Improved port security not out of reach

When the Dubai Ports World controversy surfaced in February, politicians focused on the wrong end of the supply chain. If a bomb or other dangerous material is placed in a shipping container, discovering it after it is unloaded in Seattle is too late. The plot needs to be foiled before it blows up the global trading system, instantly generating hundreds of billions of dollars in economic losses.

Congress is now considering what to do about port and supply chain security. It should adopt legislation, sponsored by Sen. Patty Murray, D-Wash., that passed the House last month and is pending in the Senate. Smart shipping containers would be scanned to detect a nuclear weapon or dangerous material. Real-time tracking data and container imagery would reduce enable political leaders to better manage the consequences should such an attack still occur.

But Congress must go further and require higher economic security standards. The Department of Homeland Security must abandon its laissez faire belief that markets by themselves will meet broader society's security requirements. Corporate America, and the investing public, must view security as a core mission, not a market option.

The real supply chain security vulnerability exists overseas where the goods are manufactured, assembled, stuffed into shipping containers and transported to foreign ports. However, where the greatest infiltration threat exists, private sector cooperation is voluntary and government enforcement is weak.

After 9/11, the United States launched the Customs-Trade Partnership Against Terrorism. While a good concept, on-site validation of security procedures are subject to advance notice, company cooperation and performed only once. No independent efforts are made to ensure that companies are actually implementing their security plans.

Such optional approaches leave the U.S. economy vulnerable to the lowest corporate denominator. Security costs are overhead, which Wall Street frowns upon. The further we get from 9/11, the less the private sector is investing in security. To adequately protect supply chains -- the lifeblood of our just-in-time business environment -- private markets must place a higher value on risk mitigation. Reduced uncertainty would allow the insurance industry to offer terrorism risk coverage more widely at reduced rates.

Five additional steps will improve port and supply chain security greatly and serve as a model for other economic sectors:

Set mandatory standards. C-TPAT participation should be required, not voluntary, for any company directly involved in global trade. C-TPAT should be internationalized through the World Customs Organization.

Strengthen enforcement. More U.S. customs agents should be stationed overseas. Foreign ports, manufacturing sites and supply chains should be subject to random, no-notice site inspections.

"Trust but verify." Global corporations should conduct independent annual security audits of their manufacturing and transportation networks, and have corporate leadership certify them.

Use market measures to promote security. Public companies should disclose in annual Securities and Exchange Commission filings their assessment of security trends, including how threats affect operations; actions taken; compliance with homeland security regulations; and an estimated security budget.

Reward real security. In return for greater oversight, the government should cap liability for corporations that meet stronger supply chain security standards.

The challenge of port and supply chain security should not be a false choice between security and efficiency. And the right answer is not what the United States does parochially but what governments and the private sector do globally.

P.J. Crowley is a senior fellow at the Center for American Progress and Robert Housman is a homeland security consultant, both in Washington, D.C.

Soundoff (Read 2 comments)
Tell us what's on your mind.

Add P-I Opinion headlines to