Committed to Being the Best	SPRING 2004

FOREIGN INSIGHT by Del Brahm

"Smart Containers" are all over the transportation news these days. Over the past months and years we have seen many, many changes in passenger and cargo processing at airports all over the world and particularly in the United States in an effort to provide security for air passengers and cargo. Now the question is how do we secure ocean passengers and cargo. Unlike air shipping where most passenger liners have a belly full of cargo, today's ocean carriers almost exclusively separate passengers from cargo. Many years ago it was not unusual to find dozens of passengers booked on ocean cargo ships for month-long voyages to various destinations in the world. Today however, most passengers are booked only on cruise vessels. Most ocean vessels are built for efficiency and spend barely a couple hours in a port leaving little time for passenger sightseeing and visiting. Additionally cabin space for passengers cannot be afforded on vessels accommodating six or eight thousand TEUs (twenty foot equivalent units). We have recently seen new huge passenger cruise liners for more and more ocean passengers. We saw the Queen Mary II docked alongside the Queen Elizabeth II on the Hudson River. The QE II was dwarfed in comparison. So now we must deal with millions of containers shipped on hundreds of vessels from and to thousands of ports, all over the world, every year. Yes, there is cargo moving outside of containers. There is: bulk cargo, breakbulk cargo, and roll-on/roll-off (ro-ro) cargo. There are some LASH (Lighter Aboard SHip) (barge) vessels and some combination vessels, but the vast majority are container ships. Most people recognize that it is virtually impossible to scan, screen, or x-ray every container before it is loaded aboard a ship. How do we secure containers against the terrorist threat? We now have a wide variety of "secure" seals available for containers. Older people will remember the original container seals, which looked like the old metal deer tags. This type of seal lost favor long before the terrorist threat took center stage. They were cheap and easy to duplicate, so that a thief could snip the seal, steal cargo from inside the container and make a new seal with the same number to replace the snipped one, so nobody would have any idea that a theft occurred until the container was opened at destination. Now there are many seals, which are much harder to duplicate. These are deterrents for thieves, but what about terrorists? In earlier issues we discussed such topics as C-TPAT (Customs-Trade Partnership Against Terrorism), cargo security in general, AMS (Automated Manifest System), and the twenty-four hour rule. All these are part of supply chain logistics and have a role to play in cargo security. Enter the "smart container." The problem is that it is slow in coming on the scene because of the various cooks developing the broth and their various reasons for development. All parties are looking toward an electronic seal, or e-seal, but the different reasons and uses are putting a fly in the broth. For example, importers and exporters are looking for e-seals or tags to provide them high-tech identification and routing. They also want to reuse these devices with a minimum amount of manipulation and cost, so they don't have to pay for an entire new device for each container. The carriers are rightfully fearful of being the entity required to provide and maintain the hardware and software to monitor these e-seals on their containers. There could be a wide range of cost difference depending on the amount and type of data to be monitored. The carriers want to keep the costs to a minimum, while still keeping tabs on their containers. The government wants whatever it takes to keep the cargo secure. Fortunately, at the time of this writing, all three of these entities are talking together, in an effort to come up with the best solution at the least cost. Prediction: The end result will be an electronic seal for a one-time use, which will be fixed to the container by the seller or seller's agent; it will be monitored electronically by the carrier or carrier's agent from the point it is affixed until the container is delivered to the consignee, or until US Customs and Border Protection opens it for an exam. If anyone tampers with it in between, the e-seal will send a "tilt" signal and the container will be stopped and inspected. If the buyer and seller want to provide additional routing or monitoring, they will have to provide their own separate device. Stay tuned. We will soon see some huge innovative changes in ocean container security. In prior issues we discussed GSP (Generalized System of Preferences). This procedure allows certain products from certain countries to enter the US duty free. It is our way of aiding some developing countries. There are some changes in the works. The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Slovakia are expected to be taken off our GSP list, when they join the EU (European Union). The thinking seems to be that they don't need our benefits when they have the EU benefits. Antigua and Barbuda, Bahrain and Barbados are also coming off our GSP list, because they are no longer considered "needy" developing nations. Algeria is expected to be added to our list of GSP countries. Keep an eye open for final changes.