HSDF THE PODCAST

Combating the Fentanyl Crisis and De Minimis Border Security Challenges - Part 1

• Homeland Security & Defense Forum • Season 3 • Episode 4

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The Fentanyl crisis creates unique border security challenges.  Hear how CBP is pivoting to address these challenges and what they need from industry to succeed.

In the first of a two part discussion, John Wagner, Sits down with Joseph Draganac and Shane Campbell, who bring years of Customs and Border Protection (CBP) experience to the table. 

Take a closer look at the challenges and strategies in place to combat the risks associated with the massive influx of de minimis shipments—those small yet significant parcels valued at $800 or less that can enter the U.S. duty-free.

As e-commerce reshapes how goods move globally, CBP faces the daunting task of screening over a billion parcels that arrived in fiscal year 23 alone. Our esteemed guests shed light on how this surge is affecting traditional retail and outlines the innovative approaches CBP employs to keep pace with this transformative period in trade. 

Wagner, Draganac, and Campbell offer rare insights into the evolving landscape of international commerce and border protection, emphasizing the need for international cooperation in securing our nation against the dangers lurking within these seemingly innocuous shipments. Join us for a compelling exploration of how CBP is adapting to ensure the safety and economic security of the United States in the age of online shopping and instant gratification.

Featuring:

John Wagner, the former CBP Deputy Executive Assistant Commissioner leads a discussion 
Joseph Draganac, Assistant Director, National Targeting Center, Cargo Division at CBP, and 
Shane Campbell, Deputy Executive Director, Cargo and Conveyance Security, with CBP's Office of Field Operations.

This discussion took place at 2023 HSDF Border Security Symposium in Washington DC on December 12, 2023.

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Announcer:

Welcome to HSDF the podcast, a collection of policy discussions on government technology and Homeland Security brought to you by the Homeland Security and Defense Forum. In this first episode of a two-part series, learn more about the unique border security challenges around fentanyl interdiction and how custom and border protection is responding, featuring John Wagner, the former CBP Deputy Executive, assistant Commissioner Joseph Dragunek at CBP's National Targeting Center, and Shane Campbell, with CBP's Office of Field Operations. This discussion took place at the annual HSDF Border Security Symposium in Washington DC on December 12, 2023.

John Wagner:

Hi everyone. I'm John Wagner, thank you for that kind introduction. I've been retired a couple years at customs and border protection, spent a career in field operations and got to work with these two great guys up here with me and I dragged them in here today to talk about fentanyl and de minimis and how they're related and where CBP's headed and all the great stuff that they're doing with this. But Shane Campbell and Joe Draganac, I'll let them introduce themselves in a minute. But, Shane, I'll start with you. De minimis I'm not going to ask you to spell it, but explain for everyone, including myself, what. When we say de minimis, what are we referring to and what does that mean in the context of cargo?

Shane Campbell:

Okay, so, if you'll excuse me, I'm not going to go into the technical trade vocabulary and talk about section 301, et cetera, et cetera, but essentially, stuff that's valued at $800 or less is allowed to come into the United States duty-free. And that's the summary of de minimis. It's de minimis in the Latin term means insignificant, right, and I think that's kind of a misnomer, because de minimis right now is not insignificant for CBP or for our economy. It's huge for our economy. It's e-commerce, it's shipments to and from the United States. We're not the only country that's having an issue with this. I was just in a meeting with last week with some members of the EU, and they're having very, very similar issues to what we are and we're finding that with each of the countries that we engage through our efforts. De minimis is worldwide and every country that we've talked to is having similar issues with it when it comes to smuggling or just circumvention of customs regulations.

John Wagner:

So I mean, basically, I order something online and it gets shipped from the foreign manufacturer right to me, yes, right. It doesn't go to a retailer, it doesn't get imported as a commercial importation. It comes across the border.

Shane Campbell:

Correct, and that's changed the economy right, because now you're dealing from manufacturer to end user, without warehouses and middlemen, and hence it helps because some stuff is cheaper because you don't have all those middlemen and you don't have so much transport and warehousing, etc. However, is the person that you're working with, are they legitimate or are they not legitimate? And that's you don't know.

John Wagner:

Right, so they're. In lies some of the risk, and the known entities in a traditional cargo transaction are not necessarily now involved in a transaction, and instead of one container of a thousand products coming in, it's a thousand individual packages coming across at CBP, all with different consignees.

