You are now viewing: ITinerary Archives : 2004 Q2

*4th Mindanao Shippers' Conference (June 21, 2004)

*Economic Impact of Maritime Security Initiatives (June 7, 2004)

*A Look at Sea-Air Transhipment (May 24, 2004)

*Excerpts from Latest Global e-Readiness Survey (May 10, 2004)

*Knowing What to Expect During Information Systems Audit (April 26, 2004)

*Gamma Ray Scanning and its Application to Container Security (April 12 ,2004)

 

4th Mindanao Shippers' Conference

The SOCCSKSARGEN Shippers Association (SSA) in partnership with the Department of Trade and Industry- General Santos City Field Office, and Growth with Equity in Mindanao (GEM) will host the 4th Mindanao Shipper's Conference (MinShipCon) on July 15, 2004 in General Santos City.

SSA considers this event as a convergence of the different stakeholders of the shipping industry in Mindanao. Now on its fourth year, MinShipCon intends to increase awareness among industry players through sharing of relevant industry information that can improve the competencies of shippers and the allied sectors in the area, with the end in mind of attaining global competitiveness.

The theme for this year is "Increased Domestic and Foreign Exports Thru Efficiency in Shipping." According to the invitation letter prepared by SSA and the conference organizers, this event is being held at the opportune time for the host General Santos City in the wake of the recent opening up of a new shipping and air routes plying between Bitung, Indonesia and General Santos City.

The conference, therefore, constitutes a venue where relevant information supportive of strengthening General Santos City as a transshipment point can be shared. At the same time, significant issues and concerns affecting the shipping industry in general can be addressed and discussed with appropriate agencies and organizations. This columnist is honored to be invited as one of the resource speakers for this event and will make a presentation on the topic "Cargo Security".

I am very pleased to accept this invitation in view of the timeliness of this topic and the need for Mindanao shippers to be likewise kept updated on the latest developments in this matter.

It is to be recalled that only last week, the Port Users Confederation (PUC) organized a well-attended conference on the International Ship and Port Facility Security (ISPS) Code at the Traders Hotel. I hope to relay to the MinShipCon participants some of the interesting observations during the PUC event as part of my presentation.

For those interested in knowing more about the 4th MinShipCon event, I am reproducing below the program of activities for everyone's reference.

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Economic Impact of Maritime Security Initiatives (June 7, 2004)

The headline article of PortCalls last 04 June reported that MARINA and PPA both expect an increase in rates imposed by shipping and port operators with the nearing implementation of the International Ship and Port Facility Security (ISPS) Code.

It was further disclosed that the need for additional security equipment will translate to greater costs for shipping operators that could, in turn, result in fare or freight rate increases. Eventually, costs will be shouldered by end-consumers.

When I read this news item, I immediately remembered having encountered in my reseach a forward-looking study prepared by the Maritime Transport Committee, Directorate for Science, Technology & Industry of the Organization for Economic Cooperation & Development (OECD) that focused on the economic impact of maritime security initiatives.

The study is entitled "Security in Maritime Transport: Risk Factors and Economic Impact" and published in July 2003. For today's column, I would like to quote in part the conclusions made by this research paper due to the timeliness & validity of its numerous findings & observations.

According to this OECD study, measures addressing the most obvious gaps in maritime security have been negotiated and approved at the IMO or have been initiated by the United States. Many of these measures have yet to come into force and for those that are in effect as of March 2003, scant evidence exists on their costs.

It prepared a table estimating those costs that can be quantified. These costs were tabulated according to the measure in question, its initial, yearly and possible indirect costs, confidence level with the estimate provided, and an assessment of the non-antiterrorism benefits that might result from implementation of the measure.

Summary Table: Costs of Maritime Security Measures and Assessment of non Anti-terrorism Benefits

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A Look at Sea-Air Transhipment (May 24, 2004)

A friend who runs his own freight forwarding business requested me last month if I can write something about sea-to-air transshipment.

