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FOR RELEASE
Monday
December 6, 2004

The U.S. government should take a stronger role in developing a strategy to prepare the container shipping industry for terrorist attacks and to help the industry recover quickly if attacks occur, a RAND Corporation report issued today recommends.

Federal actions can create requirements and incentives that will prompt needed upgrades in shipping security and port improvements, according to the report, titled “Evaluating the Security of the Global Containerized Supply Chain.”

The RAND report also recommends that the private sector work with the government on security improvements and on measures to reduce the impact of shipping delays caused by such events as terrorist attacks, heavy traffic, port closures and technological glitches.

“This report outlines how to address the critical security and efficiency needs of an industry that moves more than $500 billion of goods a year and links the United States and its economy to the rest of the world,” said RAND Associate Policy Researcher Henry Willis, the report's lead author. The other author of the report is David Ortiz of RAND.

The report by RAND Infrastructure, Safety and Environment offers three key recommendations:

  • The public sector needs to help the global container shipping industry adapt and recover from major port closures resulting from a terrorist attack or natural disaster by establishing a strategy to reopen ports without sacrificing security.
  • The public and private sectors need to take security measures to address vulnerabilities on global supply routes, and to comply with international security procedures. Tamper-evident seals and radio frequency identification devices that monitor ships along trade routes are examples of such measures.
  • Research and development should focus on improving high-volume remote sensing and scanning capabilities. Current technologies are time consuming, can be inaccurate, and can be potentially circumvented.

The recommendations are based on two conclusions:

  • Supply chain efficiency and security are distinct but interconnected. In today's global economy, security cannot sacrifice the efficiency of the shipping network. Security measures must be designed and evaluated with respect to all dimensions of supply chain performance. Assessing the effects of current security measures is a vital first step.
  • Public and private sector initiatives to improve security of the global supply chain have mostly focused on preventing and deterring smuggling and terrorist attacks. However, few initiatives have examined how to reduce the impacts of disruptions in the shipping network or how to bounce back to resume normal operations after an event such as a major port closure or terrorist attack.

The container shipping industry connects all sectors of industry, enabling organizations to deliver goods both domestically and worldwide. The RAND report identifies three industry players:

  • Businesses buying and selling goods to get the products to market.
  • Businesses that deliver products by rail, roads, airplanes and ships through ports and borders.
  • Oversight groups, such as customs organizations, law enforcement, and national and international bodies that regulate tariffs, trade laws and standards for shipment.

During an age of increased terrorist threats, the ability of the global container supply chain to deliver goods efficiently and securely relies on several factors, the report says. Goods must be delivered to destinations cheaply and on schedule. Cargo flowing through the global container supply chain must be declared appropriately to trade and other governmental officials. Also, the cargo must be inspected to minimize smuggling, entry of illegal immigrants, and the use of containers as a means for terrorist attack. Efforts to secure U.S. ports must address all of these priorities.

The RAND Infrastructure, Safety and Environment unit was created in August and consolidates the work of three RAND research units: Public Safety and Justice, Science and Technology, and the Homeland Security Center.

Printed copies of “Evaluating the Security of the Global Containerized Supply Chain,” (ISBN: 0-8330-3715-3) can be ordered from RAND's Distribution Services (order@rand.org or call toll-free in the United States 1-877-584-8642).

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