A ‘Quiet Revolution’ for International Shipping

In December 2002, a little-noticed conference of the International Maritime Organization, resulted in a tectonic shift in the shipping industry and maritime security realm. The International Ship and Port Facility Security Code was adopted by 147 states and two IMO observer members, and adherents agreed to bring the Code into effect by July 2004. The timeline was short, considering the daunting objective of the agreement: to strengthen the security of international ports, international waterways and the high seas by placing new and onerous burdens on governments, shipping companies and port operators alike. As the effective date of the Code passed last week, In Focus takes a look at the aims of the Code, and offers a brief assessment of the programme’s inaugural week.

Strengthening Security

The International Ship and Port Facility Security Code, or the ISPS as it has become known, takes bold measures designed to increase surveillance and security of international maritime trade. Before 01 July 2004, very few intergovernmental agreements attempted to regulate the millions of ships that sail the high seas each year to deliver ashore “almost all the raw materials and finished products on which our land lives are built”, as William Langewiesche notes in The Outlaw Sea. The international maritime environment, so vital to our economic survival, is a seascape infested with multiple scourges: piracy, narco-trafficking, people-smuggling, environmental and bio-hazards, and maritime terrorism. The ISPS seeks to mitigate these threats by requiring ship and port operators, and the governments that oversee their activity, to adhere to agreed standards of safety and transparency.

The initiative is much bolder than it seems to the layperson. While westerners have become accustomed to oversight, transparency and compliance in the industries with which they regularly engage, it is altogether unknown in the shipping realm. For instance, the ISPS requires for the first time, that ships maintain a Continuous Synopsis Record (CSR), an onboard log of the ship’s history including information about: where it was built, under which countries it has operated and the name and address of the registered owner. The Code demands that ship crews be properly trained in safety procedures and that the ship and its operators have a pre-prepared plan detailing the appropriate response to various levels of threat. While these measures are as routine as an annual fire drill to land-based firms, they place unprecedented burdens on those who have operated until now in a virtually unfettered industry. More challenging, and incurring more costs, some ships will be required to forward detailed manifests to ports 24 hours in advance of their arrival as well as to install onboard alert systems that can notify authorities onshore when a pirate or terror attack is in progress, without raising any alarm on board.

The ISPS also puts heavy burdens on ports and governments. Under the new Code, ports must undergo detailed Security Assessments, meant to identify threats and security vulnerabilities, as well as assess the possible consequences of an attack. Like the ships they will harbour, ports are also required to formulate a security plan to respond to various levels of threat. Governments, for their part, are responsible for identifying the level of threat and communicating it quickly to ports and ships, which then might respond appropriately. Governments are also responsible for inspecting ports and ensuring compliance with the Code, and are asked to turn away ships that do not meet the ISPS standards, even employing national militaries if and when necessary.

Collateral Damage?

When the ISPS was first announced in late 2002, many analysts noted that the policy could carry heavy collateral damage for the shipping industry. The industry, as it existed prior to last week, thrives on an unregulated environment – such an environment allows for “just-in-time” shipping, a strategy under which ships change course at a moment’s notice seeking the highest bidder for its cargo; it also allows for cheap, poorly trained labour from the developing world to be hired and fired quickly and without record. Experts worried that the ISPS might disrupt worldwide shipping at compliant and non-compliant ports alike. Compliant ports might get bogged down, turning back non-compliant ships and introducing new delays; non-compliant ports might lose customers interested in shipping goods to ISPS-compliant states, or face astronomical insurance rates to make up for the added security risk of operations.

The economic risk of delays to international shipping is real. The world’s economy depends on seagoing trade to function, not least because the majority of the world’s oil is shipped by sea. As oil prices have ratcheted up due to increased demand, reduced supply and rampant political uncertainties, the world economy is ill-prepared for more price increases caused by clogs in the supply chain. Will increased physical security in maritime trade result in devastating economic collateral damage?

On the eve of ISPS’s inauguration, economic nay-sayers had every reason to fear the worst: of over 22,000 ships worldwide subject to the Code, only 53.2 percent had complied. Similarly, of 7,974 ports required to make changes to the way they do business, only 53.4 percent were compliant as of 30 June. A tally of compliant vessels running up to the ISPS start date reveals clearly that some industries were either more determined to meet the new standards, or less inconvenienced by them. Oil tankers, for example, boasted a relatively impressive compliance rate of 71 percent, while cruise ships were virtually uniformly compliant with the new regulations. Just as clearly, ports handling high volumes of international trade, especially those dependent on exports to the United States, managed to enact the required changes while others continue to lag behind.

This patchy record did not bode well, and shippers and port operators alike braced themselves for 01 July. Fears were not allayed by commentary from officials such as Christoph Brockmann of Germany’s main maritime agency, who told the press on 30 June that if European ports took a ‘zero-tolerance’ approach to ISPS enforcement, maritime trade would inevitably suffer adverse consequences.

Thus Far

After the first week of implementation of the long-awaited ISPS, the gloomy prognosis offered by many has thus far failed to be borne out. In North America, where a ‘zero-tolerance’ enforcement policy has been practiced, only 45 ships were turned away from or detained in ports for not holding the necessary certificate of compliance (42 by the US ports, 3 by Canadian ones). As over 1150 ships bring cargo to US ports from abroad every week, and assuming that there have been no gaps in the ‘zero-tolerance’ approach, this means that compliance among ships carrying cargo bound for North America has been approximately 96.5 percent in the US, and even higher in Canada. Though figures for port activity in Asia, where the world’s busiest ports are located, are not yet available, we do know that the disastrous disruption of maritime trade portended by many has not come to pass. Yet, analysts are still uncertain about giving ringing praise to the ISPS regime.

This is probably because, despite major successes, there are still hurdles yet to be overcome. For instance, though the compliance rate among shippers and port operators remains patchy. With staggered compliance, sticky issues will almost certainly arise. For example, what will be the procedure when compliant ships arrive in a compliant port after having visited a non-compliant one immediately prior? Even more worrying for coast guards and navies, what enforcement measures are necessary when ships refuse to be turned away? Such complicated situations are dealt with only vaguely in the text of the Code, and will require ad hoc solutions as they arise. The shape of these ad hoc solutions is not yet altogether clear.

Nonetheless, and despite daunting eventualities on the horizon, the first week of implementation seems to have discredited the most pessimistic prognoses. Whether there is room for continued optimism that the ISPS will perpetuate a ‘quiet revolution’ in shipping, creating a “culture of security” in a heretofore free-wheeling industry, remains to be seen. _

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