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STUDY ON THE IMPACT OF SECURITY MEASURES ON THE

EU ECONOMY AND TRADE RELATIONS

Final Report

Prepared by:

HPC Hamburg Port Consulting GmbH

In co-operation with:

Planco Consulting GmbH

Ocean Shipping Consultants

CLIENT:

EUROPEAN COMMISSION

DG TAXUD

Service Contract TAXUD/2008/DE/122

February 2010

© European Union, 2010 This study is property of the European Commission. Reproduction is authorised provided the source is acknowledged. The views expressed by the consultants do not necessarily reflect those of the European Commission.

This document has been edited for public consumption.

06/07/09 12:02 F:\PROJ\PPOS\23614_EU-Customs \Reports_JV\Final Report\Final R\final_ report_correction 060709-dw.doc

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE

RELATIONS

Final Report

This Report has been prepared by:

HPC Hamburg Port Consulting GmbH Container Terminal Altenwerder Am Balllinkai1 21129 Hamburg Germany

Phone: (+49-40) 7 40 08-135

Fax: (+49-40) 7 40 08-133

e-mail: [email protected]

Internet: http://www.hpc-hamburg.de

18 June 2009 Dr. Jansen

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page ii

Table of Content

1 EXECUTIVE SUMMARY.................................................................................................... 1 2 METHODOLOGY............................................................................................................... 9

2.1 PURPOSE OF THE STUDY............................................................................................... 9 2.2 OBJECTIVES .................................................................................................................. 9 2.3 APPROACH.................................................................................................................. 10 2.4 DEFINITIONS AND ASSUMPTIONS ................................................................................. 11

3 SECURITY OBJECTIVES AND PRINCIPLES................................................................ 13 3.1 SUPPLY CHAIN SECURITY............................................................................................ 13 3.1.1 WCO – SAFE Framework of Standards................................................................... 13 3.1.2 IMO - International Ship and Port Facility Security Code (ISPS).............................. 13 3.1.3 Safety and Security Amendment to the EU Customs Code......................................... 14

3.2 LEGAL ASPECTS .......................................................................................................... 15 3.2.1 Unilateral Requirements by 9/11 Act....................................................................... 15 3.2.2 Unilateral versus multilateral................................................................................. 16 3.2.3 Implementation Problems....................................................................................... 17 3.2.4 Use and ownership of data/ data processing and data transfer ................................. 18 3.2.5 Resource Responsibilities....................................................................................... 18

4 INSPECTION EQUIPMENT AND PROCEDURES......................................................... 20 4.1 TYPE OF PROCESS AND METHOD ................................................................................ 20 4.2 RADIATION DETECTION ................................................................................................ 20 4.2.1 Detection Process.................................................................................................. 20 4.2.2 Types of Radiation Detection Equipment/Installation............................................... 22 4.2.3 Application of Radiation Detection......................................................................... 23

4.3 SCANNING................................................................................................................... 24 4.3.1 Scanning Process and Implications......................................................................... 24 4.3.2 Scanning Technology available .............................................................................. 24 4.3.3 Types of Scanning Equipment/Installation............................................................... 26 4.3.4 Principal Findings................................................................................................. 26 4.3.5 Scanning Equipment Comparison ........................................................................... 26

4.4 OTHER ISSUES ............................................................................................................ 28 4.4.1 Performance ......................................................................................................... 28 4.4.2 Standards.............................................................................................................. 29 4.4.3 Compatibility of Radiation Detection and Scanning Equipment................................ 29 4.4.4 Developments........................................................................................................ 31 4.4.5 Analysis and Transmission of Information............................................................... 32

5 CONTAINER INSPECTION PROCEDURES.................................................................. 34

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page iii

6 PORT ANALYSIS............................................................................................................. 42

7 IMPACT OF 100 % SCANNING ON TERMINAL OPERATIONS.................................. 64 7.1 BASIC ASSUMPTIONS................................................................................................... 64 7.2 CHANGE OF PROCEDURES IN A STRADDLE CARRIER OPERATED TERMINAL .................. 65 7.3 CHANGE OF PROCEDURES ON AN RTG OPERATED TERMINAL ...................................... 67 7.4 CHANGE OF PROCEDURES IN A TERMINAL OPERATED BY AUTOMATED STACKING

CRANES ...................................................................................................................... 69 7.5 ASSESSMENT OF ADDITIONAL TERMINAL OPERATION REQUIRED BY 100% SCANNING OF

US-BOUND CONTAINERS ............................................................................................. 71 7.5.1 Additional Equipment for Terminal Operation......................................................... 72 7.5.2 Additional Human Resources for Terminal Operation.............................................. 73

7.6 COSTS OF ADDITIONAL TERMINAL OPERATION REQUIRED BY 100% SCANNING OF US-BOUND CONTAINERS ................................................................................................... 74

7.6.1 Additional Investment in Terminal Operation Equipment......................................... 74 7.6.2 Annual Costs of additional Terminal Operation necessary to scan 100% or US-bound

Containers ............................................................................................................ 75

8 IMPACT OF 100 % SCANNING AND RADIATION DETECTION ON CUSTOMS ADMINISTRATION IN THE EU...................................................................................... 77

8.1 EQUIPMENT DESIGNED FOR 100% SCANNING OF US-BOUND CONTAINERS .................. 78 8.2 HUMAN RESOURCE REQUIREMENTS FOR 100% SCANNING AND RADIATION DETECTION

OF US-BOUND CONTAINERS ........................................................................................ 79

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page iv

8.3 COST OF 100% SCANNING AND RADIATION DETECTION OF CONTAINERS BOUND FOR THE

US.............................................................................................................................. 81 8.3.1 Investment in equipment necessary for 100% Scanning and Radiation Detection of

Containers bound for the US per Port type.............................................................. 81 8.3.2 Annual Operation Costs of 100% Scanning and Radiation Detection of US-bound

Container by Port Type.......................................................................................... 82

8.4 OVERALL ANNUAL OPERATION COSTS INDUCED BY THE REQUEST OF 100% SCANNING

AND RADIATION DETECTION OF US-BOUND CONTAINERS PER PORT TYPE ................... 83 8.5 HUMAN RESOURCES, INVESTMENT AND ANNUAL OVERALL OPERATION COST REQUIRED

FOR 100% SCANNING AND RADIATION DETECTION OF US-BOUND CONTAINERS 2012

AND 2020 IN EUROPEAN PORTS .................................................................................. 84

9 COMPARISON OF 100% RADIATION DETECTION AND 100% SCANNING WITH RISK MANAGEMENT APPROACH ............................................................................... 87

9.1 RISK MANAGEMENT WITH INSPECTION/SCANNING OF HIGH RISK CONTAINERS ............ 87 9.2 EFFECTIVENESS OF THE 100% SCANNING AND RADIATION DETECTION COMPARED TO

RISK MANAGEMENT APPROACH................................................................................... 87 9.3 COST OF RISK MANAGEMENT APPROACH .................................................................... 88 9.4 COMPARISON OF OVERALL ANNUAL OPERATION COST OF 100% SCANNING AND

RADIATION DETECTION OF US-BOUND CONTAINER WITH OVERALL ANNUAL COST OF

RISK ASSESSMENT OF US-BOUND CONTAINER (3% SCANNING AND 100% RADIATION

DETECTION ................................................................................................................. 90 9.5 COMPARISON OF HUMAN RESOURCES REQUIREMENTS FOR 100% SCANNING AND

RADIATION DETECTION WITH RISK MANAGEMENT INCLUDING 3% SCANNING AND 100%

RADIATION DETECTION OF US-BOUND CONTAINERS.................................................... 91 9.6 NON-LINEARITIES ........................................................................................................ 93

10 POSSIBLE ALTERNATIVE STRATEGIES .................................................................... 96 10.1 ENHANCEMENT OF RISK BASED APPROACH................................................................. 97 10.2 MUTUAL RECOGNITION ................................................................................................ 98 10.3 RADIATION DETECTION ................................................................................................ 98 10.4 SCANNING................................................................................................................... 98 10.5 SMART CONTAINERS AND ELECTRONIC SEALS........................................................... 99 10.6 CONCLUSION REGARDING ALTERNATIVE OPTIONS ...................................................... 100

11 RECIPROCITY................................................................................................................101 12 LIST OF SOURCES CONSULTED .................................................................................103

12.1 PERSONAL MEETINGS ............................................................................................... 103 12.2 OTHER CONTACTS .................................................................................................... 104

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page v

List of Abbreviations and Acronyms

A ABP Association of British Ports AEO Authorized Economic Operator AGV Automatically Guided Vehicle ANSI American National Standards Institute APL American President Lines APM A. P. Møller-Mærsk Group ASC Automated Stacking Crane ASP Advanced Spectroscopic Portal AS&E American Science and Engineering Inc. AUS Australia

B

BC Barge/Container (Vessel)

C

CAL Container Advance List CAM Central America CARIB Caribbean CAS Central Alarm Station CBP (US) Bureau of Customs and Border Protection CKYH Shipping Alliance of: COSCO, Kawasaki Line, Yang Ming Line, Hanjin CMA CGM Compagnie Maritime d’Affrètement / Compagnie Générale Maritime COSCO China Ocean Shipping Company CPA Container Prüf-Anlage (Container Scanning Facility) CSI Container Security Initiative CT Container Terminal CTA Container Terminal Altenwerder (Port of Hamburg) CTB Container Terminal Burchardkai (Port of Hamburg) CTT Container Terminal Tollerort (Port of Hamburg) C2B Customs - to - Business C2C Customs - to - Customs C-TPAT Customs Trade Partnership against Terrorism

D

DDE Delta Dedicated East Terminal (Port of Rotterdam) DDN Delta Dedicated North Terminal (Port of Rotterdam) DDS Delta Dedicated South Terminal (Port of Rotterdam) DDW Delta Dedicated West Terminal (Port of Rotterdam) DG ECFN Directorate General for Trade, Economic and Financial Affairs

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page vi

DG TAXUD Directorate General for Taxation and Customs Union DG TREN Directorate General for Transport and Energy DHS (US) Department of Homeland Security DIHK German Chambers of Industry and Commerce DOE (US) Department of Energy DP World Dubai Ports World (wide) DPW DP World

E

EA East Asia ECH Empty Container Handler ECMT European Conference of Ministers of Transport ECNA East Coast North America ECT Europe Container Terminals (Port of Rotterdam) EDI Electronic Data Interchange EMED Eastern Mediterranean EU European Union

F

FC Fully Containerised (Vessel) FROB Freight Remaining On Board FTE Full Time Employee

G

G.A. Grand Alliance (Hapag Lloyd, NYK, MISC, OOCL) GAO (US) Government Accountability Office GDP Gross Domestic Product GPM Grands Ports Maritimes (France)

H

ha Hectare HGV Horizontal Ground Vehicle Transportation HHLA Hamburg Port and Logistics Co. HMM Hyundai Merchant Marine Co. HMR&C HM Revenue and Customs HNN Hesse Noord Natie Stevedoring (Port of Antwerp)

HPC HPC Hamburg Port Consulting GmbH HR Human Resources H.R.1 House Resolution 1 of the 110th US Congress

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page vii

I

IAEA International Atomic Energy Agency IBPEN Iberian Peninsular ICC International Chamber of Commerce ID Identification IMDG International Maritime Code for Dangerous Goods IMF International Monetary Fund IMO International Maritime Organisation IND Indian Subcontinent ILO International Labour Organization ISO International Organization for Standardisation ISPS International Ship and Port Facility Security Code IT Information Technology

K

KeV Thousand Electron Volts km Kilometre

L

LAT Lowest Astronomical Tide

M

m Metre m² Square Metre MCT Medcenter Container Terminal (Port of Gioia Tauro) ME Middle East MeV Million Electron Volts MHC Mobile Harbour Crane MISC Malaysia International Shipping Corp. mm Millimetre MOL Mitsui O.S.K. Lines MP Multi Purpose (Vessel) MSC Mediterranean Shipping Co. MT Empty Container MV Megavolt

N

NAF North Africa NCSA North Coast South America NEA North East Asia

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page viii

NEUR Northern Europe NII Non Intrusive Imaging NRF Nuclear Resonance Fluorescence Imaging NVOCC Non Vessel Operating Container Carrier NYK Nippon Yusen Kaisha Shipping Line

O

OCR Optical Character Recognition OECD Organization for Economic Co-operation and Development OOCL Orient Overseas Container Line OOG Out of Gauge Container OSC Ocean Shipping Consultants Ltd.

P

p.a. Per Annum P&O Peninsular & Oriental Ports PLANCO PLANCO Consulting GmbH PMT Photo Multiplier Tube pnx Panamax pp Post Panamax PPA Piraeus Port Authority PSA Port of Singapore Authority PVT Polyvinyl Toluene Plastic Scintillator

Q

QCC Quayside Container (Gantry) Crane

R

RC Roll-On Roll-Off/Container (Vessel) RFID Radio Frequency Identification Tag RPM Radiation Portal Monitor RR Roll-On Roll-Off (Vessel) RSEA Red Sea RTC Rotterdam Container Terminal RTG Rubber Tyred Gantry Crane

S

SAIC Science Applications International Corp. SC Straddle Carrier SCT Southampton Container Terminal SCAN Scandinavia

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page ix

SEA South East Asia SFI Secure Freight Initiative SMART Secure Material Accounted in Real Time SNCF Société Nationale des Chemins de Fer Français SOLAS (International Convention for the) Safety of Life at Sea spp Super Post Panamax STS Ship to Shore Container Gantry Crane SUB Indian Subcontinent

T

TCA Terminal de Contenedores Algeciras TCV Terminal de Contenedores Valencia TEU Twenty Foot Equivalent Unit TOR Terms of Reference TPF Trader Provides Free TPO Terminal Porte Océan (Port du Havre) T/S Transshipment TT Terminal Tractor TTU Tractor Trailer Unit

U

UASC United Arab Shipping Co. UK United Kingdom UN United Nations UNCTAD United Nations Conference on Trade and Development US United States USA United States of America USGC US Gulf Coast

V

VAT Value Added Tax

W

WAF West Africa WCNA West Coast North America WCO World Customs Organisation WMED Western Mediterranean WSC World Shipping Council WTO World Trade Organisation

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page x

Y

YML Yang Ming Line

Z

ZDS Central Association of German Seaports ZORA (German) Central Office for Risk Analysis

THE IMPACT OF SECURITY MEASURES ON THE EU ECONOMY AND TRADE RELATIONS Final Report page 1

1 Executive Summary

Background

The main objective of the study is to assess the impact on EU customs and related security aspects of the adoption of US Public Law 110-53, “Implementing Recommendations of the 9/11 Commission Act of 2007” of the 3rd August 2007. For the purposes of this study it has been assumed that, in order to satisfy the requirements of the Act, both 100% radiation detection and 100% scanning will be called for.

Implications for port infrastructure Based on statistical, logistical and regional aspects, 11 ports have been selected for inclusion in the work. The volume of container trade with the USA (covering around 80% of the total trade to the USA) constitutes one criterion for selection. In the selected ports, in 2012, 1.97 million TEU are expected to be laden containers and in 2020 2.42 million TEU. The forecast concerning laden containers from Europe to the USA is expected to be 2.42 million TEU and 3.04 million TEU in 2012 and 2020 respectively. Approximately 58% are transported via the North Sea ports of Bremerhaven, Rotterdam and Antwerp.

The 11 ports are grouped into five types each representing a particular group of European ports. The criteria for the groups are as follows: total container turnover, how containers arrive from the hinterland (road, rail and transhipment), and the proportion of container exports bound to the USA and the location. The port types are low-transhipment ports (40,000 US-bound containers per year), transhipment ports (50,000 US-bound containers per year), Mediterranean ports (66,667 US-bound containers per year), Northwest European ports (333,000 US-bound containers per year) and North Sea ports (500,000 US-bound containers per year).

Meetings were held with terminal operators and port authorities to collect logistical, technical and cost information on port operation. None of the visited ports had already prepared detailed concepts for the implementation of the “100% Container Scanning” law (except Southampton). All terminals and authorities do not expect that the law will be implemented as originally planned by the US Government.

Without substantial changes in infrastructure, procedures and organisation it will be impossible to implement the new law at the visited ports. Implementation of the new law will lead to enormous investment in port operation equipment. Furthermore, additional terminal operation as a result of 100% scanning and radiation detection will create considerable annual operational costs. However, it is difficult to receive exact information on space requirements, technical and organisational changes and related costs, since the majority of terminals are reluctant to give details of costs.

In the event that all US-bound containers have to be scanned in the future, various changes regarding operational procedures will have to be considered. These changes vary from port


to port. Consequently, the implications on container flows have been determined according to the typical or most likely operation systems e.g. for terminals operated based on Straddle Carriers, Rubber Tired Gantry Cranes or Automatic Stacking Cranes. The assumptions are as follows:

• To account for seasonal fluctuations, the capacity of all equipment is designed 30% bigger than the volumes to be scanned require at present.

• Export containers to be delivered by truck will be scanned only if they are bound for a port in the US. This requires the availability of an OCR portal.

• US-bound transhipment containers will be transported to a central scanning facility immediately after being discharged from the vessel.

• US-bound containers arriving by rail or by barge will be scanned together with the transhipment containers, before being transported to the yard.

• Empty containers bound for US Ports have also to be scanned. In order to avoid any manipulation of the container, the empty container must be sealed when it is scanned.

• The containers, once scanned, may be stacked into the container yard regardless of whether the scanning result is available, or not.

The necessary investment in equipment required for 100% scanning and radiation detection of US-bound containers to take place, expressed in real terms, for each different port type amounts to €1.87 million for the low-transhipment port, €2.43 million for the transhipment port, €1.97 million for the Mediterranean port, €8.04 million for the Northwest European port) and €10.83 for the North Sea port.

Additional manpower required to operate the equipment for the additional terminal operation are estimated at 21 employees for the low-transhipment port, 36 for the transhipment port, 26 for the Mediterranean port, 114 for the Northwest European port and 172 for the North Sea port.

