Most Recent Articles In Fashion Features
Latest Fashion Features Articles
- H&M Conscious Foundation Hands Out Awards
- Copenhagen Fashion Week: Five Designers to Watch
- Marques’ Almeida Set to Launch E-commerce Web Site
More Articles By
WASHINGTON — Apparel importers, regularly stressed about the timing of deliveries, are anxious about a House vote set for today on a bill that would require 100 percent screening of all cargo containers at foreign ports.
Some executives said the measure — should it be approved by the House and the Senate — may force them to shift their sourcing strategies and add to their costs if major delays develop at ports. Others, however, were more sanguine, saying that they would evolve to meet the new requirements and that beefed-up security was necessary.
This story first appeared in the January 9, 2007 issue of WWD. Subscribe Today.
“I think it will be an extraordinary challenge to adapt not only for the industry but also for foreign ports and governments,” said Allen Thompson, vice president of supply chain security for the Retail Industry Leaders Association, which counts giants Wal-Mart and Target as members. “This is something massive in terms of operational requirements.”
The new House Speaker, Nancy Pelosi (D., Calif.), has made passage of the initiative part of her first “100 hours” agenda. The measure, part of a broad bill implementing recommendations of the 9/11 commission, would mandate a phased-in application of technology to monitor for radiation and weapons at large foreign ports within three years and smaller foreign ports within five years.
However, the clock on the three- and five-year phase-ins would not start until a pilot project testing technology at three foreign ports — a requirement incorporated in a port and cargo security bill passed last year — was completed. It would also require containers to be sealed, “as the technology becomes available,” after they have been screened with a device that would sound an alarm if it were tampered with and notify U.S. officials.
Democrats failed in their efforts last year to pass a 100 percent screening measure in a bill that Congress passed and President Bush signed into law in the fall. They argued that the estimated 5 percent scanning rate of more than 12 million containers entering the country annually was dangerously low. Republicans resisted full inspection at foreign ports, saying it wasn’t practical.
The latest bill is expected to pass the House, but faces a tougher battle in the Senate, where Democrats maintain a razor-thin 51-49 majority, industry experts said.
Seven hundred foreign ports ship goods to the U.S., industry officials said, and the business community is concerned about the ramifications of provisions in the proposed bill. The measure is intended to step up the U.S. fight against terrorism.
Another initiative being rolled out by the Department of Homeland Security that could slow down port traffic requires to have background and immigration checks on more than 750,000 U.S. port workers as part of an antiterrorist program. Once they are cleared, port workers would be required to carry a tamper-proof identification card.
Retailers and apparel vendors imported $89.2 billion worth of clothing and textiles last year; even the slightest delay in clearing Customs in a foreign or U.S. port could interrupt their entire supply chains.
Some executives said it would be difficult to adjust, although others, who had sought to strengthen supply chains and partner with the government in security programs, weren’t troubled.
Mark Jaeger, senior vice president and general counsel at Jockey International, said the company was concerned about the 100 percent screening mandate and the impact on the global flow of containers.
“We think the risk-based system [currently employed by Homeland Security] is more sensible, but we understand the concern over global security issues,” Jaeger said. “The obvious questions of implementation, the time frame and the costs need to be addressed carefully.”
Jaeger said there was always a concern for “disruption or shocks to the extended supply chain.” He pointed to port strikes, weather delays and peak shipping seasons as factors that continually have to be monitored.
“[The proposal] would add another risk to your time schedules and deliveries,” he said. “We will have to have a comfort level that the port can handle testing all of their containers and still meet our delivery schedules.”
Commenting on background checks for port workers, Jaeger said, “In today’s environment, there is a clear need to have increased security at our ports. On the other hand, you have to look at the implications on commercial activity. We need to find a reasonable balance.”
Tom Haugen, president of sourcing firm Li & Fung USA, said the three- and five-year timetable seemed “reasonable” if ports received sufficient equipment.
“But knowing the feds, I expect they won’t, which could build in a day or two of delay at ports,” Haugen said. “It’s not a big deal for us. We just have to monitor ports and see how quickly they implement it.”
He said it could create issues in three or four years, but “most of us are worried about getting through this year without worrying about next year.”
Another apparel executive, who asked not to be identified, said retailers and importers were already taking steps to help secure the supply chain.
“We do everything possible to be compliant and safe, and even if you take out the nuclear or terrorist threat, we don’t want our employees opening up containers that have something bad in them,” the executive said. “Our dresses aren’t any good if they have anthrax powder in them.”
Thompson of RILA said the proposed screening measure raised several concerns, including whether foreign ports would have adequate staff to handle radiation portal monitors and gamma x-ray machines; lack of available technology; the potential elimination of risk-based analysis the Department of Homeland Security currently employs to scan some 5 percent of all cargo containers at foreign ports; the potential refusal of foreign governments to comply; the implications for importers and shippers, and similar demands made of U.S. exporters shipping cargo overseas.
“Let’s not put a mandate out there before it is proven whether it will work or not and whether foreign ports will agree to do it and have the adequate staff to do it,” Thompson said.
Erik Autor, vice president and international trade counsel for the National Retail Federation, said the implications of the bill appear “fairly innocuous” although it has raised concerns about the costs and lack of available technology associated with complying with using “smart” seals to secure containers.
He said one of the biggest concerns retailers have with the bill is the cost associated with the mandate of container seals that can send a signal to U.S. officials when there has been a breach.
“I think that as a general matter, retailers understand they have to pay for the cost of security,” said Autor. “But the market needs to develop the technology first.
Autor also insisted the cost associated with the container seals could be prohibitive.
“People like to say this will just be pennies per garment, but the fact is there are 12 million containers that come into the U.S. a year and when you multiply that against the cost of a seal, that is not an insubstantial amount of money and somebody will have to pay for it,” Autor said. “The ability of retailers to raise prices to offset the costs is limited and that new cost will go to the bottom line.”