Security is a State of Mind.

By Erik Hoffer

DEFINING VULNERABILITY: The overwhelming perception is that the global air freight system is both dynamic and efficient as it moves millions of packages worldwide on a daily basis. Little thought is given to possible disruptions in service or to the vulnerability of our fragile supply chain, especially as it relates to an airfreight based catastrophe. Logisticians routinely discount the myriad of threats to commerce as they use the air cargo system. Air cargo’s intrinsic vulnerability to financial loss seems to be almost transparent to them and therefore little is done or funded by business to reduce these perils at a corporate level. Only recently has our government dedicated resources to identify these risks worldwide and, unfortunately, has yet to create oversight standards to mitigate them. To the security professional, air freight is a highly vulnerable modality that can deliver a threat faster and more efficiently than a truck, sea container or rail car. With air cargo’s vulnerability to a disaster being but moments away, any informed evaluation of the threat to world commerce, through the use of air cargo as a vehicle, is a given. The simple truth is that the commercial supply chain is far from safe and no where near secure; yet in all of this controlled chaos, the air freight system performs efficiently and losses somehow are maintained at tolerable levels. How air cargo functions within the world’s supply chain, given these threats, is the basis of this chapter. THE COSTS OF LOSS The value of air cargo industry hovers about $60 billion dollars, exclusive of the tangent industries such as packaging material suppliers, insurance carriers and ancillary administrative functions. The industry outside of direct shippers is comprised of domestic passenger air carriers, dedicated air couriers, private air freight airlines, forwarders, brokers and consolidators to mention a few of the people who comprise the air matrix. One terrorist based supply chain incident could have a devastating affect on world commerce and effectively shut down commerce as we know it in all modalities. As an example, the port strike in California of 2003 cost the commercial supply chain billions in losses daily and crippled sea imports world wide for six months. Imagine the magnitude of financial losses if an act of terror was perpetrated on the United States using air cargo. The speed by which tainted freight can hit our shores is frightening and the fact that little is being done to reduce that risk as equally as disturbing. AN OVERVIEW There are many elements of supply chain and logistical security in the air freight business. Physical issues such as secure packaging, handling, storage, transfer, chain of custody and delivery of goods just begins to scratch the surface where vulnerability is a concern. Weakness in any one area can lead to disaster. No matter how hard we try there is no reasonable way to control all aspects of unattended cargo and air facilities. Transportation of air cargo from shipper to carrier presents a dynamic threat as chain of custody is rarely verified in lieu of basic cargo transfer methodology. Cargo is typically seen as a unit with no particular emphasis on physical or x-ray inspection of any one box or pallet, hence the ability to surreptitiously introduce a weapon or contraband into an innocuous bundle is basically easy. Individual courier packages get somewhat more inspection than bulk freight, but because of the generic nature of the packaging, little is really done inspection wise until the final sort, at which time it is too late to interdict such tainted cargo. Since most air cargo screening is done at sort facilities at destination, interdiction of a weapon would be done after arrival in which case it would be far too late! Security, containment and control of unattended cargo can only be achieved when all aspects of logistical move can be verified right down the pre-inspection and final verification of boarded cargo. In order to achieve operational efficiency however, air cargo gives a tremendous amount of latitude to its biggest clients. More about these policies later. Regardless of the modality of transportation secure packaging, sealing and inspection of cargo is a mandate. Without it, no one is ever sure if the packaging is original, if the goods are actually still in the box or if the box was switched with a weapon or loaded with drugs. Since choices of shipping boxes or containers are made by shippers, and the choices of bundling of various random freight is made by carriers, little can be done to create a standard by which inspection procedures could be established. The inherent lack of possible interaction unilaterally between all cargo handlers makes most air cargo transparent and unidentifiable by design. Typically the smaller and generic packages are placed in C containers, or air totes, with as many as 1000 individual small size boxes inside. The chances of discovery of stolen goods prior to delivery, tainted freight or the interdiction and remediation of a terrorist planted weapon in air cargo is a challenge. The random bundling technique associated with air cargo intensifies the risks to any single unit within that enclosure since each looks the same. Unlike containerized sea freight, which is typically palletized or floor loaded to the maximum cube of the enclosure, locked and sealed and nested aboard a ship; air cargo is randomly stacked and net strapped on aircraft pallets which creates easily accessibility by skilled thieves or terrorists before, during and after transport. The speed with which goods are transported, combined with the inherent risks of damage, theft, tampering, spoilage or the surreptitious introduction of contraband into a box, makes air cargo that much harder to monitor or secure. The fact that as many as 5 different companies may have handled, packed or sorted cargo with none of them responsible for the security function, makes for a perfect environment to steal goods or worse. Since most air carriers transfer cargo by trucks for delivery, there is little nexus or shared intelligence possible from the original shipper to the handlers with which to recognize anomalies. The ability to deploy a deadly device quickly is the crux of the issue. “Speed” is the operative word in defining air cargo risk, because the slower the speed of delivery the more apt you are to discover problems before they become disasters. For this reason, interdicting truck or sea cargo is far easier than air. The slower the freight moves, the more hands and eyes are on the cargo and the greater the need to examine paperwork and supporting security protocols. The axiom that “cargo at rest is always cargo at risk” seems to imply that air cargo is less apt to be a target but this is not the case. The difference between air cargo and other modalities is that in air freight, commodities become blended with hundreds of other packages in a consistently random order, shipped by anyone, anywhere in the world, making each box a mere drop in a sea of similar looking packages. There is a critical need to establish basic security packaging mandates on the part of shippers such that carriers and handlers stand the best chance at discovering anomalies in cargo prior to their being boarded at the embarkation airport. The more recent introduction of intelligence monitoring into the air cargo security equation has begun to help identify potential threats to help reduce the chances of tainted cargo being blindly accepted by air carriers. Only through these basic methods of risk reduction can we avert a terrorist incident involving air cargo. There has been a far greater effort put forth to examine passengers than cargo. In October 2007, the Bush administration created an executive order mandating the 100% examination of cargo on commercial aircraft by 2010. That task is both ambitious and surely doomed for failure, as deploying such a system world wide is unachievable. The executive order mandates that all cargo boarded on to passenger aircraft, here in the United States, be examined, x-rayed and evaluated. Funding has yet to be provided nor has responsibility been allocated to do this inspection. The failure to have such a global, rather than regional policy, basically negates its effectiveness and thereby minimizes the domestic effort. Air cargo is cog in a world wide supply chain and without addressing it globally, any such proposal is doomed to failure. In any form of transportation, solutions that fail to become all encompassing are rarely effective. This band aid approach to a tremendous problem once again demonstrates the ‘for show only’ approach the TSA (Transportation Security Administration) and DHS (Department of Homeland Security) takes to cargo security. THE UGLY STEP CHILD For the years before 911 and now for years after, cargo security has remained the stepchild of the worlds supply chain. Funding has been non-existent and policy undefined. Logisticians somehow failed to become proactively involved with loss control in their quest for speed, cost reduction and operational efficiency. Since