Our nation's ports serve as the gateways into the domestic supply chain, and the need to implement security measures is imperative. A full or partial closure of the port complex for an extended period in response to an attack or a natural disaster would cause significant economic losses and disruption of the nations' commerce - with an incalculable loss of public confidence and ripple effect on the stock market. The Department of Homeland Security, the U.S. Coast Guard, and state and local policy makers have recognized the urgency of this problem. For example, in the state of California, Governor Schwarzenegger has authorized funding (Assembly Bill 2043) to create a statewide plan for forecasting, prevention, detection, and response to such security threats in California ports.

With increasing federal pressure to improve the security of our national infrastructure, marine and intermodal terminals must evaluate the addition of new security procedures and technologies, while maintaining the impact in level of service to their customers. To prevent the introduction of dangerous cargo inside an imported container, the Department of Homeland Security is encouraging funding, and in some cases mandating the introduction of radiation portal monitors (RPMs) - already operating at some West Coast marine terminals. Installation of these devices allows a non-intrusive, automated method of screening for the presence of dangerous radioactive materials within a container before it leaves the terminal.

While this is one valuable technology aimed at threat prevention, other experts believe that there are more serious risks to be paid attention to than the idea of "stuffing" a container overseas and putting it on a ship. For example, an equally disturbing scenario could involve insertion of dangerous materials into a container at an origination point within the U.S. and the subsequent transport of that container into the Port via truck through the inbound gate. This possibility is often overlooked in the national media, which tends to focus on overseas threats. One has only to remember the Oklahoma City bombing for the reality of this threat.

Since 9/11, the Department of Homeland Security has channeled approximately $58 million into Operation Safe Commerce. This program was initiated by the Transportation Department and the U.S. Customs Service to fund business initiatives designed to improve security for container cargo moving throughout the international transportation system. The third tier of that strategy is to take advantage of the "secure container" and establish a "green lanes" program that speeds the passage of secure cargo. The details of these concepts are still in development, but the objective is to automatically track secure containers, while identifying those that have gone outside of the secure channels.

The point is that "cargo security" is a vast topic. There are many different lenses through which to view security problems - all important, all with their own unique risks and alternative solutions. Technology solutions are readily available: RPMs, crane-mounted scanning equipment, in-container security cameras and devices, "smart" container seals, and many more. But the cost of implementing these security measures can be high, and there are many alternatives to choose from. Thorough risk evaluation and cost-benefit analysis can help identify the most effective alternative for specific situations.

It's not just consumers that are frustrated with the ever-increasing cost of fuel. With a gallon of diesel fuel at approximately $3, and the price of oil skyrocketing to over $60 a barrel, the trucking community faces a host of new costs that must be passed on to shippers, subsequently consumers. With the perpetual uncertainty in international oil prices, the cost of moving goods by truck is a serious concern for shippers. Innovative thinking about the design of a supply chain networks can help identify cost reductions to offset these uncertainties.

Note that U.S. logistics costs traditionally have been markedly tilted toward moving goods by truck instead of by rail or other transportation modes. According to the U.S.'s 16th annual "State of Logistics Report" in 2004, our nation spent $509B on cargo movement via trucks, compared to $42B on transporting goods via rail (DC Velocity, August 2005). With the painful rise of fuel costs and continued public concerns regarding traffic congestion and air quality, logistics managers are now evaluating strategic alternatives. Road-to-rail diversion is one tactic of growing interest: the practice of shifting goods movement off our highway network and onto our rail network.

The potential of freight rail is also making its way back onto the radar screen of policy makers. Go21 (www.gorail.org), a newly formed public lobbying organization, feels a "perfect wave" is coming to persuade the North American public that freight rail has once again become a viable, if not preferred, method of cargo transportation. In just over a year, this group has met with more than 3000 local officials, community/public-opinion leaders, and businesspeople to promote the benefits of rail-based container traffic. Their message: "With U.S. freight volumes projected to increase more than 67 percent by 2020, railroads can play a larger role in moving those shipments. The goal: maximize the nation's freight rail network so the public -- as well as shippers, suppliers, and railroads -- can benefit."

Continuing public concern over quality-of-life issues such as air pollution and freeway congestion is putting pressure on our state's policymakers to find better alternatives to our current methods of handling and transporting containerized goods. As an editorial in the L.A. Times starkly stated, "the ports are the biggest source of air pollutants in Southern California." More fuel-efficient trucks won't solve the problem if more trucks are spending more time on the road to move more cargo - and even worse if they are spending their time idling at the ports due to delays! Programs such as PierPass demonstrate the innovative thinking in this community. Launched this summer by the Ports of Los Angeles and Long Beach, PierPass provides economic incentives for shippers to move trucks off of the freeways during peak periods. A "traffic mitigation fee" is charged for containers moving through the terminals during peak hours, and those fees are used to help pay for new and expanded night/weekend services at the terminals.

Despite initial resistance to the program, early results show that half a million truck trips have been diverted to off-peak hours within the first 4 months, reducing congestion both inside the massive Port complex and on the surrounding arterial freeways as well. The program set a two-year goal to reach 30% of local cargo diversion to off-peak hours… and has already achieved it.

From the broader perspective, the consequences for local and state communities include the demands on public transportation where DOT budgets are responsible for enhancements to both freight and public transportation. In Tennessee, freight traffic is driving road construction, but the Tennessee Department of Transportation is challenged with balancing the infrastructure development needs of all transportation sectors with limited funds. The traffic demands are inter-related and the state and local agencies are forced to prioritize them among disparate constituencies. One goal in accomplishing this is to match SAFETEA-LU funding authorizations to maximize the federal funds benefit.

Finally, the tragic natural disasters experienced recently in our communities serve as another reminder of the inherent vulnerability of our transportation infrastructure. Several of our nation's largest ports were adversely affected by hurricanes, and while their rapid recovery has been nothing short of inspiring, events such as these bring to the forefront the potential severity of disruptions to supply chain networks, and the need to proactively plan for such disruptive events.

There are no easy answers to these pressing issues. As mentioned, the stakeholders affected are widespread: ports, railroads, truckers, federal, state, and local policy makers - and every business that moves containerized goods through the supply chain. We as individual consumers are also affected by these challenges. The effects are both direct, in the inventory stock-outs at our favorite stores and the increase in prices passed on to us to offset the business burden, and indirect, in the quality of life we experience on a day-to-day basis in our communities. The intermodal community is working hard to help find solutions.

The new California Maritime Strategic Port Master Plan Task Force has been actively reviewing issues such as "growth, port security, environmental consequences and mitigation for growth, and improved statewide coordination of the Ports." In addition, the federal government has recognized how critical these needs are to our economy on a national scale, as evidenced by the specific strategic objectives outlined in the 2006 Department of Transportation budget: safety, mobility, global connectivity, environmental protection, and national security. These state and federal objectives align well with the needs of the industry and community stakeholders, and provide hope that solutions satisfying the interests of all parties can be realized.

A common thread among all these challenges is that they deal with inherent uncertainties that can be difficult to predict. Fortunately, proven tools and technologies such as simulation modeling are available to help the logistics manager systematically evaluate a broad spectrum of "what-if" scenarios and perform a thorough, quantitative cost-benefit analysis. Simulation can provide an opportunity to "test drive" changes to systems infrastructure or operations before a decision on capital investment is made - whether to learn how those changes will respond to expected increases in volume, or to mitigate the risk of unanticipated events. In today's rapidly changing world, the need for effective planning, preparation, and analysis has never been more apparent.