APPENDIX 6
Memorandum submitted by the Freight Transport
Association Ltd
INTRODUCTION
The Freight Transport Association (FTA) represents
the freight transport interests of businesses throughout the UK.
Its members range from small and medium size enterprises to multi-national
public companies and are involved in all modes of transport. FTA
members operate over 200,000 heavy goods vehicles, about half
the UK fleet, are responsible for 90% of freight moved by rail
and 70% of goods shipped by sea and air. This unique multi modal
mandate enables FTA to speak authoritatively on all aspects of
freight based on the broader transport needs of industry in the
economy.
Following the 9/11 terrorist attacks industry
became aware of just how vulnerable it was to the consequences
of such events in the future. At the time actions to protect against
terrorism were widely supported by industry. However, four years
on a number of questions are being asked as to the proportionality
of Government responses to the apparent threat, the costs to business
and the lack of tangible benefits for those making the efforts
to comply with new rules and guidelines.
FTA has been involved in transport security
developments since the early 1990s, in the post-Lockerbie era.
In the interests of its members, some 11,000 companies involved
in freight transport either as operators or customers, FTA has
tried to influence the shape of government security measures that
benefit rather than hinder domestic and international trade.
This evidence considers domestic and international
transport security issues and the issues of vehicle theft as well
as linkages with the prevention of terrorism. We also consider
future developments and how these can achieve maximum effect and
the least disruption to freight movement.
SECURITY AND
DOMESTIC FREIGHT
MOVEMENT
(a) The scale of the problem
FTA conducted a survey of its members in 2003,
the results showed that the estimated value of unrecovered losses
of vehicles and loads was £160 million for van operators
and £50 million for heavy goods vehicle operators. In total
this represents losses of £210 million. However, this figure
does not take account of consequential losses, in other words
the cost of vehicle downtime or replacement, the administration
required, the knock-on effects on customers and resultant increases
in insurance costs.
In the period July to September 2005 the total
value of heavy goods vehicles and loads reported stolen to TruckPol
was £20.2 million. Undoubtedly the total is likely to be
higher than this as not all truck crime is reported to the Police.
Furthermore, not all police forces report into TruckPol.
(b) Industry's role
Industry has made significant strides forward
in vehicle security in recent years. The Motor Insurance Repair
Research Centre (MIRRC—Thatcham) has developed a 10 star
rating system for truck security. The system is a scale indicating
the theft difficulty level and mirrors the sort of scheme that
has been in place for cars for a number of years.
Security on vehicles has also been improved.
As well as an increase in the use of tracking devices there has
also been an increase in the use of immobilisers on vehicles.
The result of this is that there has been a rise in the number
of drivers who are assaulted for their keys, which sometimes includes
attacks using gas.
There are other areas where industry can focus
its efforts in order to reduce thefts. These include anti-theft
training of drivers and other staff and steps to make depots more
secure as well as the purchase of more modern vehicles and technology
to make theft more difficult. The vetting of drivers and sub-contractors
is also important in reducing theft.
(c) Government's role
FTA believes that there is a greater need for
a more joined-up co-ordinated approach between all the different
Government, police and Driver and Vehicle Licensing Agency databases.
This would allow more effective targeting of truck thieves and
bring with it benefits in combating terrorism.
The way in which the police respond to truck
crime also varies between different forces. This problem is exacerbated
by the fact that forces do not have a shared understanding of
what is a serious goods vehicle crime.
A study by the National Criminal Intelligence
Service (NCIS) has concluded that a significant proportion of
road freight crime is caused by highly organised criminal groups
with their own networks across the UK. In FTA's view truck crime
is serious because it has a significant impact on the UK economy.
However, at present, due to the lack of effective policing, the
financial rewards of road freight crime by far outweigh the associated
risks of detection and prosecution.
The Government could put in place various measures
to assist in reducing vehicle and load theft. Central to this
in FTA's view is the need for provision of a network of secure
HGV parking facilities or financial incentives for private parking
operators to provide such facilities for goods vehicles. This
would have a range of benefits including a reduction in thefts,
the improvement of facilities for drivers and the removal of sources
of nuisance from local residential areas.
Government could also assist through the provision
of additional resources, via the Home Office, to support the development
of schemes such as TruckPol and also to ensure that the development
of SOCA (the Serious Organised Crime Agency) encompasses HGV crime
as well as possibly providing anti-terrorist intelligence. At
present, although there are a number of initiatives to combat
truck crime, such as TruckPol, Operation Indicate and Operation
Grafton and others, these are hampered by a lack of Government
funding. These initiatives are now all the more important because
of the threat that stolen vehicles could be used in terrorist
attacks, in particular those used to carry high consequence dangerous
goods.
DANGEROUS GOODS
SECURITY
The events of 9/11 focused attention on a new
style of terrorism and as a result there was increased concern
over the vulnerability of dangerous goods movements and the possibility
that they could be used in an attack. Of special concern are high
consequence dangerous goods, that is to say those that, if misused,
can cause a large loss of life or seriously damage the economy
or environment.
