Assignment
Lovely GA
ugcs3_v3_project_attachments_C5BCF10B-D766-4464-B2A0-D4180BECF7DE_Artifact-3.pptxImpact of Public Policy on Cargo Security
Steven C. Higgs
TLMT 605 Cargo Security Management
American Public University
Dr. Seli Agbolosu-Amison
17 April 2020
Ras James (RJ) - You did a great job
AGENDA
Introduction
Risk Factors of Cargo
Risk Factors of Bulk Shipments
Risk Factors of Vessels
Risk Factors of Security
Costs of Attack on Maritime Transport
Cost of Security Measures
Conclusion
Slide 2 of 13
INTRODUCTION
9/11 terror attacks sparked increased security
Security policies must take into account risks
Impossible to inspect 100% of containers
Security policies must take into account costs
Sheer volume creates substantial risk factor
Security policies must be broad-based and responsive
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Initially after the 9/11 terror attacks, air travel incurred a dramatic increase in restrictions and security measures. At first, sea travel was not a security concern.
Shortly afterward, the reach of the Al-Qaeda network was realized. The maritime network was scrutinized for security threats.
Cost benefit analysis must be conducted in depth to account for the relationship between the risk, not conducting 100% security, and the costs to implement these programs.
Seafaring vessels carry over 80% of the world’s trade volume. This network is complex and international, and therefore must have polices which account for the substantial risk incurred when enacting policies which may slow down and disrupt international trade relationships.
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RISK FACTORS OF CONTAINERS
Approximately 15 million containers in circulation (OECD, 2003)
Time constraints
100% Inspection requirements would shut down ports
Large volume causes vulnerabilities
Cannot capture every container for inspection
Means for terrorist activities
Stowaway personnel for nefarious purposes
Steal or smuggle high value or dangerous items
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With approximately 15 million containers in circulation, and about 232 million moved through ports in 2001, there is sufficiently high activity to allow opportunities to arise where organizations and personnel with nefarious intentions to subvert the system to accomplish their means.
The OECD states – “In a worst case scenario, a terrorist organization could pack a global positioning satellite-enabled weapon of mass destruction within a shipping container, introduce it into the international transport system using legitimate shippers, intermediaries and carriers, and remotely detonate the weapon upon its arrival in the heart of a major population center” (OECD, 2003) this is possible with minimal coordination and a basic understanding of international security practices. Of key note only about 2% of containers are physically inspected in the United States.
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RISK FACTOR OF BULK SHIPMENTS
Bulk shipments cause a higher security concern (OECD, 2003)
High combustibility of liquid propane, gasoline, kerosene, and other potentially volatile bulk goods
Typically hazardous material shipments face higher scrutiny in policy
Highest risk is during loading or unloading operations
Bulk shipments of ammonium nitrate offer highest risk
Several terror organizations have used ammonium nitrate for explosives
A bulk cargo vessel loaded with ammonium nitrate could be used in a “suicide” operation with catastrophic effect.
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Bulk shipments are typically of low threat due the correlation of bulk goods being inert and low value items such as large quantities of coal, ore, or grains. However, over 1.6 million tons of the very hazardous nitrogen fertilizer – ammonium nitrate were transported by bulk seafaring methods.
These items are managed by the Safe Practice for Solid Bulk Cargoes Code which reduces the risk of accidents involving these cargoes.
Chen et al notes the typical coupling of the type of shipment versus the desire transport attributes, which reflects the diversity of transport service characteristics (Chen, 2014). To note here, hazardous goods are typically traversed in a way to avoid crowding or approaching ecologically fragile areas. Additionally, Bulk goods are typically moved via large volume methods. (Chen, 2014)
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RISK FACTOR OF VESSELS
Attacks typically target vessels.
Vessels are not typically used as weapons (OECD, 2003)
Attacks usually consist of:
Hijacking
Ransom or Cargo Theft
Politically motivated
Destruction
As much loss of life as possible
Cripple trade by blocking portts
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The difficulty of triggering an explosion on vessels makes it more likely that a terrorist organization would hijack a vessel for the intent of taking control of cargo or holding passengers hostage. Attacks are most likely to occur at points of entry or passage, such as the Strait of Gibraltar, Malacca or the Panama Canal.
