Where Does Supply Chain Security Fit in Maritime Competitiveness

1
Where Does Supply Chain Security Fit in Maritime
Competitiveness?
Northwest Maritime Trade Summit Seattle November
12, 2003
2
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?

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I Have Seen the Enemy..
And it is us!!!
4
Who are the players in supply chain logistics
management?

• Shippers
• Carriers (all modes)
• Logistics providers
• Terminals (Foreign and Domestic)

5
What is out there

• ISPS (Port Terminal)
• Seaport Hardening Grants (Port Terminal)
• CBP 24 Hour Manifest Rule (Supply Chain)
• C-TPAT (Supply Chain)
• CSI (Foreign Port Supply Chain)
• Operation Safe Commerce (Supply Chain)

6
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

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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

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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.

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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.

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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)

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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

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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
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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

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The Smart Box

• Heavy-duty seal, unique ID and internal sensor
• CBP 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

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Smart Box Issues

• CBP 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

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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

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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 CBP inspections

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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 LLPs to increase
  visibility across entire supply chain