Alternative Sea Cargo Reporting Business Case Development Project Approach Version 2.2 Prepared by Cargo Projects Team,

1. Alternative Sea Cargo Reporting Business Case Development Project Approach Version 2.2 Prepared by Cargo Projects Team, 22 February 2007

2. This project has been established to develop a costed business case for the possible introduction of an alternative sea cargo reporting regime, based on the US and WCO models for pre-load cargo reporting In the latter half of 2006, a joint team of industry (AFIF, CBFCA and SAL) and Customs representatives developed a preferred model for future sea cargo reporting, based on the US pre-load reporting model. The Cargo Processing Steering Committee (CPESC), chaired by Customs’ CEO, considered the model in December 2006 and has authorised further work to establish a business case and define economic impacts if the model were to proceed to implementation. This will include further work over the next six months to scope and cost the required legislative, systems and process changes. This document outlines how the business case will be developed, including core principles, deliverables, schedule and co-development working arrangements between industry and Customs. It should be read in conjunction with the Alternative Cargo Reporting Feasibility Study, developed by the project team in 2006 for the CPESC. The Project Brief is the formally approved document for this project. This Project Approach document is a summary of the Project Brief designed for broader distribution to industry and Customs working groups.

3. The following principles should be used to guide development of the ACR business case All work products are to be jointly developed with industry and Customs: an open and collaborative environment is essential We are developing a business case – it needs to be an impartial assessment of benefits, costs and risks. A decision on whether to adopt the Alternative Sea Cargo Reporting Model has not been made and will be informed by this business case The business case only needs sufficient detail for the executive to make an informed decision, supported by industry. Only issues that have a major impact on industry or government support, costs, risks or benefits need to be resolved for the business case. We will develop and release key concepts early – details can be fleshed out later, once we have support from stakeholders for the major elements We will take a pragmatic approach before a purist or theoretical approach to the model to ensure widespread industry support All models must support the statement of direction and benefits contained in the original Feasibility Study “The determinant of our success will be the quality of the questions we ask”

4. There are four major streams of work involved in the development of the ACR Business Case to enable a well-informed decision to be made on whether or not to proceed with an implementation of an Alternative Model. All streams require consistent stakeholder engagement, project management and governance Investigation and analysis • Data Element Review • Detailed review of US elements & structure • Mapping of Customs/AQIS requirements to US SCR to identify unique requirements • Analysis of Aust data quality requirements and current US model data quality • Use of bay plan within Customs • Overseas Compliance Models • Implementation lessons learned • Effectiveness of compliance regime on report timeliness and data quality • Proposed EU and UK models • Operational model costs, effectiveness & limitations (targeting, enforcement, facilitation etc) • US Safe Port Act Assessment • High level conceptual model • Opportunities for 10+2 to improve proposed pre-load model • High level assessment of impacts, benefits, issues and risks associated with model • Business Process Assessment • Understanding the detailed business processes associated with cargo movements and reporting (process mapping) • Understanding process changes across the range of scenarios affected by ACR Model Development • Data Model • Definition of new Sea Cargo Report • Modifications (if any) to Import Declaration • Modifications (if any) to proposed ACP Request for Cargo Release • Modifications (if any) to SACs and/or UPE • Agreed message format (ANSI/EDIFACT) • Bay plan transmission (when/who etc) • Compliance Model • Compliance outcomes required (timeliness, data quality, management overhead, information requirements) • Penalty and incentive regime • Impact on other programs (ACP, AEO etc) • Required legislation • Impact on other freight types (air etc) • Status Service Level • Agreed service levels with industry across a range of scenarios • Impact of the service level on Customs’ operations and industry • Implications of not meeting service level • Operational Model • Industry practices – carriers, brokers etc • Customs practices – cargo ops, targeting, compliance, enforcement, CI&SC • Impact of split models across cargo types • Resource requirements (staff, premises, support services etc) • Business continuity plan • Technical Architecture • ICS (inc CCF), CRE and FRAM system and database changes required • Supporting infrastructure • Impact on industry software developers • Impact on air cargo reports and processes • Changes to interfaces (AQIS etc) • Impact on historical data Implementation Planning • Transition Arrangements • Agreed transition arrangements & timing (port, country, region, carrier?) • Transitional compliance model, including legislation • Transitional operations model (industry/ACS) • Transitional systems model • Implementation Plan • High level business transformation plan • High level schedule • Resource requirements for implementation • Supporting resource requirements for operations (staff, premises etc) • Costing Model • Implementation costs • Transitional costs • Operational costs • Non-financial (or measurable) impacts • Customs’ costs considered in this deliverable • Risk Model • High level risks associated with implementation and ongoing operations • High level risks associated with changing global environment (US Safe Port Act, EU pre-load legislation, security events etc) Business Case Development • Economic Impact Assessment • Defining benefits and costs to Australian industry of the preferred model • Defining “winners and losers” in the model • Impact on other freight types (air, post etc) • Industry costs considered in this deliverable • Border Security Assessment • Analysing the impact of the preferred model on Australia’s border security • Final Report • Summary document, including recommendations as to whether or not to proceed and next steps

