The WCO CTS Myth – Part 2: A Closer Look at the Pros and Cons of an IGO Targeting System

A good discussion followed Part 1 of The WCO CTS Myth.  Access the PART 1 blog here.  Part 2 will focus on the functions and integration methodology for the system.  It’s important to state that this is from the perspective of the private sector technology providers.   Please feel free to challenge any points made herin.

The WCO references the Cargo Targeting System (CTS) as a cargo manifest risk assessment solution developed by the WCO to enable its Members to carry out international best practice cargo risk assessment to manage risk and facilitate trade and thus implement key parts of the WCO’s SAFE Framework of Standards and Kyoto Convention.  This overview also says it’s free.

Countries deployed:  Bahamas, Jamaica, Sri Lanka, Kenya, New Zealand, UNODC Container Control Programme, etc.

It sounds like the WCO thinks it is doing the right thing by building an entry level targeting system for it’s members who want one. There’s nothing overly nefarious here.  The problem is, it puts the WCO in direct competition with the technology vendors.  As one example, the program has irreparably damaged a Canadian Company called “Tradebytes / Secure” by replicating their “C-Hawk” software application.  To make matters worse, the WCO then recruited members of the Tradebytes team to develop and roll out the WCO CTS application.  Strange events indeed, and likely more drama to come.

The bottom line is many of us are tired of IGOs attempting to build applications for their member countries who then seek out funding from donor agencies including the World Bank, InterAmerican Development Bank, Asian Development Bank, and the US Dept. of State.  When the funding is provided, the barrier for market entry becomes complete.  Other technology providers are then blocked from competing fairly, and openly.  No open tender is announced or initiated because that would expose the shortcomings of the IGO system.  Why should they force themselves to respond to best practice requirements when their own system can’t comply right?  It’s self serving no matter which way you look at it.  Since this is the modus operandi of the WCO at the moment, (and has been the M.O. of UNCTAD for many years,) this blog will attempt to show where some of those gaps lie in the CTS.

A Beginner or Entry Level Product?

The developers of the WCO know just enough to build a rudimentary solution.  The WCO itself describes the intent of the system as this:

1.       Gather manifest/bill of lading data.

2.       Store gathered data in a database.

3.       Perform automated and manual searches,

4.       Risk assessment and targeting.

5.       Identify high-risk cargo prior to its arrival at the border.


We might conclude the CTS provides:

1.       An ability to set lookouts against certain data fields

2.       A query functions to build a view or worklist of data for customs review (e.g. query/show me all cargo reported for the vessel Maersk Dubai, arriving today at Pier 42.)

3.       A database schema that aligns with the WCO Data model for Edifact cargo reporting (CUSCAR)

This at minimum allows the customs officer to access the data, address lookouts that emerge on suspect or known/nefarious entities, and further exploit the data by filtering on data fields much like you would in MS Excel.  The functions are generally those functions that exist at a database layer for “slicing and dicing” the data.  Basic database functions are not considered “international best practice” in the view of many experts, nor should the WCO be marketing entry level data exploitation tactics as “international best practice”. It just seems like a real stretch of the truth when you start scratching the surface of what’s really there.

At least the CTS gets customs looking at the data operationally to select what they believe to be high risk shipments for closer scrutiny or inspection.  The CTS is a catalyst to action, and that’s good, because most developing nations are not doing true “targeting and selectivity” especially if they happen to use and endorse the Automated System for Customs Data (ASYCUDA).  While the approach is simplistic and rudimentary, at least something is happening to initiate customs into making risk based decisions at an operational level.  It’s still one tier better than the ASYCUDA Risk Management Module.  Risk Management doesn’t exist in ASYCUDA and it’s clear those developers don’t understand the concept.  UNCTAD may disagree, but they haven’t made a compelling argument yet that I am aware of.

