Shippers fear port security measures would disrupt commerce

While lawmakers in both parties intend to move quickly to pass legislation aimed at improving maritime and cargo security, officials with major shipping and container companies fear some new rules could be disastrous for international commerce.

Industry experts worry that new regulations for screening and inspecting cargo could place odious and costly requirements on shippers, and they are urging lawmakers to be cautious.

"If you delay the supply chain to the extent that prices go up and the cost of doing business with America is too high, and you have several shipping companies that can't upgrade their security, then the terrorists have won," said Noel Cunningham, a principal at The Marsec Group, which consults maritime companies and port operators.

On the heels of an attempt by a Dubai-owned company to take over several U.S. port terminal operations, congressional leaders say they see a rare, bipartisan opportunity to pass legislation, and the White House seems to want the issue out of the national spotlight as quickly as possible.

Lawmakers and industry officials agree that more scrutiny needs to be given to what is inside cargo containers, but exactly how that should be done is a matter of dispute.

A bill introduced by House Armed Services Chairman Duncan Hunter, R-Calif., for example, would mandate the inspection of all cargo coming into the United States.

Another measure by Rep. Jerrold Nadler, D-N.Y., and House Transportation and Infrastructure ranking member James Oberstar, D-Minn., would require all containers to be scanned before being loaded onto a ship bound for the United States.

"Subjecting 100 percent of all containers to full inspection is neither feasible nor logical," said Christopher Koch, president and chief executive officer of the World Shipping Council, which represents more than 40 of the world's largest shipping companies. He said such a requirement would be "enormously expensive" and disrupt global trade.

Another organization, the Retail Industry Leaders Association, sent a letter to every member of Congress earlier this month urging them to move with careful deliberation and become fully educated on the issues before passing legislation.

The association represents more than 400 retailers and product manufactures -- including Wal-Mart, Target, Best Buy and Home Depot -- operating more than 100,000 U.S. stores and accounting for $1.4 trillion in annual sales.

Jonathan Gold, the association's vice president for global supply chain policy, said emphasis should be placed on inspecting cargo that is deemed high-risk, while keeping containers moving through ports. "A container at rest is a container at risk," he said.

Part of the problem with pending bills involves language and the lack of definitions, industry officials say. For example, the bills call for more "scanning" or "screening" or "inspecting," but do not define those terms.

Two bills that have been gaining the most congressional support -- a Senate measure introduced by Senate Homeland Security and Governmental Affairs Chairwoman Susan Collins, R-Maine, and Appropriations Transportation-Treasury Subcommittee ranking member Patty Murray, D-Wash., and a House bill introduced by Homeland Security Economic Security Subcommittee Chairman Dan Lungren, R-Calif., and Intelligence ranking member Jane Harman, D-Calif. -- would require the Homeland Security Department to develop a plan within 90 days for the deployment of radiation detection equipment at all U.S. ports of entry.

On the other hand, legislation introduced by Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations Chairman Norm Coleman, R-Minn., would require the Homeland Security Department to develop a strategy for scanning all inbound containers. Coleman plans to kick off a series of hearings on security and the "global supply-chain" on Tuesday.

For their part, Homeland Security officials say they screen all cargo, which means an inspector reviews a manifest stating what is in every container. Only cargo that raises a red flag is actually inspected, which now comprises about 5 percent of the roughly 10 million containers that arrive in the United States each year.

Homeland Security officials say they will inspect a higher percentage if it is necessary. Industry officials generally agree that Homeland Security is using the right strategy, but acknowledge more could be done.

"It's not so much the number, it's the quality of the inspection that's important," Cunningham said. The objective should be to increase the non-intrusive screening of cargo at foreign ports, primarily with X-ray machines, backed up by more random physical inspections of containers, he added.

Industry experts point to a new system being tested in Hong Kong as an example of what might work. Through the Integrated Container Inspection System, every container is put through a gamma-ray scanning machine and a radiation portal. Scanned images are then stored in a database, where they can be reviewed by inspectors.

The system is still in its infancy, however. It is only used at two terminals and inspectors are not yet regularly reviewing the scanned images.

Koch believes the Hong Kong system holds promise. But he said the model raises an important question: Will the U.S. government and Congress trust foreign countries and foreign port operators to install the necessary screening equipment, and then share the information with U.S. inspectors?

"All of those things you can work your way through, but they are substantial issues," he said.