Policy Memo

Balancing Speed and Security: Opportunities for US-India Collaboration on Cargo Clearance

Exploring US-India collaboration to improve cargo clearance, balancing speed and security for more resilient global supply chains

Global trade is the lifeblood of modern economies, yet moving goods across borders efficiently while maintaining security is a growing challenge. For nations like India and the U.S., achieving the delicate balance between speeding up cargo clearance and safeguarding against risks is critical. India has made remarkable progress in reducing import clearance times, but the 48-hour target remains elusive, hindered by regulatory hurdles and cargo inspections. The U.S., with its advanced technologies and risk-based approaches to cargo screening, offers valuable lessons. By working together, the U.S. and India can enhance cargo clearance processes, creating faster, more secure trade routes that will benefit both economies. This collaboration holds significant promise, not just for trade, but also for strengthening regional stability and reducing dependency on China. With both nations committed to a free and open Indo-Pacific, improving the flow of goods through secure, efficient channels is a strategic priority. Through shared knowledge and innovative solutions, the U.S. and India can lead the way in building more resilient global supply chains.

Introduction

Trade has become the new currency of global power, with economic influence often surpassing traditional military might in define a nation’s standing on the world stage. As global supply chains become more interconnected, the challenge lies in balancing the need for rapid cargo clearance — the process of clearing goods through customs for import or export — with the imperative of maintaining robust security controls.¹

India has made significant strides in enhancing the speed of cargo clearance, reducing import clearance times for sea cargo from 14 days in 2010² to 87 hours in 2024.³ Despite this progress, the goal of clearing imports in under 48 hours⁴ remains elusive due to delays caused by physical cargo examinations and additional regulatory checks for specific commodities by partner government agencies. To achieve further progress, India needs to explore successful practices from other countries, including the United States.

U.S. ports, regulatory agencies, and the private sector have adopted effective practices for cargo clearance, such as using advanced technologies to conduct risk-based screening and employing automated data systems to expedite clearance processing, while maintaining high security standards. India could consider replicating these practices.

Both nations share aspirations for a free and open Indo-Pacific, where secure and efficient trade routes are essential for regional stability. By enhancing cooperation, the United States and India can build more resilient supply chains, reduce their dependence on China, and ensure the uninterrupted flow of critical goods. With bilateral ties at an all-time high, this collaboration not only strengthens economic ties but also reinforces the two countries’ mutual commitment to regional security and global stability.

The Nexus Between Expedited Cargo Clearance and National Security

The security of trade is increasingly linked to the security of nations because disruptions to global supply chains can profoundly impact national economies and, by extension, national security. The interdependence of economies means that any threat to trade routes — whether through piracy, cyberattacks, terrorism, or geopolitical tensions — can rapidly escalate into a broader security concern. For instance, in 2018, the Port of San Diego, one of the busiest ports on the West Coast, experienced a ransomware attack that critically impaired terminal operations and led to substantial financial losses.⁵ The cyberattack encrypted key data files and disrupted IT systems, obstructing cargo management and delaying operational workflows. More recently, in July 2023, the Port of Nagoya, the largest port in Japan, had to suspend its operations following a similar ransomware attack that disrupted the port’s communication systems.⁶

Nations are now prioritizing the protection of their trade networks and infrastructure as a critical component of their national security strategies. Ensuring the security of trade is not just about safeguarding economic interests but also about maintaining stability and peace in a highly interconnected world.

Balancing speed and security in cargo clearance is increasingly challenging as the volume of low-risk cargo (or green-channel cargo)⁷ increases to keep up with global trade demands. Expedited cargo clearance is essential for maintaining the efficiency of supply chains, particularly in industries dependent on just-in-time deliveries and rapid market responses. As levels of green-channel facilitation increase, this acceleration comes with the risk of compromising national security because the rush to clear goods can create room for illegal and unofficial activities, such as smuggling, trafficking, or the infiltration of dangerous and hazardous materials.

