Since 9/11, global commerce has experienced an unparalleled concern with supply chain security in the form of new regulations, requirements for stricter inspections and acceleration in development of advanced technology.

There's been lots of energy and ambition, but what have we actually learned so far? WORLD TRADE took that question to nine leading links in the supply chain and asked them, based on their experience in the past three years, what advice would they pass along?

Security is an understandably delicate issue-many of those contacted didn't want to share much. But certain key insights did emerge.

When people took their initial serious look at the supply chain following 9/11, they were startled by how loosely it was tied together. Shippers might know who was to the left or right of them, but rarely could they track either the beginning or the end of the supply line. Paperwork was uncertain, information inaccessible. That's all starting to change. In the words of one source, "Customs likes a paper trail that goes all the way from China to the retailer's shelf."

The speed, quality and the receipt of data has become crucially important. It is the fiber that binds together the web of a secure supply chain.

But, as our sources, note, this poses two basic issues.

One is cost, both direct and hidden. As one observer notes, the Fast-Release certification that lets a truck driver move more quickly through a border crossing costs only $50, but the required release time and travel expenses involved in the driver making the application adds another $750.

The other imperative is much improved collaboration between the regulators and the regulated. This was highlighted when an industry/government committee working on container safety realized the enormity of the problem. According to one insider, that realization prompted participants to push past the traditional, 'I'm the regulator, you're the regulated,' kind of impasse and search for constructive solutions.

While the pressure to introduce security improvements is strongest in the United States, nations that lag too far behind risk being frozen out of the world's largest market. International cooperation is the rule.

In sum, security at this point is a matter of trade-offs as the interests and capacities of technology, finance, commerce and national security get weighed. "Total risk elimination is impossible," one source concluded. "We need to find the proper balance."

Randy Mullett
Director of Government Relations, CNF

CNF International, through its subsidiaries, engages in regional less-than-truckload transportation, international air freight, contract logistics, ocean forwarding, and customs brokerage.

What have you learned?
What we learned is that we didn't know as much about what happened with our freight as we thought we did. When we tried to lock down the different parts of the supply chain, we found that people not involved in a particular phase of handling lacked a good grasp on how fluid the process is. For example, there was surprise at first that air freight would often get bumped to other planes and that it was hard to know in advance what was arriving on any particular flight.

We're learning a lot about our prejudices in how we look at security. Before 9/11, the goal of supply chain security was to prevent theft and the objective at Customs was to prevent smuggling. While those issues are not mutually exclusive with anti-terror, they are not the same. Doing something about theft does not mean we are doing something about terrorism.

I don't accept the argument that security is providing positive fallout. If the marketplace wouldn't support initiatives before, it was because they weren't worth it. From our standpoint, we've only seen costs go up with no real benefit to us. Our insurance rates haven't come down. Our delay time at the border is longer. There are more and more regulations and requirements on our customers. Having said that, we of course want to protect our employees, our customers, our customers' good names, and do our part for homeland security.

Words of Advice
We've got to make sure we don't drive small operators out of business. Our supply chain couldn't operate without thousands of small trucking companies, but regulation put them at a disadvantage. When you don't have a full-time staff that can do security work and background checks, you're at risk.

My advice to those smaller companies would be 'align yourself with a bigger trading partner so you're not left holding the bag.' There are consequences of not understanding all the rules and regulations (the worst case is that you could contribute through ignorance to a terrorist act). If you don't stay up on the regs, you put your business at risk.

Remember that the supply chain is not a closed loop; it's fluid. You strengthen your position by building coalitions within the supply chain.

George Cummings
Director, Homeland Security, Port of Los Angeles

The Port of Los Angeles, combined with the Port of Long Beach, comprise the third busiest seaport in the world, following Singapore and Hong Kong.

What have you learned?
You have to use good discipline to determine which vulnerability and what threat you are matching up. Meaning, for example, if you put a seal on the container, it does certain things to improve security but you need to know it doesn't do other things. It tells you that the container has not been tampered with, but it doesn't tell you what was in the container before it was sealed. A tracking device tells you that something passed a given point on a given route and a particular time, but it does not tell you who was involved with the containers. Nothing is a cure-all.

You have to involve everyone in the process. We work with our longshoremen, whom we consider to be definitely on the team for Homeland Security. They're the first hands to touch things. We want them to be aware if a container has been manipulated. Everyone involved has to be vigilante.

Words of Advice
Cost is critical. Every solution has to be against alternatives in terms of dollars. You have to figure it out at cost per container. People should not accept a technology option that does not include a cost per container.

