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2002 Forum
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2002 Oberstar Forum — Steve Lockwood's Speech
From 'Just in Time' to 'Just in Case': Long-Term Impacts of Increased Transportation Security
By Steve Lockwood, Parsons Brinckerhoff
Since 9/11, the transportation landscape in the United States has been dramatically changed—forever. The uniquely threat-free context assumptions that characterized U.S. transportation in the past no longer exist. The United States now joins the rest of the world in the necessity to respond to potential threats from enemies who know no civilized restraints, and armed with weapons of mass destruction.
Steve Lockwood
The U.S. transportation system consists of public and private providers of guideway, vehicles, transport, logistics, information, and traveler services for both passengers and freight in the highway, rail, aviation, and marine modes. The long-term trends have been toward improving the infrastructure while, at the same time, increasing the efficiency of existing systems. Important strides have been made in recent years through the application of advanced logistics services, intelligent infrastructure operations, IT-based status transparency, and demand management to provide just-in-time intermodalism and increasingly aggressive systems operations and management. Travelers and shippers have benefited from reduced transit times, increased security and reliability, minimal inventory burdens, and increased system utilization. These impacts have in turn led to secondary efficiencies in business and household economies.
Implementation of appropriate security strategies is occurring at various rates according to perceived threats, vulnerabilities, and consequences. The capacity of the sector as a whole to provide the appropriate level of security is paced by the level of desired protection and the practical challenges of scale, resources, technology, real-time retrofitting, and systems turnover.
As suggested in the figure below, counterterrorism measures introduce new costs and service-level changes on the "supply" side (infrastructure and/or service providers, such as state DOTs, airlines and railroads, truckers). Response by both public and private owner-operators to the threats of global terrorism, weapons of mass destruction, and suicidal commitments will be taking place throughout the transportation system. Security-related strategies focus on four areas:
- Preparedness (threat assessment and asset protection)
- Prevention (counterterrorism)
- Response (planning/training/equipping for events)
- Recovery (emergency relief and continuity of operations)
The preventative strategies, in particular, are introducing service interruptions, delays, and costs that are in turn experienced by system customers (travelers and shippers). The use patterns of these customers ("demand") will shift according to costs and other service qualities offered, with iterative effects on modal economics and with other secondary impacts on businesses and households.
| LONG-TERM SHIFTS IN TRANSPORTATION PATTERNS OWING TO SECURITY MEASURES | ||
|---|---|---|
| Passenger Transportation | Freight Transportation | |
| Supply (facilities & services) | Changes in the costs & level of service owing to passenger/baggage security measures | Changes in the costs & level of service owing to driver, vehicle, and cargo security measures |
| Demands (travel/shipper patterns) | Response of traveler in terms of changes in amount, type (mode), and patterns of travel | Change in shipper/customer logistics patterns owing to transport systems costs, reliability, transit time |
The short run impacts are already evident in airport queues, border-crossing delays, reduced delivery cycles, and overstressed port inspections. In the midterm and long-term, the security costs and impacts are less clear. There clearly will be costs—large, though unknown. Various future combinations of transportation and communications trade-offs are possible, and the potential of technology to support internalizing security measures is still unknown. In some cases, security measures required as a matter of public policy—and costly in the long-term—may actually bring efficiencies forward in time that otherwise might have been dependent on slow-developing market demand.
While coping with immediate threats has consumed public policy and private budgets, it is also appropriate to consider the long-term consequences. In the paragraphs that follow, a few key issues are raised with the intention of seeding this important discussion.
Some Supply-Side Issues
Security as Friction—Transportation system elements must now incorporate counterterrorism measures—principally checking people and goods for terrorism content. In-place system configurations and technology are not available to do this job efficiently, much less automatically. Thus initial security impacts are experienced as an imposed time charge on mobility as manual measures constitute the initial line of (homeland) defense. In commercial services, the impacts of security are having important impacts on the business-customer relationship. For example, the tight economics of competition in air travel received a serious blow in cost and customer relations. Just as airlines were moving toward automated, ticketless, counterless check-ins, passengers now find themselves faced with a sequence of unpredictable, non-standardized queuing, disrobing, unpacking, and incomprehensibly random personal searches. Airlines have lost customers, operational control of their real estate, and, in the short run, their opportunity to distinguish brands through service innovation. The thin margins in competitive air travel and freight service are illustrated in the near failure of key service providers, impacted by a reduction in demand.
