Port Security Systems

Following the events of September 11, 2001, the Federal government has developed and implemented several programs to enhance the security of the Maritime Transportation System. The Maritime Transportation Security Act of 2002 (MTSA) and subsequent amendments have established a framework for a national maritime security system and required Federal agencies, ports, and vessel owners to take numerous steps to upgrade security. The MTSA required the President to develop a comprehensive National Maritime Transportation Security Plan to prevent and prepare for security incidents in the Nation's ports and coastal waters.

On December 21, 2004, President Bush signed National Security Presidential Directive 41/Homeland Security Presidential Directive 13 (NSPD 41/HSPD 13) which called for the development of a national strategy to protect U.S. interests in the maritime domain that includes appropriate roles and responsibilities for State, local and private sector entities. NSPD 41/HSPD 13 directed the Secretary of Homeland Security and the Secretary of Defense to lead the Federal effort in developing a comprehensive national strategy that would better integrate and synchronize existing department-level strategies and ensure their effective and efficient implementation.

The ensuing National Strategy for Maritime Security (Strategy) was released in September 2005 and is supported by eight implementation plans that address specific threats and challenges within the maritime environment. The National Strategy for Maritime Security is designed to compliment the objectives and goals of other national strategy documents including the National Strategy for Homeland Security and the National Security Strategy.

The Strategy recognizes four national strategic objectives that will guide U.S. efforts to enhance security in the maritime domain: 1) to prevent terrorist attacks and criminal or hostile attacks in the maritime domain; 2) to protect maritime-related population centers and critical infrastructures; 3) to minimize damage and expedite recovery following an incident in the maritime domain; and 4) to safeguard the ocean and marine resources. The National Strategy further establishes five strategic actions that must be carried out to meet the above strategic objectives in the maritime domain.

Maritime ports are getting busier, ships are getting larger, and the mix of cargo being transported is becoming more diverse. These increased demands for port infrastructure and services are also causing ports to run out of land, requiring them to dredge deeper harbors and waterways and to invest in expensive shipment-handling technology. As ships are being built larger and sailing greater distances and carriers are entering into more alliances, maritime arrivals at ports are increasingly bunched. Ports that are unable to adapt to these changing demands for port infrastructure and services will lose out to competitor ports for cargo throughput.

The conventional wisdom is that, in a few years' time, the world will have maybe two European carriers, two Japanese carriers, one or two Chinese, perhaps a Korean, and a Taiwanese. And that's basically it. It will be rather like oil, or airline alliances--a small group of very large, global players. One interesting thing about this list is that it doesn't have any Americans on it. Sea-Land, a U.S. company founded by the inventor of containerization, Malcolm McLean, is still a presence, but we don't know what's going to happen to this company. It may fold into Maersk, a Danish firm with which it is tightly allied, in the way that American President Lines has folded into Neptune Orient, a Singaporean company. But in any event, it seems there will be no Americans on the list in a few years time (Maersk Line acquired the global shipping operation of Sea-Land Service, Inc. in July 1999).

Between 1980 and 1994, world trade that was moved through ports and transported in either a container, break bulk, or dry bulk vessel increased 16 percent to 2.1 billion metric tons. Movements by container over that time period increased 200 percent to 336 million tons, while break bulk and dry bulk increased 4 percent to 1.8 billion tons. This increased trade resulted as world economies grew and transportation services became more sophisticated. The transportation system has also changed to accommodate the special requirements of exports for just-in-time operations and for shippers who need reliable transportation that is fast and efficient for the shipment of time-sensitive products. To meet the needs for these types of movements, larger and faster vessels are being used in the maritime industry. For agricultural shippers, a larger vessel means greater capacity to transport commodities and products, while a faster vessel reduces transit time, which is important for time-sensitive, perishable commodities like apples and grapes.

The export of many agricultural commodities has benefitted from technological advances in refrigerated maritime containers. Perishable agricultural commodities, requiring a chilled or frozen environment, were traditionally transported on dedicated reefer ships. However, the number of reefer ships used to transport agricultural commodities has fallen as container ships have increased capacity for refrigerated containers.1 Over the period 1995 to 1997, 83 container ships were built with a total capacity of 62,000 20-foot equivalent units. Ten percent of those container slots were built to accommodate refrigerated containers, which is equivalent to seventeen percent of the 366,600 cubic feet of total refrigerated capacity in the world.

However, these larger vessels, which make regularly scheduled calls, have strained ports that are already struggling to provide adequate port services. A larger vessel requires a deeper draft, more equipment to unload and load cargo, more storage to hold cargo waiting for loading and unloading, special areas for servicing refrigerated containers, greater accessibility into the hinterland, and more services to accommodate the vessel. Ports are purchasing larger parcels of land for storage and on-dock rail services, dredging waterways and harbors to a deeper draft for the larger vessels, and building larger docks with faster and more reliable systems to unload and load cargo. However, before dredging can occur, extensive environmental reviews are required.

