The proposal would have the CBP collect detailed information about all imports of items that fall into ten specific categories. Those items would have to be held in port for 24 hours before being loaded onto the source ships headed for the U.S. Then the shipping company would have to declare the cargo's physical location onboard the U.S.-bound ship along with updates if the container is moved, reports The Detroit News. This program would introduce an extra day at least into the JIT model, but would also add the potential for unpredictable delays and backlogs, making the JIT model of distribution unworkable, the industry fears. That would result in significant costs, as would any delays in receiving essential parts or supplies.
According to the government, the new CBP regulations would apply to about 11 million cargo containers carried across the seas to the U.S. in 50,000 trips made by 1,200 ships each year. The industry thinks that magnitude of impact will result in at least $20 billion in costs to their supply networks annually, while the government's estimate is a mere $690 million. Clearly, the two sides are using different models.
The so-called '10+2' rule was proposed at the beginning of this year after about six years of development. Its goal is to decrease the likelihood of a terrorist attack in the U.S. by raising the inspection level on the millions of cargo containers entering the U.S. by its ports each year.
Car industry companies, already pressed with the tough economy and high oil prices, are asking the government for more lenient regulations that would allow them to keep their supply chains as short as possible, thereby keeping costs at a minimum. The CBP wants a ruling on the new regulations by November, though, so the fight could be a short one, however fierce.
Reader Comments
Wed Aug 20 2008 1:00 PM
zamafir says
I'm constantly amazed at how much damage a single administration's policies (and those of the smaller institutions they've constructed or shuffled leadership) can do to an entire country and its industries in only 8 years. Simply Staggering.
Wed Aug 20 2008 2:20 PM
Laz says
By the halfway point of the new administration this issue may change. With longer lead-times producers are forced to keep larger inventories which will add cost to every finish product...
Wed Aug 20 2008 4:15 PM
oldscoob says
having stored inventory saves items that are older. Now THAT is saving resources...stop extinction, store the facts.we aren't all 5 billion dollars a day in just for temporary thieves shipping...I hope the bill passes.Simply verifying integrity will keep lines fast. this bill must be for the doubted or mistakeful shippers.
Wed Aug 20 2008 7:46 PM
HECTOR says
I work in the logistics industry so I can speak with some knowledge about this topic.
The rules aren't put in effect by CBP but by TSA (lovingly dubbed Thousand Standing Around by their CBP brethren) and are as useless as they are expensive. On the air freight side (the one I'm familiar with) the TSA will demand that by a certain time 100% of the cargo is screened. It takes no familiarity with this industry - only common sense - to realize that's not possible. In fact it's a very good way to wreck the entire air freight industry.
At what point are you doing *too much* to guard against terrorism? Would you spend $20B to guard against a sunken ship? And that's just in direct costs. The indirect costs, those passed down to the consummers, can't be known. Not that those useless assholes in the TSA give a damn. As long as their burocracy survives they're happy.
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