Interest groups note caution about EC’s supply chain security proposal
European shipper, logistics and port groups have welcomed the European Commission’s proposal for a harmonized security legislation to protect Europe’s supply chain from possible terrorist attacks, but also highlighted some concerns about its application.
Measures proposed by the EC in Tuesday’s “Proposal for a Regulation on Supply Chain Security” are:
* Establish a mandatory system requiring member states to create a security (“secure operator”) quality label which can be awarded to operators in the supply chain meeting European minimum security levels thus allowing mutual recognition of the label on the internal market.
* Introduce within the mandatory provisions for the member states a voluntary scheme under which operators in the supply chain increase their security performance in exchange for incentives.
* Make operators in the supply chain responsible for their security performance in European freight transport.
* Allow “secure operators” to benefit from facilitations where security controls are carried out, and to distinguish themselves positively from other competitors in the area of security, giving them a commercial and competitive advantage.
* Allow regular updating and upgrading of security requirements, including recognized international requirements and standards, through the committee procedure.
The European Shippers’ Council said it “welcomed the fact the European Commission is proposing a voluntary security scheme for road, rail and inland waterway-based movement of freight. ESC has during the consultation process called for a voluntary “known cargo” security approach, emphasizing that not only the shipper but also the transport operator has responsibility for making and maintaining the cargo’s “known” status. The commission proposal for a “security quality label” is in line with these suggestions.”
“The EC’s proposals for such a regime under the security quality label “secure operator” appears to be in line with FTA’s suggestions,” said the United Kingdom’s Freight Transport Association, which represents British shippers and logistics companies.
“ESPO welcomes the long awaited proposal,” said Brussels-based port lobby group European Sea Port Organization.
However, all three interest groups did note some concerns: “There is no escaping to enhanced security for all the parties in the supply chain and for the fact that security will add a further line in the accounts of companies involved in international trade,” said Nicolette van der Jagt, secretary general of the ESC. “The trick will be to ensure that the costs are minimized and do not impede trade or the overall economic viability of conducting international business.
“We are also concerned that a large numbers of companies and their contracted hauliers, freight forwarders and agents would apply for a special security status without very obvious and immediate cost benefits,” she said.
“A further major obstacle will be the liability of the different parties in the chain and their individual limits of liability: if this is not
addressed and clarified it will be a substantial deterrent to companies volunteering to participate in such a regime,” van der Jagt said.
“There is a general acceptance, rightly or wrongly, that security measures must inevitably increase in the area of transport and freight; measures which could lead to a more restrictive operating environment. The EC proposal allows industry to decide whether to adapt to the new security environment or risk the potential consequences, such as delay and greater probability of unannounced checks,” said Andrew Traill, the FTA’s head of rail freight, maritime and air cargo policy.
“The key benefit cited by the proposals for becoming a ‘secure operator’ is that the transport and the cargo would receive a ‘fast-track.’ But FTA believes further, more immediate and quantifiable benefits should be given to those within the security scheme, because nobody yet knows how much of a burden will be placed on non ‘secure operators’ and, for many, compliance will not come cheaply,” Traill said.
“The benefits must outweigh the costs. Yet the proposals are somewhat light on this point and benefits, it seems, will be up to the individual member states to determine, which could have the potential to create unfair commercial advantages for those whose Governments are more industry-friendly and supportive,” he said.
“The worse-case scenario, and something FTA has been trying to prevent for many years, is that security measures become mandatory, and have no relationship with risk assessment or a company’s ability to bear the costs of enhanced supply chain security. The commission makes it quite clear that failure of the market to accept the voluntary scheme could result in more stringent measures. But the commission and member states must accept a responsibility to help businesses comply, and to ensure security does not disadvantage EU companies compared to their overseas competitors,” Traill said.
“Ports could benefit from the regulation as they become confident that cargo entering their perimeter from a chain of secure operators has been adequately secured all along the chain. However, for successful implementation of the secure operator scheme, such awarded operators need to be given tangible practical advantages,” ESPO said.
“Ports should provide preferential treatment, e.g. by authorizing to use fast-track treatment. ESPO members are, however, not yet convinced about how to implement such a fast-track treatment in port operations. ESPO will closely examine the proposal and the impacts on ports and discuss the need to make possible amendments to the proposed Commission text,” ESPO said.
Implementation of the proposal has tentatively been set for 2008. The full version of the “Proposal for a Regulation on Supply Chain Security” can be viewed at: http://europa.eu.int/comm/dgs/energy_transport/security/intermodal/index_en.htm .