In October 2024, the bipartisan CTPAT Pilot Program Act of 2023 was recently signed into law and will enable a pilot evaluation of the potential benefits of including both non-asset-based and asset-based third-party logistics providers (3PLs) in the CTPAT program. The goal is to determine whether expansion of membership to these entity types can enhance port security, combat terrorism, and prevent supply chain security breaches.
Key Features of the Pilot Program
Non-Asset-Based 3PLs: These providers arrange international transportation of freight and are licensed by the Department of Transportation.
Asset-Based 3PLs: These providers facilitate cross-border activities, manage logistics services using their own warehousing assets, and are licensed or bonded by relevant authorities such as the Federal Maritime Commission or the Transportation Security Administration.
Program Structure: The pilot program will include up to 10 non-asset-based and 10 asset-based 3PLs. Participation is voluntary and will last for at least one year, with the program terminating no later than five years after its initiation. Following the pilot period, a recommendation is required to determine if these entity type should be included permanently in the CTPAT program.
CTPAT Effectiveness Report
The new law also requires a full evaluation of the overall effectiveness of the CTPAT Program to be conducted by the Comptroller General of the United States. Due in late 2025, the report is required to analyze security incidents involving active CTPAT members and make recommendations to CBP on improvements to “improve prevention of security incidents in the cargo supply chain involving participants in CTPAT.”
What it Means
We asked one of our CTPAT experts, Bradd Skinner, what this means for the CTPAT program and its current members.
“This pilot has long been awaited and is an important first step to determine the feasibility of including non-asset based 3PLs and warehouse operators into the CTPAT Program. Expanding membership to these entities means that current CTPAT Partners could include CTPAT certification status as part of their vetting when selecting business partners that provide these types of services. The Pilot and Effectiveness Report could also provide recommended changes to the MSC and/or program administration to ensure that the program is meeting its goals of improving supply chain security while delivering trade facilitation benefits to compliant Partners.
It’s important to remember that any future changes to the CTPAT program will go through a vigorous review process and incorporate feedback from the private sector, particularly through the Commercial Customs Operations Advisory Committee (COAC). So, no immediate changes will be made in the near term, but these developments are definitely something Partners may want to keep track of over the next couple of years.”
Background
Currently, the types of entities that are eligible to become members of CTPAT are:
- US importers & exporters
- US/Canada & US/Mexico highway carriers
- Mexican and Canadian manufacturers
- Mexican long-haul carriers
- Rail & sea carriers
- Licensed US Customs brokers
- US marine port authority / terminal operators
- US freight consolidators
- Ocean transportation intermediaries and non-operating common carriers
There have been ongoing conversations about expanding this list of entity types for several years. The CTPAT Pilot Program Act is therefore a significant step in determining if and which new entities should be added to this list. The goal is to determine whether their participation can enhance port security, combat terrorism, and prevent supply chain security breaches, while also providing trade facilitation benefits to the new member companies.
The potential benefits of the Pilot Program are:
- Enhanced Security: By involving 3PLs, the program aims to close potential security gaps in the supply chain.
- Operational Efficiency: Participating 3PLs may benefit from reduced inspections and expedited processing.
- Informed Policy Making: The pilot program will provide valuable data to inform future CTPAT policies and practices.