What would I recommend to the shipper? Be in touch with the people in Customs so you know what applies to you-both the letter of the law and the intent. What pleases me most is when I got a feeling that people really understood the intent of our security regulations and don't just see them as so many hoops to jump through. Federal regulators depend on people in the industry to come up good ideas as to how things can be effective. If shippers understand the purpose of the regs, they'll listen.

Mattjis von Brink
Vice President, The Americas, KLM Cargo

KLM is the only commercial passenger airline that maintains its own fleet of cargo aircraft.

What have you learned?
The first thing we learned was how big the security gaps were! Control of the supply chain had not been very strong, both within the parts of the chain and in the handovers from one part to another.

The second thing we learned is that it's an absolute illusion to think you can physically check every shipment and box. If you did, world trade would come to a grinding halt. But, there's a big difference between checking and screening. With screening, you at least know this: the source, the methods of transport and the recipient. It starts with the information flow.

Customers are absolutely more concerned with security than before. The majority of our business comes from Fortune 500-high tech and pharmaceutical. They are taking this very seriously and they are very professional. If they say the cargo has been in a secure place, we can trust that's the case. That's absolutely the good news.

From the focus on security, we've learned to work together. The whole focus on information flows has meant a big push for investments on data interchange with common quality standards and performance. This process control bodes well because for either quality or security, you need process improvement.

Words of Advice
Know where the shipment has been before it came into your possession. And know where it is now!

Tim Lynch
President and CEO, Motor Freight Carriers Association

The Motor Freight Association consists of six large over-the-road trucking companies with a total of 60,000 drivers.

What have you learned?
In the trucking industry, post 9/11 hasn't changed that much of what we do. We were already screening prospective employees, checking into possible criminal backgrounds, and maintaining security at the terminals. These days we're doing what we had been doing, but doing it better.

I think that, today, the vulnerabilities are better understood. There are really three variables-the individual driver; the terminal and the truck; and the infrastructure. We can address the first two; infrastructure is going to be hard. Bridges and tunnels are always going to be vulnerable. One thing is to keep drivers alert for suspicious behavior, and make sure they know who to call if they spot anything.

I think the people who write regulations don't always know what impact they will have. For example, there's a tremendous push to put more regulation on the handling of hazardous materials. They're talking of requiring background checks of people with hazmat permits. There are 9 million people out there with some kind of trucking license, and 2.7 million of them have hazmat permits. That's a lot of background checks.

The best enhancements are those that have multiple benefits. Monitors, for example. You can put a monitor on a truck to say where it's going and when it's going. But, if you can add a safety benefit along with a fuel-economy benefit, that's better.

Peter Bennett
Vice President, Pacific Coast Sales, "K" Line

"K" Line provides service excellence in container and car carrier transportation to and from North America.

What have you learned?
The security situation has changed and will continue to change. International shipping lines understand and support increased vigilance, and we're working cooperatively with the U.S. government agencies charged with improving security in the portions of the supply chain we control.

The main thing we've learned is that security now involves everyone. The best defense is security awareness by employees and partners who are involved in the daily process of moving freight and documenting that movement.

There is a cost to adding security and up to this point the majority of that increased cost has been absorbed by the shipping lines and shipping terminals. There has been a concerted effort by government agencies to minimize the impact of new regulations on customer service. Our experience is that customers have understood the need for new security requirements, such as providing shipping documentation early to meet the 24-hour rule.

Standard operating procedures have to comply with the new security environment. Chartered ships must demonstrate they are aware of and will comply with the growing security requirements. We require our vendors to be C-TPAT compliant.

Words of Advice
Make security a priority and work with others who share that priority. Shippers and others who have a good awareness of security are finding that they generally do not encounter problems when they work with shipping lines and others who set a similar security priority. Government targeting of higher security risks rewards the good shipper and the good carrier.

We have gained valuable experience and knowledge through our participation in the Operation Safe Commerce initiative to test new forms of security technology throughout the cargo supply chain. We recommend other companies participate in such undertakings.

Michael Ford
Vice President, Regulatory Compliance and Security, BDP International, Inc.

BDP provides full global logistics, including freight forwarding, trade and security compliance, customs brokerage, tracking, transport, and storage.

What have you learned?
We now know more about ourselves regarding security than before, in part because our internal focus has been coming from a high level.

A company's security effort needs to start at the top and be global. If it starts at the top it grabs the attention it requires. We've been able to enhance our employment areas to make sure we're hiring the right people and we've tightened up areas inside our own system to be sure that the proper security is in place.

We've learned what everybody involved in international transportation has learned-that we can't slow goods down. They need to move; indeed they need to move faster. Supply chain security and efficiency are not mutually exclusive.

Customers now ask us how to develop additional security aspects to their supply chain, to make a more thorough review of their process and to build the program. So, many technological initiatives are under way that the number of ideas becomes daunting. We try to pick and choose for clients those that will work better.