Physical inspection of goods plays a critical role in this balance because it directly ties cargo clearance to national security. Although thorough inspections are necessary to detect and prevent potential threats, they can significantly slow the clearance process, creating bottlenecks and increasing costs. Thus, governments and customs authorities need to find ways to streamline physical inspections without sacrificing security. This can be achieved by leveraging advanced technologies like artificial intelligence and implementing risk-based screening to prioritize high-risk cargo while allowing low-risk goods to move quickly. The nexus between expedited cargo clearance and national security lies in effectively managing this trade-off, ensuring that security measures remain robust and uncompromised while facilitation levels increase.

The nature and extent of cargo risk varies among countries as global trade operates within various trust environments. India often experiences a broad range of trust levels, from high with Nepal and Bhutan to moderate with Bangladesh and low with Pakistan, leading to varying levels of cargo risk. In a low/no-trust environment, such as the trade relationship between India and Pakistan, political tensions and mutual suspicions severely limit trade, leading to minimal trade exchanges, which are viewed as confidence-building measures.⁸ In the United States, although trade relationships with Canada are characterized by high trust,⁹ trade with Mexico — despite being more robust — is still plagued by security concerns, regulatory differences, and economic disparities, necessitating more effective cargo security measures.¹⁰

Finally, in high-volume, high-stakes environments such as the US-China or India-China trade relationships, the immense scale of trade often means that economic needs take precedence over political differences. Nonetheless, owing to underlying strategic rivalries, the importance of cargo security controls increases. This concern is particularly relevant given the growing apprehension in both US and India about the potential use of Shanghai Zhenhua Heavy Industries Company (ZPMC)-manufactured containers and cranes for surveillance or to introduce vulnerabilities into critical infrastructure.¹¹

Effective Risk Profiling and Optimal Mitigation Strategies

Border agencies, other regulatory authorities, and security agencies actively manage risk in conducting cargo clearances. Collectively, they identify, assess, and respond to specific threats and types of risks, such as undervaluation, misclassification, smuggling, and security threats. Each of these risks demands unique profiling and mitigation strategies.

Identification of risks involves detecting potential threats through intelligence, data analysis, and physical inspections. For instance, customs and border agencies identify smuggling risks through irregular shipping patterns and pinpoint security threats through advanced scanning and intelligence sharing. Assessment involves evaluating the severity of these risks, such as financial impact for undervaluation, public safety for smuggling, and national security for hazardous materials. Response involves implementing appropriate mitigation measures based on the assessment: fines or increased scrutiny for undervaluation; confiscation or legal action for smuggling; and heightened security measures and international collaboration for security threats. The United States has encountered various incidents but has successfully managed effective profiling and responses to balance trade facilitation with national security and public safety, highlighting opportunities for cross-country learning and collaboration to enhance global cargo security practices.

After the 9/11 attacks, U.S. authorities implemented a series of cargo security initiatives to enhance both the speed and safety of international trade. The establishment of the National Targeting Centre (NTC)¹² and the Customs-Trade Partnership Against Terrorism (CTPAT)¹³ in 2001 marked the beginning of a new era in cargo security. The NTC was created to analyze and manage risks associated with cargo shipments. For its part, CTPAT fostered collaboration between customs officials and traders, with the trade community helping to improve border security and, in return, benefiting from reduced examination rates and access to free and secure trade (FAST) lanes.

In 2002, the Container Security Initiative (CSI) was set up to inspect high-risk cargo containers before they reached U.S. ports, aiming to prevent potentially dangerous shipments from entering the country.¹⁴ The CSI focuses on enhancing trade security by identifying, pre-screening, and evaluating high-risk containers before they are shipped, using automated targeting tools and strategic intelligence, as well as advanced technologies, including X-ray and gamma-ray machines and radiation-detection devices to ensure rapid and effective screening without disrupting the flow of trade. The 2006 Security and Accountability for Every Port Act (SAFE Port Act)¹⁵ further strengthened port security by mandating comprehensive radiation screening through the advanced Radiation Portal Monitor (RPM) program, which can detect low levels of radiation and distinguish between genuine threats and harmless “nuisance alarms.”