The annual costs for the additional terminal operation, expressed in actual monetary terms consider depreciation, equipment operation, maintenance and labour. The costs do not reflect possible productivity decreases caused by traffic or space bottlenecks. The cost of the additional terminal operation as a result of 100 % scanning can be estimated at €1.59 million for the low-transhipment port, €2.67 million for the transhipment port, €2.09 million for the Mediterranean port, €8.65 million for the Northwest European port and €12.90 million for the North Sea port.

The forward projection of these assessments for each port type concludes that an investment of €62.64 million will be required for equipment to perform the additional terminal operation in 2012 and €79.95 million in 2020. The required personnel will be 860 employees in 2012 and 1080 in 2020. The annual cost of the additional operation will amount to €64.45 million in 2012 and €81.67 million in 2020.


Port authorities and terminal operators indicated that they are willing to perform the additional terminal operation as long they can charge the additional costs. Ultimately, this means that the goods transported in a container to the US will be more expensive.

Inspection equipment

Further interviews with port authorities, port customs officials, national customs authorities and producers of scanning and radiation detection equipment provided technical and cost information on scanning and radiation detection techniques.

Terminal operators said that spreader and straddle carrier mounted radiation detection equipment will not work because they will not stand up to the rigorous working environment. In the port context, radiation detection typically comprises two components:

• Primary screening: Applied to all traffic required to be screened • Secondary screening (advanced spectroscopy): Carried out only on those containers,

which trigger an alarm.

Actual acquisition costs are €85,000 for primary radiation detection equipment and €350,000 for secondary radiation detection equipment.

Scanning builds up an image or picture of the contents non-intrusively. The interpretation of images requires skilled analysts. The analysis and interpretation could either take place in real time, at the point of scanning, as the images are generated, or be carried out remotely in the USA. National customs authorities expressed their opinion that the development of the essential software to transmit to the USA and to interpret the images in real time in the USA will take a long time.

As a price guide, for the transmission of X-rays, high depth steel penetration and an OCR system to be able to link the scan images to a real container unit, €2,400,000 is expected for a mobile unit, €3,200,000 for a drive through portal and €4,500,000 for internal (facility installations (conveyors):

The hardware technology has not changed very much in the recent past, since the emphasis of research has been in the area of interpretation and the development of the related software. Ideally, the aim is to be able to fully automate the interpretation process, although this is still some way off. At the moment there is still no effective substitute for human judgement.

Ports that already have scanners, nearly all use them for other purposes than those originally planned in connection with the law “100% Container Scanning”, i.e. scanners are almost all used for scanning of import containers. The scanners in the ports visited have a very low performance (4-15 containers per hour), mainly caused by operational procedures. The port of Bremerhaven plans to replace the existing facility with a new scanning facility. However, none of these scanning facilities is designed to perform 100% scanning of US-bound containers.


Concerning 100% scanning and radiation detection, the following basic principles have been chosen:

• For containers arriving by truck, in port types with lower volumes, drive through equipment with a capacity up to 60,000 trucks per year (300 days, 10 hours per day) will be used. In ports with higher volumes, the drive through equipment capacity of up to 96,000 trucks per year (300days, 16 hours per day) is assumed.

• The device, assigned to scan transhipment containers (arriving by rail, barge or feeder vessel) is proposed to be located at a site central to the terminals. An internal scanning facility with a conveyor belt is assumed to be able to scan 120,000 containers per year (300 days, 20 hours per day). To achieve this capacity, a constant container flow is a prerequisite.

• Scanning of containers and radiation detection will be done simultaneously in both the drive through and the central facility

• To account for seasonal fluctuations, the capacity of all scanning facilities is designed 30% bigger than the current volumes require. Furthermore, buffer space is provided in front and behind the scanning facility.

Impact of 100% scanning on customs administrations in the EU

Discussions with port customs officials, national port authorities and international organisations more directly involved in supply chain activities, technological and cost information on inspection procedures, as well as a broad cross section of opinions, have been collected as a basis for the assessment of the impact of 100% scanning.

The role of the operators and the customs concerning 100% scanning and radiation detection is not always clear. Some operators said that responsibility should be entirely with the customs, while others saw themselves as taking the lead. In some instances, scanning would be considered as a national government responsibility, while in others it would be assigned specifically to customs. Furthermore, there are differences between national customs administrations as to how they see their role.

The additional personnel required for 100 % scanning and radiation detection is indicative of the impact of the request of the US-legislation on customs administration in the EU, as well as the investment and the annual operation costs requirements. The estimate of the required human resources for the different port types is based on discussions with custom authorities in the ports or on national level. It is assumed that customs authorities in the European ports will have the responsibility to interpret scanned images and to release unsuspicious containers.

It is assumed that a drive through scanning device will require 5 people; 1 operator, 1 truck organiser and 3 image interpreters. 6 people will be required for an internal scanning centre; 2 technical experts as operators, 1 container flow organiser and 3 image interpreters. The scanning personnel are assumed to work in two or three shifts, 6 days a week depending on


the container volume. For administrative activities (considering also sickness and vacation) the number of employees is expected to increase by 30%. The number of staff required for the operation of the radiation detection equipment is estimated to be 1 employee per shift and station.

Approximately 12% of the required personnel should possess high customs education, approximately 65% should possess middle customs education and approximately 23% should be skilled in technical aspects (middle or high education). The image interpreters will need training. Experts involved in scanning of import containers since 2003 consider training on the job to be the most efficient form of training. The period necessary to gain sufficient experience is reported as one year.

It is estimated that 17 employees are needed for the low-transhipment port, 24 for the transhipment port, 32 for the Mediterranean port, 117 for the Northwest European port and 164 for the North Sea port.

The extrapolation of the human resource assessments per port type at all European ports with US-bound container trade for 2012 und 2020 shows that the human resources required for 100% scanning and radiation detection will be 890 employees in 2012 and 1,140 in 2020. Together with the human resources essential for the additional terminal operation, a total of 1,750 people will be needed in 2012 and 2,220 in 2020.

Although scanning and radiation expertise exist in the customs authorities to a certain degree, it is already employed in other customs activities necessary to provide security to supply chains in and to Europe. This expertise cannot be switched to the scanning of US-bound containers. European security cannot be neglected in favour of the 100% scanning of US-bound containers. Furthermore, the introduction of new techniques or technical equipment would also demand further training for these experts. Additional manpower has to be employed and trained, which will all take time.

The investment for scanning and radiation equipment, space preparation and buildings necessary to perform 100 % scanning and radiation detection are estimated based on the actual figures provided by producers and responses given by ports or national customs authorities. The investment per port type expressed in actual monetary terms amounts to € 4.98 million for the low-transhipment port, € 7.01 million for the transhipment port, € 9.53 million for the Mediterranean port, € 36.20 million for the Northwest European port) and € 51.50 for the North Sea port.

The investment for scanning and radiation detection at all European ports with US-bound container trade amounts to €275.76 million and € 351.71 million for 2012 and 2020 respectively. Taking into account investment for additional terminal operation the amounts raise to €338.40 million in 2012 and €431.65 million in 2020.


The annual scanner operating costs consider depreciation, maintenance, energy consumption and labour. The cost of 100 % scanning and radiation detection amounts to € 2.21 million for the low-transhipment port, € 3.01 million for the transhipment port, € 4.05 million for the Mediterranean port, € 14.48 million for the Northwest European port) and € 20.38 million for the North Sea port.

The projection of these assessments per port type at all European ports with US-bound container trade arrives at annual costs for 100 % scanning and radiation detection of €112.06 million in 2012 and €143.20 million in 2020. Considering also the annual cost of additional terminal operation the overall annual costs add up to €176.51 million in 2012 and €224.86 million in 2020.

According to the interviews, neither terminal operator nor customs authorities are ready to bear these costs induced by the US request to scan 100% of the laden containers to US-ports. Because of the request, it is possible that the price of goods sent to the US from Europe or via Europe will increase.

Effectiveness: Comparison of scanning with existing inspection procedures

The existing security management in the EU is based on a risk assessment based approach. This is the preferred method among all EU countries. This approach is also a principle that underpins two major WCO initiatives, the (SAFE) Framework and the Revised Kyoto Convention. Within the framework of the European Customs Security Amendments, security pre-arrival/departure declarations will be a voluntary option for traders from July 1, 2009 and a compulsory requirement as of January 1, 2011. This will contribute to improving the effectiveness of the risk assessment. Further supply chain security will be achieved by the AEO concept.

The approach of 100% scanning and radiation detection is in stark contrast to the risk targeted controls e.g. those carried out under the CSI. It is difficult to demonstrate that 100% scanning would be more effective. There would be a possible deterrent effect, but the evidence, such as it is, from the current risk based approach demonstrates that the risk is anyway low. As a deterrent, therefore, 100% scanning and radiation detection would not contribute very much. 100% scanning is rigid and unlikely to improve security compared to the risk management approach, which is flexible. 100% scanning might even create a false sense of security and undermine security by diverting scarce resources from other essential measures. 100% scanning will divert EU resources from EU’s security concerns and therefore not improve the overall security situation

According to the national port authorities and national custom authorities in Europe, 100% scanning would not lead to a significant increase in security. If 100% scanning were to be implemented there would be little point in continuing with the risk based approach to security. 100% scanning, therefore, effectively represents an alternative approach, rather than a complementary approach.


Furthermore, 100% scanning and radiation detection has a high potential to disrupt trade and transport unnecessarily, within the EU and worldwide. Moreover, 100% scanning and radiation detection has the potential to induce an important reorientation of transport flows worldwide and in the EU and would risk undermining the European Union's port policy.

However, some alternative strategies to enhance container security should not be neglected.

• Development and acceptance of enhanced risk based approaches and mutual recognition of AEO and C-TPAT. This would result in a “priority lane”, through which a proportion of traffic would flow.

• The potential of SMART container and electronic seals etc. merits further investigation, the latter also in combination with risk based approaches.

Non-linearity Scanning equipment is designed in a way to achieve a high capacity utilisation. Consequently, the infrastructure necessary to operate the equipment is also designed for this capacity utilisation. The non-linearity of the cost function becomes apparent by the correlation between US-bound container volumes and the overall annual operation cost because of 100% scanning and radiation detection per container. The cost per scanned container decrease the higher the capacity of the scanning facility is utilized and increases when volumes require a further scanning device, which cannot be utilized optimally. The higher the scanned volumes and consequently the number of scanning units are, the less the significance of non-linearity.

Non-linearity demonstrates that it would be economically non-viable for ports with lower US bound volumes to invest into scanning facilities. Consequently, they will have a severe competitive disadvantage with regard to US bound containers and would have only minor incentives to remain in the market for this trade.

Reciprocity While the law imposes the requirement for the 100% scanning of containers bound for the USA from ports worldwide, there is no such requirement for trade in the opposite direction. This therefore raises the possibility of the imposition by countries of a reciprocal requirement. Certainly the imposition of such a condition would pose a problem for the USA. It was almost the universal view of respondents that it is not a policy that should be seriously entertained by the Commission.

The non-reciprocity of security measures could also cause other states to introduce their own security requirements in retaliation and the proliferation of incompatible unilateral measures could represent considerable barriers to trade. Another significant disadvantage of the unilateral approach is that the implementing state has no way of knowing for certain if its measures are effective in preventing the perceived threat of terrorism.


Multilateral measures – on the other hand - are developed by international organisations, which view security as a global public good and aim to improve the security of all their members. Their main aim is to create uniform, albeit voluntary, standards, which can be adopted by all members taking account of their economic development. As a result, multilateral security measures are most likely to lead to a more consistent security regime than a patchwork of bilateral agreements with selected trading partners used to implement unilateral security measures (such as the CSI or 100% scanning).


2 Methodology 2.1 Purpose of the Study

This study is concerned with the adoption by the USA of the Public Law 110-53 “Implementing Recommendations of the 9/11 Commission Act of 2007” on the 3rd August 2007.

It is an anti-terrorist measure and under the legislation 100% of all containers shipped to the United States will be required to be scanned at the port of loading (prior to departure.) The objective is to check the contents of the containers for fissile materials and the presence of dirty bombs and (other) weapons of mass destruction.

The nature of the inspection and checking necessary to fulfil this objective is not precisely in the Law, but could include 100% radiation detection (to look for the presence of radioactive substances) and 100% imaging (to build up a picture of the contents of containers.)

The Law is due to be implemented by July 2012, though provided certain conditions are met, it can be deferred by two year increments.

The following main activities regarding this development have so far taken place:

• Preliminary assessment of the impact carried out by the Commission with contributions from the member states in 2008

• Report by the DHS to Congress in April 2008 on the progress made in testing the feasibility of 100% scanning in three ports (Cortes, Qasim and Southampton.)

• Independent evaluation of the Southampton trial by the UK customs in March 2008

• CBP Report to the Congress on Integrated scanning Systems The difficulty of assessing the impact of 100% scanning and the lack of detailed information led the Commission to undertake three studies: one concerned with trade, one with transport aspects and one with the impact on customs. The purpose of this study is to analyse the impact on customs. This study is led by DG-TAXUD.

The results of the study are intended to be used to provide the Commission with a solid basis for its on-going discussions and negotiations with its US counterparts.

2.2 Objectives The main objective of the study is to assess the impact of 100% scanning on customs and related security aspects. This includes estimating the costs that would arise as a result of 100% scanning on terminal operation and security assessment. Furthermore the study examines the constraints on technology, port infrastructure and customs resources that could affect the viability of 100% scanning.


The results to be achieved can be summarised as follows:

• An examination and assessment of the technology employed and under development for 100% scanning, its strengths and weaknesses, its performance, challenges and constraints,

• An assessment of the impact of 100% scanning on port infrastructure, including volumes of US trade, relevance of transhipment and the effect on terminal operations’ procedures and the development of estimates on additional terminal operation costs necessary to scan US-bound containers,

• An assessment of the impact on EU customs administrations, taking account of the evolution of HR demand, cost of scanning and radiation detection, organisation, deployment, insurance, health issues and training

• An assessment of any non-linearities in the cost functions

• A comparison of 100% scanning with existing security measures and their relative effectiveness, considering all costs and constraints, including the transmission and analysis of information

• A consideration of the possible adoption of the policy of reciprocity

Account is also taken of the merits of 100% scanning in relation to well established risk-based approaches to container security and some conclusions are drawn regarding some possible alternative solutions to 100% scanning.

2.3 Approach

To achieve the results, an approach has been selected, which combines the analysis of opinions and discussions in the public as well as in the research community with practical experiences gained in European ports and by the national customs authorities. Therefore, the scope of work for the study is divided into two phases:

1. A phase of desk research, to study available published documentation and literature in both Europe and the USA.

2. A phase of fieldwork, comprising a series of personal interviews with port authorities, terminal operators and national customs authorities as well as contacts with relevant organisations in Europe.

As a starting point for the second phase, based on statistical, logistical and regional aspects 11 ports are selected for inclusion in the work. Their volume of container trade with the USA constitutes one criterion for selection, together with their mix of traffic between road, rail and transhipment. The need to obtain a broad geographic spread is another important criteria for port selection and discussion with DG-TAXUD. The following ports have been selected. Meetings were held variously with terminal operators, port customs officials and port authorities:


• Antwerp

• Rotterdam

• Gioia Tauro

• Felixstowe • Southampton

• Hamburg

• Bremerhaven

• Le Havre

• Valencia

• Algeciras

• Piraeus

Parallel meetings with customs authorities at the national level have been given high priority. Further contacts have been established with

• Manufacturers and suppliers of screening and scanning equipment

• Port and shipping associations, both national and international

• Chambers of Commerce • Other relevant bodies, including the IMO, WCO etc.

In addition the following meetings were held with DG TAXUD:

• Kick-off meeting held on Wednesday 21st January 2009

• Presentation of first results (desk research) on 18th March 2009

• Progress meeting on 21st April 2009

• Presentation of Draft Final Report, meeting held on 2nd June 2009

2.4 Definitions and Assumptions

This is an area where there is some confusion of terminology - on both sides of the Atlantic. It is therefore important to clarify some definitions in order avoid confusion. In addition, the basic assumptions on which the work has been based are stated.

The following points are made:

• Screening is taken to mean all security activities to check/investigate the contents of a container. It can either be intrusive, e.g. physical inspection or the use of sniffer dogs, or non-intrusive, including risk management, study and analysis of shipping documents, etc. Scanning and radiation detection, both non-intrusive techniques, are also screening activities.

• Scanning is taken to mean non-intrusive imaging (NII), i.e. the building up of a picture of the contents of a container, by the use of X-rays or gamma radiation.


• Radiation Detection is taken to be a passive non-intrusive process that screens the container for the presence of nuclear and radiological materials.

The US legislation is somewhat ambiguous as to what is required in terms of X-ray detection and imaging. For the purposes of the study it has been assumed that, in order to satisfy the requirements of the Act, both 100% radiation and 100% scanning will be called for. This is the general expectation - though a 100% scanning only scenario will also be considered.

Next it has been assumed that:

• The study is primarily concerned with export containers from EU ports to the USA

• All containers must be scanned at the last port prior to despatch

• Only containers to be discharged in ports in the USA need to be scanned

The interface between customs and terminal operators in terms of activities and responsibilities for scanning is also not precisely defined at this point. For the purposes of the study, it has been assumed that all activities relating to the scanning process itself will be the responsibility of national customs authorities, but the ancillary operations, such as, for example, the movement of containers to and from the scanner will be carried out by the terminal operator.

Another open question concerns the interpretation of the scanned images and where this will be carried out under the Law. It is the view of equipment suppliers that all images will be transmitted back to the USA and will therefore not be analysed in real time. Crucially, however, this would mean that the task would not be the responsibility of national customs authorities.

For the purposes of cost estimations and the assessment of the impact on customs, the most probable scenario taken, is that all images will be analysed in real time by national customs authorities. The technical and logistical constraints of transmitting all images to the USA for analysis and clearance will also be discussed.


3 Security Objectives and Principles 3.1 Supply Chain Security

This subchapter provides a short introduction to the main security measures at international level, including the “WCO Safe Framework of Standards”, the “ISPS Code” as well as the Safety and Security Amendment to the EU Customs Code.

