The Current State of Port Security

The Current State of Port Security
by April Terreri
Source: World Trade

Are we there yet?

Global supply chain security wasn’t even a term a mere decade ago, but for today’s trade community it is a never-ending discussion aimed at producing greater levels of security, notes Kelby Woodard, president of Eden Prairie, Minnesota-based Trade Innovations, specializing in customs compliance and global supply chain security. “What I worry about is complacency, so we need the trade to be fully engaged in supply chain security,” he cautions. “Some ask why we continue to require compliance to these initiatives, failing to recognize that the reason nothing has happened is because we are doing all of these things.”

At the same time, Shaun Donnelly reports that while problems persist in global supply chain security, the downturn in activity due to the recession worldwide is masking some of those problems. “As the economy improves and trade starts to grow again, we believe the problems will manifest themselves again,” says Donnelly, senior director of international business policy for the National Association of Manufacturers in Washington, D.C.

Security improved significantly since 9/11 through relationship building and resource sharing among federal, state, and local law enforcement and emergency response agencies, notes Beth Rooney, manager of port security at the Port Authority of NY & NJ. “These improvements are due in large part to physical security improvements, personnel enhancements through training and drills, and through a tremendous amount of work done in collaboration and partnership with other agencies,” she says.

The Port of NY & NJ is the third largest in the country and it is the highest at-risk port as well. “While folks view us to be the end-all of the port, the reality is we touch only 13 of over 190 commercial maritime facilities in the port,” continues Rooney. But the port continues to take an active role in security and has, for the last six years, chaired the Area Maritime Security Committee, a bottom-up approach to security that is working well. Historically, port and terminal operators and law enforcement entities competed for grant dollars. So the port decided to work collaboratively to assure the money went where these various entities felt the greatest risks were, explains Rooney. “We wrote our own document called ‘Port-wide Strategic Risk Management Plan’ in which we identified initiatives for the next five years that would benefit everyone. This is a huge success story for us because the only reason we could accomplish this was by collaborating with our two states, five boroughs, the City of New York, 17 New York counties, and seven New Jersey counties.” This type of plan is now a national requirement for the nation’s top 45 ports.

The Ports of Los Angeles and Long Beach account for about 45 percent of containerized cargo entering the U.S. Port security is approaching the optimal state in terms of capabilities and initiatives performed to achieve its security mission, adds Cosmo Perrone, director of security for the Port of Long Beach. “We are approaching the point of execution on critical large-capital projects as we continue to look for continuous improvements.” He adds that because larger ports are reaching maturity, they will focus on resiliency and the trade community’s ability to operate under adverse situations.

Like the Port of NY & NJ, the Ports of Long Beach and Los Angeles are landlord ports—as opposed to operator ports—and are not regulated under the Maritime Transportation Security Act. Operator ports adhere to the U.S. Coast Guard’s rules for port facilities. “But we have a duty to our customer base as well as to the public at large and to the national economy to assure goods move through our port in an effective and secure manner,” says George Cummings, director of port security, Port of Los Angeles. The port developed a layered security model allowing terminal operators, transportation companies, and other stakeholders to operate under a unified security system within one command-and-control center. “We can deploy information in real time to our customers or response agencies, including military organizations.” He adds that California’s 11 ports are discussing the feasibility of developing a Pacific Coast model of regional integration to facilitate security monitoring and response.

Most in the industry believe the risk-based layered approach set by the Congressional SAFE (Security and Accountability for Every) Port Act is still the most efficient way to ensure security, as it attempts to balance governmental requirements with the expeditious movement of trade. Nevertheless, there remain concerns with components of some of the initiatives.






Is the model working?

“Generally speaking, we agree with a risk-management approach,” says Rooney at the Port Authority of NY & NJ. “But when one of the components of this approach (C-TPAT) is a system based predominately on trust, this concerns us.”

Rooney is also concerned about the fact that overseas radiation portal monitors are unable to detect shielded nuclear materials. Another concern relates to U.S. overseas inspectors. “The GAO and others indicate a number of containers are not inspected overseas because of issues including sovereignty and limited resources for equipment and manpower. So these containers are not inspected until they get here.” She adds that if the layered approach was working according to expectations, and overseas inspections were taking place as required, there would be no need to re-inspect these containers once they hit U.S. ports. She maintains the model is not working as it should.

Resource allocation where risks are the greatest is of prime importance, says Donnelly at NAM. “Our country cannot afford to have every piece of cargo coming into the U.S. have to pass the most rigorous security screening that you would expect to apply to a package from an unknown shipper in the most dangerous parts of the world.”






