No one relishes the thought of terrorists using a commercial cargo carrier as a means to deliver WMDs to the U.S., but that possibility seems to be on the minds of more and more people lately, whether they represent the federal government or the trade community.

Everyone it seems is a little anxious these days; and the climate has spawned a flurry of new rules and regulations aimed at securing transportation and global supply chains. To say this is a daunting feat would be an understatement.

A new "New Deal?"

Operation Safe Commerce, however, is one initiative that holds plenty of promise and is generating optimism about how the government will proceed from here on out. Concentrating on the ports of New York/New Jersey, Seattle/Tacoma, and Los Angeles/Long Beach, this public-private partnership uses federal grants to test pilot programs, which will analyze supply chains from beginning to end and come up with ways to improve security.

According to trade executives, the government's willingness to engage in a thorough analysis of how to make supply chains safer before implementing far-reaching rules is a welcome change in strategy. Too often, the process works just the opposite, with the trade forced to conform to government rules that they complain are inadequate and haven't been thought out.

This time it's different. J. Michael Zachary, Director of Port Planning and Logistics for the Port of Tacoma, says Operation Safe Commerce (OSC) will utilize all of the existing security initiatives, from the Customs-Trade Partnership Against Terrorism to the Container Security Initiative, with the single goal of "developing international standards that would be applicable to all containers in an international trade program."

OSC is not an R&D project, however. By specific order of the Transportation Security Administration, OSC mandates commercial items-items that can be bought off the shelf today with a minimal amount of customizing. "What we're doing with OSC is taking a family of components, applying an architecture, and integrating them into and end-to-end solution," explains Boeing executive Mike O'Neil, Program Manager, Maritime Cargo Security Systems. Boeing is one of the companies involved in several of the pilot programs that will be conducted under OSC. On top of that, "the government is looking to deliver a solution in a very time-responsive manner."<

The nuts and bolts of OSC

Part of what makes OSC unique, and maybe even a little unconventional, is its attempt to provide comprehensive security along the entire supply chain from beginning to end. Furthermore, while smart seals and other technologies are helping improve security in certain areas, there's more to the picture. "A smart container has not been proven to be immune from somebody coming in and changing the 'smartness' of the container," says the Port of Tacoma's Zachary. "Besides that, you're not really looking at supply chain security. If you were, you'd be going back to the origin of the pallet-before the box is sealed. If you put a smart seal on a box that already has a bomb in it, you just guaranteed smooth entry of that box with the bomb in it."

Zachary explains that, "In general, most of the projects (in the Northwest U.S. load centers) are coming from an overseas port, primarily a 'country of interest,' or one which we suspect 'bad guys' may hang out in." Likewise, the shipments under scrutiny are those that "may be prone to having something slipped in-electronics, machinery, food stuffs," he says. "Most are full containers, but some are from consolidators. OSC goes all the way back to the origin of the pallet-who built the pallet, who certified that the pallet was clean, who put the pallet in the container or in a truck for LCL, and who inspected that container before the seal was put on. These are the kinds of vulnerability assessments that are being conducted under OSC." Zachary explains, "A nice Phillips Electronics factory in China is probably pretty good, but some mom-and-pop operation in the middle of Pakistan is probably not as good-they don't have the technology to do a lot of this stuff."

While 'countries of interest' may figure prominently in some of the OSC pilots, one headed up by Unisys looked at a supply chain originating in Brazil. Ned Ahearn, Partner, Global Supply Chain Management, says that particular pilot involved coffee imports for Sara Lee that came in through the port of NY/NJ. In that case, "the 'manufacturing plant' was a farm where the coffee was grown. The green coffee beans were picked and sent to a Sara Lee distribution center where they were cleaned and packed. That's where Unisys came in to verify that the bags of coffee contained no WMDs or contraband."

Greg Baroni, President of Unisys' Global Public Sector, says the company participated in a second pilot with Sara Lee that involved apparel. In the meantime, Unisys also plans to conduct an additional pilot with Motorola, Baroni says, which will analyze electronics shipments between Taiwan and Seattle.

Maintaining product flow

Security usually means sacrifice to importers though; specifically, sacrifices in supply chain speed, flexibility, and cost effectiveness. Zachary remains a realist on this front. "Our goal is to make sure that whatever comes out of OSC is economically and commercially viable. That means minimal financial and operational impact to the trade. That may be a pipe dream; we don't know."

Zachary's counterpart, Beth Rooney, Manager for Port Security at the Port Authority of New York and New Jersey agrees. She says that at this stage in the program, the financial and operational impact of OSC on the importing community is unknown. "We don't have a clue. It could be $1 or $500." The focus, says Rooney, is on keeping costs down while at the same time looking for business solutions that offer a value proposition.

Ron Maehl, Boeing's Vice President of Network Enabled Systems, believes that OSC is a win-win for everyone involved. "If we can increase the overall awareness when it comes to inventory and allow companies to improve their number of inventory turns, you unlock a huge amount of money." Boeing's Mike O'Neil concurs. He says, for instance, that car manufacturers lose a percentage of their vehicles when they're imported into the U.S. "Interestingly enough, they're driven off the ship and straight into some 'bad guy's' backyard. That car is a perfect platform for some terrorist getting something dangerous into the United States. Security for wheeled vehicle cargo is a big concern, and so too is bulk cargo."

Both Maehl and O'Neil stress that when it's all said and done, the financial outcome for importers will be better rather than worse, even for the small guys. According to O'Neil, "One company we spoke with imports about 10-15 containers a year. But because importing wasn't 'routine' for them, they would typically have a loss percentage of 20 to 25 percent of the containers. If you're running a business and you're losing that percentage of accounts payable; that's not one I would want to be involved in. We think that by securing the supply chain against terrorists we also enhance in-transit visibility and help that small business gain access to information." Maehl adds, "The economics of this business are every bit as important as technology, probably more important."