3.1.1 WCO – SAFE Framework of Standards

The WCO’s “Framework of Standards to Secure and Facilitate Global Trade” provides a multilateral set of standards for container security. The Framework consists of four components: harmonisation of advance electronic cargo information requirements on shipments; adoption by members of a consistent risk management approach to address security threats; outbound inspection of high-risk containers and cargo, preferably using non-intrusive detection equipment upon request; definition of the benefits that Customs will provide to businesses that meet minimal supply chain security standards and best practices. The Framework creates harmonised standards in relation to benefits, technology, communication and facilitation and encourages the recognition of other standards.

It is based on two pillars: customs - to - customs networks and customs - to - business partnerships which consist of consolidated standards. The C2C pillar provides for co-operation between customs authorities in order to inspect cargo before it arrives at the destination port. It achieves this by providing for the use of advance electronic information to identify high-risk containers or cargo. The C2B pillar aims to create an international system for identifying private businesses that offer a high degree of security.

The framework is at a rather high policy level and will be implemented on a voluntary basis by interested governments. Consequently international customs authorities must also create a network of bilateral or multilateral co-operative relationships to share information and to enhance trade security. Thus, for example, the US Container Security Initiative (CSI) will continue to exist alongside the multilateral WCO SAFE Framework of standards. The ”Safety and Security Amendment to the EU Customs code” on the other hand is incorporating the main components of the SAFE framework and ISPS Code, in order to comply with both multilateral initiatives/standards on a European scale. The EU and the USA signed a letter of intent to implement the requirements of the WCO SAFE Framework and are doing so.

3.1.2 IMO - International Ship and Port Facility Security Code (ISPS)1

The International Maritime Organisation (IMO) as part of the United Nations is responsible for the safety of life at sea and environmental protection. In December 2002, the IMO amended

1 This overview of IMO and WCO frameworks of standards is based int. al. on “Christopher Dallimore: Securing the

Supply Chain: Does the Container Security Initiative Comply with WTO Law? - Inaugural-Dissertation, Münster 2008”


the International Convention for the Safety of Life at Sea (SOLAS) with the expressed aim of safeguarding “the worldwide supply chain against any breach resulting from terrorist attacks against ships, ports, offshore terminals or other facilities”.

The ISPS is the result of consultations with member states, inter-governmental organisations and non-governmental organisations held under the auspices of the IMO’s Maritime Safety Committee. The provisions of the Code require security plans and enhanced security measures for ships engaged in international commerce and port facilities. Owing to the fact that the ISPS Code does not directly regulate land facilities, container security falls outside its scope. However, the security of land-based facilities has been regulated by the Framework of Standards 2005 issued by the WCO and the Code of Practice on Security in Ports 2003 issued by the ILO/IMO.

3.1.3 Safety and Security Amendment to the EU Customs Code2

The main task of customs nowadays in all administrations is the protection of citizens and their interests, while facilitating legitimate trade.

The safety and security amendment to the EU customs code covers activities supporting the development and implementation of measures enhancing security through improved, more sophisticated customs controls. The amendment introduces proper security controls to ensure the protection of EU’s internal market and, in close co-operation with major trading partners in the world, secure the international supply chain. The amendment balances controls with trade facilitation. Traders demonstrating compliant efforts to secure their part of the supply chain will be rewarded by benefits such as fewer controls.

The "security amendments" to the Community Customs Code, which entered into force in April 2005, provides the legal framework for the measures introduced in the EU Customs Security Programme.

• Traders are required to provide customs authorities with information on goods prior to import to or export from the European Union (Pre Arrival / Pre Departure Declarations). This will enable customs authorities to carry out better risk analysis, e.g. before goods arrive in the customs territory, and to focus on high risk cargo due to the availability of risk-information at an early stage. It will also allow quicker processing and release upon arrival, resulting in a benefit for traders

2 Regulation (EC) No 648/2005 of the European Parliament and of the Council of 13 April 2005 amending Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, OJ L 117 of 04/05/05 Regulation (EC) No. 1875/06 amending Regulation (EEC) No 2454/93 laying down provisions for the implementation of

Council Regulation (EEC) No 2913/92 establishing the Community Customs Code


• Reliable and compliant traders will benefit from simplifications in the customs procedures and/or from facilitation with regard to customs controls relating to safety and security under the Authorised Economic Operator (AEO) Certification scheme. The AEO concept should ensure a safer and more secure end-to-end supply chain. Being recognised as an AEO will constitute an added value for the operator, as it demonstrates compliance with solid security criteria and controls. This will provide a competitive advantage to participating companies.

By introducing a new risk management framework the aforementioned "security amendments" provide a better risk information sharing mechanism and set uniform Community risk-selection criteria for controls, supported by computerised systems. Such an efficient risk assessment is vital to detect illegal goods crossing the EU borders such as drugs, explosive materials or nuclear and chemical weapons.

These three approaches are interlinked and will provide enhanced security through a combination of measures. The provisions were planned to enter into force as of 2007 and will be finalised by July 2009, although this deadline might be extended since not all member states are able to implement the “paperless” customs process until then.

The European Community is expecting more security and more facilitation from these rules as, for example, the use of advance electronic information and electronic systems for risk analysis will enable customs to identify high-risk cargo bound for Europe at an early stage in the logistical process. With the new security initiative, Customs will be enabled to carry out more targeted controls on high risk shipments by means of automated systems, as well as new technologies.

All these enhanced security measures have to be seen against the international background, as there are mainly ISPS (refer to section 2.1.2) as well as the WCO Framework of Standards (2.2.1)

3.2 Legal Aspects

This sub-chapter summarises the unilateral requirements of the United States, discusses unilateral vs. multilateral approaches and outlines some key problems regarding 100% scanning in respect to legal aspects.

3.2.1 Unilateral Requirements by 9/11 Act

The legal basis for the so-called “100% scanning requirement” reads as follows:

The 9/11 Recommendations Act establishes the following under its section 1701 regarding container scanning and seals:


General Rule – A container that was loaded on a vessel in a foreign port shall not enter the United States (either directly or via a foreign port), unless the container was scanned by non-intrusive imaging equipment and radiation detection equipment at a foreign port before it was loaded on a vessel.

Timeline - This must be implemented by July 1, 2012, unless a port meets two of several conditions for extension.

Extension Conditions:

(A) Systems to scan containers are not available for purchase and installation.

(B) Systems to scan containers do not have a sufficiently low false alarm rate for use in the supply chain.

(C) Systems to scan containers cannot be purchased, deployed or operated at ports overseas, including, if applicable, because a port does not have the physical characteristics to install such a system.

(D) Systems to scan containers cannot be integrated, as necessary, with existing systems.

(E) Use of systems that are available to scan containers will significantly impact trade capacity and the flow of cargo.

(F) Systems to scan containers do not adequately provide an automated notification of questionable or high-risk cargo as a trigger for further inspection by appropriately trained personnel.

The 9/11 Act provides the Secretary of DHS with the authority to extend the 2012 deadline in two year increments provided two of the six statutory conditions exist. There is no limit to the number of extensions that can be granted.

3.2.2 Unilateral versus multilateral3

The main advantage of the unilateral approach lies in the fact that the state has total control over the security standards it considers necessary to protect its national security and can formulate its strategy accordingly.

National security measures are invariably mandatory in nature, backed by primary legislation and enforced by trade measures. Recent examples of security measures in the United States include the SAFE Port Act 2006 and H.R. 1 Implementing the Recommendations of the 9/11 Commission.

3 Refer to “Christopher Dallimore: Securing the Supply Chain: Does the Container Security Initiative Comply with WTO

Law? - Inaugural-Dissertation, Münster 2008” pp. 13 - 23


However, it is important that such legislation is transparent, reflects international standards and allows sufficient flexibility. At the same time the US - as prominent global player - is in a position to enforce its unilateral customs controls through effective sanctions. Through the CSI, CBP seeks co-operation from strategically important states and uses its trading power over those states in order to conclude security agreements. In fact, Section 1701 of the Act Implementing the Recommendations of the 9/11 Commission 2007 (amending Section 232 of the SAFE Port Act 2006) goes even further and effectively makes the very existence of trade relations, (as far as container transport is concerned), with the United States dependent on the implementation of U.S. security standards (from 2012 earliest).

It is important to note that UN Resolution 1456 obliges states to respect their international obligations when implementing security measures. Another significant disadvantage of the unilateral approach is that the implementing state has no way of knowing for certain if its measures are effective in preventing the perceived threat of terrorism.

Multilateral measures are developed by international organisations, which view security as a global public good and aim to improve the security of all their members. Their main aim is to create uniform, albeit voluntary standards, which can be adopted by all members taking account of their economic development. In particular, a body such as the World Customs Organisation can ensure that countries - even if they are less developed and short of resources - are not excluded from security standards by coupling their implementation with necessary capacity building. International organisations also formulate measures within the framework of the treaty obligations binding their members as well as international legal principles. As a result, multilateral security measures can (in theory at least), lead to a more consistent security regime than a patchwork of bilateral agreements with selected trading partners used to implement unilateral security measures (such as the CSI or 100% scanning).

3.2.3 Implementation Problems

These requirements to be implemented in all international ports, which are willing to continue maritime trade with the US are causing not only technical, logistical or economic impacts, but they are affecting the sovereignty of the countries trading with the US.

The US government is aware of this fact; e.g. the US cannot compel foreign governments to use specific equipment for the 100% scanning requirement. The United States Government Accountability Office (GAO) identified challenges in nine areas that are related to the continuation of the SFI pilot programme and the longer-term 100% scanning requirement.4 At

4 Based on: United States Government Accountability Office: “SUPPLY CHAIN SECURITY - Challenges to Scanning 100

Percent of U.S.-Bound Cargo Containers; Statement of Stephen L. Caldwell, Director, Homeland Security and Justice; Testimony Before the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, Committee on Commerce, Science, and Transportation, U.S. Senate; GAO-08-533T


least two of them are more or less directly linked with the legal framework (including the national budget / public spending regulations) of the countries involved.

3.2.4 Use and ownership of data/ data processing and data transfer

The legislation that mandated the SFI pilot programme and 100% scanning does not specify who will have the authority or responsibility to collect, maintain, disseminate, view, or analyse scan data collected on cargo containers bound for the United States. While the SAFE Port Act specifies that SFI pilot programme scan data should be available for review by U.S. government officials, neither it nor the 9/11 Act establishes who is to be responsible for managing the data collected at foreign seaports. Other unresolved questions include ownership of data, how proprietary information is to be treated, and how privacy concerns are to be addressed. For example, officials from UK Customs stated that UK privacy legislation barred sharing information on cargo containers with CBP unless a specific risk was associated with the containers. To comply with UK laws, while still allowing CBP to obtain scan data on container cargo, UK Customs and CBP negotiated working practices to allow CBP to use its own handheld radiation scanning devices to determine whether cargo containers emitted radiation, but this was only for the purposes of the SFI pilot programme. According to the European Commission, for 100% scanning to go forward, the transfer of sensitive information would have to take place systematically, which would only be possible if a new international agreement between the United States and the European Union (EU) was enacted. In the absence of agreement with the host government at more than 700 seaports that ship cargo to the United States, access to data on the results of container scans could be difficult to obtain.

3.2.5 Resource Responsibilities

European government officials expressed concerns regarding the cost of equipment to meet the 100% scanning requirement, as well as the cost of additional personnel necessary to operate the new scanning equipment, view and transmit the images to the United States, and resolve false alarms.

Though CBP and DOE have provided the bulk of equipment and other infrastructure necessary to implement the SFI pilot programme, they have also benefited from host nation officials and port operators willing to provide, to varying degrees, the resources associated with additional staffing, alarm response protocols, construction, and other infrastructure upgrades.

However, according to CBP, there is no assurance that this kind of mutual support is either sustainable in the long term or exists in all countries, or at all seaports, that export goods to the United States.


From the point of view of the US trade partners, it is not clear who has - in case of implementing 100% scanning in their harbours - the inspection authority. In other words: Who takes responsibility for, “stopping a suspicious container” before loading the ship bound for US? Who would be liable for the economic consequences, if the container was stopped wrongly? , i.e. finally the container is not a risk, or alternatively a “true risk container” reached the US?


4 Inspection Equipment and Procedures 4.1 Type of Process and Method

This is an aspect that needs to be clarified: attention is again drawn to the distinction between screening (radiation detection) and scanning (imaging.)

It is necessary to consider two main components, relevant to the study, which will be necessary to implement 100% scanning of US bound containers. These are as follows:

First, the type of activity or process, of which there are two:

• Radiation detection: to measure the presence of radioactive materials including primary and secondary screening steps

• Scanning: to build up an image of the contents of the container

Second, the method used to deploy each process, including for scanning equipment such installations as the following:

• Drive through portals

• Internal (facility) installations (conveyors)

• Gantry systems

• Mobile systems and for radiation detection equipment the following types:

• Drive-through portals

• Mobile equipment

• Spreader mounted

• Straddle carrier mounted

• Hand held

While both radiation detection and imaging are considered for 100% scanning of export containers the emphasis is on imaging, since there are far greater implications surrounding its implementation in almost all respects, including the impact on customs, port operation and financial aspects.

4.2 Radiation Detection 4.2.1 Detection Process This is a passive, non-intrusive process that screens (in this context) containers for the presence of nuclear and radiological materials. The process is capable of detecting various types of radiation emanating from special nuclear materials, from natural sources and from isotopes commonly found in medicine and industry.

Detectors do not emit X-rays or any other radiation. They read energy emitted by radioactive sources that happen to pass near them. They are therefore completely safe and they are used to ensure that radioactive materials are not improperly moved.


In the port context the screening typically comprises two components:

• Primary screening: Applied to all traffic required to be screened

• Secondary screening: Carried out only on those containers, which trigger an alarm, typically 1% or 2% of the total number of containers passing through the primary detectors.

By way of example, all containers entering a port may pass through a pair of radiation detector portals. The majority of these containers clear the portals - the primary detectors - without incident. In a minority of cases, they trigger the alarm. Such containers are then diverted into a designated holding area for further - secondary - inspection.

An alert by a primary monitor indicates that a source of radiation has been detected. An alert by itself does not necessarily mean that a nuclear weapon or harmful radiation has been detected. There are many legitimate, “innocent”, sources of radiation, including naturally occurring radiation and various medical and industrial isotopes that pose little or no threat.

The primary detector is designed to screen the container for the sources of gamma radiation/free neutrons. The presence of the latter - at between 20 and 30 counts per second - can only come from fissile material.

At the primary stage the application of norm filtering, which is the application of sophisticated software, can cut down the incidence of innocent alarms that are presented to the operator. The container may trigger an alarm, but the norm filtering then kicks-in and in up to 85% of cases identify the source as benign. These cases are then not presented to the operator and the cargo passes straight through. This norm filtering cannot be set to 100% because in some cases a high gamma reading may look benign, but may be shielding something sinister.

The purpose of secondary inspection is to establish what isotopes have been detected in order to decide whether they are innocent or sinister.

For example, radioactive isotopes of potassium occur naturally in some vegetables and are innocent. On the other hand, the detection of the presence of an isotope of cobalt could be dangerous.

In order to carry out the secondary inspection, equipment employing advanced spectroscopy is employed. This provides a spectrum that illustrates the “signature” of the isotopes present and can be used to discriminate between them.

The equipment may be a fixed installation or mobile, e.g. handheld.

Following this analysis, a decision can then be taken as to the contents of the container.


There are two possibilities:

• The contents can be identified, are benign and the container is cleared

• The contents cannot be explained and may appear sinister. In practice, this occurs only in a tiny minority of cases. However, in such instances, a specialist has to be called in to carry out further investigations. Emergency services may have to be notified and the port closed. Under no circumstances must the container be opened at this stage.

In practice, the interpretation of the spectra produced by ASP equipment may be complicated by the fact that one “signature” overlaps or shields another. It therefore becomes very difficult to discriminate between them, no decision as to the source of the radiation can be taken and specialist expertise is required.

A typical primary installation comprises both a PVT and a He-3 detector, while NaI (Sodium Iodide) detectors are commonly used in ASP equipment for secondary inspection.

4.2.2 Types of Radiation Detection Equipment/Installation

The following are the main types of equipment/installation employed for radiation detection applications:

• Drive through portals • Mobile equipment

• Spreader mounted

• Straddle carrier mounted

• Hand held

Of the above types, all are well established with the exception of the spreader and straddle carrier mounted types, which are still at the testing stage. However, to provide a comprehensive overview, they are included in the analysis, although port terminal operators are of the opinion, that this equipment is not able to resist the physical constraints experienced during container handling. In general, attitudes towards these types were negative. It was considered that the working conditions would be too rough for the equipment to last for very long. Obviously there is a difference between laboratory conditions and the port.

A He-3 scintillator comprises, inter alia, a bulb-like device with a long filament. It requires careful handling and is vulnerable to banging and shaking, which would be bound to occur on this type of equipment. Also, the point was made as to what would happen if there was an alarm. It would cause more disruption to yard/terminal operations than if this occurred at the point of entry/departure of the terminal.


In summary, nobody thought that this type of equipment has much future potential - and is anyway concerned with radiation detection - rather than scanning - for which application established equipment performs quite well.

Hand held equipment is used, but is not always very satisfactory in use. Although it has some ASP capability, it can be very slow – sometimes taking up to 20 minutes to produce an image, which may then be difficult to interpret. They are probably a necessary part of an overall comprehensive installation, but only for occasional use.

4.2.3 Application of Radiation Detection

Radiation detection is relatively well established and is already installed in some ports where it is carried out for both export and import, but with the emphasis very much on the latter. In Antwerp all containers pass though detector portals at the in and out gates. In the UK import cargo is screened in selected ports under the cyclamen programme.

The emphasis of activity is on cargo arriving and departing by road, though rail traffic is also covered. However, relatively little - if any - transhipment cargo is screened.

It should also be noted that the above sections describe scanning equipment for road traffic applications, but similar arguments in terms of technology and type would apply to rail scanning equipment.

Countries tend to be concerned with national security and are therefore more interested in what is coming into their countries (not only radioactive materials, but also other illegal imports such as smuggled goods) than what is leaving. This exactly mirrors the concern of the USA, except that European countries are not proposing to export their borders.

National approaches start with a concern for national security - that is the basis of national inspection policies. If that fits in with the requirements of the USA then that is a bonus. Radiation detection is therefore not seen as a measure being related only to US cargo, but to all containers.

