Highlights
– Proposed bill would establish minimum security standards for United States bound cargo containers along the international supply chain
– Cost of cargo security laws likely to fall on the consumer and could alienate key trading partners
– Enhanced supply chain security standards could challenge the need for 100 percent scanning
A new bill designed to improve port and intermodal supply chain security, titled S. 3174, was recently introduced in the United States (US) Senate. The bill will seek to ensure that cargo containers remain sealed and secure against potential tampering along the international supply chain, and especially in areas characterized by minimal levels of inspection and control. In summary, minimum-security standards would be established for securing and monitoring all US bound cargo containers as the shipments move along the supply chain.
Although the bill has not outlined methods or technology that would be implemented or utilized, it is likely high-tech electronic locks and global positioning devices will be evaluated as possible components for the security regime. According to the bill, if cargo shipments fail to meet the requirements one year after the procedures have been established and implemented, these shipments would be denied entry into the US. The bill is in the first stage of the legislative process and has been referred to the Senate Commerce, Science, and Transportation committees.
Establishing a set of guidelines that will boost the integrity of inbound goods is crucial for US security in the long-term as millions of containers arrive in US ports each year. However, hurriedly enforcing absolute security initiatives such as the new bill and the Secure Freight Initiative on key international trading partners may also result in slowed trade and significant economic losses for the US economy in the long-term.
Stronger Security Could Alienate Key Trading Partners
The bill is in the first stage of the legislative process and could undergo several revisions and changes in mark-up sessions while under committee consideration. The following uncertainties remain:
• The bill’s cosponsors failed to provide an overall cost estimate for the program’s port security measures.
• Shipping companies remain fearful that several countries in the European Union (EU) could retaliate by requiring reciprocity of the same container security laws.
Additionally, significant challenges remain for the Security and Accountability for Every (SAFE) Port Act’s Secure Freight Initiative (SFI). Under SFI, the US will require 100 percent cargo scanning for radiological and nuclear materials by 2012. The first phase of SFI was successful and has now transitioned into its second phase of testing at large volume ports (Previous Report).
However, a top US Customs and Border Protection official recently testified that the 2012 deadline for 100 percent scanning is unrealistic. Additionally, a recent report by the Government Accountability Office (GAO) also highlighted challenges remaining for the SFI (Source). Among GAO’s nine identified challenges for the SFI, notable areas that require improvement and solutions include:
• The ability and efficiency of high-tech scanning equipment at high volume ports and ports operating under extreme weather conditions.
• Neither the SAFE Port Act nor the Implementing the Recommendations of the 9/11 Commission Act (9/11 Act) identify whether the US or foreign participating states would bear the costs and resources of 100 percent scanning.
• GAO reports a strong international concern that 100 percent scan will divert resources away and is inconsistent with accepted risk management principles.
• GAO warns that foreign governments could require 100 percent scanning for all US exports, a potentially damaging result that could hinder the flow of trade.
Further, a US customs official stated that the costs of the SFI would be added to the supply chain and likely to the consumer. Customs experts have estimated that by the time the SFI law comes into effect, the costs could number up to US$1 billion annually (Source).
Layered Approach Essential, But Challenges Remain
If S. 3174 gains support in the Senate and House and eventually becomes law, the initiative will likely complement the existing risk based security cargo security procedures including the Container Security Initiative, 24-hour manifest rule and the “10 + 2” information mandate. However, the new bill and the Secure Freight Initiative are not likely to coexist.
The new bill seeks to establish procedures that will secure and track cargo containers along a container’s entire intermodal journey. If US officials develop effective procedures with proven advanced technology for the new bill, the need for 100 percent scanning under the Secure Freight Initiative at over 700 international ports against potentially compromised cargo will seem irrational and costly. Instead, the scanning equipment could be utilized only if a container’s tracking information suggests its lock or location has been compromised along the supply chain.
As stated previously, it may prove more efficient in the long-term to work on a more balanced risk assessment approach, especially as new technology still requires evaluation and as foreign governments grow increasingly weary of future cargo container rules.
