Ocean cargo container security tops concerns of supply chain executives, report indicates

Sept. 1, 2005
Ocean cargo container security ranks as the number one concern among executives responsible for supply chain operations at the largest global import and

Ocean cargo container security ranks as the number one concern among executives responsible for supply chain operations at the largest global import and export companies, according to a new report from global management consulting firm A T Kearney. Conducted in collaboration with the International Cargo Security Council (ICSC), the report and its findings were presented at the opening of ICSC's annual conference, featuring the twin themes: “The Return on Investment of Cargo Security” and “Securing the International Supply Chain.”

Executives interviewed for the report also believe that new technology, such as radio frequency identification (RFID)-enabled “smart boxes,” could enhance container security as well as improve container visibility throughout the supply chain, which could also address their other major concerns about supply chain efficiency. Interviews revealed that closely behind security, executives were mostly concerned about reducing inventories, lead-time variances, stock-outs, and preventing the loss of containers. Participants, including ICSC members, were from the retail and consumer packaged goods, chemicals, automotive and high-tech industries, representing companies that account for 29% of United States imports.

The study pointed out that container shipments account for 90% of world trade, are growing at a 5% compound annual rate, and an average of about 14 containers come into US ports every minute. Today, about 95% of these containers are not inspected for weapons of mass destruction or other types of security threats. One chemical executive said that for certain import and export products, his company is willing to do “whatever it takes to guarantee container security.”

“Unreliable data”, caused by manual entry and disparate information systems, emerged as an underlying theme of the respondent's concerns. Said one retail executive, “Sixty to 65 percent of my data regarding container movement is timely and accurate. The 35 to 40 percent of remaining data is missing or inaccurate.”

Interviewees were asked to rank and quantify the potential operational and security benefits of receiving more accurate and timely data, such as could be provided by smart boxes equipped with RFID devices within an information network. The study found a total average benefit of $1,150 per container journey, with most of that coming from the savings of tightening supply lines.

The study found that in recent years most executives had focused the bulk of their resources on improving their domestic (US) supply chains. However, in the “post-9/11 world” their companies are increasingly turning their attention to new technologies that can help them improve the security and efficiency of their over-ocean supply chains, and to conform with government programs such as the Customs Trade Partnership Against Terrorism (C-TPAT), which has encouraged use of smart boxes for faster clearance through US Customs and Border Protection.

A copy of Smart Boxes: RFID Can Improve Visibility, Efficiency, and Security in the Global Supply Chain is available from www.atkearney.com or www.cargosecurity.com.

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