FTA has been closely involved in working with
the Department for Transport's security directorate, TRANSEC,
in the development of a United Kingdom voluntary scheme consisting
of codes of practice and supporting guidance on road and rail
transport security for dangerous goods. This has been done in
advance of new UN security provisions being adopted in the ADR
and RID international agreements which concern the carriage of
dangerous goods by road and rail. A briefing note is included
as an appendix to this submission and provides more information
on this subject.[3]
In developing this voluntary approach FTA has
been concerned to ensure that the measures used are practical
for industry and that they are in proportion to the risks posed.
SECURITY AND
INTERNATIONAL FREIGHT
MOVEMENT
In the 1990s FTA and other industry organisations
worked with the UK Government to develop and implement a system
of air cargo security that industry could tolerate and benefit
from. This became known more popularly as the Known Shipper security
regime.
The Known Shipper Security Concept
(a) How it works in air freight
Those downstream of the aircraft are responsible
for securing and maintaining the security of export air freight.
The benefit is simple, this is to prevent cost and delay from
cargo screening that would otherwise be required at the airport
before the plane flew. Nothing today flies without the airline
having an assurance that cargo is known to be safe to fly, it
is therefore said to be "Known Cargo". Policed by the
security division within the Government's Department for Transport,
shippers identify cargo for export by air, check it, pack it and
keep it secure by limiting access to the cargo to authorised personnel
only. They also check the vehicle loading and security measures
for the road transit stage of the cargo's journey. These are the
"Known Shippers".
Any receiving agent also needs to have security
measures in place to protect the cargo from unauthorised access.
They need to convince Government security inspectors that they
can do this, and that they have also checked the security measures
of their customers to make them known shippers and able to present
"known" cargo. No screening is required if the known
cargo remains secure. The agent, referred to as a "Registered
Agent", maintains the security of the cargo in transit to
the airline and it can be loaded straight onto an aircraft without
screening.
The cooperation of all in the chain, and trust
is essential for the system to work effectively. In this respect
the regime was modified slightly following proposals coming from
freight forwarders and shippers alike to ensure that known shippers
are properly audited and vetted by independent third-party government
authorised inspectors, rather than by the shippers' service provider,
something which could have been open to abuse through commercial
pressure.
(b) Application to other modes and the supply
chain
In the post-9/11 world FTA was among the first
to propose that the Known Shipper system be applied to all transport
security in order to facilitate international trade and transport
at the same time as securing it, and without over-burdening the
companies involved.
Today, the Known Shipper approach to transport
security has gained general acceptance in principle, although
there is still some way to go to implement it around the world
in a standard way. Importantly, the link between customs auditing
regimes and security has also become widely accepted. This enables
risk assessments to be made not just on the cargo, but looking
at the origin, destination and route taken, the consignor and
consignee and the nature of the business, in order to determine
what cargo requires the specific attention of security personnel
before allowing it to be imported or exported. The majority of
freight, representing legitimate and secure trade, continues unhindered.
The modal approach to transport security: high cost
and unpopular
However, not all international security measures
that have been introduced follow the Known Shipper approach. Rather
than looking at the security of the freight itself from origin
to destination, the focus was initially put on the security of
ports, ships, aircraft and airports. Today all ports involved
in international trade must comply with internationally agreed
security put in place around the immediate vicinity of the ship
and port. Clearly, the security of many ports and shipping lines
must have been found seriously wanting as many claimed to face
large extra costs almost overnight in order to comply with regulations
designed to prevent unauthorised access to the terminals, ships
and the cargoes.
The problem of cargo theft in and around ports
is not a new one, and one might have expected that effective measures
to prevent unauthorised access to cargo and cargo areas would
have been something that the ports and shipping lines would have
had in place anyway. Therefore it came as a surprise to many shippers
to be asked by some ports and shipping lines to foot the bill.
Shippers have been angered at the way security costs have been
separated out from all the other costs of doing business, and
in the case of port security charges, being imposed on shippers
when they do not even have a commercial relationship with the
ports.
The USA imposed a ruling in 2004 whereby ship-borne
exports from Europe and elsewhere destined for the USA need to
be known to the customs agency 24 hours before loading onto ships.
It would be wrong to suggest that businesses have encountered
difficulties complying with this requirement; nevertheless it
should also be recognised by the US authorities and others (such
as the European Union which is set to follow suit with its own
pre-shipment notification) that this has resulted in increased
lead times for many shippers which carries with it an inherent
cost to industry.
FORTHCOMING DEVELOPMENTS
The European Union is soon to announce security
proposals for all freight transport into and out of the territory
of the EU and within the territory of the EU. Encouragingly, it
looks likely to resemble an amalgamation of the Known Shipper
concept (now becoming established in the EU air freight industry)
with customs risk assessment procedures used to profile trade.
FTA is concerned to ensure that the various
international approaches tie-up to form a single, co-ordinated
and cohesive framework that is proportionate and practical. We
also seek to make sure that the measures proposed are not confusing
to those trying to implement them and that international and national
trade is not adversely affected.
