Where Does Supply Chain Security Fit in Maritime Competitiveness? Northwest Maritime Trade Summit Seattle November 12, 2003
Overview • Who are the players? • What is the threat? • What is being studied (and why)? • What does it all mean? • Where do we go from here?
I Have Seen the Enemy….. And it is us!!!
Who are the players in supply chain logistics management? • Shippers • Carriers (all modes) • Logistics providers • Terminals (Foreign and Domestic)
What is “out there” • ISPS (Port & Terminal) • Seaport Hardening Grants (Port & Terminal) • C&BP 24 Hour Manifest Rule (Supply Chain) • C-TPAT (Supply Chain) • CSI (Foreign Port & Supply Chain) • Operation Safe Commerce (Supply Chain)
Where do we stand today? • SeaTac Airport received $257 million in Federal grants for security since 9/11 • Seaport Hardening grants $300 million (Port) • Operation Safe Commerce $58 million (Supply Chain) • 2004 Homeland Security Appropriations Bill- $4.6 Billion • $125 million to Port Security • $140 million to Supply Chain Security
Port Security vs. Supply Chain Security • Apples vs. Oranges • What is the definition of a “Port”? • Who “owns” the cargo? • Operational costs vs. capital grants • It is our concerted opinion that supply chain security is significantly more important than hardening of our Ports
Mission of Operation Safe Commerce To determine, document and test the best policies, practices, procedures, processes and technology available to prevent, deter and identify the introduction of unmanifested material into the global supply chain.
Ultimate Goal ofOperation Safe Commerce To produce a report that identifies the practices and standards that can form the basis of national and international standards for supply chain security.
Operation Safe Commerce • Supply chain security initiative, not a Port security effort • OSC is not a pure technology effort • OSC is concerned with evaluation and enhancement of: • Policies (governmental) • Procedures (logistics) • Processes (physical)
Significant Points • OSC must prove to be economically and commercially viable • OSC is not a military logistics effort • Ports are not the direct beneficiary of OSC
OSC: Supply Chain Definition CSI Inspection C-TPAT Inspection Order Entry Customs Inspection Port of Debarkation Manufacturer Consolidation Facility Port of Embarkation Distribution Facility Intermodal Transfer
Operation Safe Commerce • Total $58 million awarded • $27.5 M - Tacoma/Seattle (9 projects)- Pinkerton Consulting • $13.7 M - LA/Long Beach (3 projects)- Sandia National Laboratory • $13.8 M – NY/NJ (6 projects)- BearingPoint/JBC • $2.96 M - National Coordinator- Transportation Security Lab/Battelle
The Smart Box • Heavy-duty seal, unique ID and internal sensor • CB&P requiring use ($20 per box) as part of C-TPAT by 1 Dec • World Shipping Council “dislikes” the Smart container • Operation Safe Commerce is Studying the concept
Smart Box Issues • CB&P indicates box will receive special “green lane” status • Concern over sealing a “bad thing” inside a protected box • Concern over eSeal security and tampering • Costs- Who pays?? • Technology is not the answer
What does this mean for the PNW maritime industry? • Port security is being enhanced at Seattle, Tacoma and Everett • Seattle and Tacoma are in a leadership position with OSC and other private demonstration projects for container supply chain security initiatives • Ports must remain competitive re: Vancouver, BC and California
What does this mean for the PNW maritime industry? • More inspections of containers at US Ports is not the answer • Ports must stick to their core business • Not a clearing house for shipping documents • Not a fire department • Not responsible for USCG waterside patrols • Not responsible for CB&P inspections
Next Steps • Focus on supply chain security vs. Port hardening • Work with international maritime organizations to develop standards for supply chain security • Work with Shippers and LLP’s to increase visibility across entire supply chain