governmental oversight into the commercial supply chain is taboo, no effective protocol has been established leaving the problem to fester and the criminal elements to mature and perfect their craft unabated. When the DHS (Department of Homeland Security) established programs such as C-TPAT (Customs Trade Partnership against Terrorism) and the Known Shipper Program, which is an equivalent design for air cargo, best practices were defined for signators to implement and compliance was to be rewarded with operational efficiency. Although no laws were passed to mandate compliance with C-TPAT standards, the threat to shippers of ‘slower passage of cargo’ for those not willing to sign on, was the stick that made compliance with C-TPAT principals a viable carrot. No TSA, DHS, DOD or CBP programs or policies however have addressed air transportation vulnerability to a point where any of them has required, legislated or mandated by policy, any risk reduction component. No best practices have been recommended or adopted at the federal level and neither carrot nor stick have been offered up to participants. It seems that ‘do the right thing’ was implied in the air cargo industry, but since it was not defined, industry has become their own monitor resulting in no action by anyone. The lack of specificity in policy results in a nebulous interpretation of requirements making the proposed governmental programs ineffective and inconsistent. Consistency is a basic tenet of effective security. Just because we have not had a supply chain incident, most Americans, in their complacency, feel confident that the Government is actively participating in securing our homeland. Air cargo is potentially the biggest offender and therefore the greatest economic threat. Although the Known Shipper programs and soon to be effective, Certified Shipper Program, have aided in establishing best practices for containment and control of unattended goods, little is really being done to close these security gaps. Our borders are more porous than ever and with more air freight volume being established daily, we must focus on effective screening techniques and become more flexible in relaxing our need for speed. Greater passenger and baggage observation and inspection have been getting better, general air cargo, especially courier cargo and most randomly consolidated air freight, still have little to no scrutiny coming into the United States or even boarding a passenger plane from some countries. Cargo shipped from this country abroad does get some further observation and inspection, but moving tainted, contraband, illegal, or hazmat cargo still remains easy for those with the know how to bypass the system. With approximately 50 million domestic cargo shipments started daily and twice that internationally, the problem is acute. Air vulnerability is not exclusively limited to terrorists and thieves; cargo can contain contraband foods, illegal animals, artifacts, skins, drugs, currency, counterfeits and even items as small as insects or fruit flies all present a real risk to our country and to our National economy. Although some domestic and international passenger baggage is checked with dogs, x-ray, reviewed intelligence and visually inspected, air cargo is more often than not given a green light through most U.S. airports with little or no real chance to interdict dangerous materials. A BOARD ROOM DECISION Vulnerability to any type of loss presents a real problem to business who use importation or export by air as their modality of choice. To accept risk without remedy is one course of action. “Wait and see” is a dangerous platform because certain types of losses can balloon exponentially causing at times, irreparable financial harm to the shipper or owner of the goods. Brands can be compromised when consumer confidence is shaken due to a theft, contamination or terrorist act using a National Brand as a cover. For example the failure to protect certain drugs or controlled substances from theft can result in death and personal injury that can be traced back to the manufacturer or shipper. Besides contingent financial losses, ingestible goods out of the care and control of the owner or carrier must, by law, be destroyed thereby negating insurance as a financial remedy. Recovery of lost assets, especially in air cargo is rare, since discovery is rarely made until the item does not show up for delivery at which time the thief is long gone and the goods are distributed throughout the supply chain. Issues involving the illicit use of cargo to attack the United States or its assets can, under the Patriot Act, result in prosecution of the original owner of the cargo or asset used by the perpetrators. Logisticians must continually make supply chain decisions based on routes, times, nature of goods and of course the carriers. In many cases carriers, fearful of theft, reject certain types of goods, hence certain types of shippers, due to the inherent nature of theft with regard to their products. Items such as jewelry, electronics, chips, ethical drugs and even eyeglasses often times are the core of carrier losses. Many shippers choose to insure cargo based on route criteria. Goods originating in or delivering to certain countries present more of a risk than others. Goods staged by forwarders for consolidation frequently are kept in facilities where security is suspect. Insurance is typically focused on conditions of loss. Many supply chain managers make assumptions that once a carrier has is goods in their care and control that both their insurance and the extra policy taken out by the shipper cover all possible conditions of loss. This could not be further from the truth. Losses that occur on carrier property, be they theft or damage typically are covered to the extent of the carriers stipulated limits of liability. Insurance taken out at origin is rarely extended to all handlers of the cargo. Since air cargo may be taken by truck (drayage) to an airport, moved by one or more carriers and then delivered by yet another third party trucker; conditions of loss and the magnitude of vulnerability to perils is multiplied many times. Unless specific insurance is taken out by the shipper for any and all conditions of loss, the shipper may suffer. Carriers are liable for cargo based on cents, calculated by the pound, except as specifically noted in the contract of carriage. Unless the air bill covers special conditions, many limits of liability take effect against the cargo are based on the handler’s insurance coverage, or lack of it. WHO IS THE THREAT: When dealing with effective remedy to supply chain security issues, regardless of the logistical environment, you must first have an idea of your adversary. In many cases time can be an adversary in situations regarding time sensitive goods such as body parts, vaccines or blood. In some cases damage based on rough handling can contribute to many conditions of loss as well as mysterious disappearance of cargo due to clerical errors. Losses can occur in warehouses, on trucks, on airport property such as in-bond facilities or in any modality handing the cargo. Cargo in transit is always accessible to people; and many of these handlers do not have appropriate vetting to guaranty security for the goods or physical containment on the property. Many airside employees lack the skill to handle sensitive goods according to a given procedure. Just think about the trucking industry for instance, remembering that almost all air cargo moved by truck at some point in its cycle. The annual driver turn over rate in most common carrier companies is approaching 125%. Just to keep the trucks on the road, business has had to accept applicants with tainted or criminal records, people with no permanent residences and some who are hired on a day to day basis thereby creating havoc in investigating losses associated with these employees. Training and company integrity is consistently lacking with transient labor pools making internal theft and vulnerability from within a significant concern. In the forwarding business, many carriers are unknown to the shipper or recipient because of interlining. In some cases air carriers can legally choose to move your cargo by truck or even rail without our permission or knowledge also intensifying the risk of loss. In order to effectively plan for a threat, that threat and adversary must be defined. Defining threats begins with enumerating eminent issues and potential issues into a matrix weighing each component in regard to costs of loss and the reasons and speed with which to provide remedy. As countermeasures are developed to tighten supply chain security, the overall effect gradually reduces each specific vulnerability to manageable levels. At times however the trade off is increasing security is operational inefficiencies which defeat the purpose of moving cargo by air. Because a terrorist need only be successful once to achieve his goal, the triage approach to controlling the security of your supply chain seems futile. By degree, controlling the international supply chain is all but impossible. As stated not all threats are terrorist based, yet