Counting the Cost

Counting the Cost

Copyright 2003, Traffic World, Inc.

Much effort is going into understanding the impact of security initiatives on transportation but "nobody really besides ourselves and Georgia Tech is looking at it from a quantitative point of view," said Chip White, executive director of the Savannah Maritime Logistics Innovation Center. The center has been set up to address this knowledge gap and provide information that can be used in the development and refining of trade security regulations.

The SMLIC is a partnership between the Georgia Ports Authority and research centers in the state, namely the Georgia Institute of Technology, Georgia Southern University and Armstrong Atlantic State University. Together they aim to develop new technologies for the efficient and secure movement of goods. Another goal is to create jobs in the region by commercializing the technologies that are developed. But White stressed that the center is being established as a national resource that promotes international best practices.

Most of the work currently being done to assess the supply-chain implications of tighter security measures focuses on visibility issues; how productivity is affected is receiving far less attention, according to White. The center''s researchers will have a ports system in Georgia at their disposal to use "as a big laboratory" to drill down into productivity issues, he said.

As an example, White pointed to the recent decline in world trade activity in terms of the U.S. gross national product and anecdotal evidence that supply-chain security is one of the forces putting a brake on trade growth. Industries are pulling some suppliers closer to the point of assembly, he explained, and this has important ramifications for productivity. For example, auto manufacturers are moving some of their Canadian supply base south of the border into the United States to avoid having to cross the Ambassador Bridge into Canada, he said.

The trend was described by Home Depot and Wal-Mart during a panel session at the 6th Science in Savannah Symposium, Aug. 18-19, which was organized to help develop a blueprint for the fledgling SMLIC. These major port users "are asking more questions that have a security-related tone," White said. They are reviewing their supplier bases with security in mind. As a result, "the design of supply chains is being affected and productivity could be affected in a negative way," he said.

At the same time there is more emphasis on end-to-end supply-chain management. The theme of the Symposium was "Innovative Maritime Logistics for a Secure Homeland" but the service lines that distinguish maritime logistics are becoming blurred as companies develop more of a global supply-chain perspective. This is reflected in the emergence of bundled transportation services as providers such as FedEx and United Parcel Service put more emphasis on multimodal solutions for shippers, White said. The global perspective "is promoting vertical integration in transportation right now," he said.

The SMLIC does not have a specific research agenda yet, but one of the areas in which White is interested is the 24-hour rule for submitting cargo manifests and the resultant impact on productivity. While the rule brings new responsibilities for trading partners, there is also a potential win-win for ports and port users since the requirements can drive improvements in productivity as well, White said. Also, developing such efficiencies "would allow for rational adjustment of these regulations to enhance security and productivity." The SMLIC plans to release its schedule of research work within 30 days of the symposium''s conclusion.