Presentation at the IIIrd Hemispheric Conference on port security - Organization of American States OAS/CIP - April 2008

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IIIrd Hemispheric Conference on port
security OAS/CIP
Port Security and the World Bank
Michel Luc Donner
Port and Maritime Transport Specialist
The World Bank

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Contents
 ISPS cost of compliance report (in Developing
Countries)
 Supply Chain Security (SCS)

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 http://http://worldbank.orgworldbank.org/ports/ports
 http://http://www.worldbank.orgwww.worldbank.org/transport/transport

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

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Why ?
 Requests by Country-Clients : concerns about financing and
consequences of non-compliance
 Not a compliance assessment
 Centered on Developing Countries

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Methodology
 12 selected ports
 on-site missions

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12 selected ports
Africa
Black SeaBaltic
Latin America
Caribbean

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Analysis per Region
 12 selected ports:
o 3 in West Africa
o 5 in Baltic and Black Sea
o 4 in Latin America & Caribbean

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4 ports in Latin America & Caribbean
 Heavy upfront investments
 Annual Running Costs
 Actual security costs per TEU or TON

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

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Annual Running Costs
port L1 L2 L3 L4
Annual Running
Costs
1.3 1.8 2.6 3.3
( x usd 1mio )

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

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Global Analysis
 Heavy upfront investments
 Actual security costs per category

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

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Actual security costs per category
Region/po
rt cost/TEU cost/Ton /Passenger
A1 1.06 0.04
A2 1.82 0.05
A3 2.59 0.04
B1 4.2 0.17
B2 0.4 0.50
B3 10.56 0.42
B4 14.33 0.03
B5 3.98 0.04
L1 2.31 0.023 0.69
L2 3.68 0.48 0.86
L3 4.59 0.46
L4 9.91 0.16
minimum 0.4 0.03
maximum 14.33 0.50
average 4.95 0.22

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Security Cost per TEU
0
2
4
6
8
10
12
14
16
CostperTEU(US$)
A1
A2
A3
B
1
B
2
B
3
B
4
B
5
L1
L2
L3
L4
Port
Security Cost per TEU

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Security costs per ton of cargo
0
0.1
0.2
0.3
0.4
0.5
Costpertonof
cargo(US$)
A1
A2
A3
B
2
B
2
B
3
B
4
B
5
L1
L2
L3
L4
Port
Security costs per ton of cargo

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Conclusions and remarks
 Range is quite wide
 Orders of magnitude, not rocket science
 Averages not as high as predicted
 Uneven levels of security achieved
 Contributing factors
 Security fee
 Collateral benefits

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

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

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Comparison with the UNCTAD Report
 Unctad : 55 questionnaires / WB : 12 on-site
 Unctad : majority in developed countries / WB : all
developing countries
 Unctad : small and large ports / WB : majority of smaller
ports

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

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Supply Chain Security (SCS)
 Background and genesis
 Main components, initiatives and stakeholders
 SCS Guide (project)

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

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

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Main initiatives
 24-hours manifest
 C-TPAT
 CSI
 ISO 28.000(1))
 ATDIATDI
 10+210+2
 100% scanning (2012)100% scanning (2012)
 AEOAEO
 Multilateral, bilateral, unilateralMultilateral, bilateral, unilateral

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

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

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

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SCS Guide (project) (II)
 Outline of container integrity solutionsOutline of container integrity solutions
including High Security Seals and RFID seals,including High Security Seals and RFID seals,
and their state of standardization andand their state of standardization and
affordability in Developing Countriesaffordability in Developing Countries
 Outline of Advanced Inspection TechnologyOutline of Advanced Inspection Technology
including radiation detection and high speedincluding radiation detection and high speed
scanning; relevance of AIT for Developingscanning; relevance of AIT for Developing
CountriesCountries
 Users check-listsUsers check-lists

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ConclusionConclusion
 ““A balance must be struck between ensuringA balance must be struck between ensuring
security and facilitating trade, if we are tosecurity and facilitating trade, if we are to
preserve the efficiency of shipping and cargopreserve the efficiency of shipping and cargo
operations and allow global trade to flourishoperations and allow global trade to flourish””
(…)(…)“In the ongoing Western-driven development of“In the ongoing Western-driven development of
a global framework of rules and standardsa global framework of rules and standards
governing international shipping”governing international shipping”(…)(…)
 To ensure that the measures introduced areTo ensure that the measures introduced are
sensible and pragmatic, a multilateralsensible and pragmatic, a multilateral
approach is more likely to produce pragmaticapproach is more likely to produce pragmatic
solutions than uncoordinated unilateralsolutions than uncoordinated unilateral
initiatives”initiatives”

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ConclusionConclusion
To ensure that the measures introducedTo ensure that the measures introduced
are sensible and pragmatic, aare sensible and pragmatic, a
multilateral approach is more likely tomultilateral approach is more likely to
produce pragmatic solutions thanproduce pragmatic solutions than
uncoordinated unilateral initiatives”uncoordinated unilateral initiatives”
OPENING ADDRESS BYOPENING ADDRESS BY MRMR LEE KUANLEE KUAN
YEW,MINISTER MENTORYEW,MINISTER MENTOR, AT THE INAUGURAL, AT THE INAUGURAL
SINGAPORESINGAPORE MARITIME LECTURE, 25 SEPTEMBERMARITIME LECTURE, 25 SEPTEMBER
20072007

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And, to be truly global, Global TradeAnd, to be truly global, Global Trade
must take on board the Developingmust take on board the Developing
Countries.Countries.