Securing Americas Ports The Global Supply Chain Trends, Risks and Opportunities 2d BAFT Conference f

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Securing Americas PortsThe Global Supply
ChainTrends, Risks and Opportunities2d BAFT
Conference for InternationalFinancial
Institutions

• David S. Ortiz, Ph.D.
• June 15, 2006

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Many Define the Supply Chain As a Network of
Contracts and Transactions
Transaction Layer
Retailer
NVOCC
Foreign Supplier
Consolidator
Import/Export Bank
Foreign Supplier
NVOCC Non-vessel Operating Common Carrier
Contractual Relationship
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But the System Depends on a Logistics Layer to
Transport Goods
Transaction Layer
Retailer
NVOCC
Foreign Supplier
Consolidator
Import/Export Bank
Foreign Supplier
Logistics Layer
Customer
Truck Carrier
Truck Carrier
Ocean Carrier
U.S. Port
Rail Carrier
Foreign Port
NVOCC Non-vessel Operating Common Carrier
Contractual Relationship
Physical Relationship
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An Oversight System Implements and EnforcesRules
of Behavior Within and Across Layers
Oversight Layer
Federal Trade Commission
Intl Maritime Org
World Customs Org
U.S. Coast Guard
U.S. Customs and Border Protection
Transaction Layer
Retailer
NVOCC
Foreign Supplier
Consolidator
Import/Export Bank
Foreign Supplier
Logistics Layer
Customer
Truck Carrier
Truck Carrier
Ocean Carrier
U.S. Port
Rail Carrier
Foreign Port
Oversight or Regulatory Relationship
NVOCC Non-vessel Operating Common Carrier
Contractual Relationship
Physical Relationship
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Supply Chain Security is Non-Traditional

• Traditional Security
• Conflict of nations
• Resolved through diplomacy, engagement, and
  military force

• Non-Traditional Security
• No political borders
• Does not conflict with sovereignty
• Countered rather than resolved
• Requires broad international cooperation

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Supply Chain Efficiency and Security Capabilities
Are Distinct but Interconnected

• Supply chain is designed to provide inexpensive
  transport
• Efficiency
• Shipment reliability
• Combating smuggling now includes combating
  terrorism
• Shipment transparency
• Supply chain systems exhibit network properties
• Fault tolerance
• Resilience

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RAND Volcker Initiative Workshop Brought Together
Key Leaders from Industry

• Key insights from participants
• A policy window to address freight transport
  capacity will open when consumers feel pain
• Security will be a significant motivator
• DOT National Freight Policy and North American
  Security and Prosperity Partnership are good
  starts
• No unified view of freight transport system
• In the short term, promote effective use of
  resources
• Capital for public and private infrastructure
  improvements is needed

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Trends in Freight Transportation Offer
Opportunities
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• Contact information
• David S. Ortiz, Ph.D. Henry H. Willis, Ph.D.
• dsortiz_at_rand.org hwillis_at_rand.org
• 703-413-1100x5517 412-683-2300x4650
• Reports and analysis available at
• http//www.rand.org/pubs/index.html