Around 9 a.m. Eastern time on Sept. 11, 2001, U.S. Coast Guard Commandant Adm. James M. Loy was meeting with senior industry executives about the agency’s Deepwater program, the billion-dollar project to upgrade Coast Guard cutters and helicopters.
Earl Agron, who was to become APL’s head of security, was in a taxi in Singapore on his way to a meeting. The driver asked if he had heard about what had happened in New York, then turned on the BBC.
Carl Bentzel, staff maritime counsel with the Senate Commerce Committee, knew something bad was in the wind when he was having coffee with the committee’s aviation counsel and the official was called away to a phone call. Then another, and another: two planes had dropped off the grid, and officials were getting worried.
Ten years after al Qaeda attacked the twin towers in New York and the Pentagon outside Washington, any transaction that brings a shipper in touch with the international supply chain is permanently colored by September 11. A new world of security apparatus has been layered over the movement of goods, in a sense profoundly changing the levers of trade in the name of keeping commerce moving as seamlessly as it used to in the era before September 11.
Realted: Bonner's Freedom to Act.
Governments now require more information from shippers and carriers than they did before. Ocean carriers have formalized security practices more than they ever have, and air carriers have reformed their security structures continually, even as they’ve been targeted in attempted terror attacks as recently as last year. Shippers have screened thousands of workers and sought to extend their security programs deeper into intricate supply chains that stretch far back toward far-off suppliers.
U.S. ports have spent about $2.56 billion in port security grants in the 10 years since September 11, according to the American Association of Port Authorities, new bureaucracies have been born, and some $500 million has been spent creating a worker identification program that has produced 1.6 million identity cards.
It’s certainly created some sense of security: The shipping containers and air cargo shipments that pass through nuclear detection devices at airports and ports haven’t been the targets of terror attacks, as far as is known. But events such as the failed attempt to plant bombs on cargo aircraft last year in the Middle East and reports in government documents released by Wikileaks this year and in documents found in the raid on Osama bin Laden’s hideout show the world of shipping has remained on the terror target list.
But spending on security, at least from the U.S. government, is declining.
Federal grants to ports for security programs this year will be $15 million less than last year, and budget-cutting pressures in Washington could dig deeper and open what security advocates say would be new gaps in constantly changing distribution channels.
Ten years ago, it didn’t take long to demonstrate the shipping supply chain was vulnerable to terrorist attack. By the end of the day September 11, extra security measures backed up traffic 12 miles on the Canadian side of the Ambassador Bridge. Wait times jumped from 10 minutes to 10 hours. New York harbor closed, but within a day officials realized the region was running low on fuel that was delivered by tanker.
The fuel crisis caught the attention of members of Congress. They inundated the Senate Commerce Committee with calls for action, Bentzel said. The year before, Chairman Ernest “Fritz” Hollings, D-S.C., offered a maritime security bill to put into law the findings of a commission on seaport security. The biggest risks to security came from theft and smuggling. Terrorism was barely mentioned.
The bill got little traction, but was brought back quickly after the attack. “It was a wake-up call. Hollings called us in and said, ‘We’re going to do an aviation bill, a port security bill, and some kind of rail bill,’” said Bentzel, now vice president of Washington lobbying firm DCI Group.
The Maritime Transportation Security Act of 2002 was the second major piece of transportation security legislation to clear Congress. The first was the aviation security bill created by the Transportation Security Administration.
Federal agencies didn’t wait for directions from Congress. Within days after the attacks, members of the trade community were meeting with officials at the Transportation and Treasury departments, hammering out a security regime that wouldn’t strangle the flow of trade.
Customs Commissioner Robert C. Bonner was rolling out a five-point strategy topped by twin initiatives, the Customs-Trade Partnership Against Terrorism and the Container Security Initiative, which posted inspectors to foreign ports to help local officials locate high-risk cargoes.
Just days after the attacks, Michael D. Laden, head of Target’s in-house customs brokerage, was called to meetings at Customs. “The real telling part for me was how completely out of touch they were with reality of what a supply chain was and how it works,” he said. “At one point, one of them said, ‘We want Target to assure us that every vendor you do business with is secure and safe.’ I looked at him like he had eight heads. I said it would never happen.”
He challenged the Customs officer to guess how many vendors Target had. Maybe 500?
“It’s 15,000 vendors in 84 countries,” Laden said, and the list keeps changing.
Laden was a member of COAC, Customs’ private sector advisory committee for commercial operations, and chairman of the American Association of Exporters and Importers. COAC became the vehicle for industry’s participation in the creation of C-TPAT in early 2002. Today, it remains one of the foundation stones of Customs’ security regime.
