How 9/11 Forced Efficiency Upon Supply Chains

Supply Chain Dive – The Sept. 11 terrorist strikes were a wake-up call to the government that our borders weren’t secure. Suddenly, every plane, ship and container became suspect. Back then, vessels carrying freight would arrive at U.S. ports uninspected, and containers’ contents were often unknown to Customs and Border Protection (CBP). Then, the looming threat of terrorism forced the government to demand more information, placing the burden of security on supply chains.

Yet, the post-9/11 supply chain has arguably become much more efficient today than it was before the attack, according to Jon Slangerup, Chairman and CEO at American Global Logistics. In identifying shippers – collecting and sharing data in the process – and better understanding the cargo hand-off points, government agencies and industry stakeholders worked together to improve safety without compromising the speedy movement of product.

“What we encountered since 9/11 was an understanding of how silo-driven the management of those supply chains were, and to some extent still are,” Slangerup told Supply Chain Dive. “The various agencies involved in protecting people and assets pulled together very quickly.”

In the sixteen years since 9/11, these gained efficiencies have translated into bottom-line gains, as the cost of shipping as a percentage of a product’s total cost has fallen. Here are five of the main changes that made this happen:

Data led to supply chain efficiency

Since 9/11, there’s been a lot of attention paid to the points where cargo changes hands: from origin of manufacturing, to shipper, to marine terminal for loading, to ocean carrier, to marine terminal for offloading, to rail and trucking, to the warehouse and distribution centers.

“That’s where the risk and cost lie,” said Slangerup. Once the cargo is on a vessel, the content is already known and screened. With increased pre-shipping data requirements due to post-9/11 security concerns, the supply chain was forced to create efficiencies in the hand-offs, where money and time are often wasted, said Slangerup. As a result, the cost to move goods is a smaller proportion of the sale price to the end user than it was 10 years ago, he said.

Information and data leads to visibility and answers as to when a shipper can expect their goods to show up on the dock or warehouse. Using data, companies can see where the breakdowns occur in the supply chain, to make corrections.

The ocean shipping industry is taking more time from a visibility perspective than the air industry, because of the multi-nation integration needed to share information without giving away a competitive advantage. Like the airline industry has already done, the ocean side is now forming alliances to help integrate information and cross-sell.

“This revolution of information started with the small package industry in the early 1980s, with companies like FedEx and UPS,” Slangerup said. By the time of 9/11, those same companies already had significant information tools available to them to more easily comply with increased scrutiny. Those that didn’t have those tools in place had to scramble to get them. The air freight side was in better shape to do that than the ocean freight side, which is catching up.

 

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Feature Image Source: James Tourtellote, CBP, U.S. Dept. of Homeland Security