Tuesday, November 9, 2010

Small Packages, Big Headaches

Terrorist attack, though thwarted, highlights vulnerability of international air freight

A shudder went through the international air freight system last week, when it was discovered terrorists in Yemen had used UPS and FedEx to ship packages containing bombs headed for Chicago. The multi-billion dollar air cargo industry carries millions of time-sensitive packages every day, everything from fresh flowers to industrial repair parts.

While authorities have not yet taken steps other than an intensified review of air cargo screening procedures, experts say a requirement for checking every package, as is already in place for shipments on passenger planes, could bring the entire system to a halt.

It could also lead to a major rate increase, as carriers look to recoup their additional security costs. Screening devices such as a “pulsed fast neuron” analysis machine can cost up to $10 million, and ultimately, the costs will be borne by the end user.

Growing concern about foreign shipments could even accelerate a trend toward “domestication,” making U.S.-based production a more attractive option for U.S.-based firms, and cutting into offshore sourcing.

Any successful terrorist attack using international air freight will dramatically disrupt deliveries worldwide. As we noted in conjunction with the Icelandic volcano, in supply chain planning, in addition to “just in time,” it is important to look at “just in case.”

Kirk Shearer
TOTALogistix, Inc.
800-989-0054 x103

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