clearing the docks

The United States continues to struggle with security concerns surrounding the 17,000 truck-sized containers that flood U.S. ports every day, each loaded with as much as 30 tons of cargo. A recent study by the Brookings Institution estimates that customs officials are able to inspect only about 2 percent of all containers arriving at the country's docks.

However, a new report from Stanford's Graduate School of Business suggests a radical approach to clearing the docks at U.S. ports: pushing the inspection process back up the supply chain. Rather than attempting to find dangerous cargo via inspections at the U.S. point of entry, authors Hau Lee and Seungjin Whang call for shifting the emphasis to the foreign ports where containers are loaded onto ships, and even to factories and distribution centers where containers are filled with goods. The result, they say, would be greater security, a more efficient supply chain and millions of dollars in savings.

"In manufacturing, the way to eliminate inspections is to design and build in quality from the start. For supply security, the analogy is to design and apply processes that prevent tampering with a container before and during the transportation process," the researchers wrote in their paper, Higher Supply Chain Security With Lower Cost: Lessons From Total Quality Management.

In that report, the authors present a mathematical model that demonstrates the value of "proactive" port security. As an illustration, they compared the costs to a major Silicon Valley electronics manufacturer if the government decided to inspect twice as many of the company's containers to the cost of proactive inspection. They found that the company, which asked not to be identified, could save approximately $1,000 on each of the 4,300 containers it ships each year (a total of $4.3 million), while making its supply chain significantly more secure.

Why not simply step up inspections at ports? Lee says the process would be expensive, harmful to the economy and ineffective. In addition to increased labor costs, more extensive inspections would cause shipping delays. Companies that have adopted just-in-time inventory strategies would have to carry more inventory, another added expense.

In the meantime, the U.S. government is experimenting with a number of methods to streamline inspections, including the Customs-Trade Partnership Against Terrorism, or C-TPAT, a joint effort with foreign governments that rewards shippers and carriers that certify the use of best security practices with expedited processing at U.S. ports of entry. The United States and the governments of some trading partners are also working toward a series of bilateral agreements to permit exchange of customs officers and to step up shipment screening at outbound ports.

There is also talk of "smart containers" fitted with electronic sensors capable of detecting changes in temperature or air pressure that would indicate a hole had been drilled in the container. Other sensors would detect the presence of certain chemicals, biological elements or radioactivity.