Fair Use/etc...
(from IBD, no url)
A COMPUTER-AGE TRADE
MELTDOWN? Aging Gov't System
Could Hit Just-In-Time Economy
Date: 9/14/99
Author: Daniel J. Murphy
How's this for a pre-Y2K problem: Soaring imports threaten to
overwhelm Uncle Sam's computers used for counting goods
entering this country.
Sound far-fetched? It's not. The government's mainframe
computer that does the chore has been running at full tilt for
several years. According to computer experts and trade officials,
the system stands near collapse.
It's a new kind of trade problem -one posed not by protectionists,
but by processing power and politicians facing a challenge unique
to the information age.
And the stakes are high. The U.S. Customs Service and
businesses agree that any breakdown of more than a few hours
could cost U.S. companies that rely on just-in-time delivery lots of
money.
How? If key parts get stuck at the border, some factories might
have to close down. Some might have to take permanent losses.
The ripple effect could cost the economy billions of dollars.
On the export side, things are little better, though experts agree the
threat isn't as great.
Despite the threat to the economy, little has been done. The White
House, Congress and Customs have dragged their feet on
spending the estimated $1.5 billion it will take to put a new system
in place. The delay is putting the flow of goods at peril.
At least three so-called brownouts already have occurred. More
may be on the way.
Known as the ACS, for Automated Commercial System, the
computer hobbles along in its 15th year of operation in
Newington, Va., a quiet Washington suburb.
When it was brought on line, imported goods into the U.S. were
$332 billion. Now nearly $1 trillion in goods from the around
world land on these shores every 12 months. Observers agree that
the system did well what it was designed to do for years.
Not anymore. In the past year, the sorely overburdend system has
flashed warning signals that it's hit the end of its capacity.
The computer first went on the blink Sept. 14, 1998, leading to a
six-hour shutdown, according to Customs officials familiar with
the mishaps. It took three weeks to catch up inside Customs.
The second hiccup took place a little more than two weeks later.
This time, the system stuttered along over a two-day period.
'Customs got so many jobs in at one time, their system locked up.
And the only way that they could unlock their system was just
close it down and erase all the jobs,' said Bill Ansley, president of
Samuel Shapiro & Co., a Baltimore customs broker and freight
forwarder.
'So, in effect, they blew away our request to process these
transactions. And we had to resubmit those.'
The computer crashed again several times last winter.
This summer, Customs responded. It ran a simulated computer-
shutdown test in the ports of Charleston, S.C., and Savannah, Ga.
Instead of using the computer, officials counted the old-fashioned
way, with pen and paper.
The results? After just six hours, backlogs exploded. And after a
theoretical 30-day shutdown of the computer, cargoes would have
been delayed by as long as eight days in port - an intolerable
situation for companies that depend on precisely timed delivery of
goods.
Observers compare a potential computer outage to a traffic jam
caused by an accident. A fender-bender might take just a few
minutes for cars traveling right behind it to pass. But vehicles lined
up, say, a mile away would likely wait much longer to clear the
congestion.
The same logic applies to cargo, including high-priority farm goods
that could spoil.
'The breakdown of a computer requiring paper entries would
cause significant disruptions and delays,' said Don Zarin, the top
international trade lawyer for the firm of Dechert, Price &
Rhoads. 'Any delay of 24 or 48 hours would have a very
significant impact on companies.'
Customs broker Arthur Litman explained the risk to auto
companies using just- in-time methods across the Canadian
border.
'A few hours could be the difference in shutting down a line, or
half a day maybe,' said Litman, vice president of Buffalo,
N.Y.-based Tower Group International.
'It turns out that Customs on the Canadian border is very
sensitive to this,' Litman said, noting officials have found other
ways to keep the trucks moving across the border.
But there are limits to what officials can do if the customs network
shuts down for a long time. Emergency funds for added
processing power and data capacity have been widely labeled
band-aid fixes.
'From what I've seen in the past, they've answered the problem,'
said Peter Powell Sr., CEO of C.H. Powell Co., a Westwood,
Mass. customs broker, referring to the Customs Service. 'But if
the problem emerges again six months from now, I just have no
idea if they will be able to basically handle it in the same way.'
The problem has mostly been kept out of public sight.
New York City customs lawyer Matt Gold spoke on the computer
system's woes before a group of international trade lawyers at the
American Bar Association's annual meeting last month in Atlanta.
'They were completely unaware that the problem is looming,'
Gold recalled. 'Outside the customs community, there's practically
no awareness of the problem.'
Right now, there's little talk about solving the problem. Officials
are wary, after seeing the computer fiascos that plague the Internal
Revenue Service and the nation's air traffic controllers.
The House Ways and Means and Senate Finance committees this
year did authorize funds for the new Automated Commercial
Environment, or ACE system.
But 'those committees both oversaw the problems . . . with the
IRS,' Litman said. 'Since they've already been through that
experience, they're being particularly cautious with Customs.'
President Clinton's budget this year asked for user fees to pay for
a new, faster computer. But that prompted bitter complaints from
brokers, who say they already pay user fees to the U.S. Treasury.
And getting Congress to act won't be easy.
A meeting held last week by Rep. Jim Kolbe, R-Ariz., of the
Appropriations Committee, held out the possibility of only modest
funding, leaving some frustrated.
'They've just got to understand that these are bricks-and-mortar
kind of issues that you've got to spend money on and do or there
will be consequences,' said Barry Nemmers, chairman of the
American Association of Exporters and Importers' Customs
Committee.
While possible snags in processing imports give businesses fits,
both Customs and the Census Bureau also face a Y2K problem on
the export side: At year's end, they will replace a 25-year-old
system for exports out of service.
The front-line trade agencies worry that firms won't switch to the
new Automated Export System fast enough. If so, companies
could be forced back to filling out forms the old-fashioned way -
with pen and paper. Again, that could create massive backlogs of
goods and hurt U.S. trade.
Customs' Outbound Programs Director Peter Baish described the
process of signing up as 'fairly simple. But if everybody waited
until November or December, you know we only have a limited
amount of people. Between us and Census, we could have a
problem.'
He explained that in June about 216,000 product shipments per
month were leaving U.S. shores under the new AES system,
compared with 1 million on the old one. Baish said he had hoped
for about twice that amount.
The poor performance led Customs Commissioner Raymond
Kelly to take out ads nationwide to alert corporate America to the
switch.
'I would like to have a half- million (product shipments) a month
by November,' Baish said.
(C) Copyright 1999 Investors Business Daily, Inc.
Me
|