What immediately came to my mind is the apparently successful implementation done last year in Northport, Port Klang, Malaysia and I am featuring this example in today's column. Since the pioneering system is credited to both Northport (Malaysia) Bhd and MASkargo, all the information details that follow are reprinted from industry briefings and bulletins published by Northport.

This milestone effort to promote combined sea and air cargo handling of transshipment cargo started commercial operations more than a year ago in January 2003. Under the combined modal arrangement, sea-bound shipments of cargo arriving at Northport are consolidated at the designated air zone operated by MASkargo in Northport Distribution Park, located within the port perimeter of Northport in Port Klang.

From the Customs-free Northport Distripark the cargo is trucked by MASkargo-owned trucks to the Advanced Cargo Centre in Kuala Lumpur International Airport in Sepang, about 60 km from Port Klang, for re-shipment to final destinations.

Process Flow of "Sea-Air" Transhipment

Shipments arriving at Northport identified as air cargo containers -whether full containers load (FCL) and less container load containers (LCL) - are transferred to the container depot for deconsolidation. Freight forwarders handling the particular shipment arrange for transport to transfer the cargo to the "air zone" in the Northport Distripark (situated one km away from the Northport wharves).

The appointed freight forwarder then books cargo space and designated flights through MASkargo Air-Zone online handling office situated in Northport Distripark. Since the air zone at Northport Distripark is recognized for the purposes of bill of lading as Maskargo destination, forwarding agents can cut an airway bill at Northport.

The agents have the freedom to use their preferred airline's airway bill or MASkargo airway bill. The air zone at Northport Distripark is equipped with on-line IT applications for the agents to submit relevant shipping and trade documentations, including the Customs.

At the air zone in Northport Distripark, MASkargo will collect the booked air cargo and will issue MH truck flight manifest for Customs declaration and seal the shipment at the "sea zone" of MASkargo" in Northport Distripark. Shipments consolidated at the "air zone" in Northport Distripark' are then transported by Perkhidmatan Kargo Udara MAS (PKUM) using truck-flights to ACC, which act as the transshipment port.

(Freight forwarders who are not appointed by Maskargo can use services of Perkhidmatan Kargo Udara MAS.)

Although the truck-flight is operated by a MASkargo subsidiary, shippers or freight forwarders need not be restricted to using only the services of MAS flights. The services of other airlines calling KLIA can be used.

To ensure smooth cargo flow between the two gateways, the Royal Malaysia Customs agreed to do away with the need for import declaration form (used for the movement of dutiable goods) and instead use another document treating the cargo movement as an inter-terminal transfer movement.

Upon arrival at the ACC in Kuala Lumpur International airport, the seal is broken and the cargo is unloaded into the warehouse. Malaysian Customs will then cross check the manifest issued at air zone and allow the cargo to depart out of KLIA by air to the specified destination.

Industry observers have noted that this combined transport mode works well for specific cargo types, such as high-tech products and time-sensitive cargoes, including fashion items. For such cargoes, shorter transit time is critical to reach competitive markets within a specified time.

Some of the initial shipments handled under this "sea-air" combined mode ranged from shoes to textiles that were previously carried by "all blue-water" mode from Port Klang to Europe. In the case of shoes made in Indonesia, these are shipped to Northport by feeder vessels and consolidated for shipment by air via the Kuala Lumpur International Airporty.

The combined mode saved nearly three weeks of transit time.

The author has 20 years experience in the development, project management and implementation of IT projects in Philippine ports, transport and logistics. He is presently an independent consultant for IT projects and initiatives in Philippine ports and transport industries.

For comments or inquiries, email him at leo@morada.name.

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Excerpts from Latest Global e-Readiness Survey (May 10, 2004)

Since 2000, the Economist Intelligence Unit has published an annual e-readiness ranking of the world's 60 largest economies.

A country's "e-readiness" is essentially a measure of its e-business environment, a collection of factors that indicate how amenable a market is to Internet-based opportunities. These ranking allows governments to gauge the success of their technology nitiatives against those of other countries.

