"New screening method could eliminate clash between trade and security Switch inspection focus to air-cargo shippers/ expert"

Friday, September 20, 2002

New screening method could eliminate clash between trade and security
Switch inspection focus to air-cargo shippers/ expert
By Russell Barling
United Kingdom - The London Financial Times


Heightened security in the air-cargo industry need not bring the supply
chain to a halt if the focus of inspections switches from goods to who
is shipping them, according to a trade security expert. 

The task of inspecting each shipment inevitably leads to a clash between
trade and security, an environment in which future strategies for both
are compromised. 

Stephen Tisdale, director of the aviation and transport practice for
PricewaterhouseCoopers (PwC), said its recent study indicated the impact
of screening all air cargo would mean three quarters of shipments missed
the flight they were booked on. 

"It would simply cripple the cargo supply chain. All of the efficiency
gains of the 1990s would be eliminated overnight," Mr Tisdale said. 

"We estimate the one-off cost - in additional equipment and labour alone
- of inspecting each shipment would be in the area of US$7.4 billion,
and that does not include the cost of the disruption to the supply
chain."

All freight would have to be broken down, screened and rebuilt again,
regardless of whether it had been screened at the point of origin,
forcing terminal operators to triple and quadruple-handle freight. 

Mr Tisdale, in a presentation to Tiaca's biannual Air Cargo Forum, said
a more comprehensive version of the existing "known-shipper" regime
could provide the balance the industry was looking for. 

"There does not have to be a clash [between trade and security] if the
industry selects the correct solution," he said. 

The present regime, triggered by the 1996 crash of a ValueJet aircraft
in Florida after oxygen canisters sparked a fire in the cargo hold, is
not secure because it is administered by airlines and lacks national or
international requirements for known-shipper status. 

"Essentially a known shipper to one airline can be unknown to another,"
he said.

Mr Tisdale favours a new phased-in known-shipper regime featuring a
Web-based shipper registration programme and the eventual introduction
of a moderate level of screening based on risk evaluation. 

He rejected other proposals put forward, such as third-party clearing
houses and bomb-proof air-cargo containers, as being too costly and
disruptive to the supply chain. 

He said third-party clearing houses would see the diversion of cargo to
the facilities for inspection. There was also the time and cost of
constructing at least one facility at each airport, more at larger
ports. Bomb-proof containers were a non-starter, he said. 

"The initiative would exclude general cargo and the cost would be
prohibitive. We estimate it would cost US$4.6 billion to replace all the
ULDs [air-cargo containers] in the United States alone, and this does
not include the loss of uplift capability brought about by the heavier
equipment," he said. 

The first phase of the regime would involve establishing a registration
programme, standardised data fields with information on the shipper and
employees who have had access to the shipment, and what the cargo
contains. 

Mr Tisdale estimated the registry would cost "tens of millions [US
dollars], take six to eight months to implement and have little impact
on the flow of cargo". 

A drawback is it would probably take legislation to enforce mandatory
enrolment, often a lengthy political process for an industry where speed
is increasingly crucial. 

Phase II, targeted screening of shipments based on risk assessment from
the data provided, would take 18 to 24 months to fully implement, Mr
Tisdale said. 

PwC estimated the cost, which could be absorbed by the government in the
country signing up or recovered through transaction or volume levies, to
be in the US$350 million to US$400 million range for equipment and
personnel. 

There are several models for cost recovery in the initiative PwC is
advocating. But Mr Tisdale believed the shift in security focus from
product to shipper was the way forward, offering fewest restrictions to
the flow of the supply chain. 

"We estimate, once the regime was up and running, that 5 per cent to 20
per cent of cargo would see limited operational disruption," he said. 

"The focus needs to be shifted from a shipment's contents to who the
cargo is from."


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