C-TPAT

The premier global supply chain security program continues to be C-TPAT, says Woodard. He reports the program has matured and regulators are strengthening the program. The U.S. southern border is receiving increased examination because CBP continues to identify numerous security breaches, even among C-TPAT members.

On the other hand, Rooney feels shippers receive benefits for multiple trade routes when only a small percentage of [their affiliates] have actually been inspected, verified, and validated by CBP. “C-TPAT is a volunteer system based on trust with potential benefits from a score reduction. We are concerned about risk decisions being made on the entire supply chain of a shipper when only a small percentage of [those involved along that supply chain] have actually been verified and inspected,” she says.

Then there is the question of benefits promised under programs like C-TPAT. “One of these benefits should include speedier handling, but this has not materialized for many NAM members,” reports Donnelly. “They haven’t constructed enough green lanes at some land borders. This is a problem because companies invested in these additional costs to meet the standards for C-TPAT and comparable programs.”






10+2

The Importer Security Filing rule known as “10+2” is a regulation importers must take very seriously, as the data provides intelligence to CBP in a timely manner for the agency to conduct risk analyses of incoming containers. “This represents a massive change to the way importers do business ever since Customs entries were required,” Woodard reports. As of January 28, 2009, CBP began this process and is allowing importers a one-year probationary period during which they can file entries without compliance ramifications.

But by January 28, 2010, all importers will need an ISF associated with an entry. “If they don’t, those goods will receive a ‘do-not-load’ message overseas or will be seized by the U.S. government when the goods arrive here,” warns Woodard. “Importers will pay a $5,000 fine for every violation including not filing, filing incorrectly, or not filing in a timely manner.” The fine could be mitigated by about 50 percent for C-TPAT members.

As of mid-July, there were only 2 million ISF filings, representing less than half of all U.S. importers. “We are coming down to the wire because it takes about four months to get an ISF program in place,” cautions Woodard. Even if 10 percent of all importers haven’t submitted ISF documents, this could throw global trade into a tailspin, warns Woodard. “If you stop 10 percent of U.S. imports—most of which would be stopped overseas—that would create massive destruction to the global supply chain. ISF has really become the topic of the trade.”

Donnelly reports that NAM took a strong position initially that the program would be difficult to manage and would not enhance security. He says importers and exporters are making a serious effort to comply with the data requirements, nevertheless. “But it is a burden in terms of complying with the timelines specified,” states Donnelly. “A careful independent survey contracted by the NAM-led Customs and Border Coalition showed that 10+2 compliance is already costing our companies at least $20 billion annually, in addition to adding an average of 2.8 days of supply chain delays.”






100 percent screening

Radiation-portal scanning of incoming containers at the Port of NY & NJ is now at 99 percent. But Rooney is concerned about the monitors’ limitations to detect certain materials. “We are also concerned that the scanning process doesn’t happen until the container is moved to the outbound lane and ready to go over the road,” she says. The average dwell time for a container at the port is five to seven days. “We don’t want to have a potential threat sitting on our docks for seven days. We need to make this a business proposition by, for example, embedding radiation detection on the spreader bars of material handling equipment overseas so a container with a threat isn’t loaded on a U.S.-bound ship.”

Donnelly at NAM believes the 100 percent scanning directive is heading in the wrong direction. “It treats all cargo the same, spreading our limited enforcement resources across all shipments, rather than targeting shipments from riskier shippers from dubious places. Major transnational companies with overseas plants shipping to their own companies here in the U.S. every two weeks should not be subjected to the same intensive security review as an unknown shipper. Established shippers and importers have invested in government programs like C-TPAT and are sharing information to assure their supply chains are secure. Security checks need to focus where the risks are the greatest.”

At the Port of Los Angeles, Cummings believes scanning should begin overseas to protect the port and its waterways. “We are interested in the guidance of the DHS regarding feature enhancements in cargo security, particularly overseas.”




TWIC

The TWIC program began in early spring with a ‘flash card’ implementation that proceeded more smoothly than anticipated. The Ports of Long Beach and Los Angeles are preparing to launch a pilot program that will test the readers. “We have a grant from the Transportation Security Administration (TSA) to do this and it will take about a year before all the testing is complete,” says Perrone at the Port of Long Beach. The two ports represent about 75 percent of the entire pilot program.

The Port of NY & NJ was also chosen to evaluate the biometric reader technology. “The results of the pilot will inform the final reader rule requirements,” reports Rooney.






Air cargo security

The primary security initiative for air cargo is the TSA-regulated CCSP (Certified Cargo Screening Program). The program is voluntary and when CCSP shippers screen their own shipments, they can reduce the possibility that their cargo will be opened. They can also avoid potential delays that could occur if screening is done at the airport. Importers who are already C-TPAT members may find similar requirements that can be leveraged for easier CCSP participation, says Brandon Fried, executive director of Washington, D.C.-based Air Forwarders Association.