Check Points as Choke Points—Cross-border and inbound port/airport movements represent a special case where an already unmanaged process is focused on 8 million inbound containers per year. At some point, seals, tags and detection will be automated and international standards will push the U.S. security border back to the point of shipment overseas as a responsibility of U.S. trade partners. "Safe shipper" programs like "safe traveler" preregistration may reduce this problem in the midterm. Until that time, an unsatisfactory trade-off is made between risk and an acceptable level of delay by focusing only on high-risk containers.
Delogisticizing—Logistics costs as a percent of GDP have gone from 16 to 10 percent in 20 years. It was only a few short months ago that transportation service providers—both passenger and freight—were focused on ways of reaching the next plateau in logistics services by ever-tighter just-in-time regimes and other added-value services. The increased efficiencies have often been associated with highly refined networks of interdependency—efficient but not robust. Now, the interference of government and private security measures requires a reversal of these strategies. The increased inventory required (buffer stocks), special insurance, transportation and security technology costs—while producing a more stable and reliable system—are increasing the logistics component of the GDP.
Protection by Design—In the short run, manual inspection is the first line of defense, and critical infrastructure will be patrolled. In the mid-term, infrastructure will be modified, terminals will be reconfigured and retrofitted, structure portals and supports will be isolated and risky configurations armored, and new plans will eliminate uncontrolled adjacencies and incompatible uses. In the long term, efficient risk reduction will focus on terrorist identification and threat detection rather than target protection. Invisible, integrated technologies will reintroduce the potential for physical and operational convenience in the travel experience.
Multimodal Redundancy—The impact of 9/11 on Northeast corridor air travel suggests the virtues of multimodal options in major intercity, high-density travel corridors. The perpetually inconclusive dialogue about appropriate public support for high-speed rail might conceivably be "tipped" by the security potential of redundant modes when combined with the other safety and congestion advantages.
"Dual Purpose" Technology Investments—A singular bright spot in the security landscape is the fact that security-oriented technologies are often complementary to improved systems operations and advanced logistics strategies. Roadway surveillance and control for security purposes can be facilitated by extending existing congestion-oriented "intelligent transportation systems" (ITS). Similarly, totally transparent vehicle, container, and cargo tracking—central to weapons of mass destruction (WMD) detection—is also a key vector toward generally reducing logistics costs. ITS applications such as smart cards, personal data mining/fusion, and biometric identifiers are likely next steps in automatic screening, but they are also keys to advances in customer relationship management (CRM). Just as the Y2K investments in cybersecurity accelerated turnover in next generation corporate IT systems, various investments in transportation security may well advance the deployment of the next generation of operational improvements.
Key issues:
- How quickly can security-enhancing technology substitute investment in technology for delay and inconvenience?
- Are more redundant (and robust)—but less efficient—systems and networks essential? What will be the cost penalty paid for these changes?
- How significant are the cost penalties of more robust logistics?
Some Demand-Side Issues
Travel-Choices Impacts—The shifts in costs and service level within the supply of transportation services has already provoked a response from travelers and shippers—to different modes and types of service. For example, at shorter stage lengths—such as New York-Washington, Chicago-Pittsburgh, and San Francisco-Los Angeles, air travel has lost its time advantage; ground and private modes seem more secure. In the long run, perhaps, technology will substitute for the delays as automated monitoring evolves. At that point, a new modal equilibrium will be established.
Communications Substitution—The economics and perceived risks have also led to considerable forgone travel and shipment. Rates may return to normal as security measures are regularized, but it is also possible that overall cultural biases related to the travel/communications substitution may be permanently affected. More than ever, business travelers are looking for adequate substitutes for expensive, and now more onerous, time-consuming, insecure travel. The market for high-resolution telecommunications is already being spurred, and it is possible that the late 20th century face-to-face cultural imperative behind high business-travel rates may have been irrevocably reversed.
