Ask anyone in the industry how we as a country are doing to bolster border security in international trade at our ports and land crossings and you will likely hear, in the same breath, that we are doing a lot better but far more needs to be done. In fact, many industry insiders point to existing ‘gaping holes’ in U.S. border security that need immediate attention. Security—national and trade—really begins with securing the global supply chain network and that should involve public-private partnerships, say the experts. But, not enough is being done.

“Security is what the world trade industry worries about most,” says Kelby Woodard, principal at Minneapolis-based Trade Innovations, Inc., a firm specializing in compliance and security issues. The global supply chain will never be 100 percent secure. But, at least for the moment, he is confident that the right moves are being made. “With the layers of security and compliance programs we have in place and through U.S. Coast Guard operations and Customs and Border Protection (CBP) targeting operations, examinations and inspections—all these things contribute to a pretty secure supply chain,” he concludes.

But a multitude of players can be a curse as well as a blessing. The issue of border compliance and security is further complicated through the number of agencies involved, says Tom Cook, CEO of American River International, Ltd. in Melville, New York, a firm specializing in providing import/export security and compliance services as well as management consulting services worldwide for corporate America. The Department of Homeland Security (DHS) was supposed to consolidate all these efforts. “But, you still have the Treasury Department, the Department of State, the Coast Guard, port authorities, the Transportation Security Administration, and the Department of Transportation running in different directions from that of the DHS,” contends Cook.

So where are we today in terms of securing trade and global supply chains? The best answer seems to be, ‘it’s a mixed bag.’

Uneven scrutiny

Some initiatives are diluted through inconsistent application. “The Container Security Initiative (CSI), for example, has been implemented now for about three years,” Cook continues. “But, it deals primarily with ocean freight. What about all the freight coming in on aircraft?”

Currently, CBP operates overseas satellite offices that manage the CSI program, which pre-screens cargo at points of origin before it is allowed onto a U.S.-bound vessel. “The key issue is to be consistent,” Cook says. “You can’t put Customs officers in ocean gateways and then allow truck or air gateways to have less security.” He adds that, of the 18 terrorists involved in 9/11, about half entered the country illegally and that glaring gaps in security have to be plugged.

There is no question that securing large and robust ports is essential. “But, the vulnerability is in the secondary and tertiary ports, where there is less concern about terrorists,” argues Cook.

One of the more immediate challenges facing border security, adds Woodard, is today’s supply-chain infrastructure. “The trade argues the federal government should shoulder the cost (of strengthening the infrastructure) because trade affects a tremendous amount of the U.S. economy,” he explains. “But, since the trade industry is using that infrastructure, they should contribute as well. Part of the difficulty rests in the fact that the infrastructure is not all public—like the railroads are.”

Border security at land border crossings differs in focus. “Overall, I think land border crossings are more risky for cargo than the maritime environment because more things can go wrong because of the infrastructure problems,” says Woodard, adding anytime cargo is at rest, it’s cargo at risk.

He cites the example of C-TPAT (Customs Trade Partnership Against Terrorism), an initiative used in both land and marine environments. At land border crossings, the FAST (Free and Secure Trade) program offers expedited clearance processing and reduced inspections. Companies must be C-TPAT members to participate. “The biggest issue for FAST members is waiting in line for an hour or two before getting access to the FAST lane because of infrastructure inadequacies,” explains Woodard.

With a sorely needed extended infrastructure in place particularly at northern land crossings, the FAST program could speed up by another two or three hours, says Woodard.

One significant difference between ocean cargo and cargo crossing land borders is the extra time available to analyze ocean cargo data. “The manifest is reported to Customs 24-hours prior to lading and then there are 10 to 14 days of ocean crossing to sift through data to discover any anomalies,” Woodard says. When it comes to a land border, trade is moving at just-in-time inventory speed, with little time to spare for extensive investigation.

The political dynamics at northern border crossings—particularly in the Detroit-Windsor area—has created a strong lobbying effort directed at relaxing restraints. “After 9/11 when Customs ratcheted down border operations, the first people to scream were the auto manufacturers so there is a lot of pressure on the government to expedite cargo here,” explains Woodard.

In order to keep trucks rolling across the border, it is imperative that there be good intelligence information available. But at the moment, the instantaneous exchange of intelligence is a substantial challenge facing border protection, says Commander Jeff Carter, chief of media relations for the U.S. Coast Guard.

