'Smart' box bill sharpens focus on security

PUBLISHED : Monday, 14 March, 2005, 12:00am
UPDATED : Monday, 14 March, 2005, 12:00am

A bill moving through the United States Senate urges the country's security officials to set standards for the emerging 'smart' box industry and make the technology mandatory by 2009 for all shipments to America.

The Intermodal Shipping Container Security Act, introduced last month by Texas Senator Kay Bailey Hutchison, would require America's all-powerful Homeland Security Department to meld security initiatives for trade by air, sea, rail and highway into a single co-ordinated plan.

For Asia's maritime trade community, it would enforce the use of smart containers for exports to the US within four years and its passage would prove a windfall for the companies positioned as first-movers in smart technology for maritime trade.

The equivalent of more than 10.7 million 20-foot boxes of cargo was shipped from Asia across the Pacific last year, the majority bound for the US.

'We may not be able to physically screen every container on the move in our nation's vast economy but we should not leave vast shipments of cargo completely unchecked,' Ms Hutchison told senators last month.

'My bill lays out a systematic plan to co-ordinate and expand existing methods of screening and securing materials using available technology.'

The bill, driven by a US mandate to protect its trade transport sector from being used for acts of terrorism, is expected to turn up the spotlight on the fledgling smart technology industry.

One of the early champions of the sector has been Savi Technology, a founding partner in the Smart and Secure Tradelanes (SST) consortium, which also boasts the US Department of Defence, Hutchison Port Holdings and China Merchants as members.

A smart container, such as those being developed by China International Marine Containers under the SST initiative, will allow customs agents and exporters to monitor its integrity and location, as well as provide data on its contents and exporters' shipping patterns to detect anomalies and flag suspicious shipments in real time.

Advanced versions will allow exporters and consignees such as Wal-Mart Stores to plug the data into their back-end systems to monitor product levels and automatically trigger restock orders, keeping stocks to a minimum and reducing inventory write-downs.

Lanny Fritts, Savi's vice-president of business development for collaborative services, estimates using the rudimentary model will tack US$5 to US$10 onto the cost of shipping a box to the US.

'More information will cost more; integrating in to back-end systems will be a little more costly but it will have a lot more value and return to the company,' he said.

Even at base levels, enforced use of smart technology would have added up to $840 million to last year's cost of shipping manufactured goods to the US from Asia, and local exporters have grown weary of footing the cost of a never-ending series of security bills being driven by Washington.

However, the cost of leaving maritime trade vulnerable to attack could make smart levies look insignificant, at least in the US.

A report by the US Library of Congress last month estimated that detonation of a Hiroshima-sized nuclear weapon in a major seaport would kill up to one million people and would result in direct property damage of up to US$500 billion.

Losses due to trade disruption could reach US$200 billion, with indirect costs estimated at up to US$1.2 trillion.

Savi said the cost for Asia's exporters of using its smart technology products would be mitigated by improved supply-chain efficiency.

Its most recent study said that 'a tracking and security solution ... linked to a network platform ... could realise net benefits averaging US$1,200 per shipment'.

But all value projections will be irrelevant to Asian exporters if the fledgling industry fails to work out some of its early hiccups, such as a lack of technological reliability.