Consider the following scenario: Kellogg’s distribution ofcereal products to customers in Guatemala is coordinated throughCrowley Maritime Corporation, a U.S.-owned and operated third-partylogistics company (3PL) with a distribution centre in GuatemalaCity, Guatemala. Orders for the Latin America region wereconsolidated, and aggregate orders were placed with Kerry Inc. inGridley, Il. Kerry Inc. shipped consolidated orders, palletized andlabelled by distributor, by intermodal to Mexico City, at whichpoint trailers with orders for distributors in countries south ofMexico were moved over the road. Crowley’s general manager inGuatemala City advised Kellogg’s head office personnel in BattleCreek, Michigan that they had identified approximately 140 palletsof salmonella-contaminated cereal products still in wholesaleinventory in Guatemala. Unfortunately, despite FDA recommendationsfor disposal, government officials in Guatemala, upon learning ofthe recall through their government Facebook account, had contactedCrowley and insisted that no contaminated food products be disposedof in Guatemala. Furthermore, since the contaminated products hadbeen shipped from the United States, Guatemalan authoritiesinsisted that the contaminated products be returned to the U.S. fordisposal. Kellogg’s Supply Chain Manager had already spoken withtheir freight forwarder and customs broker regarding arrangementsto return the contaminated products to the U.S. Mexican authoritieswould not allow the contaminated products to transit throughMexico, which left marine transport as the only economically viableoption to ship the contaminated products from Guatemala to the U.S.Kellogg’s customs broker had placed a call to US Customs and BorderProtection (CBP) for advice since the returning goods would belabelled “CONTAMINATED – Not for Resale – Goods returned fordisposal onlyâ€. Since the returning shipment would not be subjectedto the same level of scrutiny as a commercial shipment, CBPexpressed concerns that someone might target the shipment forsmuggling or terrorism reasons. As a result, CBP stated they wouldonly allow the shipment to enter the US if the origin port wascompliant with the International Ship and Port Facility SecurityCode (ISPS) and the Container Security Initiative (CSI).
c) Identify and describe the relevant cargo securityprograms that are involved in the reverse logistics scenariodescribed above For example:
i) In which security programs would membership likely benefitCrowley, Kellogg’s USA, and Kerry Inc.? Why? (5 points)
ii) What would the Harmonized Code, and rate of duty, be whenreturning these goods to the US? Provide the appropriate reference.(5 points)