World trade security is a global problem requiring global solutions, continues Carter. “ISPS (International Ship and Port Security) helps us address that,” he explains. The Coast Guard works closely with players in the international supply chain and uses an international port security team conducting ISPS code compliance checks in foreign ports to ensure those facilities are compliant. This code is a requirement set by the International Maritime Organization. “We also make our ports open to foreign inspectors.”

Layered approach to security

In an effort to tighten cargo security at points of origin, the government is extending our borders beyond their physical boundaries. Initiatives like CSI (with 42 foreign ports participating so far), Operation Safe Commerce (OSC) and C-TPAT serve in conjunction with the operations of agencies including CBP, the Coast Guard, terminal operators and port authorities. Screening and inspection operations, using technologies such as radiation portal monitors and ‘smart’ and secure containers, also play a critical role in providing layers of protection. The 24-Hour Rule is a CBP requirement imposed in foreign ports, where manifest information must be provided to the agency 24-hours prior to an ocean container being loaded onto a U.S.-bound ship.

The goal is safe cargo on the inbound. “Checking and profiling all containers prior to leaving foreign ports on U.S.-bound ships is necessary,” says Gary LaGrange, president and CEO of the Port of New Orleans. “It is not an easy task, but it is achievable; all it takes is money. Congress needs to recognize they are falling short by about 80 percent under the funds that are necessary, according to what the Coast Guard identified about three years ago.”

Security is a public-private responsibility. “We need to interact constructively with our sister ports, with U.S. Customs and with the companies developing security solutions,” notes George Cummings, director of homeland security at the Port of Los Angeles. “As port authorities, we have to help give the trade industry the opportunity to participate in the exploration of technologies that relate to security issues and to supply-chain and logistics issues. These technologies offer businesses the opportunity to achieve ROI.”

The Port Authority of New York and New Jersey operates airports, bridges and tunnels, says Steve Coleman, spokesman. “Our security role at seaports is a bit different in that we are only in charge of physical security of the terminals themselves, while the majority of the port security is handled by the Coast Guard, Customs and Immigration,” he says.

Coleman believes the next level assuring port and cargo security lies in Operation Safe Commerce (OSC). “This is a national—and soon-to-be international—effort to secure containers from points of origin to their points of destination,” he says.

OSC has been in operation since September 2002, testing the security effectiveness of a high-tech tracking and data-emitting device placed on cargo containers from the time they leave points of origin until the time they reach the U.S. “We are active participants in this program and we think this will go a long way toward developing an international standard for cargo container security,” Coleman explains.

Once such standard is accepted by the international maritime and trade community, Coleman says it will secure cargo while also providing valuable inventory data through the device’s GPS capabilities. But, success depends on widespread adoption. “If businesses don’t buy into this, it won’t happen and we are back to where we are now with only a limited number of containers that can be checked.”

The layers of over-lapping security (and with it the potential for information getting lost between the crevices) are evident in the distinct responsibilities of agencies. The U.S. Coast Guard, for example, is the lead federal agency responsible for maritime and port security, while CBP is responsible for cargo security, explains Carter. “We have a strong intelligence-sharing partnership with CBP,” he says. “We and the DHS are part of the national intelligence community, and we work with other agencies to make determinations about potential threats before they arrive on our shores.”

The Coast Guard has 13 maritime safety and security teams that can be deployable throughout the country as required. “We can pack those guys up into a C-130 and move them so they can put their boats in the water at a local port to do preventive measures such as visible deterrence and patrolling,” Carter explains.

The proposed GreenLane Maritime Cargo Security Act, recently introduced into the Senate, aims to bring together various port security initiatives and provide compliant shippers with faster access to port clearance. Among its provisions is one that avails C-TPAT participants reduced searches, expedited release of cargo during all threat levels, and reduced bonding requirements.

Legislative attention to facilitating the flow of trade without jeopardizing security is very much called for, say various observers. A number of industry insiders, for example, criticize the U.S. government for dragging its feet on implementing the TWIC (Transportation Worker Identification Credential) program. “This program continues to be in a very long developmental stage and we think it’s critical to get that process moving,” says Kurt Nagle, president and CEO of Alexandria, Virginia-based American Association of Port Authorities (AAPA).

