Growing Costs Of Security

The cost of security in and related to American sea ports is increasing exponentially. Heightened security generally, and relatively frequent security alerts, is increasing the workload-and the costs-for everyone in the delivery chain: wholesalers, truckers, freight forwarders, shipping companies and firms on the receiving end. And Pacific Island exporters have not been spared.

"Nobody really has a good estimate of the costs," Phillipines Micronesia and Orient (PM&O) Line President Robert T. Colson said in an interview with Pacific Magazine recently. "But we know they are substantial."

While last year's security alert at the Golden Gate Bridge in San Francisco grabbed headlines, it also cost businesses a huge amount of money. "The estimated cost to business of that security alert was $485,000 per day," Colson said. Every truck coming up to the bridge was stopped and searched, causing significant delays.

Colson believes that there's good reason for stepping up port security. Although after the 9/11 attacks much of the public's attention has been on airports, he sees a credible potential threat from ship-based attacks. "You put enough C-4 (explosives) in a boat, sail under the Golden Gate Bridge and blow it up by remote control, you could do some serious damage," he says.

Lead time for getting goods to the docks has also backed up because of more regular dock checks, increasing both the costs of delivery to wholesalers (because truckers are spending hours in line waiting to off-load) and the potential for losses on perishable food items being shipped overseas.

Port Moresby’s port is usually busy. Photo: SANdy Scheltema

Paradoxically, despite the stepped-up security, if Customs and U.S. Coast Guard officials are able to inspect even one percent of the goods transshipped through U.S. West Coast ports "they are doing a great job," says Colson, whose container ships have been island hopping from the U.S. to Asia for 25 years. In fact, many ports are using x-ray equipment-but just a fraction of what comes through the U.S. West Coast ports actually runs through this screening process.

One of the new demands placed on shippers is the requirement they provide a detailed paper trail of goods being shipped. "In the old days, shippers didn't have to provide a detailed listing. Now they have to list everything in a container," says Colson's son Nick, the company's vice president and director of marketing.

Among the changes for shippers from the Pacific Islands is the requirement for detailed shipping documentation to be in hand on the receiving end 48 hours before arrival of the ships into the U.S. The biggest impact to date for shippers in the Islands is the new level of paperwork and stricter deadlines. But since most of the Island exporters who deal with PM&O and Matson, the two primary shipping companies that link Micronesia with the U.S., are well known, long-time customers, no real security issues have been raised.

Still, the new security regime won't be limited to paper work headaches for long. Although shipping rates haven't gone up in a big way in the past year, increases are an inevitable byproduct of the heightened security that everyone should expect to see in the months ahead, says Colson.