In principle, it is clear that radiation poses in nothing like the problem of scanning. It is to an increasing extent a common tool and people (customs, port operators, truck drivers, forwarders etc.) are familiar with it. Certainly it is much cheaper to implement than 100% scanning, though its implementation would still impose significant human resource demands on national customs authorities.

However, in some ports, it could cause operational difficulties - particularly where existing installations may be set up only to screen import cargo.


4.3 Scanning 4.3.1 Scanning Process and Implications

Beside the actual physical inspection of containers, there is also the possibility to build up an image or picture of the contents non-intrusively. This image can then be analysed and decisions made regarding the contents without opening the container.

There are two components to this process:

• Scanning to obtain an image

• Analysis and interpretation of the resulting image

The above distinction is important, particularly in the context of the study. While the scanning obviously takes place in the port, the analysis and interpretation can take place in real time as the images appear, or it can be carried out remotely, and the results fed back at some later point in time. Following this, the appropriate action would have to be taken. It is also the case that the interpretation of images tends to take longer than the imaging itself and requires skilled analysts.

The requirements of the 100% scanning law are not clear on this point. The analysis and interpretation could:

• Take place in real time at the point of scanning as the images are generated. In this case, the work would be carried out by national customs authorities who would have to have the authority to grant clearance on behalf of the US customs This would require bilateral agreements that are not in place at present

• Be carried out remotely in the USA. This would involve the transmission of all images across the Atlantic for scrutiny by US customs personnel, who would then give clearance, or not as the case may be. Apart from the IT challenges of handling large quantities of data, the results would take some time to become available. They would then have to be sent back to the terminal concerned and if necessary containers would have to be removed from the yard prior to shipment for further inspection.

Clearly there are substantial implications for both human resources for national customs and also for terminal operations, depending on which of the above alternatives is adopted.

4.3.2 Scanning Technology available Scanning can be carried out by employing one of two types of electromagnetic radiation:

• X-rays, with varying degrees of energy

• Gamma rays, similar to X-rays but with a shorter wavelength.

Both of the above have their place in scanning applications and have their attendant advantages and disadvantages:


• X-rays with a longer wavelength and with higher energy have better penetration than gamma rays.

• Gamma rays have a much smaller radiation footprint, require less shielding and can therefore be more suitable for use in crowded port areas.

Both of the above are, in principle, similar in terms of the physics involved. There is, however, one major difference: the radiation source:

• Gamma radiation results from the decay of atomic nuclei and is a natural process. This radiation cannot be switched off and radiation shielding is required even when the system is not in use. Normally for the gamma radiation Iridium 192, Caesium 137 or Cobalt 60 are used. It has a maximum steel penetration of 190 mm and therefore is more suitable for lightly loaded containers.

• X-radiation results from high energetic processes with electrons. It commonly results from two different processes: from the acceleration of charged particles and their thermalisation or from high energetic transitions in the atomic shells of atoms or molecules. For containers, which are loaded with high density material, X-ray scanners are more suitable.

For X-rays two main technologies are in use:

• Transmission, where a beam of X-rays is projected through the container from one side and an image picked up on the other side.

• Backscatter, where a beam of X-rays is directed at the container and the reflected image is picked up on the same side.

Both again have their advantages and disadvantages:

• Transmission can employ higher energies and greater penetration and copes better with the detection of elements with atomic numbers higher than 80, e.g. heavy metals.

• Backscatter takes place on only one side of the container and is therefore suitable for mobile applications and use in the container yard. It is also particularly effective and produces images with good resolution for elements with lower atomic numbers.

The choice of all of the above can depend on many factors, including the particular application and the location.

There has been a tendency recently for fixed X-ray installations to employ a combination of both transmission and backscatter, as an optimum solution.

However, this becomes very expensive and was generally considered not to be necessary for the purposes of 100% scanning.


4.3.3 Types of Scanning Equipment/Installation

The following are the main types of equipment/installation in common use:

• Drive through portals

• Internal (facility) installations (conveyors) • Gantry systems

• Mobile systems

4.3.4 Principal Findings

Scanners are in use in some ports, not to the extent that radiation detection equipment is found. Where they are installed they carry out scans as necessary, but nowhere to the extent of 100%. In practice, only a minority of import containers are scanned mainly for detection of contraband. Furthermore, the above sections describe scanning equipment for road traffic applications, but similar arguments in terms of technology and type would apply to rail scanning equipment.

Some respondents were somewhat dismissive of gamma ray equipment because of its lower penetration (see section 3.3.5.) However, such systems have a significant share of the market. One major scanning equipment supplier said that of 400 systems that the company has installed worldwide, about half are gamma ray systems. They said that the radiation and health and safety concerns surrounding X-rays can sometimes sway an argument in favour of gamma ray systems.

In the course of the work there were relatively few instances of the employment of backscatter equipment. However, there was some feeling that it is making some progress in the market, both as stand-alone units (because it can be mobile) and in combination with transmission units.

Where they are in use, port personnel were generally conversant with the different technologies, but did not know much about their relative merits and demerits. There was much concern over the possible implementation of 100% scanning and a view that the present implementation date of 2012 will not be possible. Very few – if any – have yet taken any positive steps to plan and acquire scanning equipment specifically for the implementation of the 100% law. Many ports are adopting a, “wait and see attitude” and are looking to the Commission to provide a lead.

It is clear that scanning is a very much more challenging issue for ports than radiation detection – it is a problem of a different order of magnitude.

4.3.5 Scanning Equipment Comparison

The various different types of scanning systems described above have their relative advantages and disadvantages, e.g. some of them are re-locatable while others have a high


throughput. The specific application and its location are important considerations in the selection of the most appropriate system.

There are of course also cost implications with a wide range of prices depending on the precise specification.

Nevertheless, some types of equipment will not be the best choice to scan huge volumes of containers within very short timeframes, in addition to delivering high quality scans.

Table 3.1 below summarises some typical scanning equipment in terms of the type of installation, the technology employed, depth of penetration, capacity and manning requirements.

Table 3.4-1: Container Scanning Equipment Overview

Type of Equipment Type of Radiation Source Penetration Depth Capacity [per hour] Manning [minimum]Mobile Scanner X-Ray 3-4 MV 280 mm 25 trucks 2

X-Ray 4.5 MV 300 mm 60 - 80 trucks 2X-Ray 6 MV 375 mm 120 trucks 2Gamma Ray 190 mm 60 - 180 trucks 2

Gantry Scanner X-Ray 4.5 MV 300 mm 40 - 50 trucks 1X-Ray 6 MV 330 - 400 mm 20 - 50 trucks 2 - 4Gamma Ray 120 - 190 mm 60 trucks 2

Portal Scanner X-Ray 2.5 MV 220 mm 200 - 400 trucksdepending on required analysis time

X-Ray 6 MV 400 mm 180 trucksdepending on required analysis time

Gamma Ray 120 - 190 mm 60 - 180 trucks 1Facility Scanner X-Ray 3-4 MV 350 mm 25 - 40 trucks 2

X-Ray 6 MV 410 mm 25 - 40 trucks 3X-Ray 9 MV 425 mm 25 - 40 trucks 3

Source: HPC, 2009

Devices, which are equipped with gamma ray scanners, have problems to deliver high quality images with a steel penetration of more than 190 mm. Some respondents said that this was generally insufficient for container scanning applications. They said that portal or mobile scanners equipped with X-ray systems would be able to handle large container volumes without major delays within the container flow. However, the relatively high incidence of gamma systems discussed above would appear to refute this claim.

To be able to handle the expected volumes of containers in the 100% scanning context, to minimise additional handling and interruption of the cargo flow, equipment must be capable of processing at least 25 trucks per hour. In addition, scanners must allow trucks to pass straight through without stopping in order to avoid delays and extra handling within the delivery process.

The best equipment alternative within a specific terminal will be based on the container volumes to the US, the operational mode e.g. RTG or straddle carrier and the transport mode split e.g. transhipment, barge and feeder services and rail services. More detailed


information about the different terminal operation systems and transport modes is given in chapter 5.

The acquisition cost of installations varies very widely. However, guide prices for the purchase of the following types of unit, including transmission X-ray radiation sources, high steel penetration depth and an OCR system to be able to link the scan images to a real container unit are:

• Mobile unit: €2,400,000

• Drive through portal: €3,200,000

• Internal (facility) installations (conveyors): €4,500,000

Detailed information concerning manning and infrastructure costs were not available because this is highly dependent on factors such as:

• local laws and regulations referring to exclusive zones around the scanners

• health and safety regulations

• container volumes to the US

• port operating hours

• arrangements for the analysis and interpretation of the images

• location of the installation within the terminal.

All the above questions must be clarified country-by-country and terminal-by-terminal in order to provide firm cost estimates for any specific installation.

Finally, scanning equipment can be supplied combined with radiation detection devices. This reduces the required land plot for the scan and detection zone. However, this has not to date been significant because of the very different perceived requirements for each activity and the fact that - to date at least - they take place in different locations and operationally are not closely related.

4.4 Other Issues 4.4.1 Performance

In general, the performance of both detection and scanning equipment was considered to be acceptable and was normally up to expectations. There was, however, some feeling that it is not always equal to the rigours of the port working environment and that manufacturers should take more account of the difference between the laboratory and the working environment.

However, some problems were reported. Specific comments made included the following:

• performance is adversely affected by high humidity

• rainy conditions cause problems

• the scanner cannot operate in strong winds


• equipment takes a long time to warm up: normally between 15 and 40 minutes, but up to two hours if it has not been used for two or more days

One port said that they have experienced a lot of downtime, but due to excellent service the failures are repaired within a short time period. Another port mentioned that because of the susceptibility of the equipment to adverse or extreme climatic conditions, it is better if they are housed indoors.

Even when equipment is working normally there are sometimes difficulties in the interpretation of the images for both radiation detection equipment and scanners, but this may be due to lack of operator experience. For the former, the use of hand held equipment for secondary inspection can be difficult: it is very slow and does not always give good results, even after periods of up to 20 minutes.

4.4.2 Standards

There are no international standards for radiation detection and/or scanning equipment relating to build or manufacture. Most technical specifications are based on the client’s requirements and - consequently - vary considerably.

However, there are performance standards, e.g. ANSI 42-38, defining spectroscopic requirements for vehicle monitoring at ports (also related to an IAEA specification.) and ANSI 42-35, specifying gross counting requirements for vehicle monitoring at ports. In addition, equipment must meet the appropriate health and safety standards including achievement of EC marking approval with the relevant product tests, type examination etc. to meet all EC marking requirements. However, there is a specific need to have international standards for equipment and execution of inspection processes.

4.4.3 Compatibility of Radiation Detection and Scanning Equipment

At the moment, there are no problems arising with the compatibility of the equipment used for radiation detection and scanning, as the two processes are different in various ways:

• the technology and physical principles are different

• they take place at different locations in the port, with the emphasis of radiation detection on import cargo

• mostly different makes of equipment are involved • interpretation and clearance are different processes

In summary, they are separate activities and there is not necessarily a close relationship between the two. However the following points should also be noted:

• at the moment there is a higher incidence of detection than scanning


• the situation could change in the context of 100% scanning, which could bring about a closer integration of the two activities

The relationship between ports/terminal operators and customs (and customs and national governments) could be more difficult. At the moment there IS some confusion and uncertainty between the parties involved in the context of 100% scanning in terms of the following:

• what would be their respective roles?

• who would carry out which activity?

• who would provide/pay for the necessary land, e.g. for a secondary exclusion zone?

• who would provide/ pay for the necessary infrastructure?

• who would have ultimate responsibility?

• who would be financially liable?

There was also some discussion among customs as to whether funding would be by national governments or would be expected to come out of customs budgets.

The above issues would have to be clarified before the implementation of 100% scanning.

The relationship between port authorities has not always been easy in terms of the provision of land and facilities and who should pay for them. There is the principle of TPF (trader provides free). Following the advent of the single European market there was some argument that TPF constituted a restraint to trade and was not legal. This caused considerable argument.

Port authorities and customs have different points of view. In an ideal world the port does not want any vehicles to be stopped, whereas the customs want to apprehend all illegal traffic, which will involve stopping and inspection. Consequently, there may be “agreements” between port authorities as to the incidence of vehicles that are stopped for any reason. The port then knows what percentage may be stopped and makes operational allowances for this. So if, for example, there is a high number of alarms on the radiation detector which turn out to be innocent, part of the unofficial “allowance” is taken up. The customs do not like this, since it will lower the level of other inspections available to them.

It is also the case that the overall authority of customs authorities in numerous countries has diminished over the last 20 years.

There is a significant variation between customs and port authorities in different EU countries and it is therefore sometimes difficult to generalise.

There is no apparent problem with nuclear experts, who are normally externally based and called in only when, for example, a secondary inspection presents a problem that cannot be solved.


4.4.4 Developments

The point was made by numerous respondents that the basic technology for scanning equipment has been around for a long time. The principles of X-ray scanning - both transmission and backscatter - as well as gamma rays, are well established. There has been some refinement and a move towards higher energy X-rays, but essentially the operating principles have remained the same.

As far as radiation detection is concerned, the development of germanium detectors has been a recent development. However, it has to be cooled to low temperatures (and is expensive) and some said that the images it produces are difficult to interpret. It was said that it can be useful if there are a number of different point sources in one container. To some extent it was said to be a “specification written by a scientist” and that it adds to costs without providing commensurate benefits.

The use of HE-3 detectors is becoming more problematic as the price of the gas has recently increased significantly (supplies come from nuclear establishments in the USA and Russia.) As a result, there had been a move towards to greater use of Lithium-6 scintillators.

There has been a recent trend towards equipment that combines both radiation detection and scanning in the same installation. So far, this has not been seen as a development of great significance as the attitudes towards the two processes are rather different. However, this situation could change if it becomes evident that 100% scanning will definitely be implemented.

A new approach in identifying threats such as explosives, fissile materials, toxic materials and weapons of mass destruction, is the design and development of Nuclear Resonance Fluorescence (NRF) imaging systems for non-intrusive cargo inspection. NRF will be able to inspect a region space without intrusion and measure the isotopic content of the material in that place for any element with an atomic number greater than that of helium. This new technique would involve the exposure of material to a continuous energy distribution of photons and detecting the scattered photons for complete isotopic analysis. The photons, ranging from 2 to 8 MeV, have a high penetrating capability and can identify objects through thick steel plates or protection shields of lead. The aim is to develop a high throughput system with automated identification of cargo contents with simple visual displays and alarms making image analysis superfluous.

At present, NRF equipment for application in the port and transport sector is in the design and development phase and a date for its market introduction cannot be given. First rough cost estimates given by the developing company (and probably future system manufacturer) indicate a range of 9 to 11 million Euro/unit. Costs for operation and maintenance and repair cannot be specified at present.


4.4.5 Analysis and Transmission of Information

As referred to above, the main problem surrounding the scanning issue is not the generation of the images but their interpretation; in particular, where it will take place and who will carry it out? These are questions that have yet to be addressed, but which, potentially, have enormous implications for national customs authorities.

Particular points are:

• the analysis of scanned images is potentially slow and time consuming and certainly takes longer than the generation of the image

• interpretation requires highly skilled personnel

• such personnel require frequent breaks when looking at screen images and cannot work continuously for long periods

• it is a very labour intensive process wherever it is carried out.

It is clear that human judgement is crucial to the process. Typical cargoes generate typical images and operators come to recognise them and can process and clear containers quickly (less than a minute). They become used to the types of cargo that are frequently handled.

The illustration was given that if an operator was moved from the Port of Singapore to work - say in Hamburg - it would take some time for him to analyse at the same speed as in the previous port. He would have become used to the frequently handled types of goods passing through Singapore and would have developed the skill to recognise the resulting images instantly. In another port e.g. Hamburg the pattern of freight handled might be very different - producing different scanned images - and thus a learning process would be involved.

Overall, if the technology of the hardware has not changed very much in the recent past, it is in the area of interpretation and the development of the related software that has seen the emphasis of research activity.

This is true for both radiation detection and scanning.

For radiation detection the software now available for the setting of norms permits the filtering out of innocent alarms: the portals may detect the presence of radiological material and an alarm is potentially triggered. However, before this occurs, the software is able to analyse the nature of the material detected and, in many cases - up to 85% - immediately recognise it as benign and be certain that nothing sinister is being shielded. In such cases the alarm is not triggered and the operator is not informed.

There are similar developments in the area of the analysis of ASP spectra following secondary inspection. The software is able to provide better discrimination particularly where one spectrum may be overlapping with another and potentially shielding something sinister.

Such abilities facilitate analysis, reduce ambiguity and uncertainty and thus reduce the requirement for additional investigation.


In the area of scanning, the emphasis is on the facilitation of the interpretation of the images again via more sophisticated software.

The aim ideally is to be able to automate interpretation fully, but this is still some way off. As mentioned above, at the moment there is still no effective substitute for human judgement.

Overall, it is in this area the technology is moving ahead - partly stimulated by the Law - but it would probably be developing anyway. Some respondents said that if the implementation of 100% scanning is deferred, then there is a chance that the technology will have developed sufficiently to provide easier solutions to the problem of interpretation.

Where the interpretation of scanned images would take place in the 100% scanning context remains an unanswered question, as does the ultimate responsibility, or liability.

Their remote interpretation has neither really been seriously considered by the equipment manufacturers – nor by the DHS and US Customs. It is not a usual feature of existing equipment and installations, the majority of which are geared up for analysis and interpretation in real time as the images are generated, with the appropriate number of screens and operators in place necessary to achieve this.

It is clear that the transmission of the volumes of data involved from Europe to the USA would require increases in bandwidth and other technical features. These are said to present technological challenges that have not as yet been addressed.

Remote interpretation would also mean that the images would not be interpreted in real time. This would have major operational implications: the container would pass through the scanner and would proceed to the yard for storage prior to loading. At some point, a negative result of the interpretation would have to be fed back to the terminal involved, the container involved located and removed from the stack for further investigation.

If all interpretation of scanned images of US-bound containers worldwide were to be undertaken centrally in America, the task would be immense. Based on the total volume of traffic to the USA it would be necessary to handle over 25,000 images per day, or over 1,000 per hour.


