WASHINGTON — U.S. and international ports, cargo containers and supply chains are still highly vulnerable to a terrorist attack, but the intense renewed focus on global maritime security in recent months has prompted action by the Bush administration and Congress to strengthen and improve the multilayered approach.

While it’s difficult to gauge the degree to which ports and cargo containers are safe, most experts concur that the U.S. government and private sector need to take giant steps to improve security along every point of the way to prevent a catastrophic event from shutting down global commerce. However, vast differences remain among security experts, lawmakers, administration officials and businesses over how to strengthen existing systems and where to invest in new programs.

Retailers and wholesalers imported $89.2 billion worth of apparel and textiles to the U.S. last year and are concerned about the potential for Congressional intervention in global commerce. Domestic textile executives, however, continue to press Congress to increase funding for U.S. Customs and Border Protection to step up physical inspections of containers for illegally transshipped goods, which would thereby bolster security.

Port and cargo security became a key political issue with the collapse earlier this year of a deal backed by the Bush administration that would have given a firm owned by the government of Dubai control of terminal operations at six key U.S. ports.

The House passed a port security bill in early May and a companion bill is pending in the Senate. The bipartisan bill in the House authorizes more than $5 billion for port security and requires the government to finish installing radiation screening equipment at 22 U.S. ports by the end of the 2007 fiscal year, which lawmakers maintain will cover 98 percent of incoming containers.

A Senate panel has approved a bill that would take security one step further, to foreign ports, requiring U.S.-bound cargo to be screened overseas or be turned away from U.S. ports, but does not set a deadline for enforcement. It also would create a pilot program at three foreign ports to test and establish a 100 percent integrated-screening system within one year.

But the lightening-rod issue in the Congressional debate is over a proposed measure for 100 percent inspection of all U.S.-bound cargo. Retailers and apparel wholesalers formed a coalition and so far have lobbied successfully against such a measure.

This story first appeared in the May 16, 2006 issue of WWD. Subscribe Today.

Democrats in Congress are seeking to make port security an election-year issue. They have pressed for 100 percent inspection of all containers at foreign ports, arguing the estimated 5 percent scanning rate of more than 11 million containers entering the country annually is dangerously low. Republican leaders in the House and Senate have resisted full inspection, maintaining it is not feasible because it could bring global commerce to a halt.

The heated and intense debate over such Democratic-sponsored measures to establish a time frame in which all foreign ports must screen all U.S.-bound cargo for radiation has underscored the stakes involved in balancing global commerce and national security.

“I think we are definitely better off than we were before Sept. 11, [2001],” said Jonathan Gold, who stepped down on Friday as vice president of global supply chain policy at the Retail Industry Leaders Association, of which Wal-Mart, Target, Sears and Kmart are members, to become a policy analyst in Customs’ Office of Policy & Planning to work on cargo security “Companies have invested a lot of time, money and effort into helping secure the supply chain, but there are definitely areas that need improvement.”

Recent hearings on port security on Capitol Hill illustrated how divided people are on port and cargo security.

“No matter how high we build the fences, how many Coast Guard cutters we have patrolling the harbors or how many Blackhawk helicopters circle overhead, our ports remain vulnerable when the gates are left wide open,” said James P. Hoffa, general president of the International Brotherhood of Teamsters, in testimony last month before the Senate Committee on Homeland Security & Governmental Affairs about the GreenLane Maritime Cargo Security Act pending in the Senate. “And that is the situation at U.S. ports today.”

Hoffa pointed to several areas of vulnerability in the government’s maritime security approach. He said many U.S. ports have radiation devices, but don’t check containers until they exit a port, “potentially letting a weapon of mass destruction sit in a container yard for days or weeks until it is ready to be transported to its final destination.”

“There should be a process in place to have the container screened for radiation immediately after being off-loaded from the ship before it is taken to the container yard,” Hoffa said, adding that ports also need to check empty containers.

The issue became so heated at one point that the AFL-CIO submitted a report to Congress accusing Wal-Mart Stores and RILA of investing millions of dollars to block legislative measures on port security.

Spending on port security increased 700 percent to $1.6 billion in fiscal year 2005 from $259 million in fiscal year 2001, according to a Customs fact sheet on securing U.S. ports.

Michael Jackson, deputy secretary at Homeland Security, testified at a Senate hearing last month that the department overall will spend $2.5 billion on maritime security, and if the president’s 2007 budget request is enacted, it will have spent some $9.6 billion in the area in four years.

“By deploying multiple, mutually reinforcing security layers and tools, we diminish the risk associated with failure at a single point,” Jackson said in written testimony. “Security is seldom adequately delivered via a single bullet.”

Jackson said the department’s security structure consists of four core components: vessel security, personnel security, cargo security and port facility security.

He said the department is focusing on improving two key areas in the near term in its security complex: how it targets the highest-risk containers and the tools used to inspect containers, and deployment of a transportation worker identification card for unescorted access to U.S. ports.

Retailers and wholesalers keep a close eye on two Customs programs in particular.

U.S. Customs launched several initiatives after the 2001 terrorist attacks, including a program known as the Container Security Initiative, under which U.S. agents examine high-risk cargo at foreign seaports. A total of 42 foreign ports participate and the government predicts the number will grow to 50 by the end of the year.

Customs also created a public-private program, known as the Customs Trade Partnership Against Terrorism, through which foreign cargo is screened before entering the U.S. so that shipments can be expedited. The effort involves some 5,800 companies, including most major U.S. retailers and apparel manufacturers, such as J.C. Penney, Gap, Limited and Liz Claiborne.

Gold of RILA said the areas that need improvement are the high-risk container targeting system and C-TPAT’s validation process.

Customs screens, but does not inspect, data on 100 percent of all cargo before it is loaded onto vessels destined for the U.S. All cargo identified as high risk is inspected, either at the foreign port or upon arrival into the U.S.

Companies that participate in the C-TPAT program have to apply for certification from Customs and then go through a validation, or audit, process, which means Customs agents visit the company’s locations in the U.S. and abroad to ensure the supply chain measures meet the standards.

Only 27 percent, or 1,300, of the companies that participate in the C-TPAT program have been validated; another 2,400 are going through the process. That means Customs has not approved 67 percent of all C-TPAT members that receive preferential status in the program and more timely processing of containers at U.S. ports.

Both the House and Senate bills would require third parties to help in the validation process, but retailers are opposed to auditing being outsourced to undefined entities.

Gold said Customs should maintain the validation process, but needs more funding and manpower to carry out the audits.

Erik Autor, vice president and international trade counsel at the National Retail Federation, said it is unlikely Congress will appropriate more money for Customs to hire more auditors in the C-TPAT program, but said retailers will keep pressing lawmakers to define who the third-party, nongovernmental validators will be and who will pay for them.

“There has been a lot of politicking and demagoguing on the port security issue,” said Autor. “Ports are more secure than they were five years ago, but, that being said, it is an incomplete process and a lot still needs to be addressed.”