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      - page 36 / 47





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by the Chinese government, rise in price of Chinese steel, and the rising value of the Chinese currency) also made sourcing from China unprofitable. 65

About 12 million standardized shipping containers arrive at U.S. seaports annually. With the exception of automobiles or bulk commodities, this the preferred method for transporting manufactured goods from overseas factories to wholesale distributors in the United States. Air freight is more expensive but is critical for lighter products such as electronic components used in “just-in-time” assembly operations. The possibility that a shipping container sent from a foreign port might contain terrorism-related devices, weapons, counterfeit products, and other prohibited items has raised concerns over container security to a new level. A distinct trade-off exists, however, between ensuring security and facilitating the free flow of commerce. For example, the Maritime Commerce Security Plan of the U.S. Department of Homeland Security states that the plan is to improve the security of the maritime supply chain to lower the risk that it will be used to support terrorism while at the same time to protect and facilitate lawful maritime commerce. 66

Simply stated, the question for policy makers relative to global supply chains and shipping rests on what measures are required to reduce the probability of a terrorist or other incident without unduly interfering with commerce. In the 110th Congress, for example, H.R. 1 (P.L. 110-53), “Implementing Recommendations of the 9/11 Commission Act of 2007” required by the year 2012 container scanning by imaging and radiation detection equipment at a foreign port before a container is loaded. The SAFE Port Act enacted in 2006 required, among other things, that U.S. Customs and Border Protection (CBP) conduct a pilot program to determine the feasibility of scanning 100% of U.S.-bound containers. In order to fulfill this and other requirements, in December 2006, the CBP and the U.S. Department of Energy jointly announced the formation of the Secure Freight Initiative. 67


While the security benefits associated with the requirement for 100% scanning of all cargo containers bound for the United States seem to be obvious and apparent, actual implementation has raised numerous issues. This is one example of the tradeoff between national security and supply chain efficiency.

In testimony before Congress in 2008, the U.S. Government Accountability Office laid out the major challenges related to this requirement. Among them were concerns over the lack of information on the efficacy of host government examination systems, additional time and cost requirements (particularly for equipment placed miles from where the cargo containers are stored and the comparatively short period of time containers are available for scanning when transshipped), the inconsistency with widely accepted risk management principles, and the


Jonathan Katz, "Welcome Back U.S. Manufacturing," Industry Week, August 2008, pp. 34-37.

66 U.S. Department of Transportation. MARAD. Maritime Commerce Security Plan for the National Strategy for Maritime Security, October 2005.

67 See CRS Report RL33512, Transportation Security: Issues for the 110th Congress, by David Randall Peterman, Bart Elias, and John Frittelli. Also, see Department of Homeland Security, “DHS and DOE Launch Secure Freight Initiative,” Press Release, December 7, 2006.

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