A major concern for the association is the lack of funding required for screening air cargo. The association’s members consist of large and small airfreight forwarders who use space on passenger aircraft to move their cargo. “While we are now one year out from 100 percent full cargo screening on passenger airlines, Congress still has not allocated substantial funding for members to purchase screening equipment,” says Fried. Funding can come from a variety of sources, including a DHS stimulus bucket, tax credits, or low-cost loans. “This is an unfunded mandate and in order for CCSP to be successful, we must resolve this funding issue.” Equipment can cost anywhere from $50,000 to $500,000 per machine, depending on the type of technology mandated for a particular operation.

Currently, air cargo is screened through four channels: CCSP shippers certified by TSA, airfreight forwarders with screening equipment who screen on behalf of their shippers, and the airlines themselves. “Airlines want the maximum CCSP participation as possible because they can handle some, but not all, who are non-participants,” says Fried. A fourth and growing channel are independent cargo screening facilities who are entrepreneurs who have purchased equipment and usually operate a facility outside airports.

Fried stresses that TSA wants large freight forwarders to screen as much of their freight as possible so they don’t show up at airports needing screening. “This is a piece-level mandate, meaning if you have a container with 300 pieces, each piece has to be screened and this can create huge bottlenecks,” he explains.

Like his maritime counterparts, Fried reports cargo volumes are down about 25 percent from last year, masking any potential for bottlenecks or other problems. “If CCSP is not successful, and if it does not develop into a robust program, bottlenecks will render our members less competitive while impacting the flow of commerce.”






How safe is your cargo?

Cargo theft is on the rise due to the state of the economy, notes Woodard. “The biggest issue is the lack of statistics, in part because of a reluctance of carriers and owners of goods to report incidents because of concerns about insurance rates and brand reputation.” He says cargo theft in the U.S. is usually not violent, as it is outside the U.S. He adds, however, that full-trailer theft is on the rise and a trailer is a ‘rolling store’ worth between $80,000 and $100,000.

Chubb insures importers, exporters, transportation providers, freight forwarders, port authorities, and marine terminals, says Barry Tarnef, marine loss control specialist for the Warren, N.J.-based company. Although few statistics bear out the sense that cargo crime increases during a recession, Tarnef says companies are willing to share data within industry groups to contribute to the collective knowledge of cargo theft and to develop trends that can prevent or minimize it.

Few losses involve armed hijacking since so many loads are left unattended, Tarnef explains. Most theft occurs at truck stops, rest areas, parking lots, or unsecured yards. “When we examine the statistics we have available, we notice that about 70 percent of cargo theft in the U.S. occurs from Friday through Monday, and I am convinced it’s from Friday night through Monday morning—meaning it happens over the weekend.”

There is no silver bullet for cargo security, say Tarnef. “It requires a layered approach. I examine what everyone involved in the transaction can do to prevent theft.” He suggests trucking companies conduct detailed background checks on drivers and employees. “Find secure parking facilities for your drivers. Enter into reciprocal agreements with your competitors who might have secure parking facilities where you don’t and vice versa.”

About 40 percent of these losses occur in truck stops, Tarnef continues. Therefore, lock your truck, take your keys, park where you can see your truck, and park among other trucks in a well-lighted area, he advises. “Another general rule we suggest is for drivers to drive the first 200 miles without stopping, since many loads are targeted at the distribution point or the manufacturing point. Thieves will follow trucks, knowing the nature of the cargo. Once the driver stops they have a chance to steal the trailer.” Targeted cargo includes consumer electronics, food, apparel, computers, tires, wine and spirits, cell phones, appliances, and pharmaceuticals.






Eyes to the ground

The industry sees continued partnerships in the future, enhancing information integration. “We are expanding awareness through regional connectivity that could include the entire Pacific Coast so that all our systems will create a knowledge base identifying normal operations and we can identify any anomaly,” says Perrone at the Port of Long Beach.

The world is watching how the U.S. handles global supply chain security, as evidenced in the Authorized Economic Operator (AEO) system implemented in Europe about 18 months ago, reports Woodard. “The goal is similar to C-TPAT with fewer importers involved than you would find in C-TPAT. But it’s a start for global supply chain security and customs compliance. This demonstrates the internationalization of the concept of a security partnership between the trade community and customs administrations.”



April Terreri writes frequently for WT100 on a variety of supply chain and logistics issues.




April Terreri
Contributing Editor April Terreri has recently become World Trade’s Security Correspondent, reporting on securing the global supply chain in an era of terror.