SCDigest
Editorial Staff
The
News: The U.S. House late last week
approved a modified bill that requires eventual
100% screening of all cargo bound for the
U.S.
at the port of origin. The move follows
similar legislation in the Senate, and after
reconciliation in conference, will move
on to President Bush for expected signature
into law. While relaxing some of the proposed
provisions slightly, the measure was passed
over the strong objections of a number of
business groups.
SC Digest Says: |
The
law as passed in the House allows for
a variety of extensions, and the mandate
is currently unfunded in terms of execution.
So who will pay?
What do you say?
Send
us your comments here |
The
Impact: Unclear
– the law as passed in the House allows
for a variety of extensions, and the mandate
is currently unfunded in terms of execution.
So who will pay? That’s the four billion
dollar question.
The
Story: The House action follows Senate
approval of legislation that reasonably
adheres to one of the recommendations of
the Sept. 11 commission, calling for 100%
screening of cargo bound for the U.S.
at the port of origin.
The bill
requires 100% radiation screening of U.S.-bound
maritime cargo before loading at foreign
ports within 5 years, down from the three
year horizon in some earlier drafts. It
also permits the Secretary of Homeland Security
to extend the deadline two years at a time
– meaning the requirements could potentially
be delayed for many years.
The House
legislation also mandates screening of all
air cargo carried on passenger aircraft
within three years, but not physical inspection,
as initially proposed.
The bill
was passed despite strong opposition from
a number of business groups, including the
Chamber of Commerce, the National Retail
Federation, the International Cargo Security
Council, and others. Anti-Wal-Mart groups
have recently been using the retail giant’s
opposition to the requirements to paint
Wal-Mart in a bad light in television commercials.
The problems,
according to these and other logistics observers,
include:
- The
technology
to effectively perform the scanning may
not exist.
- It
is not clear precisely what is to be scanned.
- How
the cost will be allocated has not been
addressed.
- The
process may significantly delay the smooth
flow of inbound goods.
- How
this will intersect with union rules is
also up in the air.
“Shippers
and carriers alike have been opposed, as
is even the head of U.S. Customs,”
said Gene
Tyndall, managing partner of Supply
Chain Executive Advisors and SCDigest contributing
editor. “The economic impact would
be enormous, even if the technology is available
at all ports. We are talking about millions
of containers per year.”
The
International Cargo Security Council has
previously stated that the proposed law
would “impose additional cost burdens
on the U.S.
economy, negatively impacting businesses
- both small and large - with the establishment
of cargo security and inspection protocols
that rely on unproven technologies and that
do not insure security improvements that
are commensurate with the expenses incurred.”
Sergio
Retamal, president
of Global
4PL, a supply chain and logistics consulting
firm, argues that a balanced perspective
is required.
“Shippers
and industry are always very concerned with
the efficiency and cost-benefit of any requirement.
Importers have valid concerns, and the fact
that there is such strong opposition clearly
shows that the goals and implementation
of the regulations are not clear,”
Retamal told Supply Chain Digest.
However,
he notes that the Oakland
Port
currently screens 100% of the incoming containers
for nuclear/radioactive material. There
is very little impact to the operation of
the port as far as speed of the process.
“If
the screening is efficient and cost-effective,
wouldn't it make sense to perform the screening
at origin?” he asks.
However,
Retamal believes screening 100% everywhere
for everything is not realistic or practical
given the current state of technology, and
the likely cost.
“Shippers
are also concerned over who would pay for
this extra cost,” Retamal added. “We
need to find a fair method to finance this
critical project. 9/11 cost the U.S.
billions if not a trillion dollars. The
cost of a nuclear accident or attack on
U.S.
soil would be in the trillions. Prevention
is cost effective and the smart way to go.”
The bill
as passed does not specify how the technology
and manpower requirements will be funded,
likely leading to further delays in implementation,
while still allowing politicians to claim
legislative victory.
What
are your thoughts on the cargo screening
bill? What do you think will be the real
impact on shippers? Let us know your thoughts
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