5. The business case development requires significant input and resources from other Branches within Customs. Branches with delivery responsibility for a task have been identified accordingly. Separate Statements of Work providing more details on workstreams and branch and industry involvement have been prepared. Investigation and analysis • Data Element Review • Cargo Strategic Development (delivery) • Cargo Operations (reporting policy) • Cargo IE&US • Compliance • Targeting • Enforcement and Investigations • Applications and Information Management • Overseas Compliance Models • Cargo Strategic Development (delivery) • Cargo Operations • Compliance • US Safe Port Act Assessment • Cargo Strategic Development (delivery) • Views from other branches will be sought • Business Process Assessment • Cargo Program Management (delivery) • Cargo Strategic Development • Targeting • Compliance • Cargo Operations • Cargo IE&US Model Development • Data Model • Cargo Strategic Development (delivery) • Cargo Operations • Cargo IE&US • Targeting • Applications • Information Management • Compliance Model • Compliance (delivery) • Customs Legal Unit • Cargo Strategic Development • Cargo Operations (reporting policy) • Cargo IE&US • Status Service Level • Cargo Strategic Development (delivery) • Targeting • Cargo Operations • Cargo IE&US • Operational Model • Cargo Strategic Development (delivery) • Targeting • Cargo Operations • Cargo IE&US • Compliance • Applications • Technical Architecture • Applications (delivery) • Cargo Strategic Development Implementation Planning • Transition Arrangements • Cargo IE&US (delivery) • Cargo Branches (Strat Dev, Prog Mgt, Ops) • Compliance • Applications • Targeting and Intel Strategic Development • Implementation Plan • Cargo Program Management (delivery) • Cargo Branches (Strat Dev, Ops, IE&US) • Applications • Targeting and Intel Strategic Development • Compliance • Costing Model • Cargo Program Management (delivery) • Cargo Strategic Development • Applications • Risk Model • Cargo Program Management (delivery) • Cargo Branches (Strat Dev, Ops, IE&US) • Targeting and Intel Strategic Development • Compliance • Applications Project Support Provided Throughout Project by Cargo Program Management Branch ICS Business Intelligence/Data Analysis Provided Throughout Project by Applications Branch Business Case Development • Economic Impact Assessment • Cargo Strategic Development (delivery) • Outsourced consultancy • Cargo IE&US (providing data) • Applications (providing data) • Border Security Assessment • Cargo Strategic Development (delivery) • Outsourced consultancy?? • Intelligence & Targeting Division • Enforcement & Investigations Division • Final Report • Cargo Strategic Development (delivery)

6. The business case development will also require significant input and resources from industry and other agencies All workstreams will be reviewed by the Working Group. Significant input has been anticipated from industry in the following areas. Separate Statements of Work providing more details on workstreams and branch and industry involvement have been prepared. Investigation and analysis • Data Element Review • Negligible resources required from industry • AQIS (minor input) • Overseas Compliance Models • Negligible resources required from industry • US Safe Port Act Assessment • Views from industry and AQIS will be sought • Business Process Assessment • All parties to provide input and review Model Development • Data Model • SAL (major input) • CBFCA (major input) • AFIF (major input) • AQIS (minor input) • Compliance Model • SAL (major input) • CBFCA (major input) • AFIF (major input) • Stevedores (minor input) • Status Service Level • AFIF (major input) • CBFCA (major input) • Stevedores (minor input) • Operational Model • All parties to provide input and review • Technical Architecture • SAL (minor input) • CBFCA and AFIF (minor input) • Software developers (minor input) • Stevedores (minor input) • AQIS (minor input) Implementation Planning • Transition Arrangements • SAL (major input) • CBFCA (major input) • AFIF (major input) • Stevedores (minor input) • Software developers (minor input) • AQIS (minor input) • Implementation Plan • SAL (major input) • CBFCA (major input) • AFIF (major input) • Stevedores (minor input) • Software developers (minor input) • AQIS (minor input) • Costing Model • Negligible resources required from industry • Risk Model • All parties to provide input and review Business Case Development • Economic Impact Assessment • All parties (including ACCi members) to provide significant input (data to the consultancy) • Possible input from other agencies may be required (DFAT, DITR, Treasury etc) • Border Security Assessment • Negligible resources required from industry • Other security agencies may require input • Final Report • All parties to provide input and review

7. Major Decision Point: • Include 10+2 into preferred model • Include 10+2 as option • Defer further consideration of 10+2 Major Decision Point: Agreed data elements, report structure and compliance model This indicative schedule shows most activities running in parallel to achieve an August reporting timeframe. Further time compression would risk a quality outcome, given current resource constraints. Two major checkpoints have been introduced to manage the project’s major risks (refer risk register later in this document).