Something else we've learned is that getting someone both inside and outside the U.S. to assume security responsibility is much easier than it was in the past. There are global initiatives underway and the U.S. Customs agency is exercising leadership in this area.

Words of Advice
Know who you're working with, whether they're your own suppliers or third-party providers. Do you know the actual manufacturer? Do you know the physical movement of goods from origin to port? Do you know who is loading and transporting the goods? When you're thinking about the supply chain, remember so much of it is a big unknown and Customs doesn't know a thing about it until it arrives at a port.

From a technology point of view, be careful. Look at process change rather than a technology change. There are a lot of offerings out there and there's always pressure to buy the latest. Companies might be better served is they evaluate their present applications before investing in something new. Instead of saying 'we need to spend big dollars to buy this system for international security,' look at how you are operating your current systems.

Bob Dahl
Project Manager, Air Cargo Management Group

Air Cargo Management Group is an aviation consulting firm that focuses on the worldwide air freight and express industry.

What have you learned?
There are a couple of issues. The prime benefit of air transportation is speed. A lot of security enhancements-like screening, for example-are things that will impede the flow of goods. To the extent that those changes increase the time required to move goods, that takes away the advantage that is central to air freight.

The second is cost. Security is very important. It's an added cost. If enhancements are going to be made with new equipment and infrastructure added, someone has to pay.

A lot depends on what happens in world affairs. Just think about the difference in air travel since the 1950s. So much has improved, but getting through airports and screening has gotten worse, decade by decade. I don't think we will ever get to a point where we step back and reduce security. Once things get imposed, there's a tendency to leave them in place.

Words of Advice
Part of the problem in the security business is that a lot of the specifics are available on a need-to-know basis only. Unless you are deeply immersed in this stuff and part of the security community, it's difficult to know what concerns are being addressed.

John Ferguson
Vice President, Sales & Marketing, PBB Global Logistics

PBB is a global logistics firm offering customs brokerage, customs consulting, international freight forwarding, trucking, and warehousing/distribution.

What have you learned?
Where Customs used to look at the borders, they now look at the entire supply chain. They want to see a wholly integrated service and completed forms from China to the retailer's shelf. Customs has taken on a more important role within companies. Companies see that access to the U.S. market could be jeopardized if they do not comply.

There's been physical improvement. People now are looking after fencing and satellite tracking, track and trace platforms. They are putting better security on their own premises.

Everything you're shipping between the U.S. and Canada has to have prior notification, otherwise it's stopped at the border. At present, there's a significant delay, between 2 and 4 hours. Food importers are faced with long line-ups of trucks that can push their drivers past the allotted limit on hours. There's more spoilage. I've talked to smaller food exporters in Canada who have just given up on selling into the U.S.

There's a marketing spin, as well. A lot of people have become C-TPAT approved, then call it to the attention of customers. If you carry the banner of C-TPAT, if you're approved for Fast-Release, which provides a dedicated lane for those with proper certification, then that's a selling point. If a company shows it's solid on security, most people think it's solid all through.

Words of Advice
Smaller traders cannot be as attentive as larger importers in investing in the new electronic environment required by security concerns. They might decide that international business is not a big enough market for them to justify dedicating the required resources. They might choose to opt out.

The easiest thing for a small company to do is to outsource to a trade expert, a third-party logistics company. Then, they are leveraging against a resource that is spread out among many traders.

On any new regulation, take the implementation period as the start date. Meaning, if it is announced on October 1 that a new regulation is effective January 1, start implementing on October 1.

Byron Miller
Manager, Public Relations, South Carolina State Port Authority

The South Carolina State Port Authority manages seaports in Charleston, Georgetown, and Port Royal, South Carolina.

What have you learned?
First, we focused on physical security: who gets on the terminal? Who has access? Port facilities are the focal points of the waterfront and in Charleston every day we have 11,000 vehicles that come on and off. We have closed circuit television. We're using more automatic means of monitoring our fences-as soon as there's a disruption it sends an alert to a central motion station.

The costs are significant. In the past three years the costs for port authority police have risen from $2 million a year to almost $4 million. That's just the people cost. There's also the capital cost. We identified $10 million in security-related projects over two years. That compares to a total two-year $115 million capital budget.

We're meeting part of the cost by assessing a security on vessels that come into the port based on length of vessel-$1 per foot. We don't think it will affect business but rather advertise our concern.

Words of Advice
We need transportation worker identification cards (TWIC) today. Secondly, dollars are needed to finish out the capital projects that the federal government requires but does not fund. Third, better information is necessary. What we have to realize is that technology is our friend. Fourth, there has to be a closer working relationship between the regulators and the importer/exporters. We need to eliminate duplicate regulatory systems.