34 Port Security and the Quality of Port Interchange Service Wayne K. Talley and Venus Y. H. Lun 34.1 Introduction It became clear following the terrorist attacks in New York City on September 11, 2001 that US ports and cargo at foreign ports bound for US ports were at high risk of terrorist attacks. In response to this risk, the US Congress passed a number of acts and initiated a number of programs to secure US ports and cargo bound for US ports from terrorist attacks the 2001 Aviation and Transportation Security Act, the 2002 Maritime Transportation Security Act, the Coast Guard s maritime security program, the Bureau of Customs and Border Protection s (CBP s) maritime security program, and the Security and Accountability for Every (SAFE) Port Act of 2006. Since no serious terrorist incident has occurred at US ports, one may conclude that these acts and programs have been effective in securing US ports from terrorist attacks. However, the effects of US port security acts and programs on the quality of port interchange services provided by US ports and US foreign trading ports are unclear. Can improvements in the quality of port security service increase the quality of port interchange services? This chapter addresses this question. Although it is generally agreed that improvements in the quality of port security service, such as one - hundred percent scanning of containers (Talley 2011 ), can lead to container port congestion and thus have a negative effect on the quality of container port interchange services, the question of a positive effect has not been investigated in the literature (to the knowledge of the authors). The next section discusses US port security legislations and programs, since many port security programs around the world are based upon these legislations and programs. Sections 34.3 and 34.4 discuss port interchange and port security services, respectively, as well as measures of the quality of these services. Then, a model of the relationship between the quality of port interchange services and port security The Blackwell Companion to Maritime Economics, First Edition. Edited by Wayne K. Talley. 2012 Blackwell Publishing Ltd. Published 2012 by Blackwell Publishing Ltd.
702 WAYNE K. TALLEY AND VENUS Y. H. LUN service is presented. Section 34.5 presents an empirical investigation. Data for investigating whether improvements in the quality of port security service can improve the quality of port interchange services were obtained from an e - questionnaire that was e - mailed to a database of container port operators found in Containerisation International (2009). Section 34.6 concludes. 34.2 US Port Security Legislations and Programs Following the terrorist attacks in New York on September 11, 2001, regulations, both US and international, have created barriers to deny terrorist plans and events. The US Congress on November 19, 2001 established the Transportation Security Administration (TSA) with the enactment of the Aviation and Transportation Security Act. During TSA s early existence, its primary emphasis was on aviation security, but today its mission is to ensure the security of the transportation of people and goods on all modes within and to and from the US. Improving access control to ports is an important component of TSA s security mission. Port access-control measures include alarm systems, employee background checks, security patrols, perimeter fencing, terminal lighting, a closed - circuit television system and port access/egress controls on trucks and rail cars (i.e., vehicle checks). In 2002 the United Nations International Maritime Organization (IMO) ratified the International Ship and Port Security (ISPS) Code. The Code takes a risk management approach to the security of ports, by monitoring and controlling access, monitoring the activities of people and cargo, and ensuring the availability of security communications at ports. Ports are required to have security plans, officers and equipment. Marine terminals that serve seagoing vessels of 500 gross tonnage and upwards on international voyages were to comply with the ISPS Code by July 1, 2004. On November 25, 2002 the US Maritime Transportation Security Act (MTSA) was signed into law. The MTSA seeks to protect US ports and waterways from terrorist attacks by employing a risk - based methodology that focuses on the higher security - risk sectors of the maritime industry. Further, the MTSA seeks to prevent security incidents in the movement of maritime cargo from shipper to consignee in the maritime supply chain. The international requirements of the ISPS Code are also a component of the MTSA. The implementations of the ISPS Code and the MTSA at US ports have resulted in more canine teams and identification checks at these ports. Also, floating barriers provide physical protection and add a layer of defense, by stopping attacking vessels and increasing the security breach response time for authorities. Port security plans include not only access control, but staff training on how to respond to security threats. The US Coast Guard has played an aggressive role in US port security utilizing a High Interest Vessel Boarding Program, deploying Sea Marshals aboard certain ships entering and leaving ports, and establishing port security zones around ships and high - risk port facilities. The Maritime Security Level (MARSEC) system was established to notify the severity of a security threat: (1) level one a threat is possible, but not likely; (2) level two terrorists are likely
