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Peering Into Your Supply Chain

The government wants you to share data about what's inside shipping containers. Right now, the C-TPAT program is voluntary. With all the attention to port security, it won't stay that way.

By Ben Worthen

April 01, 2006 — CSO —

Long before this winter's firestorm about a United Arab Emirates company taking over the management of six American ports, the Department of Homeland Security was concerned with the issue of port security. Over the past several years, the government has spent $75 million to track several companies' cargo containers coming into the seaports of Seattle/Tacoma, Los Angeles/Long Beach, and New York/New Jersey.

The Operation Safe Commerce project, carried out between 2002 and 2005, used GPS technology and radio frequency identification (RFID) to monitor cargo from a handful of major importers (including Sara Lee and Motorola) as it made its way from overseas factories to the United States.

The goal of Operation Safe Commerce was to identify weak links in the global supply chain. A report summarizing its findings was due more than a year ago. To date, for a variety of reasons, no report has been released. But sources close to the project say that Operation Safe Commerce revealed that companies actually know very little about what goes on in their supply chains.

Common unsafe practices identified by these sources were: truckers dropping off containers without encountering terminal security, containers left in unsecured areas, and containers bypassing a port that's considered safe (even if scheduled to pass through that port) and traveling instead through a country that poses a greater threatwithout informing the company or U.S. Customs and Border Protection.

Steve Schellenberg, a senior consultant at the trade advisement company IMS Worldwide who worked on Operation Safe Commerce for the port of Seattle, says the project "showed us that there needs to be a quantum leap in the information we possess about the supply chain."

These insights confirmed what security practitioners and experts said during the DP World controversy: No matter who runs the port, the government and private sector's work of securing these container shipping hubs has a long way to go. In fact, experts like Stephen Flynn, a former Coast Guard commander, expressed hope that the issue would focus on the urgent need to fix the sieve that is port security. (DP World eventually bowed out of the deal, pledging to cede control of the ports to American companies.)

Whoever takes over the ports, companies will have to find a way to make that quantum leap of supply chain visibilitypossibly within the next yearbecause soon the government will make sharing this information a cost of doing business for every company that engages in international commerce.