5 Container Inspection Procedures


6 Port Analysis


7 Impact of 100 % scanning on Terminal Operations 7.1 Basic Assumptions

In the event that all US-bound containers have to be scanned in the future, various changes regarding operational procedures will have to be implemented. These changes are described for each of the common handling systems named in the previous sections of this report. As already mentioned, each terminal, even with the same technical container handling system, has its own procedures, dependent on operator’s philosophies and practices, legal and/or technical restrictions, modal split, handling volumes etc. Thus the descriptions may only represent typical or most likely scenarios for the different handling systems. There is no doubt that some of the procedures may differ at different container terminals.

The same basic assumptions apply for all descriptions regarding changing procedures. They are listed in the following paragraphs prior to the description of the necessary operational changes for each technical handling system.

All further descriptions are based on the following assumptions:

• All US-bound containers have to be scanned.

• It is assumed that scanning of containers and radiation detection will be done simultaneously.

• Export containers to be delivered by truck will be scanned only if they are bound for a port in the US. This requires the availability of an OCR portal to recognise the container number and truck licence plate in front of the scanner portal

• Container scanning for containers received from the landside (road) will be completed at the gate.

• Transhipment containers will be transported to the scanning facility immediately after being discharged from the vessel in order not to create any performance obstacles in the quayside operations.

• Also empty containers bound for US Ports have to be scanned. In order to avoid any manipulation of the container, the empty container must be sealed when it is scanned.

• All Export containers to be delivered by rail will be scanned together with the transhipment container before being transported to the yard.

• The containers, once scanned, may be stacked into the container yard independently from the availability of the scanning result.

• The terminal operators will not be responsible for the analysis/evaluation of the images.

Loading a US-bound container on a vessel requires the additional release of the unit by the authority in charge for the analysis/evaluation of the scanning results.


7.2 Change of Procedures in a Straddle Carrier operated Terminal

For transhipment containers, the straddle carrier could transport them directly from the quayside to a trailer parking area, load them onto a parked trailer and return to the quayside in order to receive the next transport order. In this case, beside the additional moves to be performed by the tractor and trailer, only one additional move6 for the straddle carrier (unloading the trailer, transport to the yard and stacking the container to its storage position) applies. Due to high performance requirements at the quayside, it is unlikely that the same straddle carrier that has transported the container to the scanner portal will also execute the transport from the scanner portal to the yard.

This procedure is also not possible if transhipment containers received by a feeder vessel are not already booked to the final destination but only to the transhipment hub. In this case the IT system cannot identify US-bound transhipment containers when they are unloaded from the feeder vessel. Most of the transhipment containers are already booked to its final destination, but a minority is only booked with the destination of the transhipment hub.

Export containers received by truck have to be scanned as long as they are on the truck that delivers the container at the terminal in order to avoid additional moves on the terminal. An effective system requires automatic recognition of container number and truck licence number prior to the scanning activity, avoiding those containers not bound for US ports and not requiring scanning. If the control system of the terminal can check the container’s port of destination prior to the scanning activity, then only those trucks can be directed through a scanner portal, that carry US-bound containers or the scanner can be activated only when such a truck drives through the portal. If the scanning result is not suspicious, no additional operational procedures are necessary in terms of additional moves for container handling equipment.

Export containers bound for the US arriving by rail should be treated similarly to transhipment containers. This requires only one additional move for the straddle carrier (unloading the trailer, transport to the yard and stacking the container to its storage position).

Otherwise, a scanning portal has to be mounted over the access track where all arriving trains have to drive through. According to interviewed experts of the terminals and the port authorities, the implementation of these scanning devices is very expensive, as it requires the complete reorganisation of the railway yards. Furthermore, all containers have to be scanned and images of containers not bound for US ports have to be deleted immediately. On the other hand, all US-bound containers would have been already scanned upon arrival at the terminal. The same situation as already stated for export containers arriving by truck

6 One move is defined as any handling of a container, such as e.g. a shuffle move in order to give access to a container

which stands under another container, a movement between to different locations (including lifting and horizontal transport) etc. Additional move means any move that has to be performed in addition to the moves that apply anyhow without scanning.


would apply here: no additional operational procedures would be necessary in terms of additional moves for container handling equipment, if the scanning result is not suspicious.

Empty containers arriving by truck or train and which already have a booking reference for a US Port as a destination will be scanned following similar procedures as full containers and as already described above. No additional operational procedures are necessary in terms of additional moves for container handling equipment if the scanning result is not suspicious.

Empty containers that are booked, once they are already on the terminal, have to be scanned prior to their delivery to the quayside. As the scanning results have to be available at the latest 24 hours prior to loading the container on the vessel, it is no longer possible to directly transfer the empty container from the empty container yard handover area to the quay crane. The container has to be transported from the empty yard to a scanner and then to a storage area (either again in the empty container yard or in the full container yard – most likely the container will then be stored in the full container yard as it already has a booking reference).

Furthermore, empty containers that are already scanned have to be sealed immediately after the scanning inspection in order to avoid any manipulation. Another typical procedure at some terminals, the recording of the container number only at the moment when the empty container is loaded on the vessel, is no longer possible. Thus, operational procedures will be more complicated as the loading sequence of the vessel has already to be considered when the empty container has passed through the scanner portal and before it is stacked again in the container yard.

The main conclusions for straddle carrier operated terminals are as follows:

• Additional cost applies for the straddle carrier driver and for the tractor/trailer driver (scanning activity is not included).

• Extra space is needed for o The scanner device and necessary manoeuvring and pre-storage areas for

handling equipment and/or containers o Equipment parking areas for tractor/trailer units or for a conveyor system that

moves the container through a scanner portal o The maintenance area for additional kind of equipment and thus for the

storage of additional kinds of spare parts. • The additional space requirements may lead to reduced space for container storage

and thus to a lower handling capacity of the terminal and consequently less profit.

• Compared with RTG- or ASC-operated terminals where units are already available for tractor/trailer units, the straddle carrier needs an additional device, or vehicle, to move the container through the scanner portal. The straddle carrier itself cannot move the container through the portal due to its dimensions. Furthermore, the container is transported between the boogies of the straddle carrier, which does not allow for


proper scanning of a container that is transported by a Straddle Carrier. This applies for all containers that are not delivered by external trucks.

• An additional kind of equipment on a terminal means the adaptation of new procedures, training of equipment operators, additional maintenance resources, provision of additional spare parts, additional training of mechanics, adaptation of and integration of new equipment types into the IT-system etc., Thus the maximum operational impact of scanning on technical / operational issues is on a straddle carrier operated terminal.

• Lining-up of containers in front of a scanner as practised today by some terminals, driving with a mobile scanner over the container row and then moving the container to the container yard will not meet any performance requirements and will cause enormous space requirements when 100% scanning applies. This method is only practicable for scanning small amounts of containers.

The following additional moves for handling equipment apply:

• No additional move for export containers as these containers are scanned as long as they are on the truck that delivers the container to the terminal

• At least one extra move for a straddle carrier, plus one extra move with a tractor/trailer unit for transhipment containers, if the container is scanned on the way between quayside and container yard, after being discharged from the arriving vessel.

• At least one extra move for a straddle carrier, plus one extra move with a tractor/trailer unit for railway containers, if the container is scanned on the way between the railhead and the container yard, after being discharged from the arriving train.

In case transhipment or railway containers have to be stacked in the yard before scanning, at least two additional moves for a straddle carrier (up to 5 extra moves incl. necessary shuffle moves) plus one extra move with a tractor/trailer unit will apply.

7.3 Change of Procedures on an RTG operated Terminal

Transhipment containers are stacked in the container yard as described under the current procedures in the foregoing section. In the event that transhipment containers have to be scanned, they will have to be delivered to a tractor/trailer unit, moved to and through a scanner and returned to the storage area. This gives rise to the following additional physical activities:

• Allocation of a tractor/trailer unit at the handover position in the container yard, simultaneous allocation of an RTG at the same place.

• Picking the container from the stack by the RTG and loading it on the trailer.

• Transport to a scanner portal by the tractor/trailer unit and moving the tractor/trailer unit with the container through a scanner portal.


• Return to the handover position in the container yard, simultaneous allocation of an RTG at the same place.

Picking the container from the trailer by the RTG and stacking it to its assigned storage position.

Alternatively to the procedures described above, the tractor/trailer unit could transport the container directly from the quayside to a scanner portal, drive through the scanner portal and transport the container to the container yard to its assigned storage area, where it is then picked by the RTG and stacked in the container yard. However, due to high performance requirements at the quayside, most of the operators reject this alternative, as it reduces the quayside performance due to its longer travel distance and time consumption by the tractor/trailer unit, even if it saves extra travel for the tractor/trailer units and extra moves for the RTGs.

For export containers, arriving both by truck and rail, the same applies as already described for the straddle carrier variant.

Empty containers arriving by truck or train and which already have a booking reference for a US port as destination will be scanned following similar procedures as for full containers and as already described above. No additional operational procedures will be necessary in terms of additional moves for container handling equipment as far if the scanning result is not suspicious. For empty containers that are booked, once the container is already on the terminal the same applies as has already been explained for the straddle carrier system.

The main conclusions for RTG-operated terminals:

• Additional cost applies for the RTG driver and for the tractor/trailer driver (scanning activity is not included).

• Additional space is needed for: o The scanner device and necessary manoeuvring and pre-storage areas for

handling equipment and/or containers o Equipment parking areas for additional tractor/trailer units if the existing

equipment park cannot provide the additional required transport capacity. o In the maintenance area for additional equipment and thus for storage of

additional spare parts7.

• The additional space requirements may lead to reduced space for container storage and thus to a lower handling capacity of the terminal and, consequently, less profit.

• The following additional moves apply for handling equipment :

7 Additional moves for the equipment shorten the maintenance intervals or require additional equipment that has to be

maintained.


o No additional move for the export containers as these containers are scanned as long as they are on the truck that delivers the container at the terminal

o At least one extra move for a tractor/trailer unit for transhipment containers, if the container is scanned on the way between quayside and container yard after being discharged from the arriving vessel.

o At least one extra move with a tractor/trailer unit for railway containers, if the container is scanned on the way between the railhead and the container yard after being discharged from the arriving train.

o In case transhipment or railway containers have to be stacked in the yard before scanning, at least two additional moves for an RTG (up to 6 extra moves incl. necessary shuffle moves) plus one extra move with a tractor/trailer unit apply.

7.4 Change of Procedures in a Terminal operated by Automated Stacking Cranes

Transhipment containers are stacked in the container yard as described under the current procedures in the foregoing section. In the event that transhipment containers have to be scanned, they have to be delivered at the landside, moved to and through a scanner and returned to the storage area. This gives rise to the following additional physical activities:

• Allocation of a trailer unit at the landside handover position in the container yard.

• Picking the container from the stack by the ASC, transfer to the handover area and loading it on the trailer.

• Allocation of a Terminal tractor, picking up the trailer and transport to a scanner portal by the tractor/trailer unit and moving the tractor/trailer unit with the container through a scanner portal.

• Return of the tractor/trailer unit to the landside handover position in the container yard, simultaneous allocation of an ASC at the same place.

• Picking the container from the trailer by the ASC, transfer to the assigned storage location and stacking the container to its storage position.

Alternatively to the procedures described above, the US-bound transhipment containers could be scanned on their way from the quayside to the container yard. A scanner portal could be mounted close to the quayside and the AGVs transporting US-bound containers could be sent through the portal by rule. Advantages are:

• No extra movement nor transport are necessary

• No additional drivers are necessary

Extra time requirements are reduced to the travel time for the deviation of the AGV (from quayside via scanner portal to the container yard instead of the direct way from the quayside to the container yard).


On the other hand, this alternative has some disadvantages and is not feasible in peak situations when almost all available equipment is in use - the deviation extends the travel distance of the AGVs and thus reduces the quayside performance as it may induce unacceptable waiting times for the quay cranes. Further waiting times and performance reduction may result from additional traffic in some areas if a high number of AGVs have to travel to the scanning portal first. Another problem is the necessary maintenance of the scanner portal. When maintenance personnel have to cross through automatic operation areas activity in these areas has to be interrupted for the time that the maintenance staff needs to reach the portal. Thus, this alternative is very unlikely.

For export containers arriving by truck and rail the same applies as already described for the straddle carrier variant.

Empty containers arriving by truck or train and which already have a booking reference for a US port as destination will be scanned following similar procedures as full containers and as already described above and no additional operational procedures are necessary in terms of additional moves for container handling equipment as long as the scanning result is not suspicious. For empty containers that are booked, once the container is already on the terminal the same applies as already explained for the straddle carrier system.

The main conclusions for ASC-operated terminals are almost similar to the conclusions made for an RTG-operated terminal:

• Additional cost applies for the tractor trailer driver (scanning activity is not included) in case transhipment units cannot be scanned, while they are on an AGV and the containers have to be stored in the container yard first.

• Additional space is needed for: o The scanner device and necessary manoeuvring and pre-storage areas for

handling equipment and/or containers o Equipment parking areas for additional tractor/trailer units if the existing

equipment park cannot provide the additional required transport capacity. o The maintenance area for additional equipment and thus for storage of

additional spare parts.

• The additional space requirements may lead to reduced space for container storage and thus to a lower handling capacity at the terminal and, consequently, less profit.

• The following additional moves for handling equipment apply: o No additional moves for export containers as these containers are scanned as

long as they are on the truck that delivers the container at the terminal o At least one extra move for a tractor/trailer unit for transhipment containers, if

the container is scanned on the way between quayside and container yard after being discharged from the arriving vessel.


o At least one extra move with a tractor/trailer unit for railway containers, if the container is scanned on the way between the railhead and the container yard after being discharged from the arriving train.

o In case transhipment or railway containers have to be stacked in the yard before scanning, at least two additional moves for an RTG (up to 6 extra moves incl. necessary shuffle moves) plus one extra move with a tractor/trailer unit apply.

The main difference to an RTG-operated system is that no labour costs apply for the yard crane as this equipment is automated.

Terminal operation costs induced by 100% scanning are difficult to generalise independent of the terminal operation system. Especially when the existing facilities have to be expanded in terms of land, costs cannot be determined as they may differ in terms of the availability of land that matches the requirements and the leasing conditions. Thus, the prices may also differ at different locations. Furthermore, no terminal operator will publish such sensitive information.

As a rough estimate, the pure equipment cost for one single move can be calculated, depending on the operational system, with a minimum cost of 20 Euro8 for each move. But this figure does not reflect the real cost that applies for the terminal operator, as it does not include any cost for infrastructure, cost for provision, nor the preparation of extra space. Costs that occur due to the capacity reduction of the terminal are not included. estimates a total cost of around 160-200 Euro on average for each container that has to be moved from the stack to a scanner and back to the stack, including shuffle moves, changes in the yard stacking strategy, gate despatch etc. In , the additional cost per container to be scanned was estimated at least around 110 Euro. Other ports have not been able to assess the additional cost, due to the uncertainties mentioned above.

7.5 Assessment of Additional Terminal Operation required by 100% Scanning of US-bound Containers

To assess the requirements of 100% scanning of US-bound containers on terminal operation, the following procedures are assumed:

• Containers arriving by feeder vessel, barge or railway are scanned in a central facility before being stacked in the yard and

8 This minimum cost applies for one kind of handling equipment for each container handling (shuffle move, transport

between two destinations including vertical lift(s) and horizontal transport. If a container that is already stored in the container yard of an RTG terminal has to be scanned, at least 3 moves apply: One move (or more, if shuffle moves are necessary to get access to the container needed) for the RTG that picks the container from the yard and loads it on a trailer, one move for the tractor/trailer unit that transports the container from the storage area to the scanner and back to the yard and one move again for the RTG that unloads the container from the trailer and stores it in the yard.


• Containers arriving by truck are scanned at the gate. There are also developments to scan trains by portal scanners. These possibilities are not taken into consideration, as in most ports considerable redesign of the railway facilities will be necessary. This would be very expensive and possibly not feasible.

The minority of the transhipment containers bound for the USA, which are not already booked to the final destination, but only to the transhipment hub, have to be identified in any case, whether scanning is required or not.

7.5.1 Additional Equipment for Terminal Operation

The estimates of the necessary terminal operation equipment required for 100% container scanning are based on the container flows in the three terminal operation systems. The estimates of the additional equipment are calculated for each of the five port types described in chapter 5.2. The performance levels heavily depend on local situations and therefore differ from port to port. In order to get an impression concerning the additional equipment required, the calculation uses average performance characteristics. It has been assumed that a tractor/trailer unit performs 12.000 moves per year, a straddle Carrier 50.000 moves per year and a RMG 70.000 moves per year.

The turnover, in TEU or container per year, the number of US-bound TEU, or container per year and their respective distribution on the incoming transport mode (truck, railway, barge and feeder vessel) is determined for the five port types defined in chapter 5.2. This forms the basis to estimate the additional equipment capacity required for 100% scanning of US-bound container. In addition, a seasonal peak of 30% of the turnover has been taken into account when determining the required capacity of the equipment. According to the performance capacities mentioned above, the following additional equipment will be needed for 100% scanning. 100% radiation detection requires no additional operation.


Table 7-1: Estimated Terminal Operation Equipment per Port Type required by 100% Scanning of US-bound Containers according to Handling System

Low-tranship-ment port

Transhipment port

Mediterranean port

Northwest European port

North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857

US-bound TEU p.a. TEU 60000 75000 100000 500000 750000Total 40,000 50,000 66,667 333,333 500,000Road 20,000 1,500 43,333 176,667 265,000Rail 16,800 1,000 4,000 40,000 85,000

Transhipment 3,200 47,500 19,333 116,667 150,000

Straddle Carrier 1 1 2 5 7Trailer/Tractor 3 6 3 17 26

RTG 1 1 1 4 5Trailer/Tractor 3 6 3 17 26


* container equals TEU/1.5

Port type

Handling System

Handling System

Handling System

RTG

ASC/TTU

Annual Throughput

US-bound containers p.a.*

Straddle Carrier

additional Operation Equipment per port

additional Operation Equipmentper port

additional Operation Equipment per port

7.5.2 Additional Human Resources for Terminal Operation

Human resources from the side of terminal operation have to be provided for movement of containers as a result of the 100% scanning of US-bound containers. Currently very few containers are scanned in the ports that have been visited by the Consultants. Scanner operation is usually performed by customs mostly for import containers, for export containers partly with assistance of US officials. Additional human resources of the terminal operator depend on the utilisation of the terminal and its equipment, on handling volumes, peak loads etc. As a guideline the following figures may serve.