O'Neil offers an analogy. "If you think back about 40 years ago, most stores didn't have the ability to accept credit cards. It was largely a cash economy. Today, most everyone accepts credit cards. Think about the value that provides to the retailer in extending his customer base and managing his customers. Then think about providing better container information to the smaller importer. I think conceptually it just fits."

Zachary also sees an upside to increased security measures. If you compare trade facilitation now versus two years ago "there has actually been a slight improvement in productivity. Ten years ago when a container came into a facility the guy was told to go put it in Block A. Well, Block A could contain 100 to 150 containers, and so when it was time to load it on a ship, another guy drove around for five, ten, fifteen, or twenty minutes looking for that container. Nowadays, the guy is told to go put it in A-10-row A, slot 10-and it takes less than a minute to go get that container. Guess what? That's a savings of 15 to 20 minutes; that's money in the pocket. Improved supply chain visibility has increased productivity. But we've reached a limit of savings. We realize that now we have to go to the next step and it's probably going to cost some additional money."

Fighting an 'asymetric' enemy

"We don't think there are any silver bullets in this world to solve the problem of supply chain security," says Boeing's O'Neil.

According to O'Neil, "One of the things we like to do at Boeing is bring the best at particular functions to a problem domain and allow them to apply their core competency. Using that philosophy, we put together the following team. The first member is ADT. They provide us with physical security expertise; they also provide us with access to a significant amount of RFID technology.

"Right behind them, you need people to help you communicate from the point of data collection up to the Boeing network. We wanted somebody with global reach, and with a resplendent capability for reliability, and we have brought in Iridium to bear on this problem. They're very effective-anywhere on the globe you want to go they can reach out. We have also partnered with Parsons, a global construction company that works with transportation infrastructures. They'll help us understand how to interface with the actual maritime port environment.

Finally, integral to this entire thing is 'understanding' the process. That's why we chose Global Marine Security Systems Company. They started out in the mid-1970s providing security to oil tankers when we had this big boom in oil prices. They are now global security process specialists who help us significantly understand the process, the data flow, and where the gaps in that process are."

O'Neil says that Boeing's strategy will use two layers of redundancy. "The first layer involves an instrumenting of the supply chain that provides physical security-a layer of security that takes the cargo at point of container stuffing, and as it transits throughout the supply chain will A) insure the fidelity, B) if any breach to that fidelity occurs, provides a near real-time report, and C) allows us to track throughout the supply chain. That's our physical security layer. We think that physical security layer-in military parlance, because we're actually fighting a global war on terrorism-allows us to fight the current battle."

But fighting the current battle isn't good enough. There's the future ones to prepare for.

"This is an asymmetrical enemy," explains O'Neil-meaning that the battles are between two very disproportionate adversaries, the military-industrial complex vs. single suicide bombers. "We started searching for something that allows us to fight the future battle. And what we arrived at was a risk assessment engine that allows us to get ahead of the asymmetric enemy. One of the things we found out very rapidly when we started doing mission analysis on an asymmetric enemy was that he leaves breadcrumb trails of data. Some of them are meaningless by themselves, but if you start putting them together you start getting a real picture of what's going on. That allows us to go from reactive to proactive."

O'Neil concludes," We will use a risk assessment engine, driven by data that is both governmental and public and process execution, and we believe that this approach of using a physical security layer and a virtual security layer we bring a redundant solution that allows us to stay ahead of the 'bad guys.'"

Boeing's executives caution that "there's no such thing as 'one-size fits all' security," though. "In some instances," says O'Neil, "it's looking at process, techniques, and methods. In other cases, technology jumps out at you. So, it comes down to integration of an end-to-end system, doing a gap analysis and assessment of what looks right and what needs to be changed."

Maehl adds, "When you look at goods coming in, you have to divide them basically among ports. Take Rotterdam for instance-huge importer into the U.S. If you secure Rotterdam, that's great and you get the bulk of containers. But there's also ports like Karachi (Pakistan) that don't put out very many containers, but which could be very high risk. So the trick is not just OSC, it has to do with CSI (U.S. Customs' Container Security Initiative), and the various initiatives. When you integrate all of these together they clearly have to touch all of the containers one way or another consistent with this efficiency issue. It's very important to note, when you look at the terrorist threat, there's two things that stand out immediately; one is the asymmetry, and the other is the fact that they're very good at going after seams and cracks."

Bonni Tischler, Vice President of Supply Chain Security for Pinkerton Consulting & Investigations, which was awarded a primary consulting contract with the Port of Seattle and Port of Tacoma to help manage OSC projects, agrees that, "OSC isn't just about technology, it's not just about containers, it's really about cargo (wheeled cars, for example). Technology is just an enabler. OSC is more about people, policy, and procedures-improving the process. That's the bigger part."

Beth Rooney concurs. "It's not just technology that will solve problems." It's going to take 'people processes'-that is, "making sure the people you're dealing with are legitimate, vetting out the 'crooked' ones. We're evaluating processes and policies." The funding allocated to OSC, some $58 million, won't do the whole job but, says Rooney, "it's the first step in a multi-faceted program. We're never going to be 100 percent secure. But, we're better off now than we were before 9/11, and we're getting better every day."

And what if-the unthinkable-terrorists strike again? "The second part of the equation is how well we respond and recover," says Rooney. "I'm sure the terrorists never imagined that lower Manhattan would be up and running five days after the attack. People were back on the job Monday, even though some of them didn't even have a place to live or the usual way to get to work."