The 2009 Importer Security Filing 10 + 2 rule¹⁶ required importers to provide detailed information about their shipments — two data elements from the carrier (the vessel stow plan and container status messages) and 10 data elements from the importer (such as manufacturer, ship-to party, and container stuffing location) — enhancing the ability of US Customs to identify and address risks before goods arrived in the United States. The latest initiative, the 2018 Air Cargo Advance Screening program,¹⁷ focuses on air cargo security by mandating advance screening of cargo before it is loaded onto aircrafts destined for the United States.

Case Study: Ford Motor Company

One example, representing one of the largest customs penalty settlements in recent history, underscores the challenges of misclassification and serious consequences of noncompliance with U.S. trade laws. From April 2009 to August 2013, the Ford Motor Company presented cargo vans imported from Turkey to U.S. CBP with sham rear seats, making them appear as passenger vehicles rather than cargo vans. This misrepresentation allowed Ford to benefit from a reduced import duty rate, paying only 2.5% instead of the correct 25% duty applicable to cargo vehicles.

In March 2024, Ford reached a significant settlement with the U.S. government, agreeing to pay $365 million in penalties.¹⁸The hefty settlement highlights that noncompliance with trade regulations should not be an option, regardless of the size or influence of the company involved. It also underscores the U.S. government’s commitment to enforcing trade laws and protecting the integrity of its customs processes.

Case Study: The 2010 UPS Plane Bomb Plot

Beyond potential economic losses, cargo inspection also involves significant national security risks. In October 2010, a major security threat emerged when police in the United Kingdom discovered a bomb aboard a United Parcel Service of America (UPS) cargo plane. This alert was triggered by detailed intelligence shared through international channels, which revealed that the bomb was intended to detonate midair over the United States’ eastern seaboard.¹⁹ The device was found in a package addressed to a synagogue in Chicago. A similar device was discovered on a FedEx plane at Dubai International Airport in 2010. Both bombs had the capability of bringing down an aircraft, highlighting a severe security vulnerability in air cargo operations.

In response to these incidents, the World Customs Organization (WCO) acted swiftly to address air cargo security concerns. In 2015, the WCO proposed a shift in the timeline for submitting cargo declarations from pre-arrival to pre-loading, meaning that detailed information would need to be provided before the cargo is even loaded onto the aircraft.²⁰ This change aimed to enhance the ability to screen and mitigate threats before they reached critical stages. However, initial discussions with the trade industry revealed that such early data submission poses significant challenges because of the unavailability of information at such early stages. The WCO document emphasizes that advance cargo information should be submitted “as soon as the information becomes available, but no later than prior to loading onto the aircraft,” striking a balance between improving security and accommodating the practicalities of cargo logistics.

The Pre-Loading Advance Cargo Information (PLACI) system is currently being implemented or piloted in five major locations, including the United States, the European Union, Canada, the United Kingdom, and the United Arab Emirates. These countries enforce PLACI as an additional security layer to assess cargo risks before the goods are loaded onto aircraft. As of 2023, 35% of the world’s annual air cargo was covered by these PLACI regimes, highlighting the global shift toward heightened air cargo security.²¹These comprehensive measures demonstrate that effectively profiling risks and applying appropriate mitigation strategies are crucial in maintaining the delicate balance between facilitating trade and ensuring national security.

Recommendations for US-India Collaboration

The foregoing discussion underscores the need for collaboration between the United States and India on cargo security. India’s cargo security framework is gradually evolving, with continued investments in technology, such as implementation of electronic seals on containers providing real-time alerts if there is tampering, especially useful for sensitive or high-value cargo. India’s Customs Electronic Cargo Tracking System allows for the electronic monitoring of cargo movements using GPS-enabled devices. It enhances transparency and prevents unauthorized access or tampering with goods while in transit. In terms of air cargo security, India’s Bureau of Civil Aviation Security (BCAS) guidelines mandate thorough cargo screening of packages piece by piece, rather than screening packages that are stacked together, in accordance with earlier practices. These legitimate security considerations need commensurate increase in the screening capacity, either through technology upgrades or additional equipment and manpower, to maintain supply chain integrity and support trade facilitation. However, there is room for improvement. Below are some recommendations for US-India collaboration on cargo clearance.