Shane Campbell:

Right, because we all ordered something online, yes and no, but I'm going to change something on there which is you know. So when we talk about those individual packages, that's, I really have to caution this. It's not just packages in the mail or express consignment environments, right? Because, for example, at the Port of Long Beach, at the seaport, we will get 40 foot containers full of de minimis shipments. So now you're talking about one container with thousands of de minimis shipments that's pre-labeled for postage, whether it's US postage or UPS or FedEx, and those things, as soon as they're released from us, they enter the domestic stream and they go off from there.

John Wagner:

But those are all individualized transactions. It's not one big bulk transaction. Correct, right, correct In terms. What are some of the challenges? Like you're seeing with the change to a big focus on these types of shipments coming in, like what's the volume coming in?

Shane Campbell:

So for fiscal year 23, we had over a billion shipments, de minimis shipments with a B, with a B Right. That is that's you and that's that's a lot of like stuff to target and to examine. It really is. And I, when you ask about challenges, what challenges come along with, just you know the workload right for what we have to deal with, but also the data that goes along behind that. I'm sure you know Joe will go into that a little bit too but sometimes we're not getting the appropriate data or all of the data that we could get, as we would have with prior. You know, customs type shipments, because we knew then who the end user would be. It wasn't a billion different shipments with a billion different end users, it was what's smaller for us to target better to handle, easier hand right.

John Wagner:

So, Joe, from your perspective, working at the national targeting center now, like, what are you seeing with? Why is why is bad data a bigger problem? And what are the risks you're seeing in this type of cargo, besides the Traditional stuff of you know, counterfeits and I PR violations and all kinds of other agency violations and we could talk about fake postage, right. But like, what are some of the real consequential threats you're seeing in this environment to, and how does the data relate to that?

Joseph Draganac:

So I think it's important to understand the way CBP has really, you know, looked at it from the form of formulation of NTC and prior is the requirements for advanced information, advanced data, to really segment risk. Without that information, to be able to identify high risk indicators or previous violators and put them into our targeting system, to identify amongst this large stream. So you take that billion a year and just get that down to every day. Millions and millions of packages every day Don't have enough officers to be able to go out there and examine every single package. So we really need to, you know, find, find that needle in the haystack, and the easiest way to do that and our mind is to remove the haystack and that's with quality data to be able to apply analytics, predictive modeling. You know People like to throw out artificial intelligence is the new norm and all that, but we had something we've been doing for a long time. So it's contingent upon accurate data to do there.

Joseph Draganac:

While we can look at, through post seizure analysis, high risk indicators and different things like that, of things that you know, supply chain networks and nodes that are utilized to be able to identify those that may be high risk, without that accurate, that data. It's hard and we see the gambit of everything. You know much of this large consolidated shipments and that is used to smuggle everything from forced labor through IPR, through fentanyl precursors, pill presses. We don't necessarily anymore see the finished fentanyl, like we used to back in the day. It's mainly those production materials that transit through the US to make their way down to production labs in Mexico, and so that's the key at CBP. We have a touch point, every part of that transportation node, and really we need to be able to apply those analytics to be able to take that data and crunch down those specific targets.

John Wagner:

Interesting. So, as far as precursors and you know what are some of the specific trends that you could maybe share with us as to what you're seeing and how, how do you hold the industry accountable to that? Because it all gets back to the data too, right?

Joseph Draganac:

So a lot of what we've seen in the precursor world. Of course you know a lot of the production materials overseas in China and the other locations on there, predominantly in China, and just the way the supply chain networks work. Much of that freight transits through other countries. A lot of this is post COVID, where there weren't a lot of direct from China flights to the US at the time. So you saw a lot transiting through South Korea and other locations on there. This is where our partnerships are key Our industry partnerships, our international partnerships and our other law enforcement and domestic partnerships. But then they would come into the US, like Shane said.

Joseph Draganac:

So you have these large consolidated shipments. I wish I had a picture. So one multiple pallets could be anywhere from 800 to 20,000 boxes and one consolidated shipment under one bill of lading, and then in those boxes you open up those boxes. It's like the nesting doll, you know. You open up a box, there's another box, you open up a box, there's another box, and all those have pre-printed labels. So as soon as they deconsolidate that shipment, they scan it in and it hits that domestic stream of commerce.

