IIIrd Hemispheric Conference on port security OAS/CIP The World Bank activities in relation to Port Security and Supply Chain Security Michel Luc Donner Port and Maritime Transport Specialist The World Bank port and supply chain security 2008

port and supply chain security 2008 Contents ISPS cost of compliance report (in Developing Countries) Supply Chain Security (SCS) port and supply chain security 2008

port and supply chain security 2008

port and supply chain security 2008 http://siteresources.worldbank.org/INTTRANSPORT/Resources/tp_16_ISPS.pdf http://worldbank.org/ports http://www.worldbank.org/transport port and supply chain security 2008

ISPS cost of compliance report Why ? Methodology Analysis per Region Global Analysis Comparison with the UNCTAD report : Maritime Security: ISPS Code implementation, costs and related financing, March 2007 port and supply chain security 2008

port and supply chain security 2008 Why ? Requests by Country-Clients : concerns about financing and consequences of non-compliance Not a compliance assessment Centered on Developing Countries port and supply chain security 2008

port and supply chain security 2008 Methodology 12 selected ports on-site missions port and supply chain security 2008

port and supply chain security 2008 12 selected ports Baltic Black Sea Caribbean Africa Latin America port and supply chain security 2008

port and supply chain security 2008 Analysis per Region 12 selected ports: 3 in West Africa 5 in Baltic and Black Sea 4 in Latin America & Caribbean port and supply chain security 2008

4 ports in Latin America & Caribbean Heavy upfront investments Annual Running Costs Actual security costs per TEU or TON port and supply chain security 2008

port and supply chain security 2008 Up-front investments port L1 L2 L3 L4 security related 2.4 3.3 3.6 5.8 of which after July 2004 1.8 2.5 total ( x usd 1mio ) port and supply chain security 2008

port and supply chain security 2008 Annual Running Costs port L1 L2 L3 L4 Annual Running Costs 1.3 1.8 2.6 3.3 ( x usd 1mio ) port and supply chain security 2008

Actual security costs per category (in US$) port L1 L2 L3 L4 per TEU 2.31 3.68 4.59 9.91 Other cargo/ per ton 0.23 0.48 0.46 0.16 per passenger 0.69 0.86 - port and supply chain security 2008

port and supply chain security 2008 Global Analysis Heavy upfront investments Actual security costs per category port and supply chain security 2008

port and supply chain security 2008 Up-front investments Up-front investments port A1 A2 A3 B1 B2 B3 B4 B5 L1 L2 L3 L4 Total expected 5,6 5 5.1 0.5 0.1 2.2 0.2 2.4 3.3 3.6 5.8 (x usd 1mio) port and supply chain security 2008

port and supply chain security 2008 Security Cost per TEU 2 4 6 8 10 12 14 16 Cost per TEU (US$) A1 A2 A3 B1 B2 B3 B4 B5 L1 L2 L3 L4 Port Security Cost per TEU port and supply chain security 2008

Security costs per ton of cargo 0.1 0.2 0.3 0.4 0.5 Cost per ton of cargo (US$) A1 A2 A3 B2 B3 B4 B5 L1 L2 L3 L4 Port Security costs per ton of cargo port and supply chain security 2008

Conclusions and remarks Range is quite wide Orders of magnitude, not rocket science Averages not as high as predicted Uneven levels of security achieved Contributing factors Collateral benefits port and supply chain security 2008

port and supply chain security 2008 Contributing factors Starting point (navy base, free zone, drug traffic, political regime) Total cargo throughput Topography / layout of the port port and supply chain security 2008

port and supply chain security 2008 Collateral benefits Reduction in number of stowaways Reduction of theft and pilferage Increase in Customs revenue (more & better control) Reduction of cargo delays and waiting times More orderly ports and terminals, leading to more efficiency port and supply chain security 2008

Comparison with the UNCTAD Report Unctad : 55 questionnaires / WB : 12 on-site missions Unctad : majority in developed countries / WB : all developing countries Unctad : small and large ports / WB : majority of smaller ports port and supply chain security 2008

