Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
We have written a couple of times about security. We generally like to elevate the discourse to include aspects of protecting people, product, plant, and property in about that priority sequence. Of course, 9/11 introduced tactics that could impact e) all of the above. So, we occasionally turn to post-9/11 efforts.
The question of the day is whether those things that were comforting and logical on the surface—things like C-TPAT and TWIC—are as comforting when the covers get pulled back.
A voice crying in the wilderness
Dr. Jim Giermanski, chairman of Powers Global Holdings Inc., writes extensively on the subject of supply chain security. We have known Jim for nearly 15 years and have found him to be thoughtful, insightful, and persuasive—and always watching the right ball while the rest of us are being distracted by Lady Gaga's latest shenanigans.
In recent days, Dr. Giermanski has become increasingly vocal on supply chain security exposures, including holes big enough to drive a truck through, so to speak. We are inclined to listen, especially when he talks about systemic deficiencies further weakened by bureaucratic lip service and double-speak (no mean feat when engaged in simultaneously).
The black swan
For those of you visualizing Natalie Portman in skimpy ballet attire, we're sorry to disappoint. This ominous bird rises from the book The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb.
Professor Taleb's work concentrated on the potential for collapse of the global financial system (and the "warnings imbeciles chose to ignore"). Jim Giermanski translates the scenario to a likelihood that simply taking out one U.S. port with a weapon of mass destruction (WMD) would accomplish the same thing, given the supremely fragile interrelationships in the global supply system. His well-reasoned argument was presented in two parts in the Aug. 3 and Aug. 8 editions of The Maritime Executive magazine's MarEx Newsletter. Part 1 documented the importance of port trade and the rippling consequential effects of a successful terrorist attack on one port, while Part 2 examined the state of U.S. supply chain security.
In the second article, Giermanski offered his assessment of various federal security initiatives, most of which come up short in his eyes. Take the Customs-Trade Partnership Against Terrorism (C-TPAT), for example. C-TPAT gets high marks for its potential to discover and prevent WMD entry. The program's obvious weakness is that it is purely voluntary, with membership effectively limited to those organizations that already want to be secure. That is, those who we wouldn't worry about anyway. We have previously noted that there are some pressures from supply chain partners to get others in the chain to sign up as a condition of doing business, but these, again, are generally substantive and secure operations already.
The 2002 Container Security Initiative (CSI) is another matter. Mandatory, it is aimed at all shipments from foreign ports to the United States. While terms such as FAK (freight of all kinds) and STC (said to contain) are no longer permitted on shipping manifests, the representation of specific contents of sealed and locked containers is, essentially, hearsay, totally dependent on the shipper or its agent for honesty and accuracy. The presence of CBP (Customs and Border Protection) inspectors in foreign ports at CSI request amounts to merely so much window dressing.
The Transportation Worker Identification Credential (TWIC) program, Giermanski observes, has been characterized as a "joke" by some insiders. The Transportation Security Administration (TSA) is responsible for program execution, but although the initiative was authorized back in 2002, the first cards weren't issued until 2007. Because of the ease with which cards may be exchanged and systems bypassed, the effort has not, in the opinion of many, improved port or maritime security.
Giermanski has further opined that the "10+2" program might be useful, if it were not, like CSI, dependent on shippers' representations.
Enter high-tech solutions
Positing that scanning solutions have already failed in foreign ports and that they have proved to be unreliable in domestic ports, Giermanski goes on to explain that the most likely WMD technologies for terrorists to employ will not be intercepted by passive and static current systems.
His conclusion? We remain amazingly vulnerable to the entry of mechanisms that would wipe out a major port, cripple our supply systems, and bring down the global economy. Would that, could that, actually happen? The point may be debated, but Giermanski's conclusions point to the worst case. And the best case, in our view, would be some level of devastation.
And yet, we, amidst the bureaucratic maneuvering, have yet to mandate the in-container application of demonstrably effective existing technology, container security devices (CSDs) that monitor movement, report contents, detect unauthorized entry, and more.
