A theme one hears repeatedly these days is this: Efforts to secure supply chains from terrorism will yield long-term benefits to companies involved in trade, by making those same supply chains more efficient.
That is all well and good, but this "efficiency dividend" is still somewhere off on the horizon. One reason is that one of the central issues involving security is unresolved. That is whether the new environment requires that ocean containers be tracked individually and electronically from their origin to destination.
Statements from officials of the Transportation Security Administration in the aftermath of Sept. 11 suggested that such visibility was absolutely needed. TSA officials told industry gatherings that they wanted to know everything there is to know about every container, at every step of the process. Software executive Rob Quartel summed up the fears of industry by suggesting that the government "will continue to see an obligation to create and manage an intrusive, integrated, over-arching response" to the terrorist threat.
Technology is not the issue. Well before the terrorist attacks, container lines, logistics providers and technology developers all looked closely at the idea of individual container tracking. They concluded that while it was possible to electronically tag every container and watch it move across the ocean and inland to and from seaports, it was too expensive. Carriers did not see enough value in using sensors to track their equipment, and shippers didn't see enough value in using the devices to track their cargoes. That is why today, more than 30 years after containers came into widespread use and with several million of them circulating around the world, they are rarely tracked through individual sensors, though the technology is used for trucks and rail. When containers are tracked, it is generally through software that has been told that the box has been loaded on a ship, offloaded at the other end, etc., rather than through real-time sensors.
The issue of cargo visibility, in fact, points directly to the next phase in the development of an effective system of trade security. The Container Security Initiative and the Customs-Trade Partnership Against Terrorism can be considered Phase 1. But many understandably want to know what Phase II will look like, because it seems clear that the effort won't end with the programs in place today, however well they appear to be working. Having never thought of the trade system from a security perspective, the U.S. and indeed the world remain in the very early stages of what Stephen Flynn of the Council on Foreign Relations calls "retrofitting."
Whether real-time visibility is a necessary part of that system is one of the key debates under way, both within industry and in Congress. Some programs, including the Smart and Secure Tradelanes initiative, appear to be going down that road, evaluating technology that will allow real-time tracking as well as monitoring of the integrity of container seals and environmental changes inside a container that could indicate tampering.
But nobody is rushing to judgment. Bureaucratically, part of the reason is that the trade-knowledgeable Bureau of Customs and Border Protection has a prominent role in trade security and is serving as a counterweight to the more na?ve Transportation Security Administration.
As a result, reasonable voices of skepticism are making themselves heard. "If we are to meaningfully add to the supply chain, I don't know if you need to know each minute where (a container) is," Robert Bonner, commissioner of the Bureau of Customs and Border Protection, told the Liner CEO Forum in Boston on April 1.
"There are some strong opinions out there about the need for total cargo visibility vs. the fact it could be complicated or very expensive," said Richard Larrabee, seaport director at the Port Authority of New York and New Jersey.
Where this effort goes from here will largely be defined by initiatives such as Operation Safe Commerce. Beginning in a few months and lasting perhaps a year, experiments under this program will be conducted out of three port areas, New York-New Jersey, Los Angeles-Long Beach and Seattle-Tacoma to determine the usefulness and feasibility of any number of different security strategies pertaining to ocean container transport.
So far, $28 million has been appropriated for the projects, and more may be on the way. "What we are really trying to do is develop a systematic way to analyze concepts and come back with good thinking and real-world experience in looking at those solutions, and part of that would be the cost," Larrabee said.
Peter Tirschwell is editor of The Journal of Commerce. He can be reached at (973) 848-7158, or via e-mail at email@example.com.