A containerload of misinformation

By Michael A. Levans, Chief Editor -- Logistics Management, 3/1/2006

I've lost count of how many times our editorial staff has discussed the mainstream media's coverage of Dubai Ports World's (DPW) takeover of terminal operations from London-based Peninsular & Oriental Steam Navigation Co. (P&O). Over the past few weeks, we've watched local and national radio news, television news, and even our tried-and-true national newspapers feed a jittery nation a containerload of misinformation.

Now that this story has spun out of control—and, not surprisingly, turned into a political football—we'd be remiss if we didn't help you clarify the issue for your colleagues in aligned departments.

What's being sold: No one is selling or buying a port. States, cities, and municipalities own the ports. What P&O is selling to DPW is a company that operates port facilities under long-term contracts with port authorities. DPW will be assuming operations of certain berths, stevedoring activities, and terminal operations from P&O at 22 U.S. ports (see the list at www.logisticsmgmt.com).

Port and vessel security: The physical security of the port ultimately is the responsibility of the port authority. Port authorities must conform to security plans that are overseen by the U.S. Coast Guard, which conducts regular compliance reviews. No matter who leases and operates a terminal, they are under the watchful eye of the Coast Guard and are subject to rules enforced by U.S. Customs and Border Protection.

Foreign ownership: At the heart of the political dust storm is not foreign ownership of a company that could affect national security, but that company's ownership by a foreign government. Federal law requires a 45-day review of such arrangements by the Committee on Foreign Investments. A similar situation arose in Los Angeles/Long Beach a few years ago when a state-owned Chinese ocean carrier wanted to renovate and operate a container terminal. After intense scrutiny, the deal was approved.

The security of the world's cargo containers—the blood in the veins of the global supply chain—is an issue that transcends the DPW story. Security really begins at the port where a container is loaded on board a ship. Do we know what's in the container? Who loaded the cargo onto the U.S.-bound ship? If you ask security expert Stephen Flynn about the current state of container security, he'll tell you that this system has more holes in it than a six-ton block of Swiss cheese (see "How vulnerable is your supply chain?" at www.logisticsmgmt.com).

Whether or not the deal goes through, the DPW affair will have little or no impact on how shippers go about their day-to-day business. If nothing else, though, the hullabaloo in Congress should remind shippers that they need to heed Flynn's words: Get C-TPAT certified, become more aware of your own processes, assess supply chain vulnerabilities, patch any risk "holes," and become known to the government as a low-risk shipper.

Comments? E-mail me at michael.levans@reedbusiness.com