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Home arrow Op-eds arrow Are good business relationships good for security?
Op-eds PDF Print E-mail
Are good business relationships good for security?
Posted: 03/01/06 12:00 AM [ET]

This week, many in our nation became aware for the first time that the operations of some of our nation’s most sensitive pieces of transportation infrastructure — our ports — are frequently managed by companies that are not owned by Americans. While these arrangements appear to make good business sense, Americans are rightly worried that they might not make good security sense.

Without congressional intervention, the Peninsular and Oriental Steam Navigation Co. (P&O), which serves as a terminal operator at several major East Coast ports, will be sold from its British owners to a firm headed by the government of Dubai.

We have long known that we have not closed gaps in physical security at our ports. However, this proposed sale makes us aware that our nation’s security systems are not organized to assess or manage the unique security issues that the increasingly global nature of port management may raise.

Approximately 6,000 ships make more than 60,000 port calls to the more than 300 sea and river ports in the United States on an annual basis. While more than $20 billion in federal funding has been directed to aviation security, just over $600 million has been directed to port security since Sept. 11.

Most U.S. ports are owned by public or quasi-public authorities. These authorities frequently lease their terminal spaces to terminal operating companies. P&O is one such operating company, and a quick review of U.S. port facilities reveals that, like P&O, many terminal operating companies active in the United States are either foreign-owned or are subsidiaries of foreign conglomerates.

For example, the International Transportation Service Inc., which operates some terminals at the port of Long Beach, Calif. — ranked third among U.S. ports by the Bureau of Transportation Statistics for total value of international shipments handled — is a subsidiary of a large Japanese firm called Kawasaki Kisen Kaisha Ltd.

This firm, better known as the K Line, consists of dozens of subsidiaries involved in all aspects of maritime management, including shipping, warehousing, terminal transportation, accounting, management of ships and terminal operations. In many cases, the names of these subsidiaries would in no way reveal their business associations with a foreign-owned firm.

The Port of Long Beach also has a 25-year agreement with the Hanjin Shipping Co. of Korea under which Hanjin will pay the port a reported $1 billion to lease and operate the port’s largest container terminal. Unlike the Dubai firm seeking to buy P&O, Hanjin not only manages terminals, it also operates by its own account some 150 ships sailing into these terminals.

While these kinds of relationships have been very good for business, our government is apparently not comprehensively assessing what threats these relationships could pose to our national security.

At least four federal entities oversee some aspect of maritime transportation and trade. The U.S. Coast Guard tracks ships as they approach U.S. ports and is responsible for managing the development of security plans for individual ports. The Bureau of Customs and Border Protection reviews cargo contents. Through these processes, only about 5 percent of containers coming into the United States ever receive physical inspection.

The U.S. Maritime Administration and the Federal Maritime Commission each has responsibility for different aspects of the business transactions associated with maritime trade.

However, port authorities are not required to file copies of their terminal operating agreements with any of these entities and no federal entity comprehensively assesses these agreements for their security implications or systematically collects data on these agreements. In the absence of such assessments, we do not really know whether firms managing our ports have ownership or business relations that could create a security threat.

What is particularly disturbing is that four years after Sept. 11 we need this incident to reveal such gaps in our transportation security arrangements. Our transportation networks are truly global, and all aspects of transportation businesses have significant foreign involvement. If our government has yet to take stock of these complex business arrangements and of the threats — if any — they pose to our transportation security, what other gaps exist and what incidents more threatening than a proposed sale will reveal them?

Cummings, who represents Maryland’s 7th Congressional District, is a senior member of the House Committee on Transportation and Infrastructure.

 
 
 
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