Targeting high-risk shipments and improving data analytics capabilities. CBP has established attaché offices in 26 countries, including India, where an office was inaugurated in 2008.²² These offices play a crucial role in enhancing international collaboration on customs and border security. A milestone in US-India customs cooperation was achieved in 2021 with the mutual recognition of the US Customs Trade Partnership Against Terrorism (CTPAT)²³ and India’s Authorized Economic Operator (AEO)²⁴ programs, recognizing each other’s trusted traders’ programs and providing end-to-end supply chain security and trade facilitation. This can also help boost the AEO uptake in India, which stands at about 37%, according to India’s National Time Release Study 2024.²⁵

Building on this foundation, significant potential exists for further capacity-building initiatives between the United States and India, particularly in risk assessment and mitigation, by sharing best practices in targeting high-risk shipments and improving data analytics capabilities. With collaboration through the Trade Fraud Task Force established by the Department of Justice, the focus can be on developing more sophisticated strategies to combat trade-based financial crimes that are more common than previously understood. Trade-based money laundering, typically involving the manipulation of trade transactions to disguise illicit money flows through under- or over-invoicing and misrepresentation of goods, has been flagged as a growing global threat by the Financial Action Task Force.²⁶

Another area of collaboration can be between the U.S. Food and Drug Administration (FDA) and India’s Food Safety and Standards Authority of India (FSSAI), drawing inspiration from the FDA’s Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting (PREDICT) system.²⁷ Implemented in 2011, PREDICT is a sophisticated computerized tool designed to enhance the FDA’s ability to target and evaluate imported products by estimating their risk levels. As the second-largest entity after U.S. Customs and Border Protection, the FDA manages over 52 million import entries annually, with imported food comprising a substantial and growing share of the U.S. food supply. Despite this volume, the FDA physically inspects only about 1% of imported food each year, necessitating a highly efficient system like PREDICT.

PREDICT uses automated data mining, pattern discovery, and open-source intelligence to improve import screening and targeting. By automating queries of relevant databases, such as those for product registration and marketing approval status, PREDICT helps prevent the entry of adulterated, misbranded, or otherwise unauthorized goods while expediting the clearance of compliant products. The system assesses not only the inherent risk of a product but also considers the historical data of importers, manufacturers, and shippers. FSSAI’s collaboration with the FDA in adopting and adapting such advanced systems can be pivotal for strengthening India’s own food safety oversight, enhancing its ability to manage growing import volumes and reducing cargo clearance time.

Pre-screening of inbound air cargo shipments. In response to the attempted terrorist threats discovered in October 2010, several countries introduced pilot programs to reduce vulnerabilities in international air cargo security.²⁸ The U.S. pilot program, called Air Cargo Advanced Screening (ACAS), was designed to enhance the identification of high-risk shipments by requiring the electronic transmission of cargo information prior to loading at foreign ports. By receiving this data early, CBP can issue screening or “Do Not Load” (DNL) alerts promptly, thus balancing the speed of cargo clearance with enhanced security.

Benchmarking performance and enhancing transparency. India ratified the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO) in April 2016, aiming to expedite the movement, release, and clearance of goods. In compliance with the TFA,²⁹ the Central Board of Indirect Taxes and Customs (CBIC), an institution under the Ministry of Finance to oversee indirect taxes and customs, has been undertaking “Time Release Studies” to estimate the time taken to clear import and export cargo at 15 ports in India that cumulatively account for more than 70% of the country’s trade.³⁰ These studies have reported a year-on-year reduction in cargo clearance times, alongside the assessment of port-level and national-level initiatives undertaken to facilitate the trading environment in India. Regular conduct of these Time Release Studies has enabled comprehensive performance benchmarking, national oversight of individual ports, extensive stakeholder engagement and awareness about trade facilitation and security, and most important, enhanced transparency about the cargo clearance processes on the ground.