conditions of loss are prevalent to any cargo at any time. Most companies address threats to cargo in a declining order hoping that each selected remedy collaterally addresses lower level issues without convoluting the system. In order to effectively implement systemic changes to enhance supply chain security, businesses must adopt the mandated programs set forth by our Government. Programs that do not echo such Federal mandates will become redundant and money invested in them lost. For this reason many in the air cargo, truck and steam ship freight industries have failed to solidify on, and implement a remedy to terrorism. Basically no one wants to start a program to be told later on that it fails to comply with the ‘recommended’ governmental programs. Since no programs actually exist, no one is rushing to create their own! Whether funded internally by the carrier, provided for by shipper or clients or provided by the sea ports and airports, most modalities use little real effort to protect freight. Because no consist programs apply, cargo remains at risk from origin to destination. Unfortunately little is being done by the U.S. Government beyond studies and non binding suggestions to secure our National supply chain. The process eventually chosen must be universally adopted specific to each mode of transport and maintained throughout that industry on an international basis. Many countries fail to require any such measures since they may not be able to fund them or to technologically implement them. Just because the United States wants to benchmark technology does not make for blind international compliance. Before considering the implementation of a security process most countries will focus their efforts and on what is practical for their conditions, culture and funding. In many cases this will not even come close to US standards. Should we exclude these countries from accepting freight because they do not meet our benchmarked standards? Unlike security for a home, an office or even a vehicle, that is fairly stable and predictable, supply chain security has a number of interdependent dimensions that render most general protective systems ineffective. The dynamic differences in the approach to security and operational efficiency of each vendor differ so radically that ultimate agreement on security measures would be almost impossible. Besides having freight predominately unattended, constantly moving and changing hands, the protection available at one location may be non-existent or unavailable at another. Since air cargo rarely hits stop or choke points until it reaches a delivery airport sorting center, implementation or interdiction and inspection techniques must be germane to each vendor and handing facility and consistent for all cargo entering it. In air cargo, the original carrier thought to be hauling the freight may change numerous times for many reasons, all of which are unknown (and unnecessary to be known) by the shipper. If delivered on time, client expectations are met. Shippers must rely on the integrity of carriers just as carriers must rely on their shippers in accepting freight initially. This mutual trust has become the backbone of the air cargo industry, albeit self policing. In any product move or where a threat against specific cargo (such as pharmaceuticals or electronics) is high, you will need to know why someone wants to either steal it or tamper with it in order to develop a deterrent strategy to avoid or avert the problem. Terrorist threats are far less convoluted, their purpose is clear and direct, yet their technique, intricacy of the action plan and methodology is far more sophisticated and professionally orchestrated. Their motivation, in so far as ideology, determination, reward for success and skill will typically prevent you or your carrier from planning a suitable or sustainable defense. There is no doubt however that whether the threats is theft or terrorism, your adversary is none the less a major concern. If this paradigm is not in your business strategy, it should be. ADDRESSING THE THREAT Indicative packaging is a classic approach to cargo security since it provides a unique identity to each package. By providing visually inspectable packaging such as security tapes and self voiding seals, an anomaly or obvious breach becomes apparent to each handler thereby reducing risk. By providing a feature showing a package has been attacked, handlers stand a better chance of finding pilfered cargo. As the saying goes, ‘it is harder to beat you if you know what you are looking for’. If recipients are aware of a particular package’s appearance, unique markings, numbers or designs, receiving that package in good order is far easier that with generic boxes. By using tamper indicative packaging, the user sets a benchmark of characteristics which enable inspection at any point in the supply chain by any handler. This ability to universally visually inspect cargo is beneficial to shipper, carrier and recipient as each benefits from the technology. The more user friendly the technology is to supply chain members the more effective it will be in deterring problems. Most indicative packaging devices are in the form of tamper or shock indicating self adhesive seals or tapes that help to visually identify possible penetration in, or manipulation of a box, pallet, envelope or container. Self adhesive seals and tapes are the predominate closure method for most cargo in boxes or envelopes. When applied onto a bundled asset such as a C container door, trailer door or aircraft hatch, the device effectively offers containment to all the products inside. Devices such as tamper evident tapes and self voiding security seals help uniquely identify parcels as well as indicate penetration. These types of seals are both cost effective and highly deterrent in nature. They are typically applied at origin and provide inspectability throughout the supply chain. The more simplistic (kiss principle) they are, the greater their use and effectiveness becomes. By creating risk of discovery for the thief or terrorist, you lessen your risk of an event or loss. Adversarial analysis requires a working knowledge of the person’s ability to effectively complete his mission. Whether that is get the quarry or planting a bomb, his ability to beat you rests with a mixture of his skill and your countermeasures as well as your inherent complacency. Your ability to mitigate loss revolves around your choice of countermeasures, training and reliability of your handlers and the complex coordination required when cargo changes hands. Theft or acts of terrorism occur when the perpetrator surreptitiously gains access to cargo either en-route or prior to shipping or delivery. These situations can occur at any point throughout the transportation and storage phase of shipping. Knowledge of the location, movement and timing of the goods, the level of risk the person is willing to take and his motivation combined with his expertise play a significant role in his success or failure. Your best defense is to plan for problems before they arise and gear your best practices to deter these activities. Neither theft nor terrorism are conditions that anyone can completely eliminate regardless of the technology used, the security plan or its practical application. A perpetrators reward for success, as well as his ability to choose his timeframe, are all components that give him an upper hand. With air cargo’s speed as an additional adversary, the chances of deterring the timing of an act of terrorism (or theft) that is already in progress, is limited at best. WHAT’S BEING DONE TO SECURE THE SUPPLY CHAIN ? When President Bush created the Department of Homeland Security (DHS) in 2002, his concept was to create a central hub for the sharing of information and the selection, choice and implementation of remedy to terrorism. The concept was designed to reduce the risk of a terrorist strike on our soil by stepping up the processes need to discover problems before they can do harm. The concept further was directed at reducing the vulnerability of an attack through the commercial world wide supply chain by sharing and analysis of business data. By combining all government efforts into a centralized review process for cargo, and intelligence, President Bush felt that the deterrent value would be overwhelming and thereby curtail the threat. His goal would be achieved, at least initially, by the use of the intelligence services and analysis of data relating to inbound cargo designed to identify suspect shipments and shippers and interdict associated cargo. With selective physical inspection and assuming commercial participation, he felt his program would become the standard by which our country would secure its borders and thereby establish logistical security against another 911. By using our best and brightest tacticians reviewing inbound cargo data, the DHS could theoretically identify shipping anomalies and interdict suspect cargo before it reached our shores. The creation of the 24 hour reporting rule for containerized cargo set the stage for data verification and began to offer hope to the shipping