CRICOS No. 000213J

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Text of CRICOS No. 000213J

  • 1. Assurance of Security in Maritime Supply Chains: Conceptual Issues of Vulnerability and Crisis Management Dr Paul Barnes & Mr Richard Oloruntoba School of International Business Queensland University of Technology, Brisbane, Australia

2. Overview of Presentation

  • Aspects of Maritime Security - Old & New
  • Supply Chain Threats - Economic Impacts
  • A Conceptual Framework Systemic & Organisational Vulnerability
  • Options for Crisis Management & Vulnerability reduction
  • Issues for further Research and Inquiry

3.

  • In October 2001, authorities in the southern Italian port of Gioia Tauro discovered an unusually well-equipped and neatly dressed stowaway locked inside a shipping container.
  • Italian police named the stowaway as Rizik Amid Farid, 43, and said he was born in Egypt but carried a Canadian passport.
  • He was found to be carrying:
    • two mobile phones,
    • a satellite phone,
    • a laptop computer,
    • several cameras, batteries,
    • airport security passes and,
    • an airline mechanics certificate valid for four major American airports.

4. What are the Challenges ?

  • Approx. 90% of world trade moves in shipping containers
  • -Any reduction of throughput is likely to have a significant impact on regional and national economies.
  • Global business enterprise, and trading systems in particular, are vulnerable to terrorist incidents
  • -Perturbation of maritime supply chains will impact on movements of material across large sections of the network.
  • The asymmetry of approach in modern terrorism can make use of systems of commerce
  • -Maritime trade as a vector for terrorism.

Security in Maritime Trading Systems 5. The Management of Crises(including prevention) is critical

  • Crises have become Normal : o ften suddenly emergent
  • With major consequences across many sectors
      • Exxon Valdez
      • Barings Bank
      • Enron
      • 9/11
      • Bali bombing
      • Madrid bombing

Further issues of Importance 6. Why does do these issues matter?

  • Could the incidents have been prevented or deflected?
  • Could their consequences have been better mitigated?
  • Could they have beenanticipated?

7.

  • Attacking the ship to provokehuman casualties.
  • Using the cover of seafarer identities to
  • insert terrorist operatives.

People

  • Using cargo to smuggle people and/or weapons.
  • Using cargo to transport conventional,
  • nuclear, chemical or biological
  • weapons.

Cargo

  • Using the vessel as a weapon
  • Using the vessel to launch an attack.
  • Sinking the vessel to disruptinfrastructure

Vessels

  • Using revenue from shipping to fundterrorist activities.
  • Using ships to launder illicit fundsfor terrorist organisations.

Money

  • Loss of life and damage to property.
  • Disruption to trade flows.
  • Additional cost of transport dueto additional security measures

External Impacts Maritime Security-Issues of Complexity 8. Estimated ISPS Code Costings Maritime Security

  • Maritime carrier companies
  • Initial Cost (million USD)$1170.6
  • Yearly Costs (million USD)$725.6
  • Ships(requirements)
  • Initial Cost (million USD)$757.4
  • Yearly Costs (million USD)$4.3
  • Ports
  • Initial Cost (million USD)$55.8
  • Yearly Costs (million USD)$1.6

9.

  • Participants are expected to:
  • Establish security criteria to identify high-risk containers.
  • Pre-screen those containers prior to arrival at US ports
  • - Involving the deployment of American Customs staff in foreign ports.
  • Develop and use of ICT enabled and secure containers

Maritime SecurityContainer Security Initiative 10.

  • Participants are expected to:
  • Conducta comprehensive self-assessment of supply chain security using the C-TPAT security guidelinesjointly developed by U.S. Customs and the trade community.
  • The guidelines encompass:
    • Procedural Security ,Physical Security ,
    • Personnel Security ,Education and Training ,
    • Access Controls ,Manifest Procedures , and
    • Conveyance Security

Maritime SecurityCustoms-Trade Partnership Against Terrorism 11. Buyer Trans Security Initiatives across Supply Chains Maritime Trans Producer Composition Decomposition Customs (Port) Customs (Port) ISPS CSI C-TPAT 12.

  • An industrial dispute (late 2002) impacting 29 US West Coast ports involved > 200 ships.
  • A total of 300,000 containers remained unloaded and rail and other inter-modal shipments were delayed across large sections of the transport network.
  • Resulting in filled warehouses, freezers and grain elevators on both sides of the Pacific Ocean, costly mid-ocean diversions of maritime traffic to other ports and businesses, laid-off workers and/or reduced production.
  • Estimated loss from this disruption on Hong Kong, Malaysia and Singapore alone was estimated to be as high as 1.1 % of nominal GDP.

Supply Chain Impacts Reduced Continuity 13.

  • Up to 152,508 jobs are in some way related to the Seaway;
  • 192 million tonnes of cargo moving on the US side of the great lakes seaway system in the previous calendar year (2000);
  • USD$1.3 billion of purchases were made by firms providing transportation services and cargo handling services in the great lakes region (supporting approx. 26,757indirect j obs)

SCI Regional Economies A 2001 EIS covering the St. Lawrence Seaway and related waterways, ports and their inter-modal connections, vessels, vehicles and system users demonstrated the importance of an efficient maritime trading system on regional competitiveness. 14.

  • USD$3.4 billion of business revenues generated for firms providing transportation and cargo handling services - on the U.S. side of the great lakes seaway system (excluding the value of the commodities moved);
  • The generation of USD$1.3 billion in federal, state and local tax revenue (2000);
  • USD$1.3 billion spent on purchases for a range of service-related deliverables (i.e. diesel fuel, utilities, maintenance and repair services) by firms providing the cargo handling and transportation services.

SCT- Economic Impacts-St. Lawrence Seaway 15. A systems approach to understanding incident causation examines relationships between all aspects of events and provides a means to look more deeply at why the events occurred by focusing on theinteractions among system components .Such an approach takes a broader view of what went wrong with the systems operation or organisation thus contributing to an incident. The emphasis differs to that of industrial/occupational safety models (unsafe acts or conditions) and reliability engineering emphasising failure events and the direct relationships among these events. A FrameworkSystemic & Organisational Vulnerability 16.

  • Crisis Proneorganisations
  • Cultural beliefs about invulnerability
  • Non-existent or ineffective internal control mechanisms
  • Senior managers not trained in decision making under crisis situations
  • Contingency planning inadequate or non-existent
  • Accidents in highly complex systems
  • Cook slowly
  • Occur suddenly
  • OftenWarning signsexisted

Empirical Findings Systemic & Organisational Vulnerability 17. Smart C. & Vertinsky, I. (1977)

  • Rigidity in thinking - Restricted expectation about contingencies and their consequences- Inflexibility in considering alternative options & choices for mitigation
  • Lack of Decision Readiness Key decision makers not practiced in emergency decision making
  • Information Distortion Attenuation and filtering of information to key decision makers

Systemic & Organisational Vulnerability Application of the Concept Organisational Complexity 18. Network Complexity The Globalised Economy

  • Transport SystemsRoad, Rail, Air, Maritime
  • System of SystemsSupply Chains

Systemic & Organisational Vulnerability 19. Decision making in Crises( Assumptions) They will be impacted by the presence of: - Uncertainty / Ignorance - High Decision Stakes - Extreme Systems Compl

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