TSA Air Cargo Update

1. TSA Air Cargo Update June 2007

2. Air Cargo Landscape U.S. Air Cargo Supply Chain ~3,800 Freight Consolidators (IACs) ~ 450 Airports Millions of Shippers ~ 300 Air Carriers Inspected by TSA TSA takes a multi-layered approach to air cargo security: • Companies shipping and transporting cargo onto passenger planes are vetted to ensure they meet TSA security standards • Air carriers and IACs screen cargo using approved screening methods and technologies • TSA conducts random and risk-based targeting to identify high-risk cargo that requires secondary screening • TSA inspectors continually assess compliance with security regulations TSA Air Cargo Focuses on Two Primary Security Threats • Improvised explosive device (IED) exploding on a passenger aircraft • Stow-away commandeering an all-cargo aircraft

3. TSA Air Cargo Strategy + + Layered Approach = = Vetting 100% Screening Targeting to Cargo Security Purpose: Purpose: Purpose: To ensure that all entities that handle cargo to be transported on passenger aircraft are vetted by TSA To ensure that every shipment is To ensure that every shipment is screened by an entity in the supply assessed for elevated risk. Vet to ensure chain. companies meet security What is needed? What is needed? What is needed? requirements. 100% of all cargo on passenger 100% of all cargo will be analyzed for Entities are vetted to strengthen and aircrafts will be screened via risk. All cargo is subject to targeted standardize security requirements: approved forms of screening. risk - based and random screening. • Known Shipper (KS) • Certified Shipper (CS) • Indirect Air Carrier (IAC) • Air Carrier (AC) Screen with Who does what? Who does what? Who does what? the most efficient and Industry Industry Industry Industry Industry Industry effective • Performs risk analysis on cargo using the Freight Assessment System (FAS) and screens when directed. • Screens cargo display9ing risk-based characteristics. • • • • Methods. Implements policies and standards. Implements policies and standards. Screens cargo during initial packaging Screens cargo during initial packaging and applies tamper evident seal. and applies tamper evident seal. • • Screens cargo from known shippers. Screens cargo from known shippers. TSA TSA TSA TSA TSA TSA • • • • • • Conducts assessments to ensure CS Conducts assessments to ensure CS Screens elevated risk cargo (e.g., Cat II Screens elevated risk cargo (e.g., Cat II - - Randomly screens cargo using canine. Randomly screens cargo using canine. Target to • • upholds policies and standards. upholds policies and standards. IV airports, counter IV airports, counter - - 2 2 - - counter). counter). Screens cargo with evidence of Screens cargo with evidence of • • • • ensure Ensures legitimate & law Ensures legitimate & law - - abiding abiding Inspects to ensure supply chain Inspects to ensure supply chain tampering. tampering. • • entities. entities. members screen cargo in line with members screen cargo in line with elevated risk Performs risk analysis on cargo using Performs risk analysis on cargo using • • requirements. requirements. Issues certification. Issues certification. FAS and screens when directed. FAS and screens when directed. cargo is • • • • Inspects CSs, IACs and ACs to ensure Inspects CSs, IACs and ACs to ensure Inspects to ensure supply chain members Inspects to ensure supply chain members screened a compliance with security programs. compliance with security programs. comply with risk comply with risk - - based targeting based targeting second time. requirements and delivers cargo to TSA requirements and delivers cargo to TSA for inspection when appropriate. for inspection when appropriate.

4. Enhancing Air Cargo Security Through Regulations Air Cargo Final Rule/Standard Security Programs (SSPs) • The Notice of Proposed Rule Making was published in November 2004, with the industry comment period closing in January 2005 • The Air Cargo Final Rule was published on May 26th, 2006, and impacts the air cargo supply chain through such mandates as: • Requiring background checks of approximately 50,000 freight forwarder and aircraft operator employees and agents • Extending secure areas of airports to include all-cargo operations • Requiring IACs that tender cargo only to large all-cargo operators to follow a TSA approved security program • Details regarding industry compliance with Final Rule requirements were included in the carriers’ revised security programs which were published in January ’07 and effective in March ‘07 October 2006 Security Directives/Emergency Amendments (SDs/EAs) • Removed previous provisions that allowed for certain types of cargo to be exempted from screening • Mandated 100% screening of cargo tendered in passenger terminals • Mandated 100% screening in smaller domestic airports (Category II-IV) • Required IACs to screen a certain % of cargo shipments

5. Certified Shipper Program • Provides a mechanism by which TSA can achieve 100% screening while still allowing for the flow of commerce. • Certified Shippers must: • Adhere to increased security standards. • Share responsibility for supply chain security. • Employ tamper evident technologies. • Permit on-site standards validations.

6. Freight Assessment System (FAS) Overview • The Freight Assessment System (FAS) is the program mandated by Congress in 2003 that supports both DHS & TSA strategic objectives to improve security around air cargo movement in the U.S. • FAS is a technology solution that identifies elevated risk cargo at various points in the supply chain • TSA is committed to implement a system that is developed in partnership with industry that increases security and minimizes the impact to the flow of cargo • FAS will : • Provide a means to collect standardized data on cargo shipments from air carriers and Freight Forwarders/Indirect Air carriers, • Augment/relate the shipment data with existing TSA data in legacy management systems, • Present a risk indicator to industry with an action directive, • Analyze and feed back data into the continued development of the risk model