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 at the Feedback button below.