Seeking Safe Harbors

Pamela Sherrid, U.S. News and World Report
April 28, 2003

If there was any doubt that terrorists could attack the United States via its bustling maritime trade, it should probably have been erased by an arrest in Florida earlier this month. The Coast Guard nabbed a drug dealer for selling phony crew-member papers to leaders of a Philippine terrorist group with ties to al Qaeda. Those documents, issued by shipping firms, are required of any seaman working on vessels that make stops at ports in the United States.

There’s also no question that terrorist acts at U.S. ports could play havoc with the nation’s economy. Last fall, the government, the shipping industry, and various importers engaged in a simulation game: What would happen if "dirty bombs", designed to scatter radioactive material, showed up in shipping containers from abroad? The participants found that closing the ports and stepping up the inspection rate of containers threatened manufacturing inventories in a matter of days. This forced, among other dire consequences, an avalanche of earnings warnings that halted trading on the New York Stock Exchange.

Since September 11, the federal government and the maritime industry have made strides in strengthening security on the nation’s water borders. The Coast Guard has stepped up patrols, the Bureau of Customs and Border Protection has started targeting for inspection high-risk containers (like those from an unknown shipper) in foreign ports, and domestic ports have tightened up employee identification systems. At the behest of the United States, the 89-year-old international convention governing safety and environmental protection at sea adopted a set of antiterrorism measures. By June’s end, the Coast Guard must finalize rules to implement those changes and similar ones mandated by Maritime Transportation Security Act, which became U.S. law late last year.

But the government has devoted far less money to maritime security than it has to airline security, and many say the challenge is greater. "If you take the paint off the jets of Continental and Delta, their operations are pretty much the same," says Adm. Larry Hereth, the Coast Guard’s head of port security. "But waterfronts are tremendously varied and complex, with facilities as different as refineries, passenger ferries, and container docks."

Worries. The industry readily admits that maritime safety is not up to par. "Lots of times there’s not even a watch on the gangway," says Stephen White, CEO of consultant Maritime Security Group. The Coast Guard’s draft regulations call for measures to prevent hijacking, tampering with cargo, and using a ship as a weapon; for ports to boost security threats and breaches. But even though there’s been progress, "many in the industry are just wringing their hands," says Stephen Flynn, a former Coast Guard commander and now a senior fellow at the Council on Foreign Relations.

The stalemate comes not from the rules per se but from the expense of meeting them. Many ports are quasi-governmental agencies that aim to boost a region’s employment while operating on slim margins. The Coast Guard estimates that the new safety measures will cost $1.4 billion over the next year, with $6 billion over the next 10 years. But so far, Congress has approved less than $400 million in grants to be doled out to the industry, and just $93 million of that has actually been disbursed. An additional $105 million in grants is expected to be announced soon, but there are going to be many disappointed applicants – the total of funding requests for projects equals 10 times the amount up for grabs. The port of Philadelphia, for instance, has a security to-do list totaling $2.6 million, "but we don’t have the money," says Bill McLaughlin, head of government affairs for the Philadelphia Regional Port Authority. Many port officials think the feds aren’t doing enough. "This is a national defense issue, and we believe the cost should be funded by the federal budget," says Kurt Nagle, president of the American Associations of Port Authorities.

If the United States has a hard time getting its own port security shipshape, imagine the difficulties in imposing rules on the shadowy world of foreign-flag ships, which transport almost all the cargo the U.S. ports receive. Congressional Democrats, who were recently rebuffed in their latest attempt to increase federal spending on maritime security, are dismayed that the Coast Guard has hand off responsibility for certifying the security plans of foreign-flag ships to governments such as Liberia and Panama.

"Smart boxes." Money shortfalls may turn out to be less of a problem in the case of technologies that also offer business advantages to importers and exporters. NaviTag Technologies, a Massachusetts based start-up, for instance, has designed a portable, battery-powered tracking device that fits on the locking bar of a shipping container. The device sends an alert if the container is opened during transit and transmits its position every few hours via satellite to NaviTag. The firm received a government grant last summer to design the prototype. The unit is being tested by big shippers such as Bose, Hasbro, and Hewlett-Packard, which want to keep inventories lean and provide better customer service. "Being able to keep track of assets in shipment would be an incredibly good thing," says Paul Tagliamonte, Bose’s director of logistics. NaviTag believes shippers would be willing to pay the $40 a voyage the system is expected to cost per container. As a carrot, U.S. Customs has promised that such "smart boxes" will be released more quickly when they arrive in the United States.

But when it comes to the nitty-gritty of port and ship security, like training the thousands of vessel and facility security officers required by the new law, many experts predict the industry will have trouble meeting the July 2004 deadline. As ports compete for limited federal funds, shipping firms are already considering a security surcharge. "Inevitably, shipping costs are going to go up," says John Hyde, head of North American security for Maersk Sealand, the leading container carrier. "A guy who buys one of the 25,000 shirts that was shipped in a container is going to pay more." Just consider it a terrorism tax on the economy.

Press Contacts

NaviTag Press Office

Seeking Safe Harbors