Impacts of Increased Logistics on Production—New security measures in terms of shipment tracking, verification, and receiving functions have added to the cycle times and uncertainties with important negative feedback into shipping costs and service. The potential of disruption of critical relationships is already leading key players to seek more stable and dispersed approaches, diversify their supply chain links, and move back to the more loosely coupled production/distribution models of the previous generation. This is impacting business models.
Hardened Land-use—The business models and land use of modern logistics with its focus on few highly reliable suppliers and concentrated warehousing patterns may require modification. Just as high-risk offices may be equated with high-risk workplaces, corporate deconcentration is likely in some urban settings, and national and global dispersion is likely to be considered.
Key Issues:
- What level of transportation-communications substitution might be expected in various personal modes such as air, rail, and auto?
- Is a change in public policy regarding support of multimodal options justified in intercity and/or urban scales?
- What level of privacy intrusion is necessary and/or acceptable to implement efficient screening programs (subject-cooperative vs. non-cooperative personal identification systems)?
- Will security-related slowing of freight transportation reduce the rate of private investment in advanced logistics and other management innovations that drive national productivity?
New Roles: Public and Private?
Relegitimization of Government—In recent years, the secular trend within the transportation sector has been toward reducing federal involvement—deregulation, the devolution of responsibly to lower levels of government, and increased privatization. Now, the international and national-scale dimensions of security refocus attention on the original constitutional responsibility of the federal level—national defense. The establishment of the Transportation Security Administration (TSA) signals the assumption of some federal responsibilities. Beyond airport security where the federal role is relatively clear, there are issues of appropriate federal actions with other modes where there is no federal operations responsibility. For highways, rail, ports, and transit, the federal government must play a lead role in setting security standards, including the identification of nationally critical facilities. It is a also major customer for protection and response business and will be heavily involved in information systems, given the large-scale personal database requirements with associated privacy and related legal issues. Yet within the transportation sector—as in many others—the federal establishment is not yet equipped by policy or capacity to rapidly assume (reassume?) many of these roles.
Institutional Cooperation—The events of 9/11 revealed the fragmentation among public agencies and jurisdictions responsible for surface transportation operations. Chains of command and interjurisdictional relationships were sometimes unclear and communications were substantially not interoperable. The lack of practiced cooperation is now the focus of many regional training and simulation exercises. Perhaps the habits developed in these activities will help to bridge the stovepiped character of the relations among transportation and public safety agencies that has long hampered improved highway operations. The need for consequence management communications interoperability among disaster first responders may also establish the long-needed platform for improved "normal incident management" coordination.
Public and Private Owner-operators—For state and local government or private service providers, total risk avoidance is not an affordable option. However, there are a broad range of responsibilities to be met, including installing immediate protective surveillance and protection, acquiring appropriate enterprise technologies, buying the right insurance, securing data networks, and assimilating security into corporate strategies. Vigilance must become a habit, and security, the same kind of internalized priority represented by safety. A key issue will be the determination of the appropriate level of investment based on the perceptions of both customers and the workforce and rolling out sequences that address the worst risks first.
Key Issues:
- What level of federal involvement in surface transportation is appropriate? Should the feds define critical facilities and set security standards for state/local and or private facilities?
- Is it an appropriate public investment to subsidize the premarket investment in private IT for security logistics?
- Does an efficient response to security risks suggest the need for new partnerships or institutional realignments?
Bottom Line: Internalizing the Cost of Security
Development and deployment of security strategies will require considerable development and an enormous private installation investment. The costs will be borne in the cost of travel and shipping. It is not clear how many years of efficiency-based progress these costs will absorb. However, many security strategies relate to building and populating information systems that more closely identify, characterize and monitor customers and freight within the transportation system. The platforms for these functionalities obviously have dual uses—for both minimizing terrorist threats and for the provision of more targeted service. The security imperative requires earlier—and perhaps less graceful—implementation of such capabilities. But the bottom line is a more stable and robust system to withstand the risks of terrorism or any other unpredictable events that may occur.