ASYCUDA in reality, -has nothing of value for risk management.  The WCO CTS however enters the market with “something”.  It’s just not very good, not does it offer much of a platform for the country to mature into more advanced capabilities like you might find in the modernized nations.  To date, the WCO developers minimally understand the concept of risk management, resulting in a minimalistic application.  Should we care?  Not really, but the WCO markets and channels the delivery of the system using the UNCTAD vaporware model which creates a barrier to market entry for the rest of us.  See Part 1 of this discussion for an in depth overview of the WCO and UNCTAD tactics at play.  This is why we care. 

The WCO is also seeking help from US CBP and New Zealand Customs.  Certainly, there is expertise that lies in both organizations. The WCO will create a perception that the assistance is a noble effort, but they will not inform US CBP or NZ Customs that the WCO selling tactics of the system will further block the private sector from entering this portion of the market.  It further confirms an agenda is at play here to compete with the private sector and gain ground on functions that do not exist in the system at this stage.

Another partially good outcome from the WCO CTS effort is this:  The CTS deployment approach encourages the filing of advance commercial information (ACI).  However, if you are going to do that correctly, you should be focused on “when” data is filed and not “where” data is filed.  I worked on ACI related initiatives almost exclusively in Canada and the U.S. from about 2001-2011.  It’s the largest step forward to virtualizing the border for a customs organization, and positions well for data exploitation as a second phase.  It allows Customs to “push the border out” and address serious threats before arrival.  The future of customs is in here, but its not just about Advance “Cargo” Information.  It should probably be addressed under a separate Advance “Commercial” Information Program effort.  A Cargo document is just one of many available supply chain transactions.  At one time we helped to initiate and acquire the use of Bayplans and Stowplans, Container Status Messages, and Importer Security Filings in North America.  All this work birthed from the US CBP Advance Trade Data Initiative (ATDI).  There’s a reason why these items are considered best practice now and populated throughout the WCO Safe Framework.  -But tackling this as part of the WCO CTS effort creates noise and confusion.  They are best served as separate programs where one leads to the other.  In conclusion, we might agree that “some” functions offer “some” value, yet the marketing of the WCO CTS is in some instances untrue, or greatly exaggerated. 

Deployment Concerns:

Data Integration

Let’s begin with Data Integration.  It always makes sense to seek out where the data currently is filed and use that source database as the “system of record.” It doesn’t make sense to create another filing mechanism for the trading community because it only increases cost and redundancy.  While we’ve operated using these principles for many years, enter the WCO and their decision to force the carriers to refile a second time in many instances for the CTS.  For those 90 countries running ASYCUDA, the filing mechanism is already there.  It doesn’t make sense to introduce another competitive filing mechanism.  It also doubles this cost to trade. 

In principle, every electronic transaction costs $1USD on average (beyond the technical cost there are sometimes the peripheral costs to have an employee key in the data, format it, and send it).  If I’m an ocean carrier filing a CUSCAR/Manifest transaction in ASYCUDA, I would have great concerns if I had to do it a second time in another system for the same customs administration.  We have an IGO endorsing Single Window and Collaborative Border Management Frameworks and Methodologies that are designed to reduce the redundancies of trade reporting by promoting one filing for sharing with many OGAs.  Instead the WCO CTS requires the same transaction to be filed twice to one agency.  It doesn’t make sense.  The WCO should care about this.

The WCO reports that major shipping lines have supported the current pilots.  I find that hard to believe after watching carrier alliances like the World Shipping Council (WSC) and affiliates challenge US CBP for years on advanced filing of data, like what was accomplished with the 24hour manifest rule in North America.  When employed at GreenLine Systems we worked on obtaining Advance Trade Data for many years for US CBP.  Those efforts eventually became the 10+2 initiative.  Those principles are now in WCO SAFE.  There’s a right way to do this and a wrong way.  It doesn’t feel right with this CTS effort. 

We will be providing additional insight and analysis on current and missing functions of the WCO CTS.  This will include a functional report card and overall score.  Stay tuned for Part 3 of this blog called:

The WCO CTS Myth – Part 3: “A Functional Comparison of the WCO CTS With Best Practices for Targeting and Selectivity.”