Cargo Security is Everyone's Business, Experts Say
Global logistics systems ''are incredibly vulnerable, and?incredibly valuable''
NEW YORK - 10/25/04 - The effort to secure and still reliably and cost-effectively move shipments of goods around the world must involve not only governments, but also manufacturers, suppliers and transportation experts at every point in the supply chain.
That was the conclusion of a recent meeting of top security experts and business leaders who met recently in New York to discuss the best ways to strengthen a global supply chain which links 4,000 ocean ports with 46,000 ships carrying 5.8 billion tons of cargo shipped in 11 million containers every year.
With 80% of the world's cargo shipped in containers by sea and the economic loss from the detonation of a weapon of mass destruction (WMD) shipped via container estimated at $100 billion, terrorism and theft have become global risks of daunting proportions, they said.
"After 9/11 it became apparent to everyone that a major task lay ahead: that is the task of securing international supply chains so that global trade can occur at the rate it is and grow at the phenomenal rate it does every year," said Peter Tirschwell, editorial director of the Journal of Commerce.
Until the terrorist attacks of September 11, 2001, he said, "very little attention had been given to that question."
Stephen Flynn, a retired US Coast Guard Commander and author of the recently published book, "America the Vulnerable," said "one of the issues of our time is, 'How do we protect global networks that are increasingly susceptible to our adversaries' targeting and exploiting them?'"
"The fundamental thing we have to come to grips with here is that supply chain visibility and accountability is something that is central for security to be able to police systems," Flynn said. "The more efficient the systems are, the less time there is for bad guys to do bad things."
Al-Qaida and other terrorist groups "are bent on attacking modernity as well as attacking dominant military, economic and cultural powers," he said.
The US depends upon global networks that lie largely outside its territory - transportation, logistics, finance, energy, intellectual capital and information, Flynn said. "The systems are incredibly vulnerable, and they are incredibly valuable," he said. "They are the global networks that underpin basically the generation of wealth on the planet."
Worldwide imports and exports now each amount to about $6.5 trillion a year, said Joseph McGrath, president and chief operating officer of the Unisys Corp.
Countries around the world, he said, "are economically interdependent. Being economically interdependent, they are therefore equally vulnerable" to disruptions in the supply chain whether from a strike, natural disaster or terrorism."
When a container comes into the port of New York, for example, "We must be sure it is Nikes, not nukes," McGrath said, contrasting the Nike brand of sneakers with nuclear weapons.
"Private and public partnerships are probably more critical in this area than any other area in government because it truly needs to be seamless and it needs to deal with all the regulatory and risk management issues," McGrath said.
McGrath said that the typical shipping container can pass through 17 handoffs, each posing a new risk.
He used as an example a cargo shipment from Karachi, Pakistan, destined for an Illinois department store.
The delivery of 75,000 shirts in 600 cartons involved four modes of conveyance - truck, container truck, feeder vessel and container ship. The cargo went through the territories of Pakistan, India, Sri Lanka, Canada, and the US, and crossed the Suez Canal, the Arabian Sea, the Mediterranean Sea and the Atlantic Ocean.
The shipment took a total of 75 days.
At any point along the way, he said, there is a risk of theft or of smuggling illicit drugs, weapons such as AK-47s or rocket-propelled grenades or of hitchhikers such as the presumed terrorist who was found hiding inside a container with airport maps and a phony mechanic's identification.
Elaine Dezenski, director of cargo and trade policy at the US Department of Homeland Security, said, "We all agree that the number one threat we are dealing with is weapons of mass destruction. That is a given... where it comes in terms of vulnerabilities along the supply chain could be at any point and it deserves a zero-tolerance approach."
US policy "has been moving toward 100 percent screening for WMD through radiation detection," Dezenski said.
It is simply not possible to inspect every container, she said, pointing out that the problem has forced governments, port authorities and companies to devise ways to use information, risk assessment, technologies, and human resources to pinpoint high-risk cargo.
"Information is critical in that we need the best information out there to make a risk assessment on cargo coming into the country," Dezenski said. "It is the integrity of that information combined with intelligence and other types of information that we use to make a determination on the admissibility of a piece of freight."
"The better that information is, the earlier we get that in the supply chain, the more robust our decision can be in terms of making that admissibility decision," she said. "That is why we need it sooner, earlier, in order to make that risk assessment decision which will allow us to focus the resources we have more effectively."
Norman Inkster, a noted security expert and former president of Interpol, the worldwide clearinghouse for police information, said that the realities of business in the 21st century is that Western countries have outsourced much of what their economies need to areas of the world that are more dangerous and over which they have very little control in respect to securing the supply chain.
The major challenge for international business now is assessing the ability of any country to deal with the problem of securing the supply chain when determining how much to outsource, Inkster said.
Dezenski and Inkster agreed that neither governments nor industries can do the job alone, that both have to share the responsibility. And that goes for both developed and developing countries, they said. There is a need for an internationally approved set of standards, they said.
"Governments have the responsibility to develop programs...shippers have a responsibility to carry them out," Inkster said.
The participants said that the US has accomplished "a lot" in the three years since the terrorist attacks of 9/11.
Specifically, they said, the US has instituted a "24-hour rule" that requires cargo manifests be given to US Customs agents 24 hours before the container leaves port for the US; forged partnerships with foreign ports for the inspection of cargo outside the US; and made improvements in technology to inspect cargo.
One unusual outcome Tirschwell said, has been that the private sector, contrary to its usual position, is advocating more government regulations, both to set standards for and to regulate security requirements.
"Today we have a voluntary system that needs to be made more secure," he said.
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