Piracy is still an occurrence due to large vessels carrying large sums of cash in order to pay port fees and salaries. Pirates may also confiscate a vessel and cargo in order to operate the vessel as a “ghost” vessel – where the vessel is repainted and uses false documents to gain new contracts. Pirates will continue to take new cargo, sell the cargo, and continue to gain contracts in new ports.
Piracy is an ancient and current phenomenon. In 2007, for example, piracy was estimated to cost $16 billion annually. Piracy is one of the prime sources of funding for terrorist organizations, and governments have resorted to using Navies to protect hot spots for piracy. (Bazaitu, 2017)
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COSTS OF ATTACKS ON MARITIME TRANSPORT (1/2)
Direct vs. indirect costs
Direct cost of damages to vessel, injuries to people, etc.
Indirect costs of emergency security measures
Insurance premiums
Route restrictions
Security Policy
Case study
M/V Limberg
United States west coast port lockout
lockout set supply lines back by months from an 11-day port lockout
Economic costs were estimated at $1 Billion per day (Lazaro, 2002)
Slide 7 of 13
Direct costs are straightforward. They are the immediate aftermath that can be tangibly defined and assessed. These are the immediate destruction and loss that occurs from an event.
In October 2002 terrorists used 440 lbs of TNT in a small boat to attack the M/V Limberg off the coast of Yemen, causing 50,000 tons of oil being spilled. (Foreign Policy Bulletin, 2009)
This event is a great case study for the indirect costs. Insurance premiums for Yemeni vessels immediately skyrocketed. Routes were changed to not encounter Yemeni waters. Agencies cancelled port calls to Yemen. The second and third order effects to these policies are loss of economic gains to both Yemen, Yemeni vessels, Yemeni agencies, and also those agencies who would usually do business there.
Another great case study was the west coast port lockout
A union-related issued caused the Pacific Maritime Association (PMA) to lock out members of the International Longshore and Warehouse Union (ILWU) while heavily laden cargo ships were left in ports from Seattle to San Diego and holding up the offloading and loading of billions in exports and imports. The economic impacts were estimated at $1 Billion per day for the 11-day lockout.(Lazaro, 2002)
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Port security can be highly disruptive to economics
Booz Allen Hamilton War Game
Economic losses from port shutdowns: $58 Billion
Even with 24-hour inspections assisted by military, only 20% is feasible (OECD, 2003)
Alternative to mitigate security costs is to move screenings to ports of embarkation (OECD, 2003)
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COSTS OF ATTACKS ON MARITIME TRANSPORT (2/2)
The United States cannot realistically conduct screenings in port and expect to have a streamlined process for security that does not interfere with the greater economy or supply chain. The amount of personnel hours and added delay to the screening process is such that the additional security measures would shut down ports.
A key point here is that in the future there would potentially be autonomous systems that facilitate a much faster and effecting screening process – one that does not exist today. The idea would be to have an autonomous system that would unload containers to allow inspection, or potentially very small drones that are able to enter containers to scan for threats. These are futuristic and potentially non-feasible systems that are only theoretical in nature.
The final point here is that the mitigation factor to the substantial delays is the movement of the screening process backward in the movement process to capture the threats before it leaves the port of embarkation. This will be discussed further in the subsequent slides as part of the Container Security Initiative and the Customs-Trade Partnership against Terrorism.
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COSTS OF SECURITY MEASURES (1 of 2)
Safety of Life at Sea (SOLAS) and International Ship and Port Facility Security Code
Low direct costs associated
Very large indirect costs
Transponders
Completing port assessments
Approval of security plans
Ensuring ship compliance
Ship alert systems
Slide 9 of 13
According to the International Maritime Organization, only the SOLAS and International Ship and Port Facility Security Code are mandatory measures for security following the World Trade Center attacks during a special meeting of the Maritime Safety Working Group. (OECD, 2003)
SOLAS and ISPS have special provisions that ensure the safety of all 174 countries and vessels under their umbrella.
