Con-Way Transportation Services Inc., today announced that effective Jan. 2, 2003 the company's four less-than-truckload operating units will apply a homeland security surcharge on all shipments moving across the Canada / U.S. border (both northbound and southbound).
The surcharge will be $8 per shipment.
Company officials cited the September 11 attacks and the subsequent cost of government-mandated changes in freight security at the Canada and U.S. border as the reason for the surcharge.
Those changes have included registration of each piece of equipment and each driver who crosses the border and mandated changes by both the U.S. and Canadian customs authorities concerning cross-border documents and security inspections.
As a result of the changes, the time to cross the border has increased, tying up equipment and lengthening trip times, the company said. Additional time is also spent in preparing shipments for customs clearance.
"The need and concern for security is a goal we can all support, but it is having an impact on our operating costs," said Douglas W. Stotlar, executive vice president and CEO of Con-Way, which is a subsidiary of CNF Inc. "As government agencies on both sides of the border have continued to formulate and modify security plans, the increased cost impact has become a constant within our operations. It's now time to begin to recover these costs."
Con-Way is participating in U.S. government meetings to help formulate a national "Customs Trade Partnership Against Terrorism" program. Known as C-TPAT, the program has a large budget and involves many U.S. government agencies.
C-TPAT will eventually establish minimum physical security standards for all facilities in a LTL motor carrier network. C-TPAT meetings have discussed the need to include high intensity lighting, security cameras, perimeter fencing, high security rooms for freight not delivered and higher cost trailer seals.
Other requirements discussed include electronic control devices for more secure entry into service facilities, new computer systems to monitor and capture shipment identity and transfer of the information to government computers, increased personnel security work during applicant background checks and the creation of data files on all employees engaged in cross-border traffic.
"Con-Way has already invested in a number of these security systems at major facilities in urban areas. But each universally mandated improvement will come with a cost," said Stotlar. Con-Way has estimated the cost to implement the facility, systems and procedural changes discussed so far to be an additional $15 to $20 million when put in place throughout their network of 426 service centers.