public of an effective security effort being passed along to air cargo. With the ability to act unilaterally, Bush felt that these policies administered by this central agency would be the cornerstone of risk reduction world wide. Instead of this focused succinct concept, we now have over 350,000 people in a newly formed, self contained bureaucracy, called the TSA/DHS that is so mired in their own layers interpreting the President’s simple original security plan, that have effectively done nothing to secure our supply chain or our borders. There has been no positive or effective action especially in air cargo or in domestic trucking and only some basic improvements in containerized sea freight. We have spent more money in defining and analyzing the potential problems than solving known risks, by a ratio of 5000 to one. We have dressed up thousands of untrained part time TSA passenger air inspectors and armed them with state of the art screening technology for passengers and bags, but failed to consider the total picture of air security with relation to cargo which sits directly below these passengers. We now permit Canadian and Mexican trucks to cross our borders with minimal inspection and no basic rules for safety or security. We have almost zero security on the passenger rail system and less on water craft. Passenger protection, aka what is visible to the public, is simply a confidence builder with a very low effectiveness against a professional adversary. With over $5 Billion in dedicated assets to secure our skies, the TSA have spent only $55 million on like and kind protection technology for air cargo. The TSA is well meaning but have shown themselves as organizationally inept and ill equipped to mandate, implement, select or fund changes to the security process for cargo across the board. There is no reasonable system that can detect every form of contraband nor is there any way to guaranty 100% success in any security endeavor, however without challenging industry to step up self imposed systems and to create more stringent criteria for insuring the integrity of air cargo, little will be done to improve our current condition. Congress needs to empower those qualified to make such decisions to act and mandate compliance without regard to politics. Industry has to understand that the speed of commerce is directly proportionate to the risks associated with a terrorist strike. Somewhere between 100% physical inspection and administrative scrutiny lies an acceptable and effective mix. If cargo were to be slowed to avoid it being stopped, would that not be a better alternative to cargo security? SECURITY IS NOT A PERFECT SCIENCE A number of programs have evolved from the original DHS premise. By definition both the Known Shipper Program and conventional cargo screening programs imply an administrative overview of a shipper, cargo and recipient. The collected data would then be used to detect anomalies based on historic shipping and commodity norms or other criteria that would indicate a noticeable change in behavior. This method is done completely in the back office and rarely if ever has “hands on” any box. The obvious flaw in this thinking is that even if the shipper is known, and the cargo and recipient are both innocuous, the box may still contain a bomb. In my personal experience with the package delivery business, even if a box was to be leaking powder or fumes, or if the box had battery cables hanging from it and it was poorly packed or labeled, it probably would still manage to arrive at a distribution hub, here in the USA, and possibly even get delivered to a client! Some news networks have shown this scenario in practical terms by shipping a restricted (non-lethal) package and having it arrive at their offices just as if they shipped apple pie! Given that any unsecured and unchecked cargo can be transshipped numerous times to elude this form of intel detection, and once at an airport, it can be shipped over the road to further confuse the process, administrative scrutiny falls short of a true protection platform. The goal of an economic terrorist is to deploy a weapon of mass destruction, or mass effect, here in the commercial US supply chain, such that it creates fear, disruption of business and costly remediation sufficient to stop commerce at some level. Providing protection against an ideological focus such as this is impossible. AN AMBITIOUS BUT UNACHIEVABLE GOAL Nothing short of 100% screening both physical (visual) and mechanical can prevent problems. Such an approach is not only impossible, given the nature of international commerce, but impractical based on the sheer volume vs. time for such an inspection to take place. Air freight moves in predetermined cubes designed to fit the belly of the aircraft with rigid weight and volume constraints. Rarely if ever does a package or pallet move independently. Bundling is the norm but typically without respect to the nature of cargo. In many cases liquids move in close proximity to other cargo and hazmat is rarely if ever segregated among freight on air pallets. Proposed government projects such as the use of RFID as a quick fix to identify individual packages amongst the sea of like and kind cargo, proved ineffective and impractical. Because in theory RFID was viewed as a security rather than a logistic tool, millions of dollars were spent by government and industry to attempt to implement this technology. The goal was to screen cargo, bundled in containers or on pallets in such a manner as to identify if something was added or removed during transit. Because RFID has severe limitation on reading tag density, through metallic enclosures or with metallic interference and surely not through liquids, this attempt failed! RFID is available in two forms, passive and active. A signal emitting or battery operated RFID seal sends a signal to a receiver where a non powered tags simply receives and returning a signal through an antenna. Active RFID proved unsuited for many reasons, especially cost and the inability of users to effectively return these devices. Security for all practical purposes was not achieved with RFID devices simply because they could not be shown to identify a single box as original, thereby failing to achieve its goal of packaging identity. The infrastructure needed to use such a system world wind presented a dynamic problem because not ever tag operates at the same frequency. Since curtailing a focus on RFID as a solution, our security gurus have failed to adopt more practical policies and materials and have basically done nothing since these studies. Diversity of cargo, generic packaging techniques, bundling of hundreds of packages on air pallets and in C containers contribute to the chaos involved with choosing a fixed inspection (choke) point, product or process. In many airports throughout the world, in-bond or staged cargo means no more than unattended boxes out on the tar or in uncontrolled warehouses and in many cases loose boxes, awaiting palletizing and loading onto aircraft. Very rarely is this staged cargo caged or securely controlled while awaiting loading. In many airports around the world, access to these staging areas is easy and therefore regardless of the security inspection program used when cargo is tendered, the possible introduction of a weapon or the removal of freight (while being staged) is always prevalent. The random nature of cargo in terms of size complicates any inspection processes. The lack of dedicated manpower funded by the airlines themselves at every station all but precludes 100% inspection of over the counter freight. The courier business is notorious for a complete lack of controls. Items picked up in drop boxes or given directly to couriers can seamlessly slip through into both commercial aircraft and freighters with little to no hands on inspection. A bomb can easily be delivered in any size parcel, containing a biologic or explosive. AN IDEA TO HELP THE INSPECTION PROCESS By placing pre inspected cargo into a consistent contained format would not only speed technology inspection and reduce load times, but so too would this format improve operational efficiency and throughput for the carrier. Secure packaging done after inspection at airside would create an increased revenue platform for freighters and commercial aircraft alike because the cube and weight of each ‘brick’ could be preplanned. The contents of each ‘brick’ would already known on the manifests and the visual ability to discover penetration would be simple and universally understandable. The use of these so called cargo bricks would give carriers boarding and offloading cargo a visual inspection point for all cargo in the bundle, thereby speeding the offload process. By requiring bulk shippers to pack in a predetermined ‘brick’ format, using tamper evident shrink films, security tapes or other visibly inspectable components, we would move closer to assuring packaging integrity. These requirements will compliment the Known and Certified shipper initiatives and benefit the carriers tremendously. The use of airport choke point inspection for bulk cargo could be achieved since