A final slap in the face
An ultimate irony, with potential consequences that are considerably beyond ironic, is that all of our efforts are focused on inbound cargo and containers. We pay no attention whatsoever to outbound containers. This is a remarkable oversight, given the rise of homegrown terrorism around the planet (which the Europeans recognize and act on) and the requirement that every single domestic passenger (outbound human cargo) is subjected to examination, often stringent and intrusive.
The beat goes on
In a subsequent think piece in the Sept. 26 MarEx Newsletter, Dr. Giermanski took a hard look at CBP's Automated Commercial Environment (ACE) program. CBP maintains that ACE will better protect us from attempts by terrorists to use the international supply chain as a means to attack the United States, or in a more benign application, to smuggle illegal cargo into the country.
His conclusion is that ACE, whatever it is claimed to be, is not a cargo security system and reveals nothing about real cargo to CBP.
Much of the rest of the world is beginning to understand the usefulness and importance of a chain-of-custody system from initial origin to ultimate destination. C-TPAT, to be fair, has source-to-destination intentions, but, as noted, remains voluntary. ACE, based on interviews, is reported to be full of gaps and inconsistencies, with differing interpretations of when and how discrepancies are handled and reported.
The ultimate questions center on whether the agencies charged with protecting us are: 1) capable; 2) influenced by transient political correctness; and/or 3) genuinely understand the execution processes involved in global supply chain operations.
Baiting the bear
So, Giermanski soldiers on, continuing to make his case and constantly digging deeper into areas of concern for supply chain security, and, consequently, national security. We could get into—and he has gotten into—border security issues and the related political sensitivities.
He has been brave enough to ask tough questions of DHS Secretary Janet Napolitano. Questions tough enough that we, wishing to stay off any no-fly list, might hesitate to pose.
We, in turn, are positioning these issues and questions in front of you. Consumed as most of us are with the nitty-gritty of on-time complete shipments, pick/pack/ship productivity, and the cost of fuel, it is an imperative to consider the larger issues from time to time.
Especially those that have the potential to bring us all down. Keep your eyes peeled for black feathers.
In response to rising cargo theft events, railroad operator Union Pacific is fighting back on two fronts, including technology and security investments as well as tight coordination with the shippers who supply the precious goods it carries.
In response, Omaha, Nebraska-based Union Pacific says it has invested more than $30 million since January of 2023 on security projects like 24/7 camera units and strengthened fences. The company has also launched drones with thermal imaging capabilities that can fly surveillance missions to identify would-be trespassers who get too close to its mainline tracks, rail yards and infrastructure.
But on top of those physical defense, the company says it has also redoubled efforts to work with shippers. Recommended security strategies include strengthening the locks on containers against bolt-cutters, and attaching GPS sensors to cargo to identify real-time threats both on and off the railroad.
Union Pacific also offers a list of “Shipping Do’s and Don’ts” to shippers before they send their shipments:
cargo owners should avoid placing identifying information on the outside of containers, such as company names or logos.
prior to loading, make sure the locking devices on containers are properly operating.
restrict information on high-value shipments to key personnel only.
when possible, load high value products toward the nose of the container.
theft-deterrent or barrier seals are recommended over plastic or tin seals, as they provide the highest level of protection from unauthorized entry into intermodal containers or trailers.
As the Trump Administration threatens new steps in a growing trade war, U.S. manufacturers and retailers are calling for a ceasefire, saying the crossfire caused by the new tax hikes on American businesses will raise prices for consumers and possibly trigger rising inflation.
Tariffs are taxes charged by a country on its own businesses that import goods from other nations. Until they can invest in long-term alternatives like building new factories or finding new trading partners, companies must either take those additional tax duties out of their profit margins or pass them on to consumers as higher prices.