“This is probably our lead concern and what we consider our highest priority,” notes Cummings at the Port of Los Angeles, whose port participated in a prototype phase to test the program’s efficacy. Other port directors echo his insistence on the importance of the ID program. The TWIC credentialing system uses access control technologies—such as biometrically enabled ‘smart’ credentials—for transportation personnel requiring authorized unescorted access to secured areas of the national transportation system including ports, airports, trucking and rail facilities.

Despite their support, port directors recognize the significant financial investment required in implementing these systems. If they do invest in their own versions while waiting for the government’s final TWIC decree, they worry whether their credentialing systems will be compatible with the system eventually chosen by the federal government. “This is creating a lot of concern right now,” Nagle says.

The Port of Los Angeles, for example, recognizes the urgency of implementing this program. “It’s been widely recognized as a key component of port security, because there is a gap in the current approach requiring private operators to comply with the security regulations of the Coast Guard,” Cummings says. “By using such a credentialing system, we can eliminate the vulnerability of an unauthorized person gaining access to a terminal, which means we can operate with tighter control and greater flexibility.”

With the volume of throughput at Los Angeles’ terminals, Cummings explains a wide range of personnel need access, such as laborers, truckers and legitimate vendors. “We can’t afford to have a lot of delay at the gates, so these systems can let us know right away if a person is authorized,” he says.

Unwilling to wait for the federal version to be unveiled, the Port of Los Angeles is conducting an initial assessment and planning for its own credentialing program. “Once the federal government produces its TWIC program, we would align with their program, similar to what the State of Florida is doing,” Cummings says. “I believe other ports are considering similar steps as well, but our strong preference would be to have the federal TWIC program be implemented as soon as possible.”

Where’s the beef?

One common mantra among port directors is how the lack of federal funding is undermining the security of their ports and cargoes. “There needs to be a dedicated pool of money exclusively for ports security,” says New Orleans’ LaGrange, past Chairman of the American Association of Ports.

Ports need about $400 million annually over the next 10 years, says LaGrange. “But, the ports have received only about one-fifth of that amount.” His own port, for example, requires $64 million. “We’ve only received $8.5 million in grants so far; but that’s not unique compared with other ports.”

He adds that seaports generate about 85 percent of all Customs duties—yet reap no benefit from those monies for homeland security projects. “Congress’ approval of the level of funding we (ports) are requesting would be a sign—both domestically and internationally—that the United States is serious about maritime security,” says LaGrange.

Nagle at AAPA agrees the biggest challenge facing ports is funding. “The funds just are not there to help public ports make the security enhancements the federal government requires,” he says. The concern is whether ports will be able to make the adequate investments in their infrastructures to accommodate trade growth if they have to divert funds to handle security issues. “You obviously need to be able to do both, so we think it’s important for the federal government to continue to increase significantly the level of funding to help ports make the security enhancements they require,” Nagle says. Ports, he notes, are public agencies with limited resources available at state and local levels. “Yet they have the dual needs of both the security side and the infrastructure investment side of this issue.”

Compounding the funding issue is the proposed structure of the granting program, essentially lumping all modes of transportation within a targeted ‘infrastructure protection program.’ “There is the concern of spreading the funds further and wider—back to the adage that freight doesn’t vote,” continues Nagle. “We need to have specific legislation and regulations geared to enhancing security on the maritime side—as it is on the aviation side.”

LaGrange cites examples of glaring inequities in the granting process. From the same pot of resources available to a port to invest in radiation detectors, for example, a Tennessee volunteer fire department draws funds to purchase a fire truck. “That comes out of the ports’ pot and that simply should not happen,” says LaGrange. He adds another port received over $1 million for a security vessel. “But there is no one to operate that vessel.”

With ports not only vying amongst themselves for grants but complicating the issue more by having to compete with bus terminals and train stations and the like, the prognosis for improvement is limited. “It’s a question of developing metrics that compare those on a risk basis to determine where funding should go—and that’s difficult to compare across transportation modes,” he says.

Deficit management

Despite funding and infrastructure shortfalls and concerns, ports continue to operate with admirable economies while investing in security. Still, some like Port Everglades were forced to charge user fees to manage cost squeezes. In addition to having to comply with the federal MTSA (Maritime Transportation Security Act) and Coast Guard port requirements, Florida ports must comply with supplemental security requirements imposed by the state Department of Law Enforcement, explains Phil Allen, director for Port Everglades.