Of special note – these policies are of low relative direct costs but of high associated indirect costs. Indirect costs include provisions to ensure all vessels are equipped with warning systems, transponders, security protocols, security officers, and that the vessels have conducted adequate security planning for each vessel. Additionally, organizations are required to conduct port surveys prior to the utilization of port facilities.
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COSTS OF SECURITY MEASURES (2 of 3)
Container Security Initiative
Utilizes automated targeting based on software to identify risk (Bakshi, 2011)
Requires 24-hour advance manifest submission
Costs approx. $5-10 Billion per year (OECD, 2003)
Slide 10 of 13
The CSI uses metrics such as manifest and organizational data to determine the risk of a vessel to the United States. This requires manifests to be submitted at least 24 hours before containers lading onto vessel. From this, about 5-8% of containers get flagged for further administrative review of documents. The 24 hour advance submission of manifests costs 5-10 billion per year due to clerical requirements and the reduction in flexibility to accept last minute bookings. (Bakshi, 2011)
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COSTS OF SECURITY MEASURES (2 of 3)
Customs-Trade Partnership against Terrorism
Moves the location of ensuring container integrity to the shipper
Increases security requirements for companies throughout supply chain (OECD, 2003)
U.S. Customs validates foreign port suitability
Slide 11 of 13
CTPAT guidelines require security profile assessments for procedural, physical, and personnel security that is comprehensive and extensive in nature for the entire supply chain BEFORE entering the United States. Membership requires the United States Customs to analyze these ports to ensure compliance. Therefore, direct potential costs to participants could be relatively high. Other costs include training staff, adding security guards, developing plans and processing C-TPAT paperwork. (OECD, 2003)
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CONCLUSION
World Trade Center attacks of 9/11 were a catalyst for maritime security.
Maritime Transportation is substantial and vulnerable
Disruptions can have massive ripple effects
Solutions to security are international
The most effective policies are multilateral
Slide 12 of 13
Many measures have distinct benefits. We cannot have sufficient security without expending some costs in implementing these measures, but the alternative is to absorb the costs of destruction.
The key to ensuring a free and open maritime trade network is to have allies and partners who accept these implements as the way to ensure a cost effective alternative to absorbing costs of piracy and terrorism.
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REFERENCES
Bakshi, N., Flynn, S. E., & Gans, N. (2011). Estimating the operational impact of container inspections at international ports. Management Science, 57(1), 1–20. doi: 10.1287/mnsc.1100.1252
Bâzâitu, R. (2017). INFORMATION AND DISINFORMATION ON MARITIME PIRACY PHENOMENON. Scientific Bulletin “Mircea Cel Batran” Naval Academy, 20(2), 137–142. https://doi.org/10.21279/1454-864X-17-I2-026
Bush highlights success of military, intelligence community in preventing terrorist attacks. (2009). Foreign Policy Bulletin, 19(1), 58-98. doi:http://dx.doi.org.ezproxy1.apus.edu/10.1017/S1052703609000537
Chen, Y. Y., Zhang, P. L., & Liu, T. X. (2014). Study on classification of transport goods for its transport attributes based on quantitative theory III. Applied Mechanics and Materials, 513-517, 3024-3028. doi:http://dx.doi.org.ezproxy2.apus.edu/10.4028/www.scientific.net/AMM.513-517.3024
Harmon, J. A., & Jarmon, J. A. (2014). In The New Era in U.S. national security An Introduction to Emerging Threats and Challenges(pp. 75–120). Lanham: Rowman & Littlefield Publishers.
Lazaro, M. (2002). West coast port lockout leaves suppliers dry. Home Textiles Today, 24(6), 1-1,67. Retrieved from https://search-proquest-com.ezproxy2.apus.edu/docview/223044804?accountid=8289
Leonard, T. J., Gallo, P., & Véronneau, S. (2015). Security challenges in United States sea ports: an overview. Journal of Transportation Security, 8(1-2), 41–49. doi: 10.1007/s12198-015-0155-9
OECD, 2003, Security in maritime transport: risk factors and economic impact, Maritime Transport Committee, http://www.oecd.org/newsroom/4375896.pdf accessed on 16 April 2020
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