At the Ports of New York/New Jersey, these environmentally related dredging delays have prompted major ship carriers to consider other ports that can accommodate larger ships. At the Ports of Los Angeles/Long Beach, California, highway and rail congestion are slowing down cargo movement going through the ports, which delays the ship and its cargo. For agricultural products, this can be quite expensive given their low profit margins and perishable characteristics. For example, trucks haul cherries produced in Washington State to the ports for export by water. However, roughly two-thirds of the transit time for these cherries occurs on congested highways within 50 miles of the ports.

For ports, such capital investments are difficult to finance and implement. Local public support is diminishing, and funding from State and Federal sources is drying up. As a fixed facility, ports require large capital expenditures. In 1996, port capital expenditures totaled $1.3 billion. Nearly three-quarters of the expenditures were used to build new facilities while the remaining one-quarter went to modernization and rehabilitation projects. In order to finance new construction, ports attempt to sign long-term leases with carriers, stevedores, and companies shipping commerce, for instance, signing a lease with an export grain elevator operator to cover infrastructure expenditures and keep facilities technologically advanced.

When first introduced, containers successfully reduced pilferage. Estimates indicated that during the early years of the container revolution, theft of containerized cargo dropped to less than one-tenth of 1 percent of all cargo shipped in containers. Unfortunately, after an initial honeymoon period, during which criminals adjusted to the new container system, other patterns of theft developed.

Organized crime recognized the potential for big business. Containers, stacked in terminals, could be stolen as a whole, opened and made subject to pilferage, or serve as a conduit for drug smuggling. Much larger 'packages' containing higher value cargoes could now be spirited away with comparative ease and the spoils made it worth using more elaborate methods of deception and daring. Whereas, previously ten televisions might go missing because that was all thieves could carry or secrete, now two hundred could be stolen at a go in a container. For example, computer laptops, cellular telephones, perfume, and wearing apparel are among the top items stolen and could be worth from hundreds of thousands of dollars to millions of dollars per container load. A pallet of these devices can command upwards of $250,000. Sixty-four pallets can be loaded into a single 40-foot container, with a net value of $16 million.

Based on new patterns of cargo theft, the US Coast Guard, the NCSC, and American Trucking Association (ATA) estimate that the value of single cargo thefts is on the rise, averaging approximately $500,000 in 1996. This estimate represents a five-fold increase from 1970.

Containerized cargo theft is carried out primarily as an organized criminal conspiracy. Substantial evidence supports the hypothesis that most theft of containerized cargo is systematic in method. Often, criminals act with apparent information about cargo manifests, suggesting that collusion is occurring with transportation employees. Cargo terminals are particularly vulnerable to employee penetration at intermodal transfer points, warehouses, rail yards, and docks. In its Ports of the World: A Guide to Cargo Loss Control, the CIGNA Corporation reports that the majority of cargo loss claims involve cargo taken from transportation facilities by personnel authorized to be there and on vehicles controlled or similarly authorized by management.

This immense network of importers, wholesalers, freight brokers, truckers, and dock workers create problems for law enforcement and transportation operations in pinpointing instances of bribery, extortion, or "purchased" information. Estimates indicate that well over 80 percent of all theft and pilferage of transportation cargoes is accomplished by, or with the collusion of, persons whose employment entitles them access to the cargo that is stolen.

Each year, cargo thefts from terminals (including ports, docks, intermodal facilities, rail yards, warehouses, transfer facilities), motor carriers, and maritime vessels account for between $3.5 billion (conservative FBI estimate) to more than $10 billion (NCSC estimate) in lost merchandise. This figure represents a significant portion (3.1 percent) of annual surface transportation general freight revenue. Indirect costs related to cargo theft (not including all law enforcement or security technology costs) range from $20 billion to $60 billion each year.

The growing volume of containerized trade provides numerous opportunities for smuggling illicit drugs. Containers sealed in one nation may not be opened until they reach a final destination in another. Both the volume of container trade and the labor-intensive methods required for inspecting containers, severely limit law enforcement personnel and freight transportation operators in identifying and preventing drug smuggling.

The Drug Enforcement Agency (DEA) reports that the use of legitimate commercial freight containers by smugglers to conceal cocaine and heroin shipments has become a large-scale problem compromising the operations of legitimate business enterprises. Victimized companies are sustaining significant financial loss, erosion of operating integrity, and diminished corporate reputation. One self-insured trucking company noted that in the second quarter of this year (1998) it had a container stolen from its facility valued at approximately $3 million.

Further, since concealment of illegal narcotics in commercial shipping is the primary method for transporting drugs and money into and out of the United States, organized crime has intensified involvement in the transportation sector. Corporations financed by drug profits may purchase, own, and operate apparently legitimate trucking companies and transportation operations to transport products and to obtain crucial shipping information. Organized criminal groups are also successfully infiltrating the transportation industry by compromising employees into acts of commission using bribery or extortion to induce collusion. In addition to transportation employees, police, customs and other government officials have been targeted for corruption.