It also provides companies that wish to invest in online operations with an overview of the world's most promising investment locations. In today's column, I am reproducing excerpts from the 2004 e-readiness ranking report.

It is significant to note that in the Asia-Pacific region, the Philippines is ranked only number 11 out of a total of 16 countries. Asia-Pacific: Overview of region After Western Europe, Asia-Pacific is the next best represented region in the e-readiness rankings.

Singapore (7th) and Hong Kong (9th) are in the top ten, followed by Australia (12th), South Korea (14th) New Zealand (19th), Taiwan (20th) and Japan (25th). The fact that Australia has slipped from the top ten is due mainly to its very low broadband penetration - only 4% Australians have broadband access (and even fewer New Zealanders do), while the region's other leaders are rolling out broadband widely and quickly.

There are, however, indications of a turning point for broadband in Australia: national operator Telstra is committing to getting 1 million subscribers hooked up by 2005. While Asia lacks the region-wide coordination of the European Union, old-fashioned competition may do the trick.

Asian governments are intimately familiar with each other's e-development practices, and leaders Singapore, Hong Kong, South Korea and Taiwan routinely emulate one another's strategy on telecoms deregulation and next generation infrastructure development.

Trends and best practice; . competition, not cooperation. Increasingly, there is cooperation at both the national and the industrial level. This is particularly true in the fields of telecommunications, where many of Asia's leading operators and vendors are looking to tap into the advantages of their neighbours.

NTT DoCoMo of Japan, the grandfather of mobile Internet providers, has set up an R&D facility in Beijing to develop 4G technology. It hopes to benefit from China's low development costs while making inroads into the world's single largest mobile market.

Often it is regulatory heavy handedness in Asia that helps kick start initiatives. The fact that most of Asia's incumbent carriers remain state owned has been a boon in some ways.

Japan, despite the semi-monopoly NTT maintains, now has the most effectively deregulated local loop unbundling legislation in the world, thanks to the Ministry of Finance's control over the carrier. This has allowed for tremendous competition for broadband services and a huge jump in the number of high-speed Internet subscribers, to over 12 million in 2003.

Businesses slow on the uptake yet in other areas there is much work to be done. Despite the rapid growth of e-trading platforms, particularly in the regional finance and trading hubs of Singapore and Hong Kong, enabling technologies such as digital signatures and digital rights management remain woefully underutilized by businesses.

This is not for lack of legal infrastructure; even Thailand has passed legislation recognizing the legitimacy of digital signatures. But Asian banks, a key link in the e-commerce chain, have not adopted them in their own transactions, let alone mandated them in their clients'.

Outsourcing pushes India ahead Asia has become an emblem of the borderless economy. India's famed IT-enabled service sector, which now contributes an estimated US$17 billion to the economy annually, is a shining example to emerging markets.

India's success story has been replicated throughout the region - there are booming call centres surrounding Manila, customer help desk centers in Malaysia, and Korean and Japanese language software production houses in China. It is ironic that India hardly appears on the e-ready radar screen, though it is starting to push ahead.

If it were not for the entry of four new countries in this year's ranking, it would have moved up four places. As it is, the country is in 46th place. The reason for its disappointing showing is that until recently, India's business environment was indifferent - even hostile - to the thriving niches of programming, customer service and business process outsourcing.

Basic connectivity remains abysmally low, and has only in the past year started to receive significant investment. International bandwidth into India is set to double this year; it has already increased tenfold over the last two.

While many of India's other e-ready components are not world class, the demand created by the e-services sector will eventually pull them into line.

The author has 20 years experience in the development, project management and implementation of IT projects in Philippine ports, transport and logistics. He is presently an independent consultant for IT projects and initiatives in Philippine ports and transport industries. For comments or inquiries, email him at leo@morada.name.

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Knowing What to Expect During Information Systems Audit (April 26, 2004)

The information systems (IS) audit is a permanent fixture in the professional life of IT managers since it is part and parcel of organizational business activity.