all cargo would be similar in size and therefore fit on pre-designed conveyors using appropriate sniffer and x-ray screening technology. Much like seaport screening, one point serving many, establishes consistent monitorable controls and thereby adds positive layers to the process at a lower cost while maintaining efficiency. If shippers were brought into this equation through reduced tariffs or other financial incentives for those that comply, they may be more apt to have an incentive to buy into the process. For non bulk shippers, prescreening at time of delivery to the air carrier would be seamless. These screening items would then be bulk packed by the carrier into containers, using these bricks or some other acceptable bundled container. BUY IN The risks to people associated with tainted air cargo are somewhat greater than with other modalities since air cargo is predominately shipped with or near people. Air cargo on freighters always lands at facilities where people are present where sea freight is far more isolated from human contact until it hits the highways. Terrorist threats to ports are of course of equal concern and exhibit an equal or greater economic impact. Regardless of the terrorist event, the commercial supply chain can take months to recover and the costs in commercial and economic losses are staggering. With any disruption in supply chain activities from a simple theft to a major breach, the costs of loss far exceed and proactive remedial action possibly required by the carriers, shippers or airside facilities. The fact that security plans require buy-in from the air carriers, governments and shippers is the fly in the ointment. Everyone wants positive change and no one wants to disrupt commerce or affect their bottom line to achieve it. Not many air cargo companies are willing to fund remedy nor mandate the processes required to increase protection levels. Governments typically baulk about security expense while shippers never want to accept the inherent delays such inspections will surely cause. The carriers will always get their revenue regardless of timing of delivery of goods and therefore seem to be the course of least resistance. If Governments can contribute inspection technology in the form of machinery, a defined security plan and recommendations and funding for inspection personnel; while carriers and airport operators implement these systems; and if shippers can adjust their delivery schedules for the potential delays while revising their JIT inventory process, we can be well on our way to risk reduction in air cargo risks. WHAT’S BEING DONE? Law enforcement views cargo theft as the lowest priority possible. The Federal Government has seen fit to remove all FBI personnel from cargo theft operations and reassign their members to anti terrorist task forces. They have effectively let the current ineffective screening and inspection process discover any cargo perils including theft, terrorism, smuggling and contraband. Cargo theft has few defined laws and consequently no real deterrent value against theft. There are few convictions and most theft based prosecutions are limited to the States rather than at the Federal level. No one seems to realize the nexus between cargo theft and cargo terrorism??? In air security, most investigations are left to the air carrier security personnel, further diluting the risk to thieves and subsequently terrorist. Most cargo criminals are recidivists and most serve no time in jail if actually apprehended. Laws covering cargo theft or theft resulting in endangering human life now include the statutes contained in the Patriot Act which opens new avenues of prosecution and makes available new resources to deter these conditions especially in air cargo incidents. There has been a good deal of positive fallout from 911 relating to the bolstering of air side security through the Patriot Act, but almost zero reduction in vulnerability or interdiction. The TSA has initiated requirements for any service industry relating to aircraft be located on a secured site with appropriate fences, locks, cameras, sign-in processes as well as background checks for employees. Planes overnighting outside the United States require self adhesive tamper indicative door seals to identify unauthorized penetration. They have mandated more stringent requirements for vehicles moving freely on to airports from food suppliers and refuse companies as well as truckers, brokers and forwarders. Food carts must be sealed as well as the trucks delivering them airside from off site warehouses. The Patriot Act was implemented giving law enforcement and our legal system the tools to help identify to those would attempt to hurt the USA both internally and abroad. The legislation gave law enforcement the ability to verify the identity of a potential terrorist through access to records and to personal information, searches and verbal communication that heretofore were only available through subpoena and more fact based legal order. This law actively helps to disrupt a terrorist plots and organizational development by stifling the movement of financial resources internationally. This is a sound strategy as it accomplished the creation of useful data which could help determine shipping and cargo anomalies and thereby identify suspect shippers and cargo. The CSI (Container Security Initiative) also has been helpful in data creation on the sea port side. Both of these programs help identify smuggling, theft, contraband and drug importation as well as money laundering, conspiracies, trade fraud and terrorism. The issues however are empirical and rarely physical, hence while they are helpful and necessary they fail to address the hands-on need of cargo for inspection. Not all intelligence results in finding tainted cargo and although a strong platform, it fails to account for problems occurring en-route or after delivery to a sort facility. Other legislation in this regard includes The Port and Maritime Security Act of 2001 and the Maritime Transportation Antiterrorism Act of 2002. The G-8 summits have always had cargo security on their agenda and participants have consistently expressed interest but little action has ever taken place. Operation Safe Commerce (OSC) was to be a public and private partnership dedicated to securing the worlds supply chain, but it has also failed to mandate a workable solution and has fallen short of being effective. Carriers are constantly struggling with increasing fuel costs, salaries, personnel, equipment maintenance, regulatory barriers and stiff competition, so who can wonder why they balk about taking on the expensive function of cargo security. Notwithstanding their obvious self interest in security, brand and equipment protection and the potential loss of life which can be caused through a terrorist strike, air carriers still feel burdened by the lack of specific direction given to them by the TSA. The nebulous nature of government regulation regarding an approved definitive course of action to secure unattended air cargo is so illusive that carriers remain on the fence in terms of taking any action at all. Whether it is their job alone to screen cargo is also in question? Physical inspection vs. cursory screening was recently mentioned in an article by Bruce Butterworth, published through a think tank. “Do we really want to bring commerce to its knees by opening and inspecting all cargo or do we find some mid-ground between intelligence and inspection. Our government is moving far too slowly in helping industry to choose a world wide course of action whereby the security process would be both predictable and consistent throughout the world and done in such a manner as not to be overly prejudicial to more advanced airports and more lax with others.” One plan is the Known Shipper Program, instituted shortly after 911 to curtail the random introduction of a bomb into the cargo of large volume shippers. The members need only sign up online and declare their personnel are vetted, facilities of their shippers secure and their cargo is safe. The program uses information provided by the shipper himself to his forwarder or directly to the carrier to establish himself as a secure shipper and whose cargo is beyond reproach. This program is empirically reasonable assuming that every terrorist, thief or smuggler is always honest and forthcoming! It allows the shipper (even if it is a front operation, so long as they pay their bills) to demonstrate through the submission of a form, the fact that he is a good guy and deserves a ‘pass’ through the rigors of ‘air cargo security screening and inspection’! In these cases the shipper becomes the inspector, I call it the wolf in the hen house technique. As the sea freights’ ‘CTPAT’ (Custom Trade Partnership Against Terrorism) program dictates, all signators to the document will have full background screening for their employees, secure yards and stuffing facilities and appropriate tamper evident security packaging and sealing for their containers and trailers. There is no such mandate for air cargo and even if there were, it could not be universally enforced based on the diversity