(a) Keeping it voluntary
FTA hopes that the steps to be proposed will
be voluntary, and not made mandatory through regulation. In other
words, industry, whether importers/exporters, manufacturers, retailers,
distribution service providers, logistics companies, warehouse-keepers,
or freight forwarders, may assess the costs and benefits to their
businesses of compliance, and choose if, to what extent and how
they need to comply.
Anti-terrorist security measures, comparable
with theft prevention measures, require investment in systems,
physical protection, personnel, training and planning. The extent
to which one invests in these depends on an assessment of the
risks. Risks vary from company to company, industry to industry,
region to region and country to country and what is appropriate
to one business may not be appropriate to another. Neither will
companies know what the threat assessments are, as these are made
by the security services based on their own intelligence and assessment
criteria. Therefore companies will need to balance the level of
security they adopt with what they believe will be the standards
being sought by governments.
Governments will need to share with industry
the types of measures and the minimum standards of security that
will reduce the level of threat represented by industry and, thereby,
the risk of having cargo delayed by the authorities for security
reasons. Naturally, such measures and standards may vary according
to the threat assessments being made, and industry will need to
assess in turn how they respond.
PROVIDING INCENTIVES
The more incentives there are to invest in security
the more companies will respond positively and enable the security
services to better target the real threats and not detain legitimate
trade.
FTA has long argued that security can yield
some significant benefits to those that apply it:
— Prevention of delays at ports, airports
and borders caused by security checks and cargo screening.
— Increased supply chain visibility
exposing inefficient practices.
— Brand protection through preventing
a business being used by terrorists to deliver an attack—the
impact of having one's name associated with such an event could
seriously damage one's public image and wipe millions of dollars
off the share price.
— Avoidance of security charges imposed
by others in the supply chain on unknown cargo.
— Trade facilitation measures, such
as reduced customs reporting or audit requirements.
(a) Few tangible benefits apparent today
The benefits identified above are difficult
to value and may not be known until security measures have actually
been implemented and company accounts examined.
For example, currently the number of reported
delays caused by security controls to cargo, known or unknown,
appears to be negligible. Therefore, avoidance of security-induced
delays—one of the primary benefits cited for implementing
cargo security, is not being realised. The realities of business
mean that the majority of companies are not able to find the capital
to invest, or seek the required authorisation for such investments,
without being able to first demonstrate very tangible and real
cost benefits.
(b) What would represent an attractive and
more immediate incentive to invest in improved security?
There has been very little debate on this question,
although FTA has attempted to raise this issue on numerous occasions
with various governmental and international organisations.
FTA believes it is worth exploring the possibilities
of reduced insurance premiums, caps on liability, tax benefits,
reduced security charges where these are imposed by others, grants
towards security systems, etc. All of these could have an immediate
impact on a company's bottom line.
Failure to provide incentives may impede security
FTA believes that until the debate turns to
provision of such benefits in a serious and meaningful way the
groans of disapproval every time a new security initiative is
mentioned will become louder and louder.
We also feel that governments need to take seriously
the complaints of shippers about such things as security surcharges
imposed on them by some sectors of the transport industry. FTA
has repeatedly warned that the port and ship security surcharges
are incompatible with the trend towards a known shipper security
regime, as such non-negotiable charges fail to distinguish between
secure cargo from secure sources and that which represents a greater
security threat and which should legitimately be the focus of
further security checks. The surcharges mean that there is less
incentive to make the cargo known and less incentive to invest
in security.
The drastic alternative would be to give industry
no choice but to comply with security requirements and standards
set by governments. However, this will leave industry needing
to apply security measures that may potentially bear no relation
to the actual threats they represent, or else result in cargo
being unnecessarily delayed.
Questions are already being asked as to whether
any of the security measures in freight transport are actually
making a difference to the security of society and the economy.
At present industry is only seeing the costs of security, and
yet many in the transport sector suspect that there remain many
loopholes through which terrorists and their weapons can slip
and that there are many alternative, possibly easier, ways to
bypass border security controls.
FTA believes that industry has mistakenly been
thought of as a front-line defence against terrorism which it
is not. We feel that too much focus is placed on industry to do
the job of the security services and that the money being spent
by industry on compliance would be better spent on increasing
the resources of the security services.
Four years ago industry was fully prepared to
co-operate in protecting against terrorist activities. Today,
industry is increasingly questioning its role in combating terrorism
and asking for evidence that it is even worthwhile, let alone
cost effective.
This is a very serious development. If governments
want industry to help then FTA members believe that they must
be prepared to help industry. Too many governments, the UK Government
included, expect industry to pay for security; yet it was not
industry that attacked the Twin Towers in New York. So why, as
more and more shippers are seeing it, is industry being treated
as the wrong-doer and having to pay?
FTA believes that the time has come to redress
the balance and that governments need to provide and pay for the
incentives that will encourage industry to participate in the
drive for more security for all our benefit rather than treating
industry as both the defender against terrorism and, paradoxically,
as the potential enemy within.
26 October 2005
3 Not printed. Back
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