- The Washington Times - Friday, March 21, 2003

Companies that rely on global trade face increased risk, shipping delays and new costs from the menaces of terrorism and war with Iraq.
"The dual threats of terrorism and war may be able to achieve what the anti-globalization forces have not a significant slowdown, even decline, in global trade and investment," said Gail Fosler, chief economist at the Conference Board.
U.S. firms have adjusted to tighter security and new requirements at U.S. ports of entry since September 11. The start of war with Iraq added a new level of scrutiny to all cargo entering the country.
"I'm optimistic we're going to be able to do the increased security that is necessary to protect the country without substantially impeding the flow of commerce," said Robert Bonner, head of the U.S. Bureau of Customs and Border Protection.
Customs has increased inspections and searches of people, trucks, ships, trains and airlines since Monday when the government raised the nation's terror alert status to orange, Mr. Bonner said.
The result has been some delays at borders, where lines are monitored hourly. As of yesterday afternoon, the longest wait was 1 hours, he said.
Ports of entry including seaports, airports and border crossings are not the only worry. U.S.-based companies in some sectors are especially vulnerable to interruptions in their supply chains because they rely on imports to make a finished product.
Footwear, apparel, computer, oil and gas, and many other manufacturing sectors rely heavily on imports, the Conference Board said.
While no catastrophic disruptions have been reported, the uncertainty is forcing firms to consider potential delays in sending or receiving goods.
And ocean carriers have begun adding surcharges related to the war and higher fuel costs.
Philadelphia-based BDP International, a logistics firm, is advising clients to prepare for disruptions in overseas shipments by increasing inventories just-in-case rather than just-in-time management. BDP suggests looking for alternative sources of goods, budgeting for war and fuel surcharges, and planning for freight diversions to alternative ports.
The war surcharge can reach $125 and the fuel surcharge $50 to $100 above current rates for a 20-foot, trans-Atlantic container that costs $500 to $600, said Richard Bolte, BDP's president.
"Obviously there's a lot of uncertainty," Mr. Bolte said.
Even before the Iraq war started, about 30 percent of shippers allowed extra time in the supply chain, BDP said. That uncertainty is likely to worsen.
"I think the potential is there for delays. Under the current environment, Code Orange, it is very manageable. But we all expect there will be some act of terrorism, which will ratchet up scrutiny," said George Weise, vice president of global-trade compliance at Sterling, Va.-based Vastera, a trade-management company that works with firms like Ford Motor Co., Lucent, Nortel and Nike.
"But I don't think we will see delays approaching three to five days. We will still measure it in hours," he said.
Among foreign firms, trade partners on both sides of the border are especially worried.
A March study by the C.D. Howe Institute, a Canadian think tank, said that "thickening" of the border by extra security measures could deprive Canada and the United States of the advantages of trade liberalization.

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