Allen reports operational costs for security at the port have risen from $4 million annually (pre-9/11) to over $15 million today. In addition, the port spent about $44 million over the last few years to comply with state and federal requirements for increased security efforts and infrastructure enhancements such as entrance gates, fiber optic networks throughout the port, and surveillance cameras. “Florida ports are finding it increasingly difficult to compete with other ports around the country, since (those other ports) have only to comply with MTSA requirements,” he says.

Allen notes Port Everglades’ federal partners, the Coast Guard and CBP, have ramped up inspection efforts at the port. “They are in the process of installing radiation detectors and they’re also conducting higher levels of screening—in addition to screening at the ports of origin to better protect us,” he explains.

James McCarville, executive director of the inland Port of Pittsburgh (the second-largest port on the inland waterway system and ranked among the top 20 U.S. seaports), says his security concerns are quite different from those of deep-water ports. “We are more concerned with the necessary preservation of our infrastructure,” he says. “We’ve got about 20 sets of locks and dams on the Ohio River—the loss of any one of which (through neglect or through an act of terrorism) could be a very significant loss to the economy of our nation.”

The assumption that terrorists will strike only symbolic places leaves a lot of other places exposed, including inland ports such as Pittsburgh, says McCarville. “We need to be alarmed about the rate of deterioration the locks and dams have suffered over the years due to inadequate attention as that relates to national security and economic health,” he says. Some of these structures are over 100 years old and were originally designed for a 50-year lifespan.

Security initiatives at the Port of Los Angeles involve working with industry partners, sister ports and overseas trading ports. “We are working together to discover technologies and security solutions that can also enhance the security and efficiency of logistics systems, such as container security devices that collect and report valuable data,” Cummings says.

The port, along with the Port of Long Beach, developed a joint five-year security infrastructure plan. “We identified our future needs for required funding and we will have two separate initiatives: cargo security and port security,” Cummings says.

Although the Port of New Orleans does handle some container cargo, its primary cargo is break-bulk commodities such as steel, rubber and plywood, which are transported out in the open and not in closed containers.

LaGrange says the number of Vehicle and Cargo Inspection Systems (VACIS) allotted to ports are capable of x-raying about 5 percent of all incoming containers. “But I, as well as other port directors I’ve spoken with, think the number should be around 10 percent or 15 percent,” he says. This inspection is another layer over the screening performed by CBP on 100 percent of all cargo before it arrives in the U.S.

If the answer to enhancing security means strengthening the security of the supply chain—at U.S. border crossings, points of origin and in the containers themselves—then both the public and private sectors have to meet the challenge. “C-TPAT certainly has shown that the partnership works,” Woodard says.

“The difficult part is nobody really owns the entire supply chain,” he continues. “The U.S. government doesn’t and not a single private entity does. The private and public sectors need to develop ‘what-if scenarios’ and work through contingency plans. Areas of distrust between the trade and DHS need to be broken.”

DHS Study finds Serious Security Lapses

A $75 million three-year study conducted by the Department of Homeland Security—to be fully completed in autumn 2006—has already found critical security lapses affecting U.S. seaports and the transportation distribution network, according to documents obtained by the Associated Press. The study—called ‘Operation Safe Commerce’—points to serious security oversights by personnel along the global transit supply chain, including port operators, private companies at foreign and U.S. ports, and operators of shipping lines, trains, trucks. These lapses could “enable un-manifested materials or weapons of mass destruction to be introduced into the supply chain,” the study reported.

In commissioning this study, the DHS implicitly acknowledged that vulnerabilities exist. The hope is that by identifying weak links, preemptive actions can be taken to make them more immune to terrorists.

The study reported containers could be opened during the ocean voyage to America and that: “Due to the time involved in transit (and) the fact that most vessel crew members are foreigners with limited credentialing and vetting, the containers are vulnerable to intrusion during the ocean voyage.”

Safety problems were evident in overseas ports, as well as American facilities. The study said: “There is a perception that U.S. facilities benefit from superior security protection measures. This mindset may contribute to a misplaced sense of confidence in American business practices.”