FocusChem shipping faces security challenge

17 December 2007 12:59  [Source: ICIS news]

By Adal Rafiq


On the look-out for the Trojan HorseLONDON (ICIS news)--The global chemical shipping industry could see a fall in business as manufacturers, squeezed by their respective governments, seek to mitigate the threat of terrorism at ports. But how seriously is the industry taking this threat?


Since 9/11, port security has taken two distinct paths. The first deals with the threat posed by the shipment of non-hazardous materials in containers which can be used for the purpose of terrorism, the 'Trojan horse' scenario. The second looks at the shipment of dangerous chemicals themselves.


Some chemical companies have already begun the long process of addressing the glaring holes in security.


Dow Chemical Company, the largest bulk chemical shipper in North America, has been leading the way. Approximately 1% of its shipments are of products recognised as toxic inhalation iazardous (TIH) chemicals.


According to Henry Ward, director of transportation safety and security, Dow aims for a 50% reduction in the shipment of TIH materials by 2015, compared with 2005.


To achieve similar results, chemical producers will have to avoid new, long-term shipments of TIH materials. Alternate sourcing through exchanges, swaps, contract manufacturing and purchases is one possible solution, while a more drastic alternative is conversion to less hazardous derivatives before shipment.


So far the results have been encouraging, said Ward, speaking to the Dangerous Goods Advisory Council (DGAC) at a conference in Santa Fe, New Mexico.


Dow has so far achieved a 29% reduction in highly hazardous material tonne per mile. By 2009, Dow businesses forecast that tonne-miles will be down by 50% and the number of shipments down 10%.


TIH materials were down in 2006 by 13% due to alternate chlorine sourcing and flammable gases were down 35% due to vinyl chloride rationalisation.


Sources have suggested that some moves by chemical producers presented little more than a veil of counter-terrorism measures to wallpaper over their requirements.


Although the moves appeared motivated by genuine concern, according to these sceptics it has more to do with looking for efficiencies and reducing logistical costs through consolidation into large manufacturing sites.


More importantly, Dow’s reduction targets do not refer to all hazardous materials, only those considered to be highly hazardous materials, for example TIH materials and flammable gases.


This would therefore not include fertilizers, such as urea or ammonia, which could feasibly be used to devastating effect, as seen in 1947 when a French vessel, the SS Grandcamp, exploded while carrying fertilizer in the port at Texas City, killing nearly 600 people.


The disaster was the result of a series of errors, but 60 years on a deliberate attempt to replicate its effects does not take a great leap of the imagination, such as the 1995 Oklahoma City bombing.


The high-risk threat scenarios to bulk marine shipments and iso-containers envisaged by Dow include direct attack or catastrophic release, either through collision with an improvised explosive device (even vessel-borne, as seen in the attack on the USS Cole in 2000) or a rocket propelled grenade (RPG).


An RPG attack was, however, out of the scope of a shipper's ability to mitigate the risk, said Ward.


"Since the US military cannot protect a tank against an RPG, it is not realistic to believe that a shipper can do anything to protect a tank car.


"The way to address this risk is through arms control and law enforcement, both of which are out of scope for what the shipper can do,” said Ward.


With this in mind, some of the schemes seem somewhat inadequate for the task they are ostensibly designed to tackle.


The cost to New York City of the 9/11 attacks has been estimated to be at least $83bn (€58bn). A labour dispute in 2002 that caused the shutdown of US west coast ports for only 10 days cost the US economy about $5bn.


The US Government Accountability Office estimated the cost associated with closing US ports due to a detonation in a harbour could amount to $1,000bn.


Ports are certainly high value assets, but it seems the issue that really takes up time and effort is preventing weapons of one type or another passing through, according to Tony Crane, director of transportation markets at Smiths Detection.  


One particular scenario has loomed large in the minds of governments and the intelligence communities; the possibility of nuclear material or a dirty bomb entering a country in a container vessel.


Once it has arrived at a US port, it may already be too late to prevent it becoming a weapon of mass effect (WME) with catastrophic consequences.


The massive practical economic costs, however, of inspecting cargoes once on board a ship would prove prohibitive.


The first line of defence then is to establish a degree of trust in the loading of a cargo, before it leaves the outbound port.


Handing over control over cargo bound for American shores is a contentious issue, one which creates, in effect, a virtual border, pushed out to the port of origin.


Since 9/11, schemes such as the Secure Freight Initiative (SFI) in the US have been welcomed, although there has been mounting concern over their practical and financial impact. The biggest concern with the scheme is the industries' ability to trade off security and trade.


According to Patrick Walters, senior vice-president and managing director of Dubai Ports World (DPW), containerised trade is set to grow at a compound rate of more than 10% in the next decade.


“Realistically, however, port operators will only be able to expand their capacities by around 5% a year. Currently, the proportion of international cargo scanned is estimated at around 2-5%”, said Walters.


“Congestion in ports and terminals is already an issue today, and one that can only get worse with the added demands for higher security."


Is 100% scanning the future? DPW certainly thinks so. "The concept of looking at every single container that comes into our terminal going through some sort of screening process is something that I believe, and DPW believes, is something we are moving towards."


So far, 100% scanning is still in an embryonic phase with pilot schemes in Pakistan, Honduras and Southampton in the UK. Despite initial resistance, the operational effect has been very manageable, said Walters.


The economic implications of 100% cargo scanning extend not only to technology and implementation costs, but to the indirect costs of delays in the supply chain.


“Just in time” becomes a redundant term if there are long inspection processes and delays. 


The sights of policymakers appear firmly fixed on the potential for ships to be used to transport weapons rather than as weapons themselves.


But, according to H Lee Buchanan, the US Navy's former assistant secretary for research, development and acquisition, the search has currently much more to do with drugs and illegal immigrants than for nuclear material or dirty bombs. Given the logistics, containers would not be the best method for smuggling this material in any case.


“The material is not easy to come by, and there is too much that can go wrong. How many hands does a container pass through before getting to its location?” he said.


The benefits of prevention are far more difficult to quantify and any economic justification of 100% cargo scanning will be a challenge.


There needs to be a clear agreement on the overall goals and objectives before any discussion of a 100% cargo container scanning policy.


According to Kevin Swift of the American Chemistry Council (ACC), the industry has spent $5bn on security since 9/11.


Producers have been spending 0.3-2% of their total sales on security, but the industry has been asking the federal government to regulate the entire sector.


The issue is simply far too important to be left to self-regulation.


($1 = €0.70)


By: Adal Rafiq
+44 20 8652 3214

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