However, you may be surprised to know that in a number of business entities this activity is still being considered an object of concern or, worse, misconstrued as an affront to the "technology ego" of some IT managers.

I believe that there is no other better way to prepare for an IS audit than to understand the activities involved and what can be expected during the course of the audit activity.

The most important benefit that can actually be gained from this understanding is for both the business decision-maker and the IT Manager to consider the IS audit as a "reality check" in assessing the extent to which IT systems are aligned with the organization's business strategy.

IS Audit Planning
An integral part of planning how to conduct an IS audit is understanding the organization's information system environment to a sufficient extent for the IS Auditor to determine the size and complexity of the systems and the extent of the organization's dependence on such systems.

The IS Auditor will strive to gain an understanding of the organization's mission and business objectives, the level and manner in which information technology and information systems are used to support the organization, and the risks and exposures associated with the organization's objectives and its information systems. An understanding of the organizational structure including roles and responsibilities of key IS staff and the business process owner of the application system will also be obtained.

Specific Example of IS Audit
A common type of IS audit is called "application system review" performed when a package software system is being evaluated for acquisition, before the application system goes into production (pre-implementation) and after the application system has gone into production (post-implementation).

Pre-implementation application system review coverage includes the architecture of application level security, plans for the implementation of security, the adequacy of system and user documentation, and the adequacy of actual or planned user acceptance testing. Post-implementation review coverage includes application level security after implementation and may cover system conversion if there has been a transfer of data and masterfile information from the old to the new system.

The objectives and scope of an Application Systems Review usually form part of the so-called Terms of Reference agreed upon by management and the auditor.

Performance of Audit Work
The IS auditor always starts his work by documenting the flow of system transactions.

Information gathered will include both the computerized and manual aspects of the system. The focus will be on data input (whether electronic or manual), processing, storage, and output that are of significance to the audit objective.

The IS Auditor may find, depending upon the business processes and the use of technology, that documenting the transaction flow may not be practical. In that event, the IS Auditor will prepare a high-level data flow diagram or narrative and/or utilize system documentation if provided.

He may confirm the documentation by performing procedures such as a walkthrough test. System controls will be identified and their application tested by the auditor.

Specific controls to mitigate the application risks may be identified and sufficient audit evidence obtained to assure the IS Auditor that the controls are operating as intended. This can be accomplished through procedures such as: inquiry and observation, review of documentation, and testing of the application system controls where programmed controls are being tested through the use of computer-assisted audit techniques.

A common pitfall of IT management is lack of documentation that constitutes official authorization to write a new computer program, revise an existing one, or create a new report format. This weakness in IT control can be fully addressed if IT policy requires all end user requests for new software or report formats to be signed by both the requesting business user and the approving IT manager.

How Audit Findings Will Be Reported
It is said that auditors will always have something to report even if the system environment being audited is "perfect".

This report will essentially focus on weaknesses identified in the application review either due to an absence of controls or to non-compliance. These will be brought to the attention of the business process owner and to IS management responsible for the support of the application.

Where weaknesses identified during the application systems review are considered to be significant or material, the appropriate level of management will be advised to undertake immediate corrective action.

Since effective computerized application controls are dependent on general IT controls, weaknesses in this area will also be reported. In the event that general IT controls were not reviewed, this fact will be included in the report. Expect the IS Auditor to include in his report appropriate recommendations to strengthen controls.

The author has 20 years experience in the development, project management and implementation of IT projects in Philippine ports, transport and logistics. He is presently an independent consultant for IT projects and
initiatives in Philippine ports and transport industries. For comments or inquiries, email him at leo@morada.name.

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Gamma Ray Scanning and its Application to Container Security (April 12 ,2004)

IN my conti-nuing research on commercially available and emerging technologies for enhancing supply chain security, my attention was recently drawn to studies and analysis done on the use of gamma ray scanning as an alternative to non-intrusive detection systems in port security.

