This chapter presents the discussion of Delphi statements which reached consensus after each round, based on the panellists’ comments. The conceptual model presented in Chapter 4 will be revised using the results of the Delphi survey . The conceptual assumptions included in the original model are reviewed in the light of the panel members’ opinions and the results of the three rounds .

Delphi Round One: Statements Reaching Consensus Level and Comments

S1.1 Maritime security has become a great concern worldwide. The increasing volume of container movements, their relatively high velocity in the international trade and their uniformity have posed formidable security challenges. As the loading and unloading points of a sea transport process, container ports are the most important nodes for maritime safety . However, only around 2–10% of containers are actually inspected. US ports normally inspect roughly 5% of the 17 million containers arriving at the border every year. A great concern about container security emerged from this low inspection rate. Container security is far more important than efficiency and profit for the port. Therefore, security should be seen as the first priority.

This statement was agreed at 58.8%. Panel members agreed that most, if not all, container shipping has posed security challenges and the security issue is important. Arguments in support stated that many large seaports are situated close to highly populated urban areas, which makes delivery of weapons of mass destruction in a shipping container a reality and risk that needs to be mitigated. Security and safety of container shipping are definitely the key drivers. Supportive comments also advised that there would always be a need for some physical and manual inspections. Nevertheless, as to the low container inspection rate, some disagreed with comments pointing out that inspecting 100% of containers at destination is not a viable solution since it is too far down the supply chain. The rate of inspection is not necessarily a measure of security . There is no evidence to show that security will increase just because the inspection rate increases. Using data, information and applying intelligence are then key tools and resources to enhance supply chain safety . The major disagree comments focused on the priorities between security and efficiency . For shippers and carriers, they considered efficiency more important than security and port efficiency still sits at the very heart of port operations.

S1.2 As the world’s largest national economy, USA plays a vital role in global trade. After 9/11 , the USA has reacted to the needs for strengthening security measures to enhance maritime transport safety . Some of the maritime security initiatives have influence on some export ports in terms of logistics efficiency and financing. Nevertheless, those export ports should be prepared to comply with the US container port security initiatives for maritime safety .

This statement was agreed at 65 %. All panel members acknowledged the importance for strengthening security measures. Comments stated that after 9/11 , tightening of security was naturally a high priority. The USA, as the world’s largest national economy, plays a vital role within the global supply chain. Export countries need to follow US rules if they trade with the USA. Security has always been a requirement, however, practised to differing levels of quality between ports.

Nevertheless, panel experts disagreed with the significant disadvantages that security measures could bring to logistics efficiency and financing. Measures such as the ISPS /C-TPAT guidelines/regulations which standardised the approach to security post-9/11 are no more than common-sense solutions. The compromise if any is very insignificant compared to the overall benefits derived from them. They also suggested that the responsibility is not only for the export ports, but also includes shippers , carriers and forwarders among others. Security has to be linked to the entire end-to-end journey in order to be more effective and not only depend on inspection at a specific port.

S2.1 The Container Security Initiative (CSI ) programme managed by the US Customs and Border Protection (CBP) is an influential voluntary initiative. The CSI was proposed to ensure all containers that pose a potential risk for terrorism are identified and inspected at foreign ports before they are loaded on to vessels imported to the USA. Without a doubt, the CSI has dramatically increased the level of awareness for the need to secure global trade.

At 88%, almost all the panellists agreed with this statement. The purpose behind this statement was to testify the viewpoints of panel experts on the benefits that the CSI brings to maritime security . It can be concluded that the CSI has increased the awareness of relevant stakeholders to secure global trade.

S2.2 Unlike the 24-hour rule, the CSI is a voluntary initiative. However, in order to keep the market share for US-inbound trade, the major exporters have to join the programme. Not joining the programme could make the exports lose competitiveness over their rivals.

This statement was agreed by 58.8% of panel members. Panellists pointed out that fines will be imposed for containers to the USA without have been properly manifested, thus the US government actually makes the declaration compulsory. However, disagreements stated that the 24-hour rule is a primary aspect of the overall CSI . The 24-hour rule has subsequently been adopted in the EU and China . It requires a manifest completed 24 hours prior to loading. This helps to improve the quality of data used in ship and terminal planning processes facilitated earlier. The whole ocean trade has benefited. However, the voluntary aspect, such as mass scanning is largely unadopted, due to the possible efficiency losses. Therefore currently, most export container ports work in similar ways and there are no commercial or operational competitive advantages of any significance as a direct result of the CSI . Not joining the CSI does not create competitive disadvantages.

S4.3 Productivity could improve due to better procedural arrangements. With the reinforcement of security , there is reduced likelihood of security incidents, a probability of fewer incidents being recorded and higher port reliability . Increased reliability which leads to higher trust between a port and its upstream and downstream partners in a container supply chain, contributes to the reduction of cargo processing time and results in reduction of cargo processing cost. This has a positive effect on port selection , thus attracting more container volume. Consequently, improving security level and increasing port reliability can attract more containers. Compliant participants would benefit from access certification and fast-lane treatment as well as reduced insurance costs and risk exposure.