The Trump Administration on Thursday announced it may impose “reciprocal tariffs” on any country that currently holds tariffs on the import of U.S. goods. That step followed earlier threats to apply tariffs on the import of steel and aluminum beginning March 12, another plan to charge tariffs on the import of materials from Canada and Mexico—now postponed until early March—and new round of tariffs on imports from China including a 10% blanket increase and the elimination of the “de minimis” exception for individual items under a value of $800 each.
Various industry groups say that while the Administration may have legitimate goals in ramping up a trade war—such as lowering foreign tariff and non-tariff trade barriers—applying a strategy of hiking tariffs on imports coming into America would inflict economic harm on U.S. businesses and consumers.
“This tariff-heavy approach continues to gamble with our economic prosperity and is based on incomplete thinking about the vital role ethical and fairly traded imports play in the prosperity,” Steve Lamar, president and CEO of The American Apparel & Footwear Association (AAFA) said in a release. “Putting America first means ensuring predictability for American businesses that create U.S. jobs; affordable options for American consumers who power our economy; opportunities for farmers who feed our families; and support for tens of millions of U.S. workers whose trade dependent jobs make our factories, our stores, our warehouses, and our offices function. Sweeping new tariffs — a possible outcome of this exercise — instead puts America last, raising costs for American manufacturers for critical inputs and materials, closing key markets for American farmers, and raising prices for hardworking American families.”
A similar message came from the National Retail Federation (NRF), whose executive vice president of government relations, David French, said: “While we support the president’s efforts to reduce trade barriers and imbalances, this scale of undertaking is massive and will be extremely disruptive to our supply chains. It will likely result in higher prices for hardworking American families and will erode household spending power. We encourage the president to seek coordination and collaboration with our trading partners and bring stability to our supply chains and family budgets.”
The logistics tech firm Körber Supply Chain Software has a common position. "The imposition of new tariffs, or the suspension of tariffs, introduces substantial challenges for businesses dependent on international supply chains. Industries such as automotive and electronics, which rely heavily on cross-border trade with Mexico and Canada, are particularly vulnerable,” Steve Blough, Chief Strategist at Körber Supply Chain Software, said in an emailed statement. “Supply chains that are doing low-value ecommerce deliveries will have their business model thrown into complete disarray. The increased costs due to tariffs, or the increased costs in processing time due to suspensions, may lead to higher consumer prices and processing times.”
And further opposition to the strategy came from the California-based IT consulting firm Bristlecone. “Tariffs or the potential for tariffs increase uncertainty throughout the supply chain, potentially stalling deals, impacting the sourcing of raw materials, and prompting higher prices for consumers,” Jen Chew, Bristlecone’s VP of Solutions & Consulting, said in a statement. “Tariffs and other protectionist economic policies reflect an overarching trend away from global sourcing and toward local sourcing and production. However, despite the perceived benefits of local operations, some resources and capabilities may simply not be available locally, prompting manufacturers to continue operations overseas, even if it means paying steep tariffs.”
The Google-backed humanoid robot maker Apptronik on Thursday announced it had raised $350 million in venture funding to fuel the deployment of its “Apollo” model and to scale up operations, accelerate innovation, and hire more staff.
That innovation push will be specifically aimed at expanding Apollo’s capabilities, enabling it to address a wide range of applications in industries like logistics and manufacturing, as well as eldercare and healthcare.
Texas-based Apptronik is also scaling up manufacturing of Apollo units to fulfill growing orders across priority verticals—including automotive, electronics manufacturing, third-party logistics providers (3PLs), beverage bottling and fulfillment, and consumer packaged goods.
The “series A” venture round was co-led by B Capital and Capital Factory, with participation from Google. It follows $28 million in previous funding. Apprtronik was founded in 2016 at the University of Texas at Austin’s Human Centered Robotics Lab.
“With Apptronik, we see a world in which humanoid robots play a vital role in addressing societal challenges—from assisting with disaster relief and elder care to supporting space exploration and medical advancements. Industry leaders like Mercedes-Benz and GXO Logistics are already seeing the real-world impact of Apptronik's technology,” said Howard Morgan, chair and general partner of B Capital.
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”