Home » Across Borders » Post 9/11: What has changed in the supply chain

This two-part series is based mainly on our presentation made during the Cargo Econo-mics Conference organized by PortCalls last October 23, 2003 at Hyatt Hotel and attended by executives from the shipping, airline and logistics industries.

October 2001, Port of Gioia Tauro, Italy.

Just one month away from the September 11 attack on World Trade Center (WTC) in New York, in Port of Gioia Tauro, Italy, a stowaway was discovered inside a shipping container with bed, toilet facilities and water. The man had a laptop, satellite phone, airport security passes and an airline mechanic ID (valid for several US airports). The container was chartered by Maersk Sealand in Egypt, loaded in Port Said onto vessel IPEX EMPEROR, transshipped to Italy. The final destination was Canada via Rotterdam. The container would have reached its final destination if not for nearby workers hearing the stowaway tinkering with the container’s ventilation holes.

Post 9/11: What has changed.

In the months immediately following the September 11 attack on the WTC, New York, the general consensus among security experts was that given the level of sophistication of terrorist activities, no country can be safe from terrorist attacks. In addition, US government officials were of the opinion that the next possible vector of attack will be in the international maritime trade sector. More than the fact that ships can be used as a means to transport terrorists, ships containing hazardous substances can be the subject of the attack. In addition, shipping containers can be used to conceal or deliver crude weapons of mass destruction.

Risk Factors in Maritime Trade.

International maritime trade has been characterized as a very open and porous transportation network constituting at least 80% of international trade in goods. In year 2001 alone, 232 million containers moved through ports. Of these containers, only about 2% were physically inspected.

By and large, the security risk factors in maritime trade can be summarized as to the following areas of concern:

  1. Tracking of Shipping Vessels;
  2. Security of Vessels and Port Facilities
  3. Verification of Seafarers (approximately 1 million, 20% of whom are from the Philippines)
  4. Integrity of Containerized Cargo (15 million containers)

Just to illustrate what can happen in case of an attack on maritime trade, imagine one container (containing crude weapons of mass destruction) exploding while at the container yard of the Port of Manila. While the immediate damage will be tremendous, the damage to the Philippine trading community will be unimaginable.

Changing Mindsets.

As a result of security concerns arising from the WTC attack, there had been a major shift in mindsets in relation to measures to secure the international supply chain. There is now a new focus to ensure the integrity of international cargo upstream of the supply chain. Meaning, cargo must be secured even prior to loading at the port of loading or origin port. Security measures must be made and implemented at the country of export in addition to measures being made at the country of import. Given this new focus, it becomes more important that the approach to supply chain security be integrated and that greater collaboration between public and private sector on a national, regional and global level be strengthened.

Security Initiatives to Protect Trade.

In the last couple of years, there had been numerous security initiatives at international, regional and national level (e.g., US national initiatives). While the US had been at the forefront of these new initiatives, many of these initiatives were likewise initiated by various international bodies – International Maritime Organzation (IMO), International Civil Aviation Organization, World Customs Organization (WCO), United Nations Conference for Trade and Development, Asia Pacific Economic Conference, International Chamber of Commerce and International Air Transport Association. These new initiatives involve measures such as new airplane cockpit design, ship and port security, export control, cargo control, data model and legal infrastructure to facilitate cooperation and information sharing among countries.

Concerns on Trade Facilitation.

For many in the trading and transport industries, concerns have been raised on the impact of these new security measures in facilitating trade across international borders – how these will affect the movement of goods and at what cost. While there is no doubt that security controls and restrictions are necessary to protect the supply chain, these controls can definitely affect trade facilitation and will certainly entail additional costs on both the transport and trading industries. Moreover, security measures and standards need to be harmonized to prevent delays in the international movement of goods.

The Cost of Security.

Certainly, security and trade facilitation need to be balanced. In reality, how will this be done? The US for example has been implementing various security initiatives such as the 24-hour advance manifest rule and the Container Security Initiatives (CSI). By June of this year, the new security measures under the International Maritime Organization should have been implemented. How will this be implemented? Who will bear the costs?

Our next and last article on the topic will discuss in detail the various security measures being implemented by the United States, the IMO, the WCO and other international agencies, and its impact on the trading and transport industries.

The author is an international trade and customs specialist, and a licensed customs broker. He is also a partner of the law firm of David Leabres Uvero Gaticales Mosquera Samson. For your comments, he may be contacted at agaton.uvero@wtiphils.com or at (632) 4002145 / 4050021.

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