This statement was agreed at 59%. Panellists agreed most with the contribution of efficient security procedural arrangements. They argued their viewpoints from two aspects. In theory, they agreed that productivity and port reliability can be improved; therefore, more containers will be attracted. However, in practice, the results of additional security processes and requirements are probably more neutral than highly beneficial to the overall supply chain, efficiency , productivity and cost. This may be caused by local authorities and customs that lack business awareness. Moreover, it is more difficult to achieve a better procedural arrangement in practice. As a result, the positive effects on productivity improvement would be less significant than the theoretical benefits claimed.

Delphi Round Two: Statements Reaching Consensus Level and Comments

S3 The port environment generally has become increasingly competitive; it varies between regions and places. Ports and terminals no longer enjoy de facto monopolies. Ports need to compete for individual hinterlands and terminals need to compete with other operators within one port. According to prior studies, the components of port competitiveness are: port location, port facilities, overall efficiency , hinterland networks, value-added logistics and port services , safe handling of cargoes, confidence in port schedules, simplification of procedures, operational transparency, and port labour and skills. Among these factors, for EU ports, carriers will use a multitude of tangible criteria such as port efficiency and cost related elements which are still the most important competitiveness components. Port safety and security are considered as intangible criteria. These criteria are also important and ports/terminals as an absolute minimum need to match industry standards and best practices.

This statement achieved 100% agreement. Panellists stated that it is difficult to assign tangible value to security and safety . However, minimum standards need to be met regardless of the CSI . Adequate security and safety measures are a means to ensure benefits to ship operators, shippers and port/terminals. As to ship operators and shippers , vessels and the cargo are protected and maintained at all times against theft and damage. Any port or terminal without adequate safety and security would stand at a huge disadvantage against rivals who are in full compliance.

S4.4 Although the US Customs and Border Protection stated that the CSI can bring benefits to linked ports, those benefits are still controversial. This programme transfers the container examinations from unloading ports in the USA to the loading ports overseas. On the other hand, all the checks are carried out in the host countries which bear the equipment cost. Some research claims that CSI creates competitive disadvantages due to additional investment and running costs. However, in reality, all terminal /port investment is surcharged to direct customers, with the costs ultimately being born by the Beneficial Cargo Owners (BCOs). The real burden falls to the BCOs, and ultimately to US importers /retailers and the end consumers. In fact, security regulation compliance such as ISPS has created new revenue streams.

This statement was agreed at 92.8% with no disagreement. Panellists agreed that the security measures have been looked on as a market benefit. It is cost-efficient to transfer the inspection to export ports outside the USA due to their high labour cost. On the other hand, there are actually very few containers which are called for inspection in origin ports and those are charged to the container operator and passed to shipper and end consumer as so far, no party in the supply chain incurs unrecoverable costs as a result of improved security .

S4.5 The CSI transfers the container examinations from unloading ports in the USA to the loading ports overseas. Opponents argue that it would slow down loading port efficiency . However, from a security perspective, the best is to intercept suspect containers as early as possible in the logistics chain. Moreover, CSI is merely a documentation process in which terminals and ports are not directly involved. The process is driven by pre-shipment submission of cargo manifests, from which a few containers require non-obtrusive inspections, and very few of these need actual physical inspections.

This statement was agreed at 92.8% by panel members. All panellists agreed with the necessity of inspecting suspicious containers at the early stages of the supply chain and the CSI does not cause interruption. Panellists pointed out that the manifest needs to be submitted 24 hours before loading which is usually set as the expected date/time when a vessel starts to load intake cargo. Any request for inspection is immediate and that will leave ample time for performing inspections. In practice, the number of inspections is a very small percentage, less than 1%. As to the cost side, experts have explained that extra cost will be transferred to shippers and end customers. Therefore, whether conducting the inspections at origin or destination, the results will be the same from cost and time perspectives. Additionally, inspecting containers at origin will prevent potential damage to the vessel caused by hazards. Members also advised that this solution is more applicable to large container ports rather than smaller ones due to their insufficient capability.

S4.6 CSI bilateral system of information exchange requires a host country to conduct a security check on containers shipping to a US port. In return, the host country can send its officers to any US port to target ocean-going containerised cargo being exported to their country. It is somewhat improbable that a security threat to a country originates from the USA, so the reciprocal arrangement does not (today) really add a tangible value to others. Under this system, there can be sensitive information exchange, which is deemed necessary to ensure safety of any ports involved. The USA could cease trading with the export ports if they refuse to provide information. Although the host countries may not be willing to offer any confidential information, most export nations depend upon trade with the USA, so they freely cooperate in varying degrees.

