It's dinfest time again. I got up early for my port security lunch I had to cover, then it took me an hour to get out of the city as I was fortunate enough to time my departure with the early rush.
Of course, by the time I was finished writing my article and posting it, I was driving in the wee-hours construction work. Fortunately, it wasn't as bad going south as it was north.
So, in a little glimpse of what I did that took about 5 hours to write (after transcribing the parts of the tape I made to get the quotes accurate), here's the article. Warning, it's long, and it's on port security, so most likely, the few that may be reading this have stopped reading by now, but if you do dare read on, here it is, me at my day job. Perhaps you may learn a little why Wal-Mart and Target care about port security too.
Panel: Port Terror Impact Would Be Devastating
Disagreement Continues On How To Pay For Security Improvements
The one thing not in dispute at yesterday's forum on Turning The Tide: Securing America's Ports was the devastating $1 billion a day economic impact a terrorist attack on a port could have. Within two weeks, it would cripple the economy of the United States.
"It's vitally important to have a system in place before the next attack, which could be on our ports," said P.J. Crowley, senior fellow and Director of National Defense and Homeland Security for American Progress.
"One of the critical questions," Crowley said, "is if there's an attack that comes at a port or involving a container that has come through a port, the real challenge for [Asa Hutchinson, Department of Homeland Security's Undersecretary for Border Transportation and Security], and up through Secretary [Tom] Ridge to the president, is what do we decide to do? And we also have to be mindful that the largest cost involved in the next attack and it involves a port will be a cost that we inflict on ourselves rather than the cost of whatever is damaged at the port."
Explaining that, Crowley said to "take a look at 9/11. Rightfully, appropriately, the FAA's reaction once we had the hijackings was to ground the fleet, and perfectly appropriate. However, when we do this with relation to our ports--let's say for example we decide to seal off our 361 ports--given our experience with the west coast strikes of a couple of years ago, from there moving east you're starting at a billion dollars a day-plus and then there's some idea out there based on the war gaming done in the last year that says at a two-week point, you break the economy."
As previously reported in the CIB, west coast ports shut down for 10 days in the fall of 2002 in a dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association over the control of new jobs with new technology being used at ports. Though workers did not strike, the PMA accused the union of work slowdowns that amounted to what they said was a "strike with pay" and thus locked out the workers. Ultimately, a federal judge affirmed President Bush's use of the Taft-Hartley Act to reopen the ports.
While a UC-Berkeley study in 2002 cited the economic impact of a port shutdown that could go to $1 billion a day, the Anderson Economic Group noted that U.S. earnings would be reduced by $4.7 billion, with consumer and worker losses totaling $100 million. The group also pointed out at the time that if there had been a $1 billion a day economic impact, all the ships would have to be sunk.
In the event of an attack on a port, Jim White, director of the Maryland Port Administration, said it would be up to the Coast Guard whether or not to shut down.
"I think, first of all, you make individual decisions," Hutchinson said. "I mean, if there's a risk to the Port of Baltimore, or Boston or L.A., you make a decision that the Coast Guard would make recommendations on and reference that particular port for the security of that port. But if you're looking at a 9/11 circumstance, do you shut down our economic system of this country? I think we learned that you can't do that. Grounding the planes was a very specific operational response. . . . When we shut down the Detroit Ambassador Bridge for security reasons, that was not a specific--it was an operational response but it was not appropriate in the long-term and we had to open it up very quickly. You were . . . shutting down our car manufacturers. They couldn't get parts and just-in-time delivery from Canada. The same thing would be true at our ports. Obviously, I don't see a way that you could effectively do that. But you get the war games scenario, there's some really treachy circumstances."
Crowley responded by asking Hutchinson if "we have the system in place that allows us to effectively seal off the damage to a port, or a couple of ports that may have been attacked while letting the rest of the system continue to function." Continuing, he said "the issue is [that] the president is going to have to stand before the American people and say he has confidence that we know what happened and we have an effective system so we can isolate the area that's been damaged without necessarily changing--you've got to have an economy that can function regardless of the color of the alert."
"True, I agree," Hutchinson said in response.
"And that takes investment," Crowley continued. "And when you get to that kind of national imperative that's where I come back to $46 million we're investing in ports to protect our economy. I just don't think it's enough."
Carl Bentzel, senior Democratic counsel of the Senate Commerce, Science and Transportation Committee, added: "I think this is really a crucial issue. We have to have a security posture that at the end of the day allows the United States to reopen its ports to navigation. And I think the challenge is correct if it's a container that comes in the Port of Los Angeles and it has something in it that we don't want, are you going to keep open all other ports with containerized cargo? . . . I think it'd be difficult because the attack came through the means of the importation of a container, and if your system was to deter that, you would have to come up either with a way of inspecting 100 percent, or effectively closing down commerce for a period of time."
