Better supply chains through better security

The best technology in the world provides little value if it isn't used properly. When it comes to security, that starts with the common cargo seal.

E.J. Brooks Co. (www.ejbrooks.com), a maker of cargo seals, estimates 50% of cargo containers inbound to the U.S. are not sealed on arrival. Steve Pollack of high-security locking systems maker Kaba Mas Corp. (www.kabamas.com) comments that all of the sophisticated tracking technology in the world won't help prevent loss if the container or trailer was never locked.

Whether your goal is to keep your good cargo in or bad cargo out, cargo security is aimed at a solid, verifiable chain of custody. Calling on Kaba Mas' experience in the banking industry, Pollack says to counter losses from automatic teller machines, the ATMs were replenished by three people. They were there to keep an eye on each other. Still, losses were staggering. Instead of one person stealing $100, you had three people stealing $33, offers Pollock. Unattended containers moving through an extended supply chain stretching from Asia to the U.S. heartland provide even greater opportunities for thieves or smugglers.

Loss prevention people don't like to admit it, continues Pollock, but they have to protect their stuff from the people who work for them. These people don't need to take the doors off a trailer because they can just open the doors and walk in since they're supposed to be there. Accountability, therefore, is one key to security.

Kaba Mas is one of the companies producing locking devices that control access and record who had access and when. Devices can be programmed to limit access by identity and time, so a driver, for instance, may be precluded from opening a trailer during transit but allowed access at destination for unloading. Others along the chain of custody could be granted access under specified conditions.

So, an import container could be opened by a Customs or Food and Drug Administration official, inspected and closed. A smart seal would report that incident, and a sophisticated locking device could record the incident, when it occurred and who accessed the container. Then it could be locked and generate a new random seal number. At destination, the consignee would see that the container had been opened and could check its history.

A prototype device Pollock describes uses light-emitting diodes to indicate the condition of the lock. A color assigned to Customs would tip the consignee that the container had been opened for inspection and resealed.

No one in the cargo industry is saying how much they are losing, says Pollock. The view may be that it is easier to lose some cargo than to lose a driver, he says. In the ATM business, loss prevention drove the mandate for better security. In logistics, the mandates are coming from the U.S. government, and loss prevention is not the issue.

The high-profile threat that concerns the U.S. Department of Homeland Security is a radiological device or "dirty bomb" that could be concealed in a cargo container and smuggled into the U.S. Detecting the device or its components is difficult given the millions of containers moving in international commerce. It's impossible to inspect every container... or is it?

One promising technology is the smart container, says Andy Fano with global management consultancy Accenture (www.accenture.com). Fano is a researcher at Accenture's technology labs, and he believes smart containers can be effective applying sensor technology to a subset of the container fleet. Underlying Fano's premise are two radical shifts in thinking. One is that you can't inspect 100% of the containers (e.g., place sensors or physically inspect every container), and the other is the data that sensors collect from outside the container is not noise but valuable intelligence.

Based on modeling at Accenture's labs, Fano believes 80% detection is possible with 5% penetration of the technology. That is, only 5% of the containers would have to be smart containers in order to screen 80% of the fleet. The first step is to recognize that radiation coming from outside the smart container implicates its neighbors. Each time a container is implicated, its threat level rises.

Equipping only a portion of the container fleet with sensors means that defeating a single smart container is pointless. It also reduces the false positives that are the plague of many sensor technologies. The reason is the "guilt by association" that sets up rules for response. Until a container is implicated multiple times, a direct response is not needed.

One question Fano often hears is: Why not put sensors on the bottlenecks? Why not put the sensor on a container crane or other entry point? Do that too, he says. It provides multiple layers. That's important because focusing the technology on fewer points allows the effort to be defeated by a single point of failure. That could be an equipment malfunction or malfeasance — place an operative at the controls of a container crane or bribe the operator and you provide an open door.

The lower cost of equipping a portion of the fleet of containers is also attractive and can help ensure wider adoption.

At Passport Systems Inc. (www.passportsystems.com), Robert Ledoux, CEO, and Gustavo Bottan, vice president, business development, are developing a prototype nuclear resonance fluorescence imaging (NRFI) system that can provide a signature image of a container's contents down to the isotope level. The technology, they say, goes well beyond the x-ray and radiation detection equipment currently in use.

X-ray type systems are in place in Hong Kong scanning 100% of containers bound for the U.S., Ledoux admits. But the problems with that technology, he says, are similar to those of airport baggage screening. Success depends on human or machine recognition of an image as matching a contraband item. This can lead to false positives or can cause the screener to miss a contraband item completely.

The NRFI technology, on the other hand, can look at the entire container contents and register the elements of each item. The resulting signature will indicate not only whether radiation is present, it can differentiate between uranium 235 and uranium 238. U-235 is needed to make a bomb, but U-238, though not common in commerce, cannot make a bomb.

Though the security mandates are present and evolving, it is difficult for a port or shipping line to sell the value added by expensive screening technologies, especially if they have to add a surcharge to cover the cost. Shippers don't perceive a value because it isn't clear that the U.S. government could start to impose extra procedures for target containers. Until that happens, paying a fee for screening that avoids those delays won't be perceived as adding value, says Bottan.

Though a fully operational prototype is 18 months to two years away, Ledoux suggests implementation could move quickly as additional potential for the technology comes into focus. He believes 100% inspection is possible in part because there are values beyond security.

With the ability to recognize the elements of cargo in a sealed container, it will be easy to detect other types of contraband besides the current targeted radiological device. Cocaine buried deep inside a container of coffee, for instance, will be recognizable to the NRFI device even if a trained dog or visual inspection fails to detect it.

Ledoux offers a further example that a consignee may have ordered 317L stainless steel but could be getting 316L stainless. The duty rates and quality issues raised by the discrepancy raise a number of issues. One savings for importers might be in the additional assurances they are receiving what they ordered.

On the other hand, Customs could detect purposeful attempts to avoid duties or quotas. Ledoux is confident the combination of security and other benefits will help cost justify the technology.

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