This statement was agreed 100% by panel members. Experts agreed that information exchange is vital for Euro-US maritime trade security where the export ports are willing to provide the information. Under the circumstances, that the USA is a major customer for European shippers , there is not much negotiation power as host countries. The disadvantages from sensitive information exchange are superseded by the benefits of better security and safe trade brings.

Delphi Round Three: Statements Reaching Consensus Level and Comments

S4.2 A safe and secured maritime trade is an extremely important issue in shipping industry that cannot be overlooked. With better administrative processes and IT tools, container security inspection processes can be facilitated without causing supply chain disruptions. The extra inspection time in export ports is insignificant compared to the total transportation.

This statement was agreed 100% by all panel experts . All experts agreed with the necessity for maritime security checks. They also pointed out that safety and security are ensured at multiple levels. The use of intelligence filtering through cargo declaration and manifests is the primary level and does not generate any significant additional costs or delays to the supply chain. Non-obtrusive cargo inspections using scanners are relatively quick when a consignment does not pass the initial checks. In the event that a consignment does not pass the scanning check, some significant costs could be created, potentially resulting in supply chain delays. Nevertheless, in practice, less than 0.1% of all consignments require a physical examination. For a shipper or ship owner, having security and safety checks performed at origin is far more useful than at destination.

S5 CSI compliance will not cause container port market distortion in Europe whether in the short term or long term since there has been no evidence to show it causes financial burden or logistics disruption. Small ports will be affected by the changing market arising from liner network design which aims at lowering the overall transportation cost.

This statement was agreed by 92.8% of the panel experts . Most panellists agreed that the CSI will not cause port market distortion since the industry has matured over the past 20 years and no port has witnessed decline due to maritime security and safety checks. Port call choice is based on primarily cost and secondarily demand volume. Financial burden and logistical disruption used to be the initial concerns when the CSI was introduced in 2002. Since the additional cost of CSI compliance has been set off by the Container Security Fees, from the financial perspective there is no evidence to show that container ports have been significantly affected. What is more, the world over, terminals are moving out of cities and away from urban congestion and that is leading to liner shipping network redesign. Examples can be found in Hamburg, Antwerp and Southampton. However, one expert stood against this statement. It was pointed out that the commencement of the ‘24-hour rule’ which is in conjunction with the CSI alone has resulted in issues such as different time zones, tight documentation deadlines and questions over responsibility. It cannot be denied that operational and financial issues, whether they are significant or not, have affected container ports . As long as there is disruption caused by the CSI , there will be some distortion in the EU container port market.

The Revised Model

The revised assumptions are presented in this section under the main four conceptual categories of maritime safety and security in container shipping.

Conceptual Category 1: The Necessity of Pursuing a Maritime Security Initiative

Original Assumption 1: It is necessary to carry out a maritime security initiative despite the fact that additional inspections may cause supply chain disruption and financial burden.

Revised Assumption 1: It is extremely necessary to carry out a maritime security initiative which needs to be linked to the entire supply chain in order to be effective. Moreover, the supply chain disruption and financial burden are very insignificant compared to the overall benefits derived from effective security measures.

Conceptual Category 2: Introduction of the CSI and Its Controversial Influences

Original Assumption 2: The CSI can facilitate global container seaborne trade safety and security , adding competitiveness to CSI -affiliated ports.

Revised Assumption 2: The CSI has increased the level of awareness for the need to secure global trade dramatically and facilitate global container seaborne trade safety and security . However, there are no commercial or operational competitive advantages of any significance as a direct result of the CSI .

Conceptual Category 3: Determinants of EU Container Seaport Competitiveness

Original Assumption 3: The EU container port industry is highly competitive. Port efficiency , service and cost related elements are still the most important competitiveness components.

Revised Assumption 3: The EU container seaport environment generally has become increasingly competitive. A multitude of tangible criteria that include efficiency and cost are the most important competitiveness components. Port safety and security , as intangible criteria, are an absolute minimum need to match industry standards and best practices.

Conceptual Category 4: Implications of Introduction of the CSI on EU Port Competition

Original Assumption 4: CSI compliance does not cause global supply chain disruption or financial problems for the EU container ports .

Revised Assumption 4: The additional inspection process required by CSI compliance can be facilitated without causing supply chain disruptions. The compliance cost has been overestimated and can be overlooked as it is minor in the overall supply chain. Furthermore, the security requirement has created a new revenue stream for EU export ports.

Original Assumption 5: The introduction of the CSI does not cause small ports to lose market share. EU container port market competition is not disrupted by the CSI introduction.

Revised Assumption 5: There has been no evidence to show that maritime security initiatives such as CSI and ISPS cause EU container ports or terminals lose their competitiveness . Small ports will be affected by the changing market arising from liner network design which aims at lowering the overall transportation cost.

Using the framework of the conceptual model outlined in Chapter 4 and applied throughout the research. Chapter 8 presents the main findings of the literature review synthesis from Chapters 2 and 3 and the Delphi survey .