of air cargo. C-TPAT is a voluntary program that again offers the Doctor Feel Good approach to security rather than a true effort to secure the world’s supply chain. The C-TPAT program has been in effect for almost 4 years however little is being done to actually validate members, systems, processes or containers. Currently, less than ½ of 1 percent of sea containers are actually opened for inspection. U.S. Customs and Border protection came out with the C-TPAT program some years ago as a means by which to ask industry to participate in securing the world of sea freight through the use of best practices. Since they had no real experienced personnel available for designing sealing security programs nor any original ideas, they asked the International Standard Organization to use their seal criteria as a basis for securing containers. Out of this fiasco, the ISO developed a set of recommended, not required, best practices and products to securely seal sea freight containers named ISO 17712. Among these tainted recommendations was the infamous ‘bolt seal’ recommendation. This was later (after 4 years of misinformation) withdrawn in August of ’06 but it still exemplifies the worst our government has to offer in recommending appropriate remedy to supply chain threats. Standards used to recommend best practices dealt only with their physical characteristics rather than their functional effectiveness. In the air cargo industry, no such recommendation was proposed because there are far too many bundling techniques available for air cargo and none can be sealed permanently as can sea freight. Cargo handlers must have access to air cargo at all times thereby requiring the use of self adhesive seals rather than barrier type products. There are no doors to close nor locks to apply when it comes to air cargo. Because of their inability to tackle the problem, they have effectively left remedial recommendations to chance. THE COSTS OF LOSS There is no denying that the United States has porous borders. Regardless of the level of inspection at crossing points, trucks with cargo and at times people move into and out of the United States daily. In the transportation industry and especially in air cargo, we base much of security on blind trust because over the years that is our societal norm. Based on our economic system we cannot integrate barriers to commerce without completely disrupting logistics as we know it. Logistics is the backbone of commerce and integrating walls and barriers to that system cannot come without significant push-back from all quarters. Unfortunately terrorism gets press for as long as practical and fades from public view when sufficient time has elapsed to spin out its’ media value. As a consequence funding for a cross border event is precarious and prone to mimic public awareness rather than consistent real world threats. The fact that billions are being expensed for the Mexican Fence project clearly shows that money is dedicated when there is a direct correlation between political benefit and public outcry. It seems the illegal immigrant worker issue became the instigating factor rather than the fact that a terrorist can get on to United States soil with little skill and effort. The costs of loss to our economy and GNP through a terrorist strike can be catastrophic but proactive spending to reduce this known risk is currently non existent and will not be employed unless mandated federally. Take cargo theft for instance from air, truck or sea freight, combine its effects with smuggling, money laundering and other conditions of loss and you get numbers approaching $55 Billion. This type of information rarely hits the news media. The disconnect between the need to act on passing of legislation and actually implementing it is political. No one wants to be the bearer of change, hence we stay in our stagnant state of complacency. Isn’t government great! The project costs to our government to deploy a domestic technology-based air cargo inspection plan would be about $3.6 Billion. These funds would be dedicated to the purchase of automated inspection equipment and its deployment to major air hubs both here and eventually world wide. The effect of funding such a move would establish benchmark inspection techniques that could be enhanced by carriers and governments and subsequently benefit world commerce. The initial program is clearly designed to bolster security of US bound cargo. What could be a better use of funds? In addition to dealing with technology, mandated workable process controls to shippers and carriers need to be both designed and implemented. These controls would entail a minimum of 24 hour reporting of cargo data as well as to establish cargo holds on suspect or non compliant shipments for 100% inspection. The time impact from pre-notification in air cargo, like what is being done currently in sea freight, gives authorities time to filter intelligence into the security equation to help identify anomalies before these goods enter the supply chain. The competitive nature of companies will help define this systems effectiveness. Everyone wants JIT cargo yet few will accept these internal changes. Air cargo still basically travels unencumbered with paperwork. E-Shipping is the standard and e-data is kept to a minimum by design. The more data needed the more cost and time delays. By maintaining the requirements for minimal data collection but enhancing the inspection process, shippers and carriers could reasonable enjoy some of the benefits they have now while decreasing risks. The added inspection process simply involves time, the component of air cargo which is least available! Bridging this gap can only be accomplished by creating efficiencies through packaging and loading consistencies and the ability to recognize packaging anomalies easily thereby increasing throughput. Data has currently become a point of contention among shippers and carriers as cargo data is tad amount to the compromise of business intelligence. Who maintains the data, who has access to it and how will it be evaluated are all questions that have been raised? Collectively industry has resisted data collection because of the uncertainty of its use or impact if compromised. Intelligence aside, (and I really mean that) the TSA and industry partnership has attempted to address cargo security through the use of studies rather than action. The TSA has spent multi-millions of dollars on these studies with Deloitte, Lockheed and other think tank consortiums with little to show for the investment. There are currently 300- 400 cargo security professionals at the TSA focused on the threats and vulnerabilities to air cargo, however that is 1% or less of their workforce. What it has come down to is that, according to a report from the Center for American Progress, “The TSA allows the 1.5 million Known Shippers, 4000 freight forwarders with over (10,000 individual branches and millions of personnel) and 300+ commercial air carriers that form the air cargo supply chain, to largely police themselves.” Scary. Air cargo risk can be viewed in many ways, however remedial action must be categorized in such a manner as to direct resources to the most critical areas first. By defining individual risks, air carriers and their clients can leverage their choices of whose job it is to do which task and therefore collectively participate in reducing such risk. Areas such as security tapes and seals would automatically become the shipper’s responsibility to apply, while the carriers responsibility may be to visually inspect the boxes at each hub and prior to boarding. Carriers would be ultimately responsible for the x-ray inspection of cargo prior to boarding and during a delivery sort while CBP (Customs and Border Protection) would pick up the oversight at both ends as well as act as the enforcement arm if problems are identified. POSSIBLE UNILATERAL SOLUTION Courier boxes and envelopes supplied by carriers should be required to have an indigenous number and (if possible) a tamper evident seal and markings (tied to the bill of lading) so that replacement packaging with a similar box is harder to do. Recipients would have the ultimate responsibility to compare manifest numbers with packages before accepting them. Carriers may elect to physically pack, inspect and seal counter tendered goods from certain shippers against theft and the introduction of piggybacked contraband. In this scenario the carrier would control the packaging components and security systems and bear the costs associated with this level of protection based. Shippers would be charged for this service just like the security add-on’s charged by the airports to passenger tickets. By offering a participatory plan whose outcome is mutually beneficial, carrier and shipper or carrier and government can cooperatively work to provide the unique component of security that they do best and at the least cost. SPECIFIC RISKS AND THREATS: THEFT: Cargo theft is alive and well in air shipping as well as in most other modalities. It is conservatively estimated at that air cargo theft is an annual world wide problem approaching $25 Billion, most