Table 7-2: Human Resources per Unit of Different Handling Systems

Handling System Annual Moves per Machine Staff for a 3-shift System per Unit

Trailer Tractor Unit 12,000 4 Tractor Drivers

Straddle Carrier 50,000 4 Straddle Carrier Drivers

RTG 70,000 4 RTG drivers,12 Tractor Drivers

ASC 100,000 12 Tractor Drivers Source: HPC, May 2009

The human resources required for 100% scanning of US-bound containers are presented in the following table. In addition to the personnel involved in terminal operation, 30% extra employees have been added to take into account administrative aspects, sickness leave and vacation.


Table 7-3: Estimated Human Resources for Terminal Operation by Port Type required by 100% Scanning of US-bound Containers


Transhipment port

Mediterranean port

Northwest European port North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3,200 47,500 19,333 116,667 150,000Handling System


Administration** 5 8 6 26 40Total 21 36 26 114 172

Handling SystemRTG 4 4 4 16 20

Trailer/Tractor 12 24 12 68 104Administration** 5 8 5 25 37

Total 21 36 21 109 161Handling System


Administration** 5 8 6 26 40Total 21 36 26 114 172

* container equals TEU/1,5, **additional personnel considering adminstration, sickness leave and vacation

Human Resources per port


RTG


ASC/TTU

Annual Throughput


Straddle Carrier

Port type

7.6 Costs of additional Terminal Operation required by 100% Scanning of US-bound Containers

Costs of additional terminal operation required for 100% scanning of US-bound containers depend on the technical container handling systems that are implemented at the terminals. Even at terminals with the same handling system, different approaches may apply for various reasons such as local regulations and restrictions, health concerns for equipment drivers that have to drive through scanning portals, IT-environment, pre-announcement of container information, etc. The cost of changes in the IT-systems, other necessary services (e.g. disconnecting and connecting reefer containers to be scanned) are different in each port.

However, to get an impression of the impact of additional terminal operations required for 100% scanning of containers, the investment costs and the operation cost per year that are necessary to perform the additional terminal operation are estimated, based on the required equipment and human resources.

7.6.1 Additional Investment in Terminal Operation Equipment

In order to perform the additional terminal operation, equipment has to be purchased. Based on information gained in the port analysis a trailer/tractor unit is assumed to cost 155,000 Euro9, a Van Carrier (VC) 780,000 Euro, a Rubber Tired Gantry Crane (RTG) 1,300,000

9 Prices include an amount for spare parts


Euro. The purchasing price of an Automated Stacking Crane (ASC) is estimated as 2,500,000 Euro.

Further investment might be necessary in the organisational software and in the reorganisation of the operational procedures. However, these investments, as well as investments into the road system are very port specific and difficult to estimate. The figures presented here are rough assumptions in order to take these investments into account.

The investment in equipment, software and reorganisation measures considered necessary to perform the terminal operation required by 100% scanning and radiation detection is presented in the following table for the five port types and terminal operation systems.

Table 7-4: Investment necessary to perform terminal operation required by 100%

scanning and radiation detection of US-bound Containers per Port Type


Transhipment port

Mediterranean port


TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000Handling System

equipment 1,245,000 1,710,000 2,025,000 6,535,000 9,490,000 software 50,000 100,000 100,000 100,000 100,000

reorganisation 50,000 100,000 100,000 100,000 200,000 Total 1,345,000 1,910,000 2,225,000 6,735,000 9,790,000

Handling Systemequipment 1,765,000 2,230,000 1,765,000 7,835,000 10,530,000 software 50,000 100,000 100,000 100,000 100,000


Handling Systemequipment 1,245,000 1,710,000 2,025,000 6,535,000 9,490,000 software 50,000 100,000 100,000 100,000 100,000


* container equals TEU/1,5

Investment cost per port in Euro

RTG

ASC/TTU



Port type

Annual Throughput


Straddle Carrier

7.6.2 Annual Costs of additional Terminal Operation necessary to scan 100% or US-bound Containers

The annual costs of additional terminal operation necessary to scan 100% of the US-bound containers take into account the depreciation of the investment for additional equipment, the maintenance of this equipment, the additional energy consumption and the cost of the additional personnel. These costs do not reflect possible productivity decreases because of traffic or space bottlenecks.

The estimation of annual terminal operation costs is based on experience or stems from the interviews with experts in the analysed ports. The annual depreciation considers the work life of the equipment: 7 years for Trailer/Tractor Units, 10 years for Van Carriers and 15 years for Rubber Tired Gantry Cranes.


Annual maintenance costs are estimated as percentage shares of the investment cost of the equipment, e.g. for Van Carriers and Trailer/Tractor units are estimated at 12% of the investment cost and for Rubber Tired Gantry Cranes, at 8%. Annual energy costs of the additional equipment range between 60.000 Euro and 85.000 Euro. The average annual costs of personnel are considered to 50.000 Euro per employee10.

The annual costs of additional terminal operation are calculated for the five port types and presented in the following table.

Table 7-5: Annual Cost of additional Terminal Operation induced by 100% Scanning

of US-bound Containers by Port Type in Euro


Transhipment port

Mediterranean port


TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000

depreciation 144,429 210,857 222,429 766,429 1,121,714 maintenance 149,400 205,200 243,000 513,171 1,138,800

energy 252,000 432,000 324,000 1,380,000 2,064,000 labour 1,040,000 1,820,000 1,300,000 5,720,000 8,580,000 Total 1,585,829 2,668,057 2,089,429 8,379,600 12,904,514

Euro per container 40 53 31 25 26






Euro per container 40 53 31 26 26* container equals TEU/1,5

annual terminal operation cost necessary to perform 100% scanningof US-bound

containers per port in Euro

RTG

ASC/TTU





Handling System

Handling System

Port type

Annual Throughput


Straddle CarrierHandling System

The additional terminal operation costs as a result of the 100% scanning request of the ports, are higher for ports with low US bound container volumes, than those of the port types with relatively high US-bound container volumes. Due to the high share of containers arriving on trucks, these costs are relatively low in the Mediterranean ports. All terminal operators indicated that they are willing to perform the additional terminal operation as long they can charge the additional costs. Ultimately, this means that the goods transported in a container to the US will be more expensive.

10 In the analysed ports annual labour cost varies between 30.000 Euro and 75.000 Euro per employee


8 Impact of 100 % Scanning and Radiation Detection on Customs Administration in the EU

The impact of 100% scanning and radiation detection of US-bound containers is estimated based on the experiences gained during the interviews in the ports, by discussions with experts in various associations and by discussions with experts in national customs authorities. Scanning equipment installations are already in operation in various ports. However, in Europe, scanning is executed mainly for imported containers. German custom authorities provided information on scanning facilities existing in Hamburg or planned in Bremerhaven. Further information has been provided by the interviews in the ports and with the other national custom authorities. Although these facilities are mainly for scanning of import containers, the specification provide some preliminary ideas.

Table 8-1: Specification on existing or planned German Facilities to scan Import Containers

Bremerhaven Waltershof

planned existing

Kind fixed with conveyor fixed Capacity in TEU per day 200 234investment* 13,000,000 24,000,000space sqm 2,000 8,500office space 50 450

preparation in minutes per container 7 5scanning in minutes per container 1 8

number of shifts 3 3number of employees 37 39 scanning and evaluation 34 30 administration 3 9Number of hours per year 72,767

* investment includes site preparation, infrastructure, building, hard and software

equipment

time requirements

staff requirements

Scanning

Further kinds of equipment are under development, as shown in section 3 of this report. The following table presents the different equipment types offered by producers.


Table 8-2: Specification of Scanning and Radiation Detection Equipment presented by Producers

drive through portals

internal with conveyor

Gantry Systems

radiation x-ray x-ray x-ray x-rayenergy in MV 2.5 - 6.0 3.0 - 9.0 4.5 - 6.0 3.0 - 6.0penetration in mm 220 - 400 350 -425 300 -400 280 - 375Capacity in trucks per hour 60 - 400 25 - 40 20 -25 20 -25investment costs in Mio. Euro 2.2 -4.5 2.2 - 4.5 1.7 - 4.0 2.5

Capacity in trucks per hourinvestment costs in Mio. Euro

Scanning

Radiation detection

Fixed systemsMobile Systens

secondary4 panel ASP

200,4 - 0,5

primarypanel installation

1200.1 - 0.4

It seems to be appropriate to combine the experience gained with the existing scanning facilities with the potential of the equipment offered in the market. Fixed scanning facilities and the primary and secondary radiation detection equipment will be taken into account to highlight the impact of the 100% scanning request. The drive through portal with a capacity of between 20 and 60 trucks per hour, depending on the volumes to be scanned, is considered as being appropriate to scan incoming trucks. All containers arriving by rail, barges or feeder vessels will be scanned by an internal scanning facility with a conveyor. This equipment is assumed to work with a capacity of 20 containers per hour (80% of capacity mentioned above).

8.1 Equipment designed for 100% scanning of US-bound Containers

The design of scanning equipment considers the container volumes and the modal split determined in the five port types. Concerning containers arriving by truck, a drive through equipment will be used. The capacity will depend on the volumes coming into the port. For port types with lower volumes, the capacity will be used of up to 60.000 trucks per year (300 days, 10 hours per day). In the ports with higher volumes, the capacity of up to 96.000 trucks per year (300days, 16 hours per day) has to be used.

The second scanning device, assigned to scan transhipment containers (arriving by rail, barge or feeder vessel) is proposed to be located at a site central to the terminals. An internal scanning facility with conveyor belt appears appropriate. The mechanical conveyor moves the container through the scanning device. This guarantees a continuous container flow and avoids any health risk for drivers or equipment operators. This device is assumed to be able to scan 120.000 containers per year (300 days, 20 hours per day). To achieve this capacity an inherent container flow is a prerequisite.


Seasonal fluctuations can disturb a continuous flow. Therefore, the capacity of all scanning facilities is designed to be at least 30% bigger than the volumes to be scanned require. Furthermore, buffer space is provided in front and behind the scanning facility. The size of the buffer space depends on the time estimated to evaluate the images. Assuming 2 minutes for scanning and 6 minutes for image inspection the buffer space should be sufficient for at least 5 trailer/tractor units. This corresponds with the data gained in the port analysis. For the five port types the following table presents the required facilities, the necessary capacity and the capacity utilisation.

Table 8-3: Scanning Equipment required by 100% Scanning of US-bound Containers by Port Types


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3,200 47,500 19,333 116,667 150,000number 1 0 1 3 4

capacity in trucks/year 60,000 0 60,000 96,000 96,000capacity utilisation in % 87% 0% 94% 80% 90%

Number of scanner 0 1 1 2 3capacity in container per year 0 96,000 60,000 120,000 120,000

capacity utilisation in % 0% 68% 51% 85% 85%

* TEU/1,5 equals container

Port type

internal scanning equipment at central site per port

Annual Throughput

US-bound containers p.a*.

drive through scanning equipment at the gate per port

Furthermore, it is assumed that primary radiation detection equipment is allocated at the gate and in combination with the central scanning unit. Secondary radiation equipment will also be located together with the central unit.

It is obvious that the request to scan 100% of the US-bound containers in European ports requires scanning equipment with high capacity, particularly in ports with high US-bound container turnover.

8.2 Human Resource Requirements for 100% Scanning and Radiation Detection of US-bound Containers

The estimation of the required personnel for the different port types and volumes is also based on the results of the discussions with customs authorities in the ports or on a national level. The assessment is based on the assumption that the customs authorities in the European ports have the responsibility to interpret scanned images and to release unsuspicious containers. In case the images are transferred to the US and the image inspection will be performed by US-authorities, the numbers of interpreters of the European customs authorities can be reduced to 1 per scanning unit.

For the smaller scanning device the personnel is assumed to be 5, 1 operator, 1 organiser of the trucks and 3 image interpreters. Concerning the scanning centre, the number of personnel required is 6, i.e. 2 technical experts as operators, one organiser of the container


flow and three image interpreters. The scanning personnel are assumed to work in two or three shifts, 6 days a week depending on the container volume. For administrative activities (considering also sickness and vacation) the number of employees is increased by 30%.11

The number of personnel for the operation of the radiation detection equipment, is estimated at 1 employee per shift and station.

The following table shows Human Resources required to perform 100% scanning and radiation detection in the five port types.

Table 8-4: Human Resource Requirements resulting from 100% Scanning and Radiation Detection of US-bound Containers


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3,200 47,500 19,333 116,667 150,000operation 4 0 4 18 24

image inspection 6 0 6 27 36administration** 3 0 3 14 18

Total 13 0 13 59 78operation 0 6 4 12 18

image inspection 0 9 6 24 36administration** 0 5 3 11 16

Total 0 20 13 47 70primary 2 2 4 10 14

secondary 2 2 2 2 2Total 4 4 6 12 16

17 24 32 117 164

* container equals TEU/1,5, **additional personnel considering adminstration, sickness leave and vacation

***no central internal scanner assigned see table 7-3, ****no drive through scanner assigned see table 7-3

Human resources per port type for drive through scanner at the gate

Human Resources per port type for central internal scanner

Human Resources per port type for radiation detection

Human Resources per port type for 100% scanning and radiation detection

Annual Throughput


Port type

The health impact of scanners operating in the ports to scan import containers is reported to be far below the limitations of the European nuclear protection. Also, the planned scanning facility in Bremerhaven is designed in a way to exclude any health risk. The experience gained in these cases has to be taken into account, when implementing new scanning facilities. Nevertheless, the personnel involved in the scanning have to be trained in nuclear protection. At present, any German personnel involved in scanning are trained 10 h per year in nuclear protection.

In addition, the image interpreters will need training. Experts involved in scanning of import containers since 2003 consider training on the job as most efficient. The period necessary to gain sufficient experience is reportedly one year.

11 Figures derived from discussions with national customs authorities


8.3 Cost of 100% Scanning and Radiation Detection of Containers bound for the US

The cost of the required investment will be assessed as well as the operation cost of the scanning facilities. All costs will be expressed in Euros and reflect actual prices. The costs indicated here, result from the interviews with port authorities, national custom authorities and producers.

8.3.1 Investment in equipment necessary for 100% Scanning and Radiation Detection of Containers bound for the US per Port type

The Investment is calculated based on the assigned equipment in the five port types considered necessary to scan 100% of the US-bound containers. The investment costs are assumed to be:

• €4.500.000 for internal scanning equipment with conveyor,

• €2,400,000 or € 3,000,000 for a drive through portal, depending on the utilisation12,

• €85,000 for primary radiation detection equipment, and

• €350,000 for secondary radiation detection equipment.

The cost of a building of one central facility is estimated to be €2,500,000. Site preparation and infrastructure works are assumed to cost €2,000,000 for the drive through portal and €3,000.000 for a central facility. Offices for the radiation detection are estimated to cost €70,000.

The investment calculated for the five port types is shown in the following table:

Table 8-5: Investment Cost for 100% Scanning and Radiation Detection of US-Bound Containers by Port Type


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000equipment 2,400,000 4,500,000 4,800,000 18,000,000 25,500,000

building 0 0 0 5,000,000 7,500,000 infrastructure 2,000,000 2,000,000 4,000,000 12,000,000 17,000,000

Total 4,400,000 6,500,000 8,800,000 35,000,000 50,000,000 primary 85,000 85,000 170,000 425,000 595,000

secondary 350,000 350,000 350,000 350,000 350,000 offices 140,000 140,000 210,000 420,000 560,000 Total 575,000 575,000 730,000 1,195,000 1,505,000


Investment cost per port type for 100% scanning of US-bound container in Euro

Investment cost per port type for 100% radiation detection of US-bound

containers in Euro

Port type

Annual Throughput


12 according to the producers prices include transmission X-ray radiation sources, high steel penetration depth and an

OCR see also chapter 3


8.3.2 Annual Operation Costs of 100% Scanning and Radiation Detection of US-bound Container by Port Type

The annual operation costs of the scanning and radiation detection facilities comprise the necessary investment in form of depreciation, repair and maintenance, energy consumption and personnel involved.

The depreciation considers the life span of the equipment, the building and the infrastructure. The life span of scanning and radiation detection equipment has been taken to be 10 years. The annual depreciation of this equipment is calculated to be 10% of the initial investment. The investment of buildings and infrastructure are calculated to be 3.33% depreciation per year.

The annual cost of repair and maintenance of the scanning and radiation detection equipment is estimated at 12.5% of the investment in this equipment. Repair and maintenance of buildings and technical infrastructure are assumed to be 5% of the investment.

Based on discussions with national customs authorities and producers, the annual costs of energy are assumed to amount to € 175,000 for the drive through portal and €670,000 for the internal scanning facility, including the conveyor belt. The annual energy costs of the radiation detection facilities are estimated to amount to some €175,000.

The annual costs of personnel differ between various countries between €30,000 and €75,000. €50,000 per year has been taken as an average cost per employee involved in scanning and radiation detection.

The estimated operation costs of 100% scanning and radiation detection of US-bound containers for the five port types are presented in the following table:

Table 8-6: Annual Scanner Operation Cost for 100% Scanning and Radiation Detection of US-bound Containers by Port Type


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000depreciation 306,667 516,667 613,333 2,366,667 3,366,667 maintenance 400,000 662,500 800,000 3,100,000 4,412,500

energy 175,000 175,000 350,000 1,865,000 2,710,000 labour 650,000 975,000 1,300,000 5,265,000 7,410,000 Total 1,531,667 2,329,167 3,063,333 12,596,667 17,899,167

Euro per container 38 47 46 38 36depreciation 354,833 564,833 672,333 2,458,167 3,479,833 maintenance 461,375 723,875 875,500 3,217,875 4,558,625

energy 550,000 550,000 900,000 2,940,000 4,135,000 labour 850,000 1,175,000 1,600,000 5,865,000 8,210,000 Total 2,216,208 3,013,708 4,047,833 14,481,042 20,383,458

Euro per container 55 60 61 43 41* TEU/1,5 equals container

Port type

Annual Throughput

annual scanner operation cost to perform 100% scanning and radiation detection of

US-bound containers per port in Euro

annual scanner operation cost to perform 100% scanning of US-bound containers

per port in Euro

US-bound containers p.a.


