Cargo safety and security has improved dramatically as an indirect result of the 9/11 terrorist attacks.

New laws and regulations, intended to protect United States borders from terrorist activities, have had the beneficial side effect of protecting cargo sitting in port from theft, say observers.

These initiatives include the Customs-Trade Partnership Against Terrorism and the Maritime Transportation Security Act of 2002 (see related story).

Observers point out, though, that cargo remains much more secure in the United States, Europe and other developed countries than it does in less-developed regions.

“After 9/11, the whole landscape changed” for the 361 U.S. ports, said Barry Tarnef, Philadelphia-based senior loss control specialist for Chubb Corp. “There are a number of security-related rules, regulations and practices that are in place now that weren't previously,” he said.

Although their intent was to deter terrorist activities, benefits have accrued to cargo security as well. As a result, now “very rarely do we see a theft incident” at the port itself, although theft may still occur at affiliated facilities, said Mr. Tarnef.

Damon Finneran, New York-based risk securities and logistics risk control manager for Allianz S.E., said cargo is “far more secure in the sense they typically don't go missing out of ports any more because of terrorism concerns.” And if a container's seal appears to have been tampered with, it is “questioned right away,” he said.

Don Harrell, senior vice president for marine at Liberty International Underwriters, a unit of Liberty Mutual Group Inc., said that post-9/11, the major developed countries in particular have put “a lot more sophisticated systems” in place so that when anybody ships a container, the customers are notified within 24 hours that it is coming into U.S. territory, and if that notification is not received, “it gets rejected immediately and sent away.”

Sherman Drew, Philadelphia-based assistant vice president of marine advisory services for Ace USA, said the Customs-Trade Partnership agreement in particular, which is a government-private firm partnership that aims to safeguard the trade industry from terrorists, has been helpful in offering training and support.

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Privatization also has played a role in improved cargo security, said Mr. Harrell. “Over the past 15, 20 years, there's been a tremendous amount of privatization of ports and terminals around the world,” so the situation insofar as theft, pilferage, the mishandling of goods and the quality of personnel that works in the terminals have all “improved dramatically.”

Observers say, though, that there is still an issue in developing countries.

Mr. Drew said poor conditions in terms of facilities, roadways, social and economic exposures, and equipment at the port “add to the challenges of safe handling and transporting equipment.” Employee collusion is a factor as well, he said.

Furthermore, port storage is a concern. “In many companies around the world we don't have the same luxury, as it were, to be confident that these buildings will be built to an established standard, that there might be sprinklers to provide better fire protection. That doesn't exist everywhere around the world,” Mr. Drew said.

He said ports accounting for about 20% of cargo are not part of the U.S. Container Security Initiative, a program intended to help increase security for maritime containerized cargo shipped to the United States from around the world.

These ports “clearly are not going to get the same physical and procedural securities that we have in the U.S.,” he said. Policyholders should seek out ports that have better infrastructures, he said.

Mr. Harrell said in the many countries where “clearly corruption is still very prevalent,” many companies are “trying to minimize the time (cargo is) sitting in any one place,” following a “kind of just-in-time mentality around reducing the amount of time” goods stay in a port terminal.

Mr. Drew said addressing cargo security issues requires an awareness of problem areas, which includes conducting a risk and vulnerability assessment that identifies exposures with respect to conveyances and security; protocols to prevent hijacking; physical access controls; and personnel and information security.

It also involves “just vetting and selecting the right carriers that are skilled and experienced enough to safely distribute your cargo to the point of destination.” Having a good, knowledgeable and trusted local source is invaluable as well, Mr. Drew said.