of which occurs at unprotected airside facilities, distribution and sort hubs and at points before, during and after arrival. Luxury goods such as sun glasses, jewelry, electronics, watches, CD’s, software, designer clothes and pharmaceuticals are among the long list of targeted goods. Many of these items, like any air cargo, are most vulnerable when left unattended in in-bond areas or unprotected airside warehouses. Theft can be easy for those with access and almost impossible to detect due to the sheer volume and chaos associated with cargo sorting and staging. Theft can be both a total or partial removal of the contents, thereby making detection even harder to notice. Small volume pilferage mounts up quickly when dealing with controlled substances, jewelry or electronics and because many companies fail to keep these records the small leakage continues on unabated costing businesses millions in hidden losses. Chips are often more valuable than diamonds and cash is no longer king in theft targeting. Claims of mysterious disappearance plague the shippers and the insurance industry tremendously but many never get filed simply because of the cost and affect of future business. No business wants to air their dirty laundry by informing the public that some ethical drug, blood, cell phone or commodity has been stolen and available for sale by thieves. The negative press one receives when identifying that his goods were stolen and are now free astray in the market can ruin a brand and bring their stock to its knees. This is especially true in ingestibles such as pharmaceuticals, baby formula or foods. Boxes can be surreptitious entered, items removed and resealed with little or no scrutiny because packaging is typically generic and opaque and has no viable or reliable means to detect entry and reclosure. Items can also be tampered-with in the same manner. Tampering is usually undetectable until delivered, where many physical thefts are discovered at sort facilities. No mater how hard air carriers and air couriers try, this form of loss continues to escalate. There is little to no reliable data on the dollar volume of cargo theft on an international basis because no one wants to take that data public. Insurance data is also quite fuzzy since most transportation losses, where employee infidelity is the proven cause, is not an insurable event. The Carmack amendment covers many transportation losses in compensation by the carrier based on the ‘pound weight’ of the item rather than by wholesale or market value. This biased approach to compensation makes financial recovery through insurance impossible for many high value goods. Issues such as a companies reluctance to share critical loss or embarrassing data, further complicates the ability to actually assess the magnitude of air cargo theft losses on a national basis. Without access to such data, government programs are far more difficult to propose since they are not viewed as critical. Many carriers still deny the problem exists in their company as the exposure of a theft problem could ruin their business. Government statistics and industry available loss data fail to show the magnitude of the problem so little focus is placed on creating legal remedy by them. With the advent of government mandated counter terrorist activities in shoring up airport facilities, theft control is being positively impacted, however as a collateral rather than a primary focus. Theft control for air carriers has always been the stepchild of operational efficiency. Since they have little to no control of packaging, type of goods or daily volume, carriers must rely on the use of best security practices to effectuate theft avoidance rather than develop a focused approach to the problem. Many air carriers sell cargo insurance as a profit center since actuarially this is a tremendous profit center. They sell the concept of protection at a shipper acceptable level and work the numbers and trends to bolster income. Insurance is also a state of mind! Most insurance in the cargo area, unless issue specific, is rarely an effective remedy. CONDITIONS OF LOSS DEFINED BY CATEGORY A lesser known theft condition is the compromise of intellectual data placed in courier boxes or envelopes and subsequently opened and read prior to getting to the recipient. This condition is prevalent in the courier business as generic courier packaging lends itself to this form of surreptitious penetration. Since most courier packaging is unmarked, unnumbered, generic by design and having no indigenous features, inspection for opening or replacement of the original box with an exact replica is impossible to detect. A perfect example happened some years ago on Wall Street. Venture data involving mergers and acquisitions were becoming known prior to the event taking place because couriers were able to open, read and replace documents in overnight letters. Couriers were also caught using boxes to transport drugs through the air system by replacing a letter pack with a box filled with the original document and dope and then recovering the dope before delivery, thereby using the shippers account to move the drugs transparently to the courier service. Although in these examples nothing physical is stolen, the data compromised can be significant. The covert movement of illegal drugs was simple and easy to effectuate thereby causing all parties to suffer a loss. In many of these so called victimless crimes people are in fact negatively impacted but not to the level where exposure of the problem will be the catalyst for change. DAMAGE: Most cargo suitable for air shipping is highly valuable, critical by nature and design, and or in some way sensitive or delicate. From body parts, blood and vaccines in coolers to newly calibrated electronic devices, air cargo can be most anything. Blood, pharmaceuticals and foods that need constant refrigeration are vulnerable to damage through delays or equipment failures. Electronics such as plasma TV’s are frequently damaged through rough handling where smaller items are frequently crushed or exposed to conditions that adversely affect their operation. Unlike palletized cargo moving in sea containers or rail cars, air cargo is randomly packed for shipping at the time of loading on air pallets. Cargo can be flung into C containers, loaded on air pallets and covered with 5000 pounds of non-descript cargo on top of them. Little to no priority is given to bulk air freight in so far as commodity classification or stacking priorities is concerned. The random nature of loading and stacking has become the major condition that causes most damage. Because of the speed with which air cargo navigates the supply chain, if damage is not discovered at a sort facility, it is rarely if ever found until opened by the recipient. Air claims involving concealed damage or loss resulting from packaging deficiencies are hard to prove as shippers are frequently unable to document packaging specifics and therefore many claims are denied. Outside insurance on air cargo is harder to secure than truck, sea or rail cargo and it is considerably more expensive and issue specific. Most air carriers offer the purchase of cargo insurance as an added profit center to their line haul. The Carmack amendment created bench mark valuations for lost or damaged goods which have little use in truly assessing the true cost of a loss. Values of $.25 per pound remain as active benchmarks for uninsured freight claims regardless of commodity. Little can be done to improve or bolster packaging without a considerable increase in shipping expense as all air cargo is based on a cube/weight ratio. Light and bulky freight is equally as expensive as heavier goods and therefore offers little incentive to shippers to beef up packaging standards. Damage claims in air freight out paces theft by a ratio of approximately 3:1 where damage in truck and rail is easily 10:1 over theft. PIGGYBACKING; The introduction of contraband into legitimate cargo is a condition that has existed for many years, but not recognized as a problem until 911. Threat awareness brought this condition out into the open but agencies such as DEA and CBP have been dealing with it for 30+ years. Drugs and other contraband have moved freely in the world supply chain regularly inserted into cargo of every description. This underground supply line is all but invisible to inspection as in many cases the product masks the content. Coffee blocks smells, drugs encased in tile makes them invisible and nested cargo (cargo placed inside larger items) is rarely examined because few parcels are opened. Interdiction technology ranging from x-ray and sniffer screening, which is recent, to dogs and hands on visual and physical inspection, has only been recently adopted. More effort has been put into these areas in the last 10 years than has been allocated to any theft controls. The collateral positive effect of this type of scrutiny has begin to yield a more viable means to discover weapons and drugs over any other tool. Passenger inspection personnel supplied by TSA have done little to enhance these areas as most inspectors are unskilled, poorly