The annual operation cost for 100% scanning and radiation detection varies in the port types.

• Ports with low US-bound container volumes are faced with annual scanning and radiation detection costs of approximately €2.2 million and Mediterranean ports with €4.0 million (€55 and €66 per US-bound container).

• Transhipment ports have to take into account annual scanning and radiation detection costs of approximately €3.0 million (€60 Euro per US-bound container).

• Northwest European ports with relatively high US-bound container turnover have to consider annual scanning and radiation detection costs of approximately €14.5 million.

• North Sea ports with high US-bound container volumes have to bear even annual scanning and radiation detection costs of approximately €20.4 million (€43 and €41 per US-bound container).

The differences of the cost per US-bound container between the port types depend on the achieved capacity utilisation of the scanning equipment. In the case of a theoretical capacity utilisation of 100%, the differences between the port types decrease.

8.4 Overall annual Operation Costs induced by the Request of 100% Scanning and Radiation Detection of US-bound Containers per Port Type

The overall annual operation costs caused by the request of the US-legislation of 100% scanning and radiation detection of US-bound containers, are the aggregate of the annual cost of additional terminal operation and the annual cost of 100% scanning and radiation detection. The following table presents these overall costs according to port types.

Table 8-7: Overall annual Operation Costs induced by the Request of 100% Scanning and Radiation Detection of US-bound Containers per Port Type


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000

depreciation 499,262 775,690 894,762 3,224,595 4,601,548 maintenance 610,775 929,075 1,118,500 3,731,046 5,697,425

energy 802,000 982,000 1,224,000 4,320,000 6,199,000 labour 1,890,000 2,995,000 2,900,000 11,585,000 16,790,000 Total 3,802,037 5,681,765 6,137,262 22,860,642 33,287,973








Port type

Annual Throughput



overall annual operation costs required by 100% scanning and radiation detection of

US-bound containers per port type

RTG

ASC/TTU





Handling System

Handling System


The overall operation costs resulting from the request of 100% scanning and radiation detection of US-bound containers do not significantly vary between the handling systems. In all port types the costs of labour amount to approximately 50% of the overall operation cost. The overall operation costs add up to approximately

• €3.8 million in a low transhipment port, • €5.7 million in a transhipment port,

• €6.1 million in a Mediterranean port,

• €23.1 million in a Northwest European port and

• €33.3 million in a North Sea port.

Regarding overall operation costs per container, caused by the request of 100% scanning and radiation detection, low transhipment and Mediterranean ports face relatively high overall operation costs of €95 and €92 per US-bound container. The transhipment ports in the southern part of Europe have operational costs of as much as €114 per US-bound container. These overall operation costs fluctuate to around 5 % of the freight rate per container from the Mediterranean Sea to US of €2,000. However, the ports with higher volumes situated on the North Sea or the Atlantic, have overall operation costs of €67 or €69 per US-bound container lower, but still reflecting around 5% of the rate from this range to US ports of around 1,250 Euro.

8.5 Human Resources, Investment and annual overall Operation Cost Required for 100% Scanning and Radiation Detection of US-bound Containers 2012 and 2020 in European Ports

According to the forecast provided by the recovery scenario, in 2012 in the selected ports 1.97 million and in 2020 2.42 million TEU destined to the USA will be laden. The forecast concerning containers laden from Europe to the USA assumes, in the recovery scenario in 2012, 2.42 million TEU and 3.04 million TEU in the year 2020. Approximately 58% are transported via the North Sea ports Bremerhaven, Rotterdam and Antwerp.

Human Resources 100% scanning and radiation detection of US-bound containers requires considerable human resources particularly in ports with high US-bound container turnover. According to discussions with national customs authorities approximately 12% of the required personnel should possess high, approximately 65% middle customs education and approximately 23% should be skilled in technical aspects (middle or high education).

Based on the forecasted volumes of containers laden in European ports and destined to the USA in 2012 and 2020, approximate human resource requirements in European ports can be assessed. The following table indicates the human resource requirements induced by the request of 100% scanning and radiation detection in the years 2012 and 2020.


Table 8-8: Human Resource Requirements induced by the Request of 100% Scanning and Radiation Detection in 2012 and 2020

2012 2020

890 1140

860 1080

1750 2220

Human resources required for 100% scanning and radiation detection in European ports

Human resources for additional terminal operation because of 100% scanning an radiation detection in European ports

Overall human resources required by 100% scanning and radiation detection

The additional personnel for scanning and radiation detection cannot be extracted from the staff of the customs authorities, as this will affect supply chain security in Europe. Additional personnel have to be recruited. However, experienced personnel will be difficult to find. Intensive and long lasting training will be unavoidable.

Investment The investment necessary to perform 100% scanning and radiation detection in European ports assessed for the container volumes forecasted for 2012 and 2020, is presented in the following table for scanning, radiation detection and additional terminal operation.

Table 8-9: Investment necessary to perform 100% Scanning and Radiation Detection in European Ports for Container Volumes forecasted for 2012 and 2020

2012 2020

€ 12,818,000 € 16,809,000

€ 262,943,000 € 334,900,000

€ 62,638,000 € 79,937,000

€ 338,399,000 € 431,646,000

Investment cost in European ports for 100% radiation detection of US-bound containers in Euro

Investment cost in European ports for 100% scanning of US-bound container in Euro

Investment cost in European ports for additional terminal operation because of 100% scanning and radiation detection in Euro

Overall investment in European ports because of 100% scanning and radiation detection in Euro

Annual overall operation cost The annual overall operation costs to perform 100% scanning and radiation detection are composed of annual costs of scanning and radiation detection and the cost of additional terminal operation. The following table presents the annual overall operation cost to perform 100% scanning and radiation detection in European ports.


Table8-10: Annual overall Operation Cost to perform 100% Scanning and Radiation Detection in European Ports in 2012 and 2020

2012 2020

€112,062,000 € 143,203,000

€ 64,452,000 € 81,672,000

€176,513,000 € 224,875,000

Annual cost of additional terminal operation in European ports because of 100% scanning and radiation detection

Overall annual operation cost in European ports because of 100% scanning and radiation detection in Euro

Annual operation cost in European ports for 100% scanning and radiation detection

According to the interviews, neither terminal operator nor customs authorities are ready to bear these costs induced by the US request to scan 100% of the containers laden to US-ports. Because of the request it is possible that the price of goods sent to US from Europe or via Europe will increase.


9 Comparison of 100% Radiation Detection and 100% Scanning with Risk Management Approach

9.1 Risk Management with Inspection/Scanning of High Risk Containers

The existing security management in the EU is based on a risk assessment based approach13. This is the preferred method among all EU countries. This approach is also a principle that underpins two major WCO initiatives, the (SAFE) Framework and the Revised Kyoto Convention14

Risk assessment is based on a matrix of information as a documentary analysis, which includes as its integral part, selectivity, profiling and targeting for assessing risks and addressing them appropriately. Selection criteria includes the history of the importer, exporter, carrier, agent, etc., the origin and routing of the goods, and prohibitions or restrictions.15 Risk profiling is the means by which Customs puts risk management into practice. The profiles, along with other information and intelligence, will provide a basis to isolate high risk containers.

For high risk containers, further checks are made by customs. These may take the form of additional enquiries, making intelligence investigations, carrying out radiation screening and/or X-ray scanning and even a full physical examination. The question may then be asked, how effective the current approach provides security and what does this approach cost?

The risk management approach has so far been proven successful concerning import of containers. In the opinion of the majority of the experts interviewed there is no evidence that 100% scanning will provide higher security than a risk management approach. On the contrary, experts often indicate that, in combination with electronic seals, risk management would be more effective.

9.2 Effectiveness of the 100% Scanning and Radiation Detection compared to Risk Management Approach

The blanket approach of 100% scanning and radiation detection is in stark contrast to the risk targeted controls like those carried out under the CSI. It is difficult to demonstrate that

13 see chapter 2 14 IINTERERNATIONAL CONVENTION ON THE SIMPLIFICATION AND HARMONIZATION OF CUSTOMS

PROCEDURES (as amended) 15 Further examples can be found in the WCO Manual on Risk Assessment, Profiling and Targeting as well as in the WCO

Handbook on Container Control. Risk indicators are specified selectivity criteria such as: specific commodity code, country of origin, country whence consigned, licensing indicator, value, trader, level of compliance, type of means of transport.


100% scanning would be more effective in detecting a weapon of mass destruction. Certainly it is possible that such a weapon could pass undetected through a scan, but it is not possible to assign a probability to such an event, or it could bypass scanners or go through trade flows not covered by US legislation. There would be a possible deterrent effect, but the evidence, such as it is, from the current risk based approach demonstrates that the risk is anyway low. As a deterrent, therefore, 100% scanning and radiation detection would not contribute very much.

What can be said is that the opinion was widely voiced e.g. by the national port authorities and national custom authorities in Europe that 100% scanning and radiation detection would not contribute significantly to an increase in security. 100% scanning is rigid and unlikely to improve security compared to the risk management approach, which is flexible. 100% scanning might even create a false sense of security and undermine security by diverting scarce resources from other essential measures. 100% scanning will divert EU resources from EU’s security concerns and therefore not improve the overall security situation.

Furthermore, 100% scanning and radiation detection has a high potential to disrupt trade and transport unnecessarily, within the EU and worldwide, at high cost as presented in the previous chapters. Moreover, 100% scanning and radiation detection has the potential to induce an important reorientation of transport flows worldwide and in the EU and would risk undermining the European Union's port policy.

The effectiveness of a risk management approach cannot really be quantified because if nothing sinister was found it does not necessarily mean that something sinister did not slip through. Nevertheless, the risk management approach is applied to all kinds of goods and not only to containers and therefore provides a more general degree of supply chain security. However, at present, the risk management approach is used for import and export containers. Within the frame of the European Customs Security Amendments security pre-arrival/departure declarations will be voluntary option for traders from July 1, 2009 and a compulsory requirement as of January 1, 2011. This will contribute to improving the effectiveness of the risk assessment. Further supply chain security will be achieved by the AEO concept.

100% scanning and radiation detection and a risk management approach with 3% scanning and 100% radiation detection effectively represent alternative approaches, rather than being complementary. 100% scanning and radiation detection certainly needs supplementary operation costs and Human Resources compared to a risk management approach for US-bound containers.

9.3 Cost of Risk Management Approach

In , 8 customs authority employees perform the risk assessment of all import containers as a prerequisite to the supply chain security in Europe and in order to detect tax


and customs irregularities. According to this experience, it is assumed that a team of 8 experts supported by appropriate hardware and software are able to perform the risk assessment and to create risk profiles of all US-bound containers. The assumptions for the assessment of the annual cost of a risk management approach are:

• In port types with low or moderate US-bound container volumes, 4 experts would be required and in ports with high US-bound container volumes, 8 experts with a salary of € 50,000, would be required to perform the risk assessment according to WCO standards (1 shift 6 days a week).

• AEO and C-TPAT certifications will be promoted

• Approximately 3 % of the US-bound containers are detected as risk containers and are assigned to be scanned. Radio detection is performed for all US-bound containers.

European customs are authorised to provide the container clearance and to inspect risk container. Assuming similar cost structures and port types as in chapters 6 and 7 the following costs are estimated for this approach:

Table 9-1: Annual cost of Additional Terminal Operation of US-bound Container (3% Risk Container Scanning and 100% Radiation Detection) per Port Type


Transhipment port

Mediterranean port


TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857

US-bound TEU p.a. TEU 60000 75000 100000 500000 750000Total 1,200 1,500 2,000 10,000 15,000Road 600 45 1,300 5,300 7,950Rail 504 30 120 1,200 2,550

Transhipment 96 1425 580 3500 4500

depreciation 50,071 50,071 50,071 50,071 61,143 maintenance 56,100 56,100 56,100 56,100 65,400

energy 66,000 66,000 66,000 66,000 96,000 labour 250,000 250,000 250,000 250,000 400,000 Total 422,171 422,171 422,171 422,171 622,543








annual terminal operation cost necessary to perform scanning of 3% US-bound


RTG

ASC/TTU





Handling System

Handling System

Port type

Annual Throughput

3% US-bound containers p.a.*



Table 9-2: Overall annual Operation Cost of Risk Management, Scanning of Risk-Container and Radiation Detection of US-bound Containers per Port Type (3% Risk Container Scanning and 100% Radiation Detection)


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000


energy 528,500 449,750 449,750 449,750 479,750 labour 800,000 800,000 800,000 1,000,000 1,150,000 Total 2,160,880 2,082,130 2,082,130 2,282,130 2,482,501








Port type

Annual Throughput



overall annual operation costs of risk management with 3% scanning and 100%

radiation detection of US-bound containers per port type

RTG

ASC/TTU





Handling System

Handling System

9.4 Comparison of overall annual Operation Cost of 100% Scanning and Radiation Detection of US-bound Container with overall annual Cost of Risk Assessment of US-bound Container (3% scanning and 100% Radiation Detection

The investment for terminal operation equipment and scanning devices is considerably higher in the case of 100% scanning and radiation detection of US-bound containers than the investments necessary for the risk management. Also, the cost of terminal operations and human resources are significant higher.

The comparison of the overall annual operation costs for 100% scanning and radiation detection of US-bound containers with those induced by a risk management approach with 3% scanning of US-bound containers and 100% radiation detection displays that the request of the US-legislation is significantly more expensive. The highest supplementary overall annual operation costs of 100% scanning and radiation detection appear in transhipment ports, followed by Low-transhipment ports and Mediterranean ports. Also, in the port types with high US-bound container turnover, the supplementary overall annual cost, induced by the request of the US-legislation, are considerably higher than those for the risk management approach with 3% scanning and 100% radiation detection. The following table presents the supplementary, overall annual operation costs for 100% scanning and radiation detection


compared to a risk management approach with 3% scanning and 100% radiation detection, for the different port types and handling systems.

Table 9-3: Supplementary overall annual Operation Costs of 100% Scanning and Radiation Detection compared to a Risk Management Approach with 3% Scanning and 100% Radiation Detection of US-bound Containers per Port Type


Transhipment port

Mediterranean port


TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3200 47500 19333 116667 150000

depreciation 134,357 410,786 529,857 2,859,690 4,225,571 maintenance 143,300 461,600 651,025 3,263,571 5,220,650









additional operation costs of 100% scanning of US-bound containers to risk

mangement approach with 3% scanning of US-bound containers per port type

RTG

ASC/TTU





Handling System

Handling System

Port type

Annual Throughput



Following the opinions collected in the port interviews, the discussions with national customs authorities and international organisations that 100% scanning and radiation detection does not provide more security than a risk management approach, these figures indicate that the latter also provides a measure of security and is considered to be cost effective.

9.5 Comparison of Human Resources Requirements for 100% Scanning and Radiation Detection with Risk Management including 3% Scanning and 100% Radiation Detection of US-bound Containers

100% scanning and radiation detection requires significantly more personnel not only for terminal operation but also for the inspection activities than the risk management approach. human resources necessary to perform a risk management approach with 3% scanning and 100% radiation detection of US-bound container are presented in the following table.


Table 9-4: Human Resources necessary to perform a Risk Management Approach with 3% Scanning and 100% Radiation Detection of US-bound Container


Transhipment port

Mediterranean port


TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857

US-bound TEU p.a. TEU 60000 75000 100000 500000 750000Total 1,200 1,500 2,000 10,000 15,000Road 600 45 1,300 5,300 7,950Rail 504 30 120 1,200 2,550

Transhipment 96 1,425 580 3,500 4,500primary 2 2 4 10 14

secondary 2 2 2 2 2Total 4 4 6 12 16

operation 1 1 1 1 1image inspection 2 2 2 2 2

administration/risk assessment 4 4 4 8 8Total 7 7 7 11 11

11 11 13 23 27


Human Resources for risk management, 3%scanning and radiatin detection of US-bound container per port type

Human resources per port type for radiation detection of US-bound

container

Human Resources per port type for risk management and scanning (3%)

of US-Bound containerr

Annual Throughput

3% US-bound containers p.a*.

Port type

A risk management approach with 3% scanning and 100% radiation detection does not require high equipment utilisation. Whereas the 100% scanning requires that the equipment will be utilised 24 hours a day, in three shifts, the risk management approach involves the experts only during common working hours.

Furthermore 100% scanning will generate a lot more false positives reducing the productivity of the terminal and increasing the average dwell time of containers in the terminal.

The personnel involved in the 100% scanning and radiation detection compared to fewer people in a risk management approach, clearly shows the disadvantages and challenges that the European customs authorities will be confronted with.

Table 9-5: Supplementary Human Resources of 100% Scanning and Radiation

Detection compared to a Risk Management Approach with 3% Scanning and 100% Radiation Detection of US-bound Containers per Port Type


Transhipment port

Mediterranean port


North Sea port

TEU 2,500,000 4,411,765 3,333,333 7,142,857 10,714,286Cont. 1,666,667 2,941,176 2,222,222 4,761,905 7,142,857


Transhipment 3,200 47,500 19,333 116,667 150,000primary radiation detection 0 0 0 0 0

secondary radiation detection 0 0 0 0 0Total radiation detection 0 0 0 0 0

operation of scanner 3 5 7 29 41image inspection 4 7 10 49 70

administration 0 1 2 16 26Total 7 13 19 94 137

7 13 19 94 137


Annual Throughput

3% US-bound containers p.a*.