PORT SECURITY AND SERVICE QUALITY 703 active in an area; and (3) level three a threat is imminent to a given target. The security defense for US ports is much greater than just the security defense at the ports themselves. Specifically, the security defense for US ports is layered and consists of four zones: foreign port, offshore, coastal and dockside zones (Emerson and Nadeau 2003 ). The foreign port zone (layer 1) is a foreign port at which cargo bound for a US port is denied placement on board a ship that is bound for this US port. The offshore zone (layer 2) consists of US waters inside the 200 - mile exclusive economic zone but beyond the US 12 - mile territorial sea. In this zone, ships bound for US ports are required to provide an Advance Notice of Arrival at least 96 hours before arriving at a US port. The coastal zone (layer 3) consists of US waters inside the 12 - mile territorial sea to the docks and piers of a US port. The US Ports and Waterways Safety Act allows the Coast Guard to establish security sub - zones within the coastal zone in order to keep waterways, vessels and ports safe from terrorist attacks. The dockside zone (layer 4) is the port itself. On March 1, 2003 the US Department of Homeland Security (DHS) was established. The DHS is responsible for strategies, standards and funding for the security of ports and other transportation infrastructures. The DHS Bureau of Customs and Border Protection (CBP) is responsible for establishing voluntary international programs that provide point-of-origin to final destination visibility and control over containerized freight movements the Container Security Initiative (CSI) and the Customs Trade Partnership Against Terrorism (C TPAT). The CSI is a bilateral agreement between the US and a foreign port, whereby the foreign port is to identify high - risk containerized cargo and work with deployed CBP officers (at the foreign port) to target such cargo. Foreign ports are asked to screen containers (for dangerous cargo) before they are loaded onto US - bound ships. C TPAT is a joint government business initiative to build cooperative security relationships. Businesses seeking to become C TPAT companies are required to adhere to security restrictions, i.e., a security plan that incorporates C TPAT guidelines. The benefit of C TPAT to C TPAT companies is the accelerated customs clearances of their shipments at US ports. A DHS compulsory program is the 24 - Hour Advance Manifest Rule (24 - hour rule). This requires container shipping lines to provide information electronically to the CBP, at least 24 hours before departure, about container cargo on board any of their ships which is currently at a foreign port and bound for a US port as its next port of call. The submitted information allows the screening and targeting of suspected containers. On October 13, 2006 the US Security and Accountability for Every (SAFE) Port Act was signed into law. The Act seeks to strengthen US port security by establishing technology initiatives and better data - collection programs. One technology initiative is the implementation of the Transportation Worker Identification Credential (TWIC) program, which requires background security checks and biometric credentials for all workers operating in or around US ports. The Act requires improvements in the US automatic targeting system program, which collects and analyzes container cargo data for the targeting of high - risk cargo. For example, data gathered on US - bound containers at foreign ports are to
704 WAYNE K. TALLEY AND VENUS Y. H. LUN be encrypted and transmitted in near - real time to the CBP s National Target Center. The Act also instructed the DHS to establish a pilot program the Secure Freight Initiative (SFI) to test the feasibility of one - hundred percent screening of US - bound containers. 1 34.3 Port Interchange Service A port provides interchange service to cargoes, maritime - carrier vessels and surface - carrier vehicles (see Chapter 24, Ports in Theory ); that is, cargoes, maritime - carrier vessels and surface - carrier vehicles received by a port are provided services by the port before their departure from the port. The amount of interchange service that a port can provide will depend upon the amount of resources that it utilizes in the provision of the service and the amount of cargo and the number of maritime - carrier vessels and surface - carrier vehicles that it receives for interchange service. 