One of the key efforts toward enhanced transparency is “Turant Customs,”³¹ an initiative of Indian Customs, making the entire customs clearance process faceless, contactless, and paperless — eliminating the need for physical interactions between customs officials and traders and significantly improving efficiency and integrity in customs operations. As the saying goes, “what gets measured gets done,” regular performance benchmarking — whether through real-time assessments or annual time release studies — can assist CBP in pinpointing inefficiencies and deploying technology-driven solutions to achieve more transparent, efficient, and secure border management.

The levels and procedures of controls and compliance vary significantly across countries, reflecting diverse regulatory frameworks and security priorities. Capitalizing on the increasingly robust bilateral ties between the United States and India, aligning and harmonizing customs practices, and sharing technological solutions can help both nations enhance the efficiency of cargo movement while maintaining rigorous security standards. This collaborative approach will help improve economic ties, ensure a secure and efficient global supply chain, and safeguard against disruptions caused by continuously evolving geopolitical tensions.

Notes

1
Cargo clearance ensures that goods in transit meet a country’s regulations and that the correct taxes and duties are paid.
2
Comptroller and Auditor General of India, Performance audit report No. 13: Implementation of trade facilitation measures, 2015. .https://cag.gov.in/uploads/download_audit_report/2015/Union_Performance_Indirect_Tax_Import_Export%20Trade%20Facilitation_13_2015_chapter_8.pdf
3
Central Board of Indirect Taxes and Customs (CBIC), National Time Release Study (NTRS), 2024, https://www.cbic.gov.in/entities/cbic-content-mst/NTE2.
4
Central Board of Indirect Taxes and Customs (CBIC), National Trade Facilitation Action Plan 2020-23, https://old.cbic.gov.in/resources//htdocs-cbec/implmntin-trade-facilitation/NTFAP2020-23jk.pdf.
5
C. Senarak, “Port cyberattacks from 2011 to 2023: a literature review and discussion of selected cases,” Marit Econ Logist 26, 2024, 105–130. https://doi.org/10.1057/s41278-023-00276-8.
6
CNN, “Japan port hit by ransomware attack that disrupts operations,” July 6, 2023. https://edition.cnn.com/2023/07/06/tech/japan-port-ransomware-attack/index.html
7
Green channel is a customs clearance process allowing low-risk, pre-screened cargo to bypass extensive inspections for faster entry. Red channel, on the other hand, is a situation in which goods flagged as higher-risk or needing further verification undergo full inspections and detailed checks before clearance.
8
N. Singla, “Reviving cross-LOC trade: A pathway to peace and economic development,” South Asian Voices, March 5, 2024. https://southasianvoices.org/geo-f-in-r-reviving-cross-loc-trade-05-03-2024/.
9
J. Zuckerman, Beyond the border: The U.S. and Canada expand partnership in trade and security, (Washington, DC: The Heritage Foundation, June 17, 2013). https://www.heritage.org/global-politics/report/beyond-the-border-us-and-canada-expand-partnership-trade-and-security.
10
M. A. Villarreal, U.S.-Mexico Economic Relations: Trends, Issues, and Implications (Washington, DC: Congressional Research Service, June 25, 2020). https://www.everycrsreport.com/reports/RL32934.html
11
A. Mishra, “India’s maritime security under threat from Chinese cranes,” Sunday Guardian, September 2, 2024. https://sundayguardianlive.com/top-five/indias-maritime-security-under-threat-from-chinese-cranes
12
U.S. Customs and Border Protection, CBP ACCESS user guide version 3.3, 20145, February 2014, https://www.cbp.gov/sites/default/files/assets/documents/2017-Mar/cbpaccessv3.3-021114.pdf.
13