Port type

supplementary Human Resources per port type for 100% scanning and radiation detection compared to risk management with 3% scanning and

100% radiation detection of US-bound container

Total supplementary Human Resources for 100% scanning and radiation detection of US-bound container per port type compared to risk management


9.6 Non-linearities

The scanning equipment is designed in a way to achieve a high capacity utilization. Consequently, the infrastructure necessary to operate the equipment is also designed for this capacity utilization. As indicated in the previous chapters, the cost estimation has been based on the capacity utilisation of the scanning equipment, greater than 80 %. However, the volume of containers to be scanned in ports with low US-bound container turnover is not sufficient to achieve a sufficient capacity utilisation. As a consequence the scanning costs per container are higher than in those ports where the capacity utilisation of the scanning equipment achieved is greater than 80 %. In ports where the US-bound container volumes require the assignment of several items of scanning equipment, only the last equipment might not reach a suitable capacity utilisation. Therefore, in these ports, the correlation between volumes to be scanned versus the scanning costs per container (unit costs) is less stringent than in ports where volumes require one scanning facility only.

The non-linearity becomes more visible with the correlation of average volumes of laden containers to USA with the costs per scanned container.

Figure 9-1 Overall annual Operation Costs per Container in European Port Groups because of 100% Scanning and Radiation Detection against the Average US-bound Port Turnover per Port Group

0

25

50

75

100

125

150

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

cost

s p

er c

on

tain

er in

Eu

ro

annual turnover in mio. US-Bound containers per port

North Sea ports

Northwest European ports

Mediterranean ports

Transshipment ports

Low-transhipment ports

The purchase and operation of scanning equipment are significant financial investments resulting in high costs for scanning and radiation detection. Costs are particularly high in those ports where the scanning facility are necessary to fulfill the 100% scanning request, but the container volume does not permit high capacity utilization. These ports might refuse


to handle US-bound containers, because of the 100% scanning request of the US legislation, in order to avoid these investment costs. Such opinion has already been expressed during the interviews with the port authorities.

It is logical to believe that low-volume ports would not be willing to invest in scanning equipment and would redirect US-bound containers to transshipment ports instead. Such developments will concentrate US-bound shipping activities on particular ports. Ocean carriers are concerned over the potential need to re-route and re-schedule vessels in response to changes in port policies.

The non-linearity of the cost function can be shown by the correlation between the US-bound container volumes and the cost aggregate consisting of the annual cost of additional terminal operation and the cost of 100% scanning and radiation detection per container. It becomes obvious, that the cost per scanned container (unit cost) decrease the higher the capacity of the scanning facility is utilised. In case of a capacity overflow a further scanning facility has to be purchased, which will at first perform with low utilisation. The unit cost will thus increase and slow down with the rise in capacity utilization. These unit cost developments are shown for a high volume North Sea port, a transshipment port and a Mediterranean port in the following graphs.

Figure 9-2 Development of the overall annual Operation Costs per Container for 100% Scanning and Radiation Detection in a North Sea Port with RTG-System

40

70

100

0 250,000 500,000 750,000 1,000,000

cost

per

US

-Bo

un

d c

on

tain

er in

Eu

ro

US-bound container volume


Figure 9-3 Development of the overall annual Operation Costs per Container for 100% Scanning and Radiation Detection in a Transhipment Port with RTG- System

40

70

100

130

160

0 50,000 100,000 150,000

Unit cost development in Transshipment Port with RTG system co

st p

er U

S-B

ou

nd

co

nta

iner

in E

uro


Figure 9-4 Development of the overall annual Operation Costs per Container for 100% Scanning and Radiation Detection in a Mediterranean Port with Straddle Carrier System

40

70

100

130

160

0 50,000 100,000 150,000 200,000 250,000

cost

per

US

-Bo

un

d c

on

tain

er in

Eu

ro


The above graphs also demonstrate that it would be economically non-viable for ports with lower US bound volumes to invest in scanning facilities. Consequently, they will have a severe competitive disadvantage with regard to US bound containers and would have only minor chances or incentives to remain in the market for this trade.


10 Possible Alternative Strategies

A trial that was carried out in Southampton indicated that the 100% scanning of US-bound containers would be feasible. However, Southampton in some respects was not typical: the volume of containers shipped to the USA was relatively small, as was the incidence of transhipment traffic, which presents particular difficulties. There are some points that would benefit from clarification:

• The alarm rate was in the order of 1.2% of all traffic which, based on experience was in line with expectations.

• The static equipment failed on 21 occasions during the course of the trial, but it is not known which equipment failed or the nature and duration of the fault.

• The trial indicated that staff were spending most of their time processing consignments that were innocent.

There were US personnel in the port for the trial (as in other CSI ports.) However, it is doubtful if this could be replicated in ports worldwide in the 100% scanning context. Firstly, it would require substantial overseas deployment of manpower and would greatly increase costs. Secondly, even if it were possible that such deployment was possible, issues that were dealt with between UK and US personnel on an informal basis in Southampton would have to be formalised. This would require inter-governmental bilateral agreements to be entered into which would be difficult.

Trade associations, customs bodies and security equipment manufacturers say that 100% scanning and radiation detection of US-bound containers in European ports will not happen because it would be impossible to implement, in practise. Whether for political reasons, or whether the realisation of the sheer practical difficulties - or impossibilities - involved, this is the view of the majority, based on the fieldwork.

There is intense lobbying against full implementation on both sides of the Atlantic, from organisations such as the WCO and the World Shipping Council (WSC). The WSC argues against the measure from the outset and had the backing of the retail forwarding and shipping communities in the United States.

There are also the majority of the delegates of the European seaports organisation who say that the administration wants a compromise and would welcome alternative proposals as a way of getting out of full implementation. However, any alternative must be seen to deliver enhanced container security.

In this situation it is appropriate to consider alternative strategies to 100% scanning. Some possibilities, which are discussed in the following paragraphs, represent combinations of existing methods, while there are some which are fundamentally different.


10.1 Enhancement of Risk Based Approach

Current EU security measures for containers are based on risk assessment. Control is oriented in the EU countries more on the import side (i.e. national security was focused on the protection of the national border.) The current initiative of inspecting US-bound containers - referring to CSI and Megaports - shows the following: Under the 24 hour rule, certain information relating to containers (contents, shipper etc.) are provided to the US authorities. They in turn analyse the documentation and make a decision either to clear the container or raise a query. In the event of the latter decision, they refer back to the shipper and inform the national customs.

Further checks are made by customs. These may take the form of additional enquiries, making intelligence investigations, carrying out radiation screening and/or X-ray scanning and even full physical examinations. Many queries raised are successfully dealt with without screening, scanning or full physical examinations.

The current risk based approach to security is widely accepted and is considered to be effective. For the future, and as a compromise to 100%, some development of this approach is the preferred way forward.

By supplying more detailed information on the basis of the 24 hour rule, it is suggested that the results could be improved and the level of security enhanced. Certainly this approach is receiving attention (see next section.)

Related to this is the SAFE Framework promulgated by the WCO as an effective alternative approach to 100% scanning, as discussed in detail in chapter 2. It will not be easy to implement, but if internationally accepted it could be presented as an alternative to 100% scanning.


10.2 Mutual Recognition

Following on as a development of the general comments made in the previous section, one area, which is being actively worked on is that of mutual recognition. This refers to C-TPAT (Customs - Trade Partnership against Terrorism) in the USA and to AEO (Authorised Economic Operator) in Europe.

These two approaches are similar, but are not the same. They both, however, essentially evaluate and assess shippers and would grant automatic clearance and preferential treatment to approved economic operators. This would mean that their containers would be immediately cleared and would be much less likely to be subjected to scanning. Containers moved by these shippers would effectively pass through a “priority lane”.

The granting of AEO/C-TPAT status depends on the manufacturer/shipper applying for approval. Non-approved shippers would pass through a process in accordance with the current procedures. Their containers certainly would be more likely to face more rigorous checking and inspection than “priority lane” traffic.

The problem, at the moment, is that the requirements to qualify for AEO/C-TPAT are not exactly the same. They are not exactly equivalent and the philosophies differ to a certain extent, since the US C-TPAT programme focuses mainly on technical aspects like fences, locks etc. whereas the EU AEO programme also includes safety plans, assigned personal responsibilities etc.

10.3 Radiation Detection

One component of an alternative to the implementation of the Law would be the extension of 100% screening for radioactive materials, but without scanning. As already described, there is some familiarity with this procedure as it is already installed in some ports, though more for imports than for exports. It is recognised as making a positive contribution towards security. It would therefore be likely to be more readily acceptable as a measure than scanning. The costs would be less than 100% scanning and it would cause less operational disruption in the ports.

10.4 Scanning

Another possible option would be to recognise the need for scanning, but not the requirement to scan every container. The incidence of scanning could be increased, but not to 100%. The following would be possibilities

• Increase the number of containers scanned based on a risk management approach. For example, every container queried under the 24 hour rule could be scanned, or if more rigorous conditions were applied to the risk assessment, then more scans would be generated.


• A proportion of all containers could be scanned on a random basis, even if the risk assessment did not generate a query, or such scanning could be carried out prior to risk assessment and the information analysed collectively.

• Scan all containers from what are considered to be high risk countries

10.5 SMART Containers and Electronic Seals

Recent developments, which can enhance security, but are fundamentally different to the possibilities discussed above, include tracking and monitoring devices. The following are examples:

• SMART (Secure Material Accounted in Real Time) container technology, the goal of which is to enhance the automation and accuracy of visibility into containerised cargo. A single RFID (Radio Frequency Identification Tag) would be attached to the outside of the container. That tag stores a record of the container’s inventory. An RFID reader is installed within the container and is programmed to emit a read signal whenever the container is closed. All the tagged assets within the container respond to the read signal with their identification data, which the reader receives and transmits to the external tag. Thus as tagged assets are added to, or removed from the containers, the external tag’s inventory record is updated dynamically. The benefit is that, despite there being numerous tags within the container at any given time, only the single external tag need be read to obtain an accurate, up-to-date record of the inventory.

• Electronic seals: these operate in one of three states - open, closed and secured. Its current state is determined every second by sending a light pulse through a cable. Only if the seal receives this signal back at its re-connection point is it closed. Securing can only be achieved by a fixed reader or by authorised personnel. These changes of state are recorded in an internal memory. For example, if a consignment were to be opened illegitimately the seal would not be secured and this event, along with the date and time, would be discovered when the seal was next connected to a computer with a fixed reader.

One problem that was mentioned in connection with any tracking device, was the difficulty to communicate with a container if it is located deep in the vessel. Another weakness might be risks of criminal intervention since the purely physical protection of the seal is low and there might be “electronic manipulations” hiding the fact of a broken seal.

The above are fairly recent developments17 and may have potential for the future, in particular electronic seals (it was considered that SMART technology could prove to be too expensive.) However, it is not considered that they represent alternative options at this stage.

17 In the Bremen/Bremerhaven area, one of Europe's core logistics regions, internationally renowned companies -

Hellmann Worldwide Logistics, EUROGATE Container Terminal Bremerhaven and MSC Gate Bremerhaven - have


10.6 Conclusion regarding alternative options

The issue of 100% scanning certainly will not disappear completely. The status quo is not an option. There must be some developments to enhance container security. And it is universally accepted that container security is important and neither cannot - nor should not – be ignored.

It is concluded that the following possibilities should be considered:

• Development and acceptance of enhanced risk based approaches and mutual recognition of AEO and C-TPAT as discussed above. This would result in a “priority lane” through which a proportion of traffic would flow. It is difficult to estimate what the proportion would be, but the view has been expressed that it could be around 30%. Such cargo would not be exempted from scanning altogether, but the probability of such inspection would be reduced.

• Other cargo would be processed in accordance with the current procedures. Not all of these containers would be scanned, but a proportion would be selected, on the basis of risk assessment. This would have the effect of increasing the incidence of scanning, but it would not be 100%.

• If the above proves not to be possible (or to take too long) an alternative would be to increase the number of all containers scanned, either based on a risk assessment approach or by random selection.

• Expansion of radiation screening to cover all ports: this would not present the problems of 100% scanning and would fulfil one of the requirements of the HR.1 Law. It is anyway in place in some ports, though admittedly in some cases only for imports. It could also be implemented in conjunction with risk based enhancement.

• The potential for seals etc. merits further investigation.

formed a consortium under the leadership of Astrium, to implement a security service in order to appropriately meet security requirements in the global trade in goods. The security concept supports the regulations concerning the Authorised Economic Operator, AEO, as well as complete container access control through personal authorisation, which the Customs Trade Partnership against Terrorism, C-TPAT, calls for.


11 Reciprocity

While the law imposes the requirement for the 100% scanning of containers bound for the USA from ports worldwide, there is no such requirement for trade in the opposite direction, i.e. containers exported from the USA to destinations worldwide do not have to be scanned.

This therefore raises the possibility of the imposition by countries of a reciprocal requirement – and the insistence by, e.g. the EU, that 100% of containers exported from the USA bound for Europe must also be scanned.

Certainly the imposition of such a condition would pose a problem for the USA. The implementation of 100% scanning in the USA would probably be more difficult in American ports than in Europe. Not only would there be operational difficulties at least to the same extent – but probably more – than in Europe, but also there could be other aspects, such as, for example, the strong unions that could add to the difficulties. It is also likely that implementation would be more costly than in Europe.

The evidence is that the implications of a reciprocal condition have not been lost on the Americans.

It was almost the universal view of respondents – in all different types of organisation and however negative their attitude is towards 100% scanning - that it is not a policy that should be seriously entertained by the Commission. They felt that it would be a kind of “retaliation” approach – not suited to the inter-continental negotiating table.

In general, it is indicated to treasure the general antagonism of unilateral versus multilateral approaches18

Unilateral measures could conflict with the principle of “pacta sunt servanda”, according to which partner states must comply with their obligations under regional and international trade agreements. The non-reciprocity of security measures could also cause other states to introduce their own security requirements in retaliation and the proliferation of incompatible unilateral measures could represent considerable barriers to trade. Another significant disadvantage of the unilateral approach is that the implementing state has no way of knowing for certain if its measures are effective in preventing the perceived threat of terrorism.

Multilateral measures – on the other hand - are developed by international organisations, which view security as a global public good and aim to improve the security of all their members. Their main aim is to create uniform, albeit voluntary standards, which can be adopted by all members taking account of their economic development. International organisations also formulate measures within the framework of the treaty obligations, binding their members as well as international legal principles. As a result, multilateral security

18 Refer to “Christopher Dallimore: Securing the Supply Chain: Does the Container Security Initiative Comply with WTO

Law? - Inaugural-Dissertation, Münster 2008” pp. 13 - 23


measures can (with great likelihood), lead to a more consistent security regime than a patchwork of bilateral agreements with selected trading partners used to implement unilateral security measures (such as the CSI or 100% scanning). Therefore, the EU security approach is based on the WCO SAFE Framework of Standards, which is ratified and followed by a huge majority of states.

Finally, a situation should be envisaged where the 100% scanning approach becomes international rule. That means, de facto, all national borders – as far as container transport is considered – are exported to the country from where the box is shipped. But there remains a crucial question: Would the importing country reduce its own security checks because the exporting country is scanning the respective container prior to arrival on its own territory? Most likely it depends - if risk assessment tools are used - on the reputation of the exporting country with respect to the applied risk criteria. Consequently, only a “very good” AAA-security rating might make an additional scanning dispensable for the importing country. Thus, consequently a security regime based on “100% reciprocity” will lead to useless double scanning. The magnitude will depend on the confidence between the nations or trading blocks. Resources are wasted and the international trade will be more expensive, but not more secure.


12 List of Sources consulted 12.1 Personal Meetings

• APM Terminals Algeciras

• AS&E • Belgian Customs

• Bremen Port Authority

• Bremen Ports

• British Chambers of Commerce

• British Ports Association

• Canberra

• Chamber of Shipping UK

• CMA-CGM

• DG TAXUD

• Direction Regionale des Douanes du Havre

• DP World PSA HNN Antwerp

• ECT Rotterdam • European Sea Ports Organisation

• European Shippers Council

• Freight Transport Association

• German Customs Port of Hamburg

• Ghent Port Authority

• Grand Port Maritime du Havre

• HHLA Hamburg Port and Logistics Co.

• Hutchison Ports UK Felixstowe

• International Chamber of Shipping

• Italian Customs

• London Chamber of Commerce and Industry • Maersk Line

• Malta Maritime Authority

• Medcenter container Terminal Gioia Tauro

• MSC Gate Bremerhaven

• Netherlands Customs

• Nucsafe

• OOCL

• Passport Systems

• Piraeus Port Authority S.A.

• Port Authority of Valencia

• Port Autonome du Havre


• Port of Copenhagen

• Port of Cork

• Port of Liverpool

• Port of London Authority • Port of Malmo

• Port of Rotterdam

• The Shippers Voice

• UK Customs

• US Customs Border Protection, Piraeus C.T

• US Customs Border Protection, Valencia C.T 12.2 Other Contacts

• ABI Research

• American Chamber of Commerce

• Association of German Port Operators

• Association of German Seaports • Aylesbury Scientific

• Canberra HLS

• Central Association of German Seaports

• CNN

• Cotecna

• ECMT

• European Union

• Eurostat

• Federal Finance Directorate North, Hamburg

• German Chambers of Commerce and Industry (DIHK)

• German Federal Parliament (Deutscher Bundestag) • Hellenic Customs, Piraeus Container Terminal

• ICC

• IMF

• IMO

• Information Forum RFID

• International Chambers of Commerce

• International Organisation for Standardisation

• International Shipping Management and Logistics Research Centre

• Logistics Management

• Maersk Sealand (USA)

• Marine Log


• Nucsafe

• Nuctech

• OECD

• Piers • Principal Customs Office, Hamburg

• Rapiscan Systems

• Representative of German Industry and Trade

• RFID Journal

• SAIC

• Seaports Press Review

• Several Law Documentary Sources

• Siemens

• Smiths Detection Systems

• The Heritage Foundation

• UNCTAD • University of Le Havre

• University of Münster

• US Customs and Border Protection

• US Customs and Border Protection Agency

• US Department of Homeland Security

• US Embassy Berlin, Trade Relations

• US Government Accounting Office

• US National Retail Federation

• Veritainer

• WCO World Customs Organisation

• World Council of Shipping

• WSC • WTO

• ZORA Central Office for Risk Analysis

Documents

STUDY ON THE IMPACT OF SECURITY MEASURES ON THE EU …ec.europa.eu/taxation_customs/sites/taxation/files/... · EU ECONOMY AND TRADE RELATIONS Final Report Prepared by: HPC Hamburg