May 2011 | Commentary | Supply Chain Security

Container Security: Filling in the Blanks

Tags: Logistics I.T., Ocean, Security

Dr. Jim Giermanski is chairman, Powers Global Holdings, Inc. 704-825-4741

It is often impossible to know what containers entering the United States really contain. Even with bonded shipments and the 24-hour manifest required by U.S. Customs and Border Protection’s Container Security Initiative, we merely take the shipper’s word as to a container’s contents, never knowing whether its security has been compromised during transit.

Using Container Security Devices (CSDs) provides a measure of safety. Shippers often balk at their use, however, claiming that these devices are too expensive. If shippers better understood the gains CSDs can deliver, they might appreciate their value.

CSDs provide a wealth of information. The devices allow shippers to monitor cargo from origin to destination, internationally and domestically. They can provide information such as:

  • The container’s contents; and the names of the people who supervised loading the cargo and verified the contents at origin.
  • The time the container was sealed, delivered to the embarkation port, and loaded aboard the vessel.
  • The time the container left origin, its route and progress, and whether it deviated from its course.
  • The internal environment of the container during transit, including humidity and temperature, and whether it was breached.
  • The time the container arrived at the destination port, and who opened it and verified the cargo.

Weighing the Benefits

In addition to the information gained by using CSDs, shippers benefit in cost savings. Monitoring shipments reduces costs associated with cargo loss or delay; diversions; increased insurance premiums; increased labor to reship or replace the cargo; business downtime; and seasonal promotion loss.

Why not put a number to the gains? According to a Stanford University study, the quantifiable benefits of using security controls and technology include:

  • Improved product safety. Theft, loss, and pilferage is reduced by 38 percent; tampering drops by 37 percent.
  • Better inventory management. Excess inventory is reduced by 14 percent, and on-time delivery increases by 12 percent.
  • Enhanced supply chain visibility. Access to supply chain data improves by 50 percent.
  • More efficient Customs clearance. Cargo delays are reduced by 49 percent.
  • Speed improvements. Transit times are cut by 29 percent.
  • Higher customer satisfaction. Customer attrition drops by 26 percent.

Other sources offer different, but compelling, benefits to using CSDs. Respondents to a survey by global management consultant A.T. Kearney report that they need real-time data for accurate visibility into their supply chains.

Filling in the Blanks

Because accurate data does not exist within the current logistics sector, CSDs can provide missing data deemed important to shippers. The U.S. Department of Defense is now utilizing CSDs, and has reduced overall losses in military supplies to less than eight percent, according to the A.T. Kearney report.

Using CSDs can have a favorable impact on the bottom line. Control and speed through the supply chain, and especially through ports, pays off.