34.3.1 Port interchange service production and resource functions If the amount of interchange service provided by a port is the maximum amount that can be provided given the amount of resources utilized and the amount of cargo and number of maritime - carrier vessels and surface - carrier vehicles received by the port, then this relationship may be described as the port s production function in the provision of port interchange service. If the port adheres to its production function in the provision of port interchange service, it is technically efficient in providing interchange service. 2 Port interchange produc- tion functions for freight, vessel and vehicle interchange services may be expressed as (see Chapter 24 ): PFIS = fi( R1, R 2,, R s, R S; Cargoes) (1) PVIS = vi( R1, R 2,, R s, R S; Vessels) (2) PHIS = hi( R1, R 2,, R s, R S; Vehicles) (3) where PFIS, PVIS and PHIS represent port freight, vessel and vehicle interchange services, respectively, and R s is the sth resource, where s = 1, 2,... S. A port s resource function for the sth type of resource (R s ) for interchange services relates the minimum amount of this resource to be employed by the port to the levels of its interchange service operating options and the amounts of cargo and the number of maritime - carrier vessels and surface - carrier vehicles received (Talley 1988 ); that is, Rs = Rs( Interchange Service Operating Optionn; Cargoes, Vessels, Vehicles) s= 12,, S; n= 12,, N (4) where Option n is the nth operating option of the port. 34.3.2 Port interchange service operating options A port s interchange service operating options are the means by which it can differentiate the quality of its interchange services (see Chapter 24 ). When the port s accident damage and loss operating options decrease (increase), the quality of the port s interchange services increases (decreases). When the port s reliability, accessibility and loading/unloading service - rate operating options increase (decrease), the quality of
PORT SECURITY AND SERVICE QUALITY 705 the port s interchange services increases (decreases). Examples of interchange service operating options for a container port found in the literature are: Accident damage to cargo in port in dollars Theft loss of cargo in port in dollars Departure gate reliability the percentage of time that the port s departure gate is open for vehicles Entrance gate reliability the percentage of time that the port s entrance gate is open for vehicles Berth accessibility the percentage of time that the port s berth adheres to the authorized depth and width dimensions Berth reliability the percentage of time that the port s berth is open to the berthing of ships Channel accessibility the percentage of time that the port s channel adheres to the authorized depth and width dimensions Channel reliability the percentage of time that the port s channel is open to navigation Accident damage to container ships in port in dollars Loading service rate for container ships containers loaded on a container ship per unit of time Theft loss of container ship property in port in dollars Unloading service rate for container ships containers unloaded from a container ship per unit of time Accident damage to vehicles in port in dollars Loading service rate for vehicles containers loaded on a vehicle per unit of time Theft loss of vehicle property in port in dollars Unloading service rate for vehicles containers unloaded from a vehicle per unit of time. (Talley 2006 ) A container port interchange service operating option not listed in Subsection 34.3.2 is the service rate for stored containers, i.e., stored containers per unit of storage time. When this rate increases (decreases), the port incurs a decrease (increase) in quality of service, since by being in storage containers are not passing through the port to generate greater port interchange service. Rather than using the operating option service rate for stored containers, container ports normally use its reciprocal, container dwell time or storage time per stored container, as an interchange service operating option. When dwell times for containers decrease (increase), the quality of the port s container interchange services increases (decreases). Port service quality perception measures also appear in the literature. However, these measures are generally not port interchange service operating options. Port service quality perception measures are generally viewed from the perspective of port users, i.e., carriers and shippers, whereas port interchange service operating options are viewed from the perspective of the port (or its operator). Port service quality perception measures considered by Ugboma, Ogwude, Ugboma and Nnadi (2007) include tangibles (e.g., modern cargo - handling equipment), reliability (e.g., delivers on promises), responsiveness (e.g., little waiting time for ships to get service), assurance (e.g., handles complaints in a timely fashion) and empathy (e.g., informs promptly of any problems).