Joseph Draganac:

So it's really rapid moving to understand that not, we can't intercept, we can't examine everything that freight needs to move quickly, the time it takes on there. So without that information, it's key and that's where we go back to our industry partners too to say if we aren't getting accurate information and data and what we're required under the legislation and law, how do you know what's in your planes, like, how do you know what's on your ships? How do you know what's in there that really we need to work together to kind of better understand to protect that aircraft, to protect that ship, to protect what's coming in and protect, ultimately protect American people. So that's key to really get industry to understand the self-regulation piece on this and really, at the end of the day, the ownership of that.

John Wagner:

So the boxes within the box are not manifested.

Joseph Draganac:

Correct, so many times we will not see the true parties it's going to. Shane talked about de minimis, where the requirement is that end user and many times we don't necessarily see that on there. So that's where we look for other discrepancies in the data that we can apply predictive modeling and other stuff to be able to identify.

John Wagner:

So someone just takes the box, opens it up, dumps it into the mailbox and all the other sub-packages get delivered, but you don't have visibility into what was in those originally right.

Joseph Draganac:

Correct, and that's where we're working with many of those what we call last mile carriers, those that once that package of scan gets put on a FedEx, ups, postal, dhl, whatever truck on there and gets delivered to that end user. That's where we have to collaborate with industry as well to kind of identify how these supply chain networks. And then, once we latch onto a certain illicit supply chain network, guess what it's changing. This is where using intelligence and other information to be able to predict those shifts in supply chain patterns is key.

John Wagner:

Right. So Shane, like Joe, mentioned the industry partnerships, and so what role can industry play in this? What's the expectations the government levies on them? I mean, you got brokers, you got airlines, you got transportation entities, but their customers are telling them hey, this is one box, there's not 10 inside here, right.

Shane Campbell:

Well or more right. So I literally just left a meeting with one of our partners who is one of the end shippers, and they were describing how this impacts their business too. Because they get a phone call and they are told hey, we have 5,000 boxes that you need to come pick up because they're waiting for UXYZ company to come pick these up and ship them. And they have no idea, they have no pre-notice. This is coming and suddenly they're trying to round up semi-trucks to go pick up these de minimis shipments to bring them someplace else. So it doesn't just impact us at CVP, there's a huge impact along the supply chain. So the best thing that I can say, or the easiest way I can sum it up, is you have to know who you're doing business with and you have to understand what their business actually is, so that you know, when you see something, whether you're taking it as a broker, you're taking it as a carrier, you're doing the final shipping. You know what it is that you're putting in your plane, on your boat, in your truck, wherever it is right, because there is a reputational risk that goes along with that too. Along with the national security risk, there's the reputational risk for these industries because you don't want to be associated with bad stuff, right? You don't want it for your reputation, your stakeholders, your bottom line profit margin, right?

Shane Campbell:

So I think there's ways that we could step up and partner together, and that's what we're looking for is, how do we better share information with you, with our tradeholders, with our trade partners, but also how do we get information from our trade partners, too, because there's a lot of data in Intel that really could help. I'm going to pick on Joe Joe's team and their targeting aspect, right, but also our ports of entries and our ports of entry and others, so that they can better figure out what it is that they need to look at. One billion is a big number. That's a lot of boxes to have to open up, and so we'd rather not have to do that, but rather let's focus on the true targets that we have. But we have to whittle through that, and it's easier to do that with data.

John Wagner:

Right and I mean CBP's got great history with the CTPAT program right and being able to have the known entities document their supply chains, secure their supply chains. It gives CBP reach into entities they don't necessarily directly regulate through that and you incentivize the industry to take these extra measures and secure that supply chain and remove some of the rotten hay from the haystack. So it's smaller.

Shane Campbell:

Yeah, you do. It's a great program. So currently over 10,000 members within the CTPAT program and we help with those entities. We do validation, so we go and we interview folks, we see their facilities, we help them realize some best practices that we know as an entity but also that other folks within their industry know. So if you're a shipping company, we can help share some of the best practices from shipping company to shipping company under the CTPAT program so that we can help better secure the supply chain. And that's the key is that, and that's what I mean when I say know who you're doing business with. That's securing the supply chain, which is good for us.

Announcer:

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