This type of detection system has been in use for years in several US southern ports as part of the war against drugs and narcotics but given the new focus on anti-terrorism and container security, the technology has been thrust to the forefront by the US Customs.

Ports Using Gamma Ray Systems
At the start of 2003 it was reported that Singapore's PSA Corporation installed two gamma-ray scanners at the Tanjong Pagar and Pasir Panjang ports. Similar systems will also be installed at Jurong Port which is operated by PSA Corp's competitor.

During the second half of 2003 it was also reported that the Canada Customs and Revenue Agency ordered almost a dozen mobile gamma ray scanning systems for installation in several Canadian ports of entry to further further assist customs officers to examine densely loaded containers to detect suspected contraband, weapons, and other potentially dangerous goods.

What can be currently considered as the leading technology provider of gamma ray scanning systems is a US company called Science Applications International Corporation (SAIC) based in San Diego, California which offers a technology solution called Vehicle and Cargo Inspection System (VACIS).

What Is VACIS?
Based on information found in the SAIC website, VACIS is a new technological approach to the need for non-invasive inspection of large objects. It was originally developed by SAIC to provide a new and improved method by which the US Customs Service could locate illegal drugs and narcotics.

SAIC claims that VACIS is unique because it utilizes a Cesium-137 or Cobalt-60 radiation source (depending on configuration), which allows it to provide substantially quicker inspection speeds, very high material penetration, and a much simplified operation when compared with other cargo inspection technologies. VACIS is said to be able to improve performance criteria, while offering a purchase price that is only a fraction (10-30%) of other cargo inspection methods.

What is the difference between using X-ray and gamma ray radiation for cargo inspection?

All radiographic cargo inspection systems must use some form of penetrating radiation in order to reveal the internal contents of a sealed truck, intermodal container, private vehicle, air cargo container, etc. VACIS utilizes a radioisotope to generate a gamma photon, which penetrates the cargo being inspected.

This is similar to X-ray radiation based cargo inspection systems, which use high-energy X-ray photons for this purpose. The method of creation is different, in that X-rays are generated electronically, while the gamma rays come from a small radioisotope pellet with an electronically controlled shutter opening the source enclosure.

The gamma source has a much longer lifetime because it does not require a complicated high-voltage electronic system to create its radiation. Because the gamma photons are all at a very high energy, almost all can be used in penetration of the target object rather than absorbed like those of an X-ray photon beam.

X-rays are generated in a vacuum tube covering a broad spectrum of energies. This means it takes many more X-ray photons (by a factor of thousands) to provide the same penetration achieved with a minimal number of gamma photons.

The net result is that gamma radiation provides an excellent radiographic image using a much smaller total level of radiation than is possible through the use of X-ray radiation.

Safety Considerations
This is one of the main arguments used those who prefer x-ray scanning technology instead of gamma ray.

However, proponents of gamma ray systems claim that while radiation can be harmful to the human body, the doses used by VACIS are so low that it is extremely unlikely anyone will ever receive a harmful dose.

It is said that if a truck driver were to accidentally remain in a vehicle during the VACIS cargo inspection process, he would receive an extremely small dose of radiation - equivalent to being exposed under the sun for 15 minutes or 1,000 times less exposure than dental x-ray. In contrast, a medical chest X-ray would deliver about 20,000 times more radiation than a VACIS scan.

How much material can VACIS penetrate?
SAIC claims that based on currently installed sites, VACIS can penetrate a maximum thickness of 165mm (6.5 inches) of steel while maintaining maximum contrast sensitivity.

This is said to make VACIS ideal for use in the inspection of cargo containers. To obtain more information about VACIS, the SAIC web site (www.saic.com) has a section detailing complete technical and product information.

The author has 20 years experience in the development, project management and implementation of IT projects in Philippine ports, transport and logistics. He is presently an independent consultant for IT projects and initiatives in Philippine ports and transport industries. For comments or inquiries, email him at leo@morada.name.

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