U.S. Customs and Border Protection. (n.d.). Customs Trade Partnership Against Terrorism (C-TPAT), (n.d.). Retrieved September 7, 2024, fromhttps://www.cbp.gov/border-security/ports-entry/cargo-security/CTPAT.
14
U.S. Customs and Border Protection, Container Security Initiative (CSI) factsheet, May 2013, https://www.cbp.gov/sites/default/files/documents/csi_factsheet_2011.pdf.
15
Security and Accountability for Every Port Act, Public Law 109-347 (2006),https://www.congress.gov/109/plaws/publ347/PLAW-109publ347.pdf.
16
U.S. Customs and Border Protection. Presentation on cargo security, March 2010, https://www.cbp.gov/sites/default/files/documents/10%2B2%20presentation.pdf
17
U.S. Federal Register, Air cargo advance screening (ACAS), June 12, 2018. .https://www.federalregister.gov/documents/2018/06/12/2018-12315/air-cargo-advance-screening-acas
18
U.S. Department of Justice, Ford Motor Company agrees to pay $36.5 million to settle customs civil penalty claims relating to the importation of vehicles, October 5, 2023. https://www.justice.gov/opa/pr/ford-motor-company-agrees-pay-365m-settle-customs-civil-penalty-claims-relating#:~:text=Ford%20Motor%20Company%20has%20agreed%20to%20pay%20the,Transit%20Connect%20vehicles%2C%20the%20Justice%20Department%20announced%20today
19
C. Menon Clark, “Pre-loading advance cargo information: Latest status update,” WCO Magazine, October 2017, https://mag.wcoomd.org/magazine/wco-news-84/pre-loading-advance-cargo-information-latest-status-update/
20
Ibid.
21
International Air Transport Association. (2023, October 26). PLACI: The new security regulation changing air cargo industry dynamics, October 26, 2023.https://www.iata.org/en/publications/newsletters/iata-knowledge-hub/placi-the-new-security-regulation-changing-air-cargo-industry-dynamics/
22
U.S. Customs and Border Protection, CBP attaches, (n.d.) Retrieved September 7, 2024, fromhttps://www.cbp.gov/border-security/international-initiatives/cbp-attaches
23
The Customs Trade Partnership Against Terrorism (CTPAT) is a voluntary supply chain security program established by U.S. Customs and Border Protection in November 2001, following the 9/11 terrorist attacks. The program is designed to strengthen the security of the international supply chain while facilitating the movement of cargo from compliant and trusted traders.
24
India’s Authorized Economic Operator (AEO) program is designed to enhance trade facilitation and security by certifying businesses that meet certain compliance and security standards.
25
Central Board of Indirect Taxes and Customs (CBIC). National Time Release Study (NTRS), 2024.
26
Financial Crime Academy, Fighting Financial Crimes: Spotting Trade-based money laundering indicators, August 2024).Fighting Financial Crimes: Spotting Trade-Based Money Laundering Indicators (financialcrimeacademy.org)
27
U.S. Food and Drug Administration, Entry screening systems and tools, (n.d.).. Retrieved September 7, 2024, fromhttps://www.fda.gov/industry/fda-import-process/entry-screening-systems-and-tools
28
C. Menon, Clark, “Pre-loading advance cargo information: Latest status update,” WCO Magazine, October 2017, https://mag.wcoomd.org/magazine/wco-news-84/pre-loading-advance-cargo-information-latest-status-update/
29
World Trade Organization, Article 7.6 of World Trade Organization, Agreement on Trade Facilitation, February 22, 2017. https://www.wto.org/english/docs_e/legal_e/tfa-nov14_e.htm, sub article 7.6.
30
Central Board of Indirect Taxes and Customs (CBIC), National Time Release Study (NTRS), 2024, https://www.cbic.gov.in/entities/cbic-content-mst/NTE2.
31
_____“Customs stations to set up Turant Suvidha Kendras by July 15,” Economic Times, July 10. .https://economictimes.indiatimes.com/news/economy/policy/customs-stations-to-set-up-turant-suvidha-kendras-by-july-15/articleshow/76836533.cms?from=mdr