSC to maximize their supply chain security profile and stay ahead of the curve.

For details on C-TPAT program requirements and how to apply for membership, please visit TEU Global website (www.teuinc.com); or email info@teuinc.com, or call +1 732-515-9040 or toll free 877-414-8381. Let the expert guide you through the process.