The Coast Guard's director of port security, Admiral Larry Hereth, said that "I think at the end of the day we do in the United States presently have a system to have [means] to shut down ports or reopen ports very quickly, and we do it when other incidents occur in ports."
Moderator Frank Sesno cited a report of Al Qaida working on its naval strike capability--using high speed boats and packing them with explosives or rocket-propelled grenades, and then attacking ships, including at Um Qasr in Iraq. What's the likelihood of this happening here, Sesno asked.
Al Qaida's threat "is a concern to us," Hutchinson said. "It's a serious threat. Now, is it a likely scenario for the United States? I think it's much more difficult. Clearly, they have the intent. They'll use whatever means they can. But they have not utilized suicide bombers in the United States in a narrow sense. They did on September 11. This is a threat, we believe, that is much more difficult here. One, to get the people in across the border. Secondly, to get the explosives. Thirdly, to get the boats without detection, and then to operate in the waters with the Coast Guard and the other protective systems that we have." He said he has no evidence that they're here now, "not in that context."
White said his concern "is running a business. It is just so competitive on the east coast that any interruption that we have in shutting down a port is going to have a huge economic impact on the state of Maryland." He said that there is no way ports on the east coast can absorb security costs, noting that only two ports--both on the west coast--are profitable. He does not worry about Al Qaida and suicide boats.
White said the Port of Baltimore has already put in $4 million worth of security improvements–"we can’t continue at that pace," he said–and said any additional money it received would likely go toward technology enhancements. He cited airports as getting $1 for every five cents that ports receive.
Chamber of Shipping president Joe Cox said his group, in two-and-a-half years of working with the Coast Guard, and having had over 25 meetings, has not brought up cost once, but rather, has focused "on what the government wants us to do." He said "from the shipowners’ standpoint, international requirements are there and we have to meet them."
Bentzel said government needs to take a "leadership role" on port security, noting that in various meetings he has had with the private sector, particularly Wal-Mart, port security is often cited as their biggest issue and how any attack would affect their business. He said there should be an "aggressive use of technology."
Hutchinson, in talking about technology that would allow for container contents to be sealed, said it is "no good unless you know what's in it."
Crowley, placing his remarks in context, also called for a "greater federal role" in security.
"I think there are also different levels of investment," Crowley said. "I'm not suggesting that all of this, or even most of this, is a federal responsibility. But it seems to me in lying with the [Maritime Transportation Security Act] where you are mandating an increase in security, changing the way that ports do business and other players on the waterfront do business in ways that are not directly connected to their business, that's where you need a greater federal role. And then conversely, where you find other mechanisms in the security area that both improve security and improve efficiency and there's a valid direct business investment, that's where you're going to get the partnership that you're really seeking.
"One other point as we raised here, just tangentially, is the dilemma when you go among all of the players here is that ports aren't just about the immediate, local economic impact. Ports have ripple effects across regions if not across nations. So it's very difficult to put on the taxpayers of a particular municipality the entire responsibility for something that has a broader national benefit where you've got those kind of crossover effects. That's again where the federal government has to play a lead role."
James Carafano, senior research fellow at the Heritage Foundation, though, stressed that security is a part of doing business now.
"I agree with a lot of what P.J. said," Carafano said in response. "I just question one of the assumptions of this notion is that security's not part of the business model. I heard years ago [that] if you went and said safety is a part of the business model, people would have been laughed out of the room," noting that skeptics would have said "'are you kidding me? That's a factor in my bottom line. I don't think so.' Thirty years ago, people rejected the notion that environmental protection was a part of their business model. The reality is, doing business in the global community today, that environmental protection, security and safety are all part of your business model. And it's not all bad."
While Bentzel cited Wal-Mart, one of their competitors, Carafano noted, also took steps to deal with impending requirements.
"Target, which is the second largest importer in the United States--one of the things they did on their own kind of anticipating some of the requirements for providing information on their supply chain, is they instituted a new data system to manage their supply chain," Carafano said. "But one of the things they found was they gained enormous economic benefit from gaining transparency and knowledge of their supply chain. So not only was it a security cost, but it also had enormous benefits.
