Keeping WMDs Out of the Supply Chain

Private Innovation Could Be the Answer

By Philip W. Spayd

I was always annoyed, actually quite annoyed, over the years when a colleague approached with the shopworn question, “Do you want the good news or the bad news first?”

So I will skip the question here and get to the good news first: The World Institute for Strategic Economic Research, based at Holyoke Community College, reported that Massachusetts’s exports in the first half of 2004 were over $11 billion.

That puts the state on pace to exceed the record $20 billion of goods exported in 2000. Strong growth was evidenced in pharmaceuticals, medical devices and instruments, computers and machinery, showing that Massachusetts is positioned to compete internationally in the high-value, knowledge-intensive industries.

According to the Massachusetts Division of Unemployment Assistance, jobs in the Bay State grew by 11,600 in July, including 2,200 in the sensitive manufacturing sector. Significant growth was reported in professional, scientific and business services, and in education and health services. The information “super sector” remained sluggish in July, reflecting the negative national picture in the technology sector. Overall, however, these numbers, if sustained — of course a big if — show competence and growth in forward-looking sectors.

Now a look at the bad news. It could all go up in flames in the aftermath of the detonation of a nuclear weapon on U.S soil. The toll in loss of life and economic disruption would be devastating.

The Federal government has taken many useful and important steps to secure our transportation systems. However, because of the worldwide reach of international trade and the sheer numbers of components of trade transactions, the systems remain vulnerable to an attack by terrorists on the system itself or to being used as a method to introduce a weapon of mass destruction or other implement of catastrophic terrorism into the United States. 

Unlike most methods of conventional terrorist attack, a nuclear weapon, or the components by which it would be assembled, must cross our nation’s borders. They would need to be smuggled in between the ports of entry or through a port, hidden as part of a commercial shipment. While international cooperation and greatly enhanced effectiveness in stemming the proliferation of nuclear weapons to additional countries and to the terrorist underground is of paramount importance, the practical matter — the here and now — is that WMDs and their components need to be kept out of the more-than-7 million ocean containers that enter our seaports and land border ports every year. 

In “America the Vulnerable,” Steve Flynn describes our vulnerability to terrorist attack, focusing on the transportation systems and our infrastructure. Graham Allison, in “Nuclear Terrorism,” deals with the alarmingly high possibility of a nuclear attack on U.S. soil. The 9/11 Commission Report, “Final Report of the National Commission on Terrorist Attacks Upon the United States,” reviews the history of terror attacks against the U.S. and our interests. Each offers cogent proposals for future action to deal with the threats. But these proposals require extensive national debate and are months, and more realistically years, away from full implementation. They are for the long run, but, as John Maynard Keynes is reputed to have said, we are all dead in the long run. The question then is what can we do now, in the short run, to dramatically improve supply chain security and thus contribute both to national security and the ability of companies to function and prosper in this high-risk environment?

In the great tradition of innovation in our country, we need to develop basic processes that operate at the intersection of public value and private sector efficiency. U.S. importers need to use a layered and documented series of measures that greatly enhance the security of their international supply chain and provide for greater efficiency and visibility of products moving through the logistics processes within the supply chain. The tier one supplier, as part of its contract with the U.S. importer, would need to have a highly developed security program that is designed in layers to ensure no improper goods are loaded into the container. C-TPAT currently allows for a limited staging-in of foreign manufacturers. However, it is at this stage of the supply chain, where components move through the foreign logistics systems and are brought to a facility for further processing, that a high degree of security vulnerability exists.

The facility would have a documented process for allowing material to enter; employees would be subject to background checks, including vetting with Interpol and a U.S. agency that could review the names against terrorist watch lists; the facility would employ high, documented standards of physical, procedural, human resources and information security. When goods were ready to be loaded into the container, the container would first be inspected to ensure is was a safe and “clean container.” An employee (preferably an employee of the U.S. importer) subject to additional background checks would supervise the lading of the container and attest to the integrity of the content. The container would be fitted with a tracking unit that would monitor its location and conditions within the container such as light, movement, or change in temperature throughout the transportation process. A mirror image of the lading process would be followed at the destination of the container. 

Thus, there would be complete and detailed information on the container and its contents from its loading at the foreign facility to its arrival in the US port of entry and onto its final destination. This process maintains a controlled environment for the transportation cycle of any container moving within this process. Transportation security measures currently stagnate when faced with the vast number of people, businesses and processes that have some relationship to the container throughout its journey, and with the process of integrating all the port and transportation security requirements and processes. This process focuses on the integrity of the goods as they are loaded into the container and records the path and the security conditions of the container in real time, and any deviations. Any anomaly would be reported to CBP and other appropriate law enforcement agencies. 

The benefit to the public is a layered and documented set of security arrangements that contribute substantially to the security of shipments done under this process. Shipments would not be designated as low risk because the parties are well known as lawful importers, but because they have documented and verifiable security practices. The benefit to the company is a more secure supply chain (with lower theft, damages and misdeliveries, reflected by lower cargo insurance rates), and greater visibility of the goods while in transit, allowing for more efficient supply chain management and bringing the benefits of just in time inventory management to ocean shipping. In terms of systems thinking, it is a “virtuous cycle” where the benefits continue to grow to all the parties operating within the system. A key to the success of this system would be for the government regulatory and enforcement agencies to accept and give credence to the integrity of this system and to treat shipments made under these processes that have a have a high content of security control as very low probability of containing dangerous materials.

This security system also has application for the day after the terrorist attack. Companies using this system have a documented set of processes and a high degree of commitment to supply chain and transportation security. While the borders were not officially closed in the aftermath of the 9/11 attacks, as a practical matter international trade and travel to and from the US came to a near halt, at a substantial cost to the U.S. economy. It would make sense to allow companies that have documented and controlled transportation security policies to be let back into the trading process in the aftermath of an attack. If a problem were to have arisen with a shipment made following these procedures, it would be possible to quickly identify the goods, the origin, the people involved in the manufacture and packaging of the goods and the details of the ocean voyage, providing valuable information for the investigation. All these factors set companies aside from those that do not have a documented set of security controls that begin with the entry of goods into the tier one facility and provide for visibility and evidence of control (or early warning of an anomaly) throughout the international transportation process.

We need to harness the full measure of private sector innovation in a way that contributes substantially to national security. 

Philip W. Spayd is the director of Global Trade Systems