706 WAYNE K. TALLEY AND VENUS Y. H. LUN Port service quality perception measures considered by Ha (2003) include port tangibles (e.g., the physical condition of the inland multimodal network), reliability (e.g., the expertise of port labor), responsiveness (e.g., effective resolution of ship and cargo claims) and convenience (e.g., reduction in ship turnaround time). Pantouvakis (2006) also considers the perception measures port tangibles (e.g., the physical condition of berthing facilities), reliability (accuracy in cargo pickup and delivery), and empathy (e.g., individual attention to customers). 3 34.4 Port Security Service A port s security service production function is the relationship between the maximum amount of security service that a port can provide and the amounts of security resources used by the port in the provision of this service and the amount of cargoes and number of maritime - carrier vessels and surface - carrier vehicles received by the port. If the port adheres to its security service production function in the provision of security service, the port will be technically efficient in providing this service. The port s security service production function may be expressed as: PSS = ps( R1, R 2,, R t, R SR; Cargoes, Vessels, Vehicles) t= 12,, SR (5) Port security resources R t include, for example, security inspection personnel and equipment. A port security service resource function similar to its interchange service resource function also exists. A port s security service resource function relates the minimum amount of a security resource R t to be employed by the port to its levels of security service operating options and cargoes, vessels and vehicles received by the port. This function may be expressed as: R t = sr( Security Service Operating Optionso; Cargoes, Vessels, Vehicles) t= 12,, SR; so= 12,, SO (6) Port security service operating options are the means by which the port can vary the quality of its security service. A container port, for example, can improve the quality of its security service by increasing its security inspection rates and frequencies. Examples of container port security operating options are: Container security inspection rate percent of containers that are inspected per unit of time Mobile equipment security inspection frequency number of times that mobile equipment is inspected per unit of time Departure gate security inspection frequency number of times that the departure gate is inspected per unit of time Entrance gate security inspection frequency number of times that the entrance gate is inspected per unit of time Berth security inspection frequency number of times that the berth is inspected per unit of time Channel security inspection frequency number of times that the channel is inspected per unit of time
PORT SECURITY AND SERVICE QUALITY 707 Ship security inspection rate percent of ships that are inspected per unit of time Vehicle security inspection rate percent of vehicles that are inspected per unit of time Storage yard security inspection frequency number of times that the storage yard is inspected per unit of time If a port s security service has a negative impact on the quality of its interchange service, for example by interfering with the service and thus slowing it down, then an increase in the port s security service will lower the quality of its interchange service, all else held constant. Alternatively, a port s security service may have a positive impact on the quality of its interchange service; for example, an increase in security inspections of port cargo storage areas may result in a decrease in port cargo theft, all else held constant. The non-intrusive inspection of containers at a port by scanning and radiation detection can have a negative impact on the port s quality of container interchange service in several ways. First, if the security operating option the container security inspection rate for non - intrusive inspections is increased, containers may have to wait in inspection queues, so that they sit idle or in storage for longer than in the absence of these inspections. In this case, the increase in the container security inspection rate will lead to an increase in the interchange service operating option, service rate for stored containers (stored containers per unit of storage time), thereby reducing the port s quality of container interchange service. Second, container inspection delays may arise not only because of inadequate scan- ning and radiation detection capacity but because the equipment generates more alarms than there are inspection workers to resolve. Third, redirecting containers through a centrally located inspection facility, and therefore diverting them from their usual port flow pattern, has the potential to generate significant container port congestion (Bakshi, Flynn and Gans 2009 ). If the quality of a port s security service affects the quality of its interchange services, it may be inferred that the interchange service operating options of the port are a function of its security service operating options, i.e., Interchange Service Operating Optionn = h( Security Service Operating Optionso ) n= 12,, N; so= 12,, SO (7) If changes in a port s security service operating options lead to a decrease (increase) in the quality of the port s interchange services, then the port s security service has had a negative (positive) impact on the quality of the port s interchange services. 34.5 An Empirical Analysis It is well known that an increase in port security inspections can have a negative effect on the quality of a port s interchange services. For example, the one - hundred percent scanning of containers at a container port can create congestion in the flow of containers at the port and thus have a negative impact on, for example, the speed at which containers can be loaded onto and unloaded from ships and road and railroad vehicles. However, it is unclear whether an increase in port security inspections can