"It's not just about how much--it's not just having a system in place today. It's about having sustainable security. Because the one mantra we always have to keep telling ourselves is that it took five to seven years to plan the 9/11 attack. And if we give you $40 billion and we have great port security over the next year-and-a-half, that's interesting but irrelevant. We need security that's going to be in place for decades. And so, in my mind, the right strategy is to have one that's sustainable--sustainable by the business model, not [with] gobs of annual federal funding every year. Because sustainable security at the end is going to be much better than a rash of money that which we'll spend and spend."
Sesno then interrupted Carafano and asked whether a mayor might not consider it sustainable if a liquified natural gas tanker were steaming to the center of his city.
"Absolutely. He doesn't have to have the economic benefit from it either," Carafano said, noting that among other things, there has to be security and "security systems that permit and encourage economic growth."
Sesno also said that "we were built for convenience, not for security. Nine-11 comes along and we fundamentally have to re-think what we're all about. It's the fishing vessel. It can be anything. . . . At what point do we fundamentally re-think some of this model?"
Hutchinson said "I think we're in transition, and we're thinking through all of that." Ultimately, he said, a port may decide on their own not to have certain risks, such as an LNG tanker, come through their city.
Cox said developing countries could be affected by the new port security rules to be implemented July 1, which Hutchinson said was a good thing, as "ships gravitate to secure ports."
Hereth said that with both shipping and terror a global problem, "we need a global solution." He said he has roughly 500 new personnel and 200 more enforcing the MTSA.
Carafano stressed that Hereth's Coast Guard is "grossly underfunded and undermanned," saying it needs to be fully funded and modernized. "If we're going to ramp up spending, we need money for the Coast Guard--about $1 billion a year."
Hereth, perhaps understating things a bit, said "the Coast Guard does need an improved resource picture . . . but the trend is positive," also noting that "the modernization of the fleet is vital."
Hutchinson cited the Port of New Orleans as an example of the complexity in port security, with its 50 miles of port facilities.
"We need investment by the private sector, but also leadership in government," Hutchinson said. A lot of these facilities, the undersecretary noted, are "run by private entities." Both government and the private sector can do more, he noted.
But in the end, it came back to money. Bentzel said industry needs to be looked at. It wants to compete and be efficient, he said, but said it was not as focused on security.
"There's disagreement on the funding aspect," said Jay Grant, executive director of the Port Security Council.
Former U.S. Rep. Helen Bentley (R-MD) pressed Hutchinson on the concept of user fees.
"We've been talking about $7.1 billion as quoted by the Coast Guard for the costs now," Bentley said. "Mr. Secretary, you and I know that any federal program that's ever been started has not only doubled but it's usually tripled before it's done. So we're really talking $15 billion to $20 billion. And one of the problems is funding. [Hereth] mentioned $46 million this year. That's less than--it's a tiny little bit of what's needed.
"Why don't we do something about fees on the cargoes moving in that would pay and provide the necessary funds," Bentley asked. "And also, on July 1, everybody's supposed to be in compliance. If they're in compliance, why do we need more funds?" She followed that with a question about the possibility of setting up an offshore floating pier to take care of the bad ships and containers.
"Congress can always address the fees," Hutchinson said. "I suppose that we could as well. Obviously, you resist additional burdens as necessary and you want to make sure it's fairly spread through the industry and the consumers. But that's just an option that's not on the table now. It does not necessarily mean that it would not be an option down the road. There's other ways to pass on the cost.
"The offshore facility--we actually utilize the ship itself. If in fact we know that there is a ship coming in that we have a concern about, we keep it offshore. We would have inspections or make sure that that is dealt with before we come to the shores of the United States. Obviously, that is an investment that could be considered."
Hereth also addressed Bentley, saying that "one thing about the cost since I was involved in working those estimates up with our economic staff, I'm confident that those numbers are as accurate as we could possibly make them. And let me just mention the first-year costs estimated for the standards that are being put in place on the waterfront across the United States is $1.3 billion for the first year, $7.5 billion for the first 10 years. And that includes every cost that we could possibly think of." The admiral noted that these costs are "very conservative estimates."
"We don't think there'll be a two or three fold increase in those particular costs, but that's just a piece of the cost discussion," Hereth said, acknowledging, though, that he doesn't have that $7.5 billion in hand. "That's all a shared responsibility."
"Long story short," Hereth said earlier in the forum, "we want to know every single thing that moves in the water. Who's in it, where they're going, what the purpose is. And, that's kind of a large vision or target, but the reality is there are enough agencies out there that if we pull together we can eventually do that using current technology and future technology as it's employed to build something that we're calling a common operational picture so that ports and so that agencies and so that everybody that has a need-to-know has a common understanding about the traffic that's out there and what their intentions are."