1. Proprietary and Confidential Supply Chain Security: “ The Virtual Border” UNECE Trade Facilitation Conference Honorable D. Robert Quartel CEO and Chairman FreightDesk Technologies www.freightdesk.com www.freightdesk.com

2. Private and Confidential Up to 25 Involved Parties 200+ data elements Manual data exchange processes Multiple data platforms 30+ documents or messages Complex Data Flow for International Shipments

3. Information Sources and Timing First U.S. Destination Port Foreign Port of Voyage Origin Overseas Inland Consolidation Warehouse Voyage Underway Carrier Reporting One or more consolidation layers mask goods’ origins and involved parties (40%) U.S. Customs applies physical and commercial border in port zones Carriers accept containers from multiple sources, with only partial data on contents and origins Ship manifest information must be filed by 4 days prior to arrival (AMS) Earliest possible filing of U.S. Customs entry information (ABI) Fluid Time Frame Border Today Forwarder/consolidator generates documents House Bill of Lading Carrier generates documents Master Bill of Lading Additional carrier reporting Shipment Status Vessel Manifest Customs broker and/or shipper reporting Customs form 7501 and 3461 Additional documents may finally be received here Surface Bill of Lading Process StepSource of Data Buyer Buyer generates Purchase Purchase Order Seller Seller generates documents Shippers Letter of Instruction Commercial Invoice Seller and Buyer agree Today’s border is “fuzzy”: data is reported at fluid times and not analyzed for threat Days to Arrival 40 25 21 5 4 0 Red documents reported to Customs Virtual BorderProprietary

4. Private and Confidential Aggregating Commercial Data

5. Private and Confidential Dual Purpose Information BUSINESS: In-transit VISIBILITY for the purposes of contract management, planning, process tracking, risk mitigation, documentation, etc. GOVERNMENT: Process and regulatory TRANSPARENCY for the purposes of anti-corruption, counter-terrorism, trade processing, health and safety, etc

6. Private and Confidential Commercial Data Is Critical to Security: - Cargo – What is being transported? - Carriers – Who is handling the cargo? - Conveyance – What is the route, how is it moving? - Commerce – Who are the parties to the transaction?

7. Commercial Data Key to the Security Schema Data Fusion & Profiling Government Data-store Law Enforcement Intelligence Ocean Carriers ShipperThird Parties Commercial Data-store Release Government Agency Responsible for Cargo Security Decision Portfolio of: intercept -- inspection actions Proprietary

8. Private and Confidential Data Mining for Threat and Risk Assessment Employs a synergistic array of data mining techniques Knowledge based, both specific and general Based on rules and known facts Statistical patterns and profiling Mathematical models for risk assessment and threat identification Evolutionary algorithms to detect changes in patterns and discover new patterns

9. Private and Confidential Anomalies Generated from Commercial Data

10. Private and Confidential A Global Issue EC & US Customs, 22 October 2002 “….major principles for future co-operation were stressed, most particularly reciprocity….common standards for selection….” “…. agreed… to explore…. a declaration of principle to co-operate on a mutually acceptable container security system covering the whole EU….” WCO and IMO are making it a mandate: IMO Secretary-General, William O’Neil, has strongly urged all parties concerned “to start putting in place all the necessary legislative, administrative and operational provisions needed…”.

11. Private and Confidential Principles of a Successful Data Effort This IS a transportation and logistics issue, not just a maritime issue. This IS NOT a compliance issue. A legal cargo can become a lethal cargo. Security should be dynamic: The port and customs processing is a node within the process, not even the most important focus for security. Profiling should and can begin in the Importing Country at the issuance of the purchase order from the buyer. The shipper/importer should be responsible for the process, not the carriers.

12. Private and Confidential Issues for Small Importers and Exporters Longer lead times for moving cargoes Delays in trans-shipped containers Negative impact vs. cargo originating in direct service countries Many exports to smaller US companies that are not C-TPAT certified, and not in CSI ports Technology infrastructure to comply with big country data requirements Another hurdle to competitiveness

13. Private and Confidential Benefits Source-once, APPROPRIATELY to the process Flexible, intermodal, sourcing Profiling on demand (Dynamic, not Static) Business-process centric Goes beyond human expertise