KOCH CALLS FOR CLARITY, PREDICTABILITY OF U.S. SECURITY RULES
Shipping lines support measures to enhance security in international shipping, but they need clear, predictable rules agreed cooperatively between government and industry, the World Shipping Council said.
Christopher Koch, president and chief executive officer of the Washington-based World Shipping Council, told the Norwegian Trade Council's conference that calls for regulatory clarity and predictability will increase.
The World Shipping Council, the U.S. National Industrial Transportation League and other industry organizations have asked the U.S. administration to clarify proposed security rules, particularly the controversial proposed rule requiring vessel operators to transmit cargo manifests to U.S. Customs 24 hours before U.S.-bound vessels are loaded at a non-U.S. port.
Koch also warned that costs incurred by container shipping lines because of ad hoc security measures might not be recoverable from shippers. “Carriers, already awash in red ink, are struggling to determine how to recover them,” he said. Some costs, like drayage to an inspection station, can be recovered, but others are much more difficult.
“Customs is frequently requiring carriers to offload containers for inspection in the first U.S. port of call, rather than the scheduled port of discharge — requiring significant unloading and restowing expense,” Koch said. “How can a carrier recover $30,000 of additional operating expense from the shippers of seven containers pulled for such inspection?”
Koch said U.S. security rules might impact whether commerce between countries other than the United States will be served by vessels calling at U.S. ports. “If European cargo destined for Panama, for example, is likely to be inspected by U.S. Customs in a U.S. port if the ship calls there first, shippers and carriers will want to understand such costs and delays, and there will be an incentive to serve such destinations by vessels that do not call in the U.S. first,” Koch said.
For U.S.-bound cargo, if a container originating in a particular country must be inspected at the first U.S. port of call, shippers will “need to know that for service selection,” and carriers will knowledge of such a rule that for cargo stowage planning, he added.
“As larger ships are deployed, the costs of unpredictability and delays rise, as more cargo is thrown off schedule, and more relays and rail connections are missed,” Koch said. “Both shippers and carriers should be able to understand the implications of the new security regime and plan their operations and cargo routing accordingly.”
Koch agreed that security measures must not be “so predictable that they can be evaded. “Yet, carriers and shippers should, whenever possible, be told what the rules will be so they can avoid unnecessary costs and plan with confidence, he argued.
On U.S. Customs’ proposed 24-hour prior cargo manifest rule, Koch warned that it is “a well-intentioned, serious initiative, but it also raises substantial issues that can only be properly resolved through serious industry-government cooperation and commitment.”
“Herein lies the true test for both industry and government in meeting their responsibilities — how to ensure a more secure transportation system, and the efficient, reliable flow of commerce, while avoiding needless costs and government interference.”
While shippers and carriers must support reasonable government initiatives, and not resist every new security measure, government must listen, cooperate and communicate clearly, the World Shipping Council believes.
Koch related the recent incident of the “Palermo Senator,” a containership coming into New York, with properly documented cargo, that was detained by the Coast Guard and quarantined for several days at sea outside the port. It was carrying clay tiles that naturally emit very low-level radiation.
“There was no security problem, but the carrier had to incur unrecoverable costs of many hundreds of thousands of dollars,” Koch said.
“Roughly a week later, the Coast Guard had a suspicion that a container on a ship in New York might have explosives,” he added. “Again, it was not the case, but delays and another hundred thousand dollars of unrecoverable costs were incurred.”
Koch stressed that his intention was not to criticize the government for undertaking security precautions. “But the security process will become discredited if it produces huge costs and delays that in hindsight do not appear to have been based on adequate grounds or sound procedures,” he said.
The government itself must be well coordinated, and the Customs Service and the Coast Guard must agree on their roles and responsibilities regarding cargo security, Koch said. “This is clearly an area where further clarity and progress is needed.”
Successful implementation of this policy, Koch said, will require “a culture of cooperation” with mutual and reciprocal responsibilities. “Shipping companies, importers and exporters, government, ports are all part of the answer,” he said.
“Meaningful, sustained cooperation between industry and government is needed to develop effective multifaceted strategies for mitigating the vulnerabilities inherent in massive flows of free trade and to prevent unnecessary disruptions to the flow of commerce,” Koch added.
He said that the first challenge is to design an integrated, coordinated security process and deploy the necessary capabilities to minimize, detect and intercept security risks as early as possible in the supply chain, meaning before containers are loaded aboard a ship for delivery to a destination. The second challenge is to develop and implement the systems and international protocols to ensure the efficient flow of commerce during all potential security conditions.