Surprisingly few of the government’s security programs sprang fresh from the events of September 11. C-TPAT was an expansion of a partnership between shippers and Customs to prevent legitimate cargo from being compromised by narcotics smugglers. The Automated Targeting System grew from software Customs used to screen cargo for drug shipments. The air cargo industry scaled up its lightly policed known-shipper program.
One of the Coast Guard’s fundamental ship and port security programs had its origin in regulations governing the oil spill cleanups. The International Maritime Organization adopted the rules as the International Ship and Port Facility Security Code.
Realted: TSA Sets Air Cargo Mandates.
“I can’t think of a single port that had a civilian security director before 9/11. It just didn’t exist,” said Bethann Rooney, director of security for the Port Authority of New York and New Jersey. “Ports around the country didn’t really start to think that they needed somebody to do security until MTSA began to grow some legs.”
By the time Customs and the Coast Guard were rolled into the new Department of Homeland Security in March 2003, most of the fundamental pieces of supply chain security were in place. There were some congressional tweaks, such as the SAFE Port Act in 2006.
Ten years later, there are few companies that manage international cargo the way they did on Sept. 10, 2001. Fewer would want to return to the old ways.
“C-TPAT allowed us to look under every rock,” said Kelby Woodard, then Target’s director of global security. The company would deconstruct and reconstruct its entire import process. Every step and everyone who touched the cargo came under scrutiny.
“It created tremendous visibility that had implications beyond security: We found new operational efficiencies and cost effectiveness,” he said.
Laden said the first thing Target’s senior executives asked was how much it would cost. “We had the good fortune to go back to the chairman and tell him C-TPAT wasn’t going to cost anything. We were actually going to save money,” Laden said. It was so successful Laden and Woodard formed TradeInnovations, a consultant specializing in helping companies become C-TPAT certified.
Target was one of a handful of pioneer C-TPAT companies. Today there are more than 10,000 members, and Customs Commissioner Alan Bersin wants to triple the number in five years.
Rooney said the biggest benefits to ports are intangible. “Risk before 9/11 was an insurance concept. Now it’s a planning concept that’s applied across-the-board. There are now robust methods that allow supply chain operators and owners of infrastructure to assess the risk and get the best bang for the buck.
“The other thing is partnership. Partnerships within the Port of New York and New Jersey were very good before 9/11; they are excellent today,” Rooney said. “Those partnerships have become the cornerstone of our ability to manage our risk and develop and promote security programs.”
September 11 changed the Customs Service, said John McGowan, who directed the agency’s cargo security program before the agency moved to DHS. Customs “was very loosely structured and relied on the port directors and the director of field operations. Policy was established nationally and implemented locally.” Today things are more centrally controlled.
“I think Customs and Border Protection has integrated itself into the broader homeland security enterprise. They are tightly integrated with the Coast Guard. They talk daily with agencies that they would not have talked to 10 years ago,” said McGowan, now senior vice president for Sandler Travis Trade Advisory Services.
APL’s Agron followed Laden as a COAC member. He said C-TPAT has been successful because Customs worked intensely with the private sector. “We worked together to tweak those requirements for our industry. The key was they worked with us very closely,” he said. “The tendency now is to make changes without collaboration. I think they need to develop a private sector group of advisers to provide expertise in areas where they need to tweak C-TPAT.”
Commentary: The Terrible Day.
“My fear is that it becomes too bureaucratic and too inflexible. We’re at risk of missing the true beauty of C-TPAT, which is a true partnership,” Woodard said. “I think Customs has taken substantially more power within the partnership in the past five years, and it continues to grow.”
The last piece of Customs supply chain security strategy fell into place in 2007: the Importer Security Filing, or 10+2, rule. Ten years have passed with no new attacks on U.S. soil. What was groundbreaking in 2001 is the norm in 2011, and that’s troubling to Stephen Flynn, president of the Center for National Policy.
Flynn was pushing the country to confront the terrorist threat at home even before the September 11 attacks. He said the country’s leaders chose to fight terrorism with overseas wars rather than build a system that would minimize the effects of another catastrophic event. “Resiliency” is his favorite word.
“We had nothing, now we have something. We have things we can point to and say we’re better than we were before 9/11,” Flynn said. Can the risk-management tools at the heart of supply chain security pass the “morning-after” test? Will the public still be confident in the security system the day after another attack? If the system fails the test, politicians would be prone to impose more draconian measures.
“As I look at it now, there’s been no initiative to improve the regime that we put in place in a rush after 9/11. They’ve been oversold as accomplishing more than they can deliver,” Flynn said. The supply chain today could even be more vulnerable to a major incident. “Those tools will be a casualty of a major incident,” Flynn said. “They are likely to be compromised, and there’s likely to be a backlash to them.”
Contact R.G. Edmonson at firstname.lastname@example.org.