Air Cargo Americas Congress & Exhibition 2006: TSA Cargo Security Update March 2, 2006

1. Air Cargo Americas Congress & Exhibition 2006:TSA Cargo Security UpdateMarch 2, 2006 Pam Hamilton Acting Assistant General Manager, Cargo Programs

2. MARITIME RAIL GENERAL AVIATION HIGHWAY AIRLINES TRANSIT AIRPORTS CARGO PIPELINE • ASYMETRIC • DYNAMIC • GLOBAL MARITIME RAIL GENERAL AVIATION HIGHWAY INTERNATIONAL TSNM AIRLINES TRANSIT AIRPORTS CARGO PIPELINE INTERNATIONAL INDUSTRY • ASYMETRIC • DYNAMIC • GLOBAL

4. TSNM Cargo Office

5. Mission Statement Securing the Nation’s cargo and postal supply chains—including cargo, conveyances, facilities, and personnel—through layered, risk-based security solutions that impose significant barriers to terrorists while maintaining the unimpeded flow of commerce.

6. Cargo Office Executive Summary • Risk-based, layered approach to cargo security - Balances twin goals of enhancing security without unduly impeding the flow of commerce • Inputs from private sector partnerships critical • 3-pronged approach - Policy changes raise requirements for regulated parties, and expand regulatory coverage across the air cargo domain - Day-to-day operations assess compliance through innovative and targeted programs and “boots-on-ground” audits - Technology used to automate previously manual security processes, harden existing programs, and add new capabilities

7. Airport AOA Indirect Air Carriers (IACs) Known Shipper Manufacturers,small businesses,individuals… Air Cargo Flow ~ 450 Airports ~ 3,800 IACs ~ 1.5M Known Shippers Goal: Maintain Cargo Integrity Scope: On-Airport Operations Countermeasure Focus: Physical Security Goal: Filter Elevated Risk Cargo/Ensure Industry Compliance Scope: Off-Airport Operations Countermeasure Focus: Data/System Centric Assessments Security Strategy Pre-Screen Cargo for Risk Freight Assessment System pre-screens 100% of cargo, identifies elevated risk cargo shipments, and flags cargo for inspection by the air carrier • People • Secure Access by: • Access badges • Employee checkpoint screening • Security Awareness Training • Cargo • Secure Shipment by: • External visual examination • Cargo screening (ETD, EDS, • canine, physical) • Tamper-resistant seals Vet and Certify IACs Verifies legitimacy of businesses and ensures that IACs meet TSA security requirements Establish Known Shippers Central TSA database collects and stores records of shippers who have met TSA regulations to ship via passenger air carriers Countermeasures(Current and Potential) Conduct Regulatory Inspections Inspects IAC facilities and security procedures through scheduled and unannounced inspections Low Risk Cargo • ConveyanceSecure Aircraft by: • Canine • Aircraft search • Restricted access to aircraft • Regulatory inspections • FacilitySecure Facility by: • Access Control • LEO Patrols • Canine • Enhanced perimeter security • Regulatory Inspections Vet Known Shippers Validates shipper legitimacy by vetting against government and commercial databases Vet IAC Employees Conduct STAs on company officers and employees with unescorted access to cargo Conduct Known Shipper Audits TSA inspectors verify IAC and air Carrier compliance with Known Shipper Program requirements

8. Final Regulations Raise the Security Bar • Air Cargo Final Rule is in executive clearance, with release expected within the next few months • Represents a consensus “government – industry vision” of the desired post 9/11 air cargo security baseline • - Will be first substantive change to air cargo regulations since 1999 • - Very significant – and necessary! – changes impact all segments of the industry • Will provide the foundation for roll-out of 7 completely revised security programs, which will implement these regulatory changes • - Compliance timelines established as 90 and 180 days after the security programs are finalized • Programs currently under development to provide the infrastructure needed to implement key requirements: centralized Known Shipper Database, Security Threat Assessments, and IAC training program

9. On-Going • FAS • Final Rule • Known Shipper • IACMS • S&T Pilots • Reg. Inspection Terminal KnownShipper Conveyance CountertoCounter DynamicResponse IAC Air Carriers Inspections Training Industry to Improve Security & Threat Awareness Closing Policy Loopholes Leveraging Airport Security Assets More Effectively 1. Exempt Cargo • Cargo Facility Best Practice • Regional Industry workshops • Training Program • Canine • TSA Inspection and Screening Assets • FAMs • PR/Internal Affairs“Red Team” • Inspections • SIDA Initiative • Three Underlying Principles • Community policing model • Target high-risk nodes • Control the inner perimeter

10. Near Term Cargo Initiatives Among the many ongoing passenger cargo initiatives, 4 are receiving additional focus and resources in a “surge” environment. Selected because they: • Have been identified (based on input from field inspectors, cargo industry experts, and threat analysis) as the highest consequence vulnerabilities within air cargo • Apply specific focus to specific challenges, target a specific population and node (close to and within the AOA) in the air cargo supply chain • Can produce tangible security benefits in 90 days • Require additional resources beyond current cargo team to be successful Surge Initiatives Leveraging Airport Security Assets More Effectively Training Industry to Improve Security & Threat Awareness Promoting Air Cargo Success Closing Policy Loopholes (i.e., Exempt Cargo)

11. Questions and Comments