Comparison with the UNCTAD Report in US$ average cost / TEU average cost / TON UNCTAD 3.60 0.08 World Bank 4.95 0.22 pondered ports < 500,000 teu/annum ports <15 million tons p/a 4.80 0.11 5.40 0.17 port and supply chain security 2008

Supply Chain Security (SCS) Background and genesis Main components, initiatives and stakeholders SCS Guide (project) port and supply chain security 2008

port and supply chain security 2008 Background The ISPS Code in fact is a dedicated component of the larger global security initiative commonly known as “Supply Chain Security” (SCS). Whereas the ISPS Code concentrates on security issues related to vessels, individual port facilities and the direct port environment, SCS aims to make the entire logistic chain, from producer to consumer, more secure, but, at the same time, more efficient. While the ISPS, in spite of being an International Code sponsored and led by the International Maritime Organization (IMO), took quite some time to achieve full implementation, SCS is still a mosaic of components and initiatives that may be introduced and become compulsory on a global scale. port and supply chain security 2008

Main Stakeholders and actors World Customs Organization (WCO) International Organization for Standardization (ISO) International Maritime Organization (IMO) World Trade Organization (WTO) Regional Organizations National Governments International Trade, Logistics and Transport professional Associations port and supply chain security 2008

port and supply chain security 2008 Main initiatives 24-hours manifest C-TPAT CSI ISO 28.000(1) ATDI 10+2 100% scanning (2012) AEO Multilateral, bilateral, unilateral port and supply chain security 2008

port and supply chain security 2008 Main components Advanced Electronic Cargo Information Data collection, aggregation and analysis Risk management Container seals Scanning equipments and image analysis Integrated Border Management (border agency cooperation) Authorized Economic Operator management Real-time cargo tracking and tracing port and supply chain security 2008

SCS Guide (project) - genesis The concept of this Guide started to take shape during the 25th International Association of Ports and Harbors (IAPH) Biannual Conference that was held in Houston, Texas, USA from April 27 to May 4, 2007, when experts from the following organizations and companies: The Rotterdam Port Authority The International Association of Ports and Harbors (IAPH) The company SOGET (a Joint Venture of Port of Le Havre Authority and Port of Le Havre Port Community) The Port of Le Havre Authority The World Bank (Energy, Transport and Water Department) concurred on the need to increase the awareness of the global trade and transport community, and in particular that in the developing world, of the developments in the field of Supply Chain Security, or SCS. This meeting was followed up with another meeting in Rotterdam in September 2007 in which also a Representative of the World Customs Organization (WCO) participated. port and supply chain security 2008

SCS Guide (project) (I) Commented Inventory of on-going and future initiatives and their reciprocal compatibility Insight in international developments and uncertainties Status of SCS from a Regulatory point of view Insight to the overlaps, bridgeability and interoperability between the proposed certification systems (C-TPAT – AEO - ISO 28.000(1) Status of mutual recognition port and supply chain security 2008

SCS Guide (project) (II) Outline of container integrity solutions including High Security Seals and RFID seals, and their state of standardization and affordability in Developing Countries Outline of Advanced Inspection Technology including radiation detection and high speed scanning; relevance of AIT for Developing Countries (scanning for Customs = scanning for security ?) Users check-lists port and supply chain security 2008

port and supply chain security 2008 Conclusion OPENING ADDRESS BY Mr LEE KUAN YEW, MINISTER MENTOR, AT THE INAUGURAL SINGAPORE MARITIME LECTURE, 25 SEPTEMBER 2007 “A balance must be struck between ensuring security and facilitating trade, if we are to preserve the efficiency of shipping and cargo operations and allow global trade to flourish” port and supply chain security 2008

port and supply chain security 2008 Conclusion To ensure that the measures introduced are sensible and pragmatic, a multilateral approach is more likely to produce pragmatic solutions than uncoordinated unilateral initiatives” port and supply chain security 2008

port and supply chain security 2008 And, to be truly global, Global Trade must take on board the Developing Countries. port and supply chain security 2008