8. The project governance and operational model will involve management and oversight across industry and Customs Trade Facilitation Program Board • Cargo Processing Executive Steering Committee • Customs: Executive Officers • SAL: Michael Phillips (Chairman) • AFIF: Fritz Heinzmann (Chairman) • CBFCA: Bob Wallace (Chairman) • CAPEC: Jeff Fairburn (Director) • ACCI: John Collins (senior representative) • Meets quarterly to review significant progress and issues (such as data element and 10+2 decisions). Approves business case at conclusion of project. • Project Program Board • Snr Executive Chair: Jane Bailey (ND, Cargo Div) • Cargo Strat. Dev. David Leonard ( NM) • Cargo Operations: Matthew Corkhill (NM) • Cargo Program Mgt: Craig Langford (NM) • Cargo IE & US: Jo Corcoran (NM) • Compliance: Sharon Nyakuengama (ND) • Targeting: John Valastro (NM) • Applications: Michelle Kinnane (NM) • Meets monthly to approve workstream deliverables and project progress. Escalation point for internal and industry issue resolution Program Governance Oversight Customs Project Sponsor David Leonard National Manager Cargo Strategic Development Branch • Customs Working Group • Targeting: Julie Doensen (Director) • Compliance: Shane Davie (Director) • Applications: John Mostovoy (Director) • Cargo Operations: Bruce Smith (Director) • Cargo PM: Dane Cupit (Director) • Cargo IE&US: Steve Moore (Director) • Naa Opoku (Director) • Meets weekly to review workstream progress and manage inter-dependencies and issues. Members of the Working Group will also be leading or assisting with the development of the various models • Industry Working Group • SAL: Alan Brundish (GM Cosco Shipping) • Alan McDermid (GM Border Agencies) • CBFCA: David Katte (Director BCR Freight) • Paul Zalai (Mgr Freight & Bus Ops) • AFIF: Brian Lovell (CEO) • Stevedores: Adrian Sandrin (GM Ports IT, Patricks) • Mark Dolan (Optimisation Mgr DP World) • AQIS: Lee Cale (Manager Electronic Systems) • Meets fortnightly or monthly to progress workstream deliverables and approve items before progressing to CPESC Customs Project Team Additional staff member required for oversight of Economic Impact Assessment • Customs Regional Advisory Group • Stephen Pearce (Victoria) • Michel Cafun (Queensland) • Peter Stankiewicz (NSW) • Meets monthly to provide regional operational input to the model development and implementation planning phases. Meetings may be combined with Customs W/G Meetings

9. It is critical to get the right mix of workshop participants in order to deliver a quality outcome in the timeframe available to deliver the business case. The following guidelines are designed to assist industry associations select the appropriate workshop participants and to support them appropriately during the process Customs’ executives may also find the above guidelines useful in selecting participants for the various workshops and the Customs Working Group. In this case, the Branch leadership takes on the equivalent role of the industry association in supporting the workshops and Working Groups

10. Issues that cannot be resolved at the Working Group level, and that the Project Team and/or Working Groups believe is sufficiently important as to affect the project outcomes, should be escalated to the Customs Steering Committee and/or the CPESC according to the following process. All other issues will be resolved at Working Group levels

11. The following risks and issues apply to the business case development.

12. While this project (to develop a business case) is unlikely to impact other projects running within Customs, the project will need to ensure that its proposed models are aligned with those being developed by the following projects

13. This project will specifically exclude examination or development of the following areas • Other transportation modes, such as air and postal freight • Major changes to bulk and break bulk cargo reporting • Changes to reports and processes outside of sea cargo reports and import declarations, except where required to accommodate the alternative cargo reporting model; specifically: • Underbond Movements • Progressive Discharge Reports • Outturns • Impending Arrival Reports • Unaccompanied Personal Effects declaration • Tactical ICS changes, except where noted in the original Feasibility Study Report (Version 2.0, December 2006) • Targeting and Profiling systems changes, outside of those required to accommodate new or changed data elements • Consideration of Australian exports • This project excludes preparation and/or presentation of a proposal to government. It is anticipated that any proposal to government will be developed after the final business case has been presented to the Customs Executive and CPESC.

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