trained and unable to effectively deter smuggling. Since most smuggling it is done in cargo which is outside their scope of passenger inspection systems, screeners fail to make an impact on interdicting these nested goods. The programs requiring checking accompanied baggage and freight from passengers is only now being performed regularly. According to the Center for American Progress, only 5 percent of the 2.8 million tons of air cargo carried on to commercial aircraft is screened for explosives and other dangerous devices. That would mean that negligible to no screening is done to the almost 1 million tons of freight passing through passenger terminals. Illegal food, animal and agricultural cargo can also be the basis of the deployment of a weapon of mass effect or mass destruction by air. Biologics and related chemicals are next to impossible to detect in the sea of small packages on an aircraft or in passenger baggage or freight. The fact that animals can be an effective terrorist tool makes all cargo suspect and no cargo inherently safe. SMUGGLING: Can be defined as the shipping of contraband cargo into the United States that is either misclassified to avoid tariffs’ and duties or is made up of illegal or banned goods or people. Smuggling can be dangerous cargo, ethical drugs, controlled substances, animals or any type of innocuous cargo that is deemed an exception by our government as acceptable for importation. Counterfeiting is fed by smuggling efforts. A creative terrorist can easily introduce a weapon, explosive or biologic inside cargo, nested as a piggyback to some approved shipment or inside a person or animal. Discovery of this form of smuggling is extremely difficult if not all but impossible. Intelligence typically is the key to discovery of this form of threat, where conventional physical inspection techniques are ineffective. This type of nesting is extremely common in drug or currency smuggling, where smaller bags are nested in larger cargo or vast amounts of contraband cargo is sent to many locations to be then combined and transshipped elsewhere once inside the United States. This same method is used to extract goods. Reverse smuggling can move weapons, currency or stolen goods out of the country. Regardless of the size of the cargo, misclassification is an easy and reliable ploy to beat the system. INDUSTRY OVERVIEW Passenger accompanied air cargo is a major profit center for the airline industry. It accounts for approximately 15% of their overall revenue with no additional expenditures required. To require more physical security in this one area of revenue would not only decrease profits but would add residual operational costs, slowdowns and dedicated personnel to administer. The balance between each revenue generating component in the air industry affects their willingness to fund and implement enhancements, so unless mandated, there is no incentive to go overboard on shoring up this vulnerability. Air cargo security is an uphill no-win battle between what is industry practical and what is mandated by law. Numerous congressional attempts have been made at mandating 100% inspection through legislation. The cost of 100% cargo screening on commercial passenger aircraft would be in the billions of dollars. Funding such an inspection mandate would be a challenge. It has been proposed that there be a fee charged for security, much like the airport security fee for passengers. With millions of air shipments daily, new funds would collect quickly. The issue is who administers these funds? What guidelines would be needed to purchase technology and of course, what technology would be purchased and from whom? Since there are really no answers to these questions, no one can begin this course of action. According to the International Air Transport Association there will be a 26% increase in Asian air freight in the next few years resulting in a tremendous bottleneck if even a few percent increase in inspection is required. The issue with world wide air cargo inspections is also based on a countries ability to fund such inspection and if the current air side facilities can handle this in a secure manner. The EU certainly has a range of both excellent and suspect air facilities. Third world countries rarely if ever can provide even minimal standards of care and inspection to air freight. The Asian market is surely the greatest revenue generator in the air cargo industry. The growth rate of goods shipped by air from China and the Pacific rim is staggering with no end to that growth in sight. Every air freight carrier and every commercial passenger airline is embroiled in getting market share. The more encumbered air cargo becomes by inspection requirements the slower air cargo becomes. There is a delicate balance between what a shipper is willing to pay to move goods and what trigger he would have to alter his supply chain and modality. Speed is value proposition for air freight however with the complex interconnection between modalities which exists today, switching from purely air to a sea/air or sea/land combination is tenuous. Price is always an issue but with the fluctuations in fuel costs and the possible implementation of security processes, airlines are sensitive to the balance of freight rates with these possible new expenditures in mind. The higher cost of inspection combined with the possible security operational slow downs, could cost shippers more than they are willing to spend. The new developments in sea freight and dedicated sea lanes, combined with the faster speed of sea cargo, are major concerns to the air industry. At what point do shippers bail out because of costs vs. speed considerations? In spite what can be seen as slower transit times, the globalization of our supply chain is fixed and there are basically no choices for some shippers and commodities other than air, regardless of the increases in cost, paperwork, time and reduced schedules. Commodities such as consumer electronics, toys, high end apparel and foot ware are some of the time and market sensitive products that mandate carriage by air; so despite the pitfalls and increased costs, these items will continue to fly. The higher costs of transit however will soon make its way to the market. Since the air cargo industries’ infrastructure just cannot support the increased security requirements of a changing world, shippers will soon be seeing surcharges on air freight and even higher premiums on smaller shipments. Since many Asian routes are growing faster than predicted these ship points will soon become choke points in order to accommodate security procedures and some shippers may be forced to change modality to get goods to market. Direct sailings from many Asian ports to the United States can reduce sea times significantly hence the declining delivery gap between air cargo and sea/land services will make financial sense to many. The trend in choosing modality is the fine line between costs and time, and it is no longer clear cut. CONCLUSIONS: Legislation means different things to different countries. Laws created here have no binding effect elsewhere. Security systems such as background screening for transportation workers (TWIC cards) is an excellent way to know who is handing your cargo, however it does not apply elsewhere. C-TPAT, best practices asks that over seas cargo container stuffers (packers) be vetted to insure compliance with anti-terrorist security procedures. This is a great concept that is all but impossible to guaranty. The Known Shipper program requires a complete background be done on volume air shippers to help speed their cargo through the system but fails to account for the thousands of consolidators who become the middlemen in these logistical moves. Here again, a great concept but easily corrupted by anyone able to infiltrate these companies and use their good name as a screen for covert activities. E-manifests have been proposed as a security tool but because these documents can say anything and are written by the shipper, their use as a security component is suspect at best. The technique of tainting lots of cargo at one time is a reasonable terrorist approach given the speed with which air cargo moves but the fact that one small envelope of a bio weapon can shut down commerce is a precarious concept.. Inspection is the only way this can be stopped. Overall the air cargo industry provides a reliable and cost effective way to speed goods to market from world wide points. The industry recognizes it’s role in commerce and like any business views profitable operation as their main strategy. The fine line between our governments ability to alter the actions of private enterprise for the greater good is a gray and uncharted path. Given the changing world in which we live and threats we face to our way of life by terrorists, we must find a way to mandate changes to industry processes and thereby effectively protect our borders while not disrupting commerce. Vulnerability is the new paradigm for long term business planning in any business, but especially in logistics. It need not take another 911 to motivate our law makers to act in this regard.