708 WAYNE K. TALLEY AND VENUS Y. H. LUN have a positive impact on the quality of port interchange services. This question was investigated using information gathered from an e - questionnaire 4 that was constructed and e - mailed to worldwide container ports and marine terminals in a database found in Containerisation International (2009). Operators of nineteen container ports and marine terminals in Australasia, China, Europe, North America and South America responded to the questionnaire. A sample questionnaire appears in the Appendix. It consists of 16 questions. In questions 1 through 7, the respondent is asked to provide the name of the port or terminal and his or her name, department within the port or terminal, job title, phone number, fax number and e - mail address. The remaining questions, 8 through 16, ask the respondents to assess whether the quality of interchange service (as measured by a given interchange service operating option listed in Subsection 34.3.2 ) could be enhanced by improving the quality of the security service (as measured by increases in the nine security service operating options listed in Section 34.4 ). Questions 8 through 11 indicate that the quality of port interchange service improves as a result of an increase in the given container port interchange service operating option. Questions 12 through 16 show that the quality of port interchange service improves if the given container port interchange service operating option decreases. For the nine port security service operating options under each of the questions 8 through 16, the quality of port security service improves if the port security service operating options increase. Respondents to questions 8 through 16 were asked to rank their responses on a 5-point scale (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree and 5 = strongly agree). Consequently, each respondent was asked to make a total of 81 responses related to these questions nine interchange service operating options multiplied by nine security service operating options. In order to test (using these responses) whether an improvement in the quality of a container port s security service will result in an improvement in the quality of the container port s interchange service (i.e., whether a positive relationship exists between a container port s quality of interchange service and its quality of security service), t - tests of arithmetic means were performed. Specifically, 81 arithmetic means were computed based upon the 19 responses to each of the 81 questions. The 81 arithmetic means appear in Table 34.1. The nine security service operating options in the table are labeled a through i. The arithmetic means in Table 34.1 were used to compute t - statistics to test whether these arithmetic means could have come from a sampling distribution of means with a population mean of 3 (denoting neutral in the respondents rankings). An estimate of the standard deviation of the sampling distribution of means is obtained by dividing the standard deviation of the 19 responses for each question by the square root of the sample size (19 observations). The t - statistics in the final column of Table 34.1 were determined by taking the difference between the sample mean and the assumed population mean of 3 (for the sampling distribution of means) and dividing this difference by the estimate of the standard deviation of the sampling distribution of means in column 4 in the table. The absolute values of the critical t - values for tests
Table 34.1 An empirical analysis of port interchange versus port security service operating option responses Survey question Arithmetic mean Std. dev. Std. dev/ n t-statistic a_8 2.10526 0.80930 0.18567 4.8190 b_8 2.21053 0.91766 0.21053 3.7500 c_8 2.63158 1.01163 0.23208 1.5875 d_8 2.36842 1.01163 0.23208 2.7213 e_8 2.26316 0.99119 0.22739 3.2404 f_8 2.10526 0.80930 0.18567 4.8190 g_8 2.26316 0.93346 0.21415 3.4408 h_8 2.31579 1.05686 0.24246 2.8219 i_8 2.47368 0.96427 0.22122 2.3792 a_9 2.10526 0.80930 0.18567 4.8190 b_9 2.26316 0.87191 0.20003 3.6836 c_9 2.47368 1.07333 0.24624 2.1374 d_9 2.42105 0.90159 0.20684 2.7990 e_9 2.42105 1.12130 0.25724 2.2506 f_9 2.31579 1.05686 0.24246 2.8219 g_9 2.42105 1.07061 0.24561 2.3571 h_9 2.42105 0.96124 0.22052 2.6253 i_9 2.26316 0.80568 0.18484 3.9865 a_10 2.05263 0.70504 0.16175 5.8571 b_10 2.36842 1.01163 0.23208 2.7213 c_10 2.42105 0.96124 0.22052 2.6253 d_10 2.47368 1.02026 0.23406 2.2486 e_10 2.31579 1.00292 0.23009 2.9737 f_10 2.21053 0.91766 0.21053 3.7500 g_10 2.26316 0.99119 0.22739 3.2404 h_10 2.26316 0.99119 0.22739 3.2404 i_10 2.31579 0.82007 0.18814 3.6368 a_11 2.73684 1.14708 0.26316 1.0000 b_11 2.89474 0.99413 0.22807 0.4615 c_11 2.89474 1.10024 0.25241 0.4170 d_11 2.63158 1.11607 0.25604 1.4389 e_11 3.10526 1.24252 0.28505 0.3693 f_11 3.05263 1.22355 0.28070 0.1875 g_11 2.73684 1.19453 0.27404 0.9603 h_11 2.47368 0.90483 0.20758 2.5355 i_11 2.42105 0.76853 0.17631 3.2836 a_12 3.31579 1.15723 0.26549 1.1895 b_12 2.94737 1.22355 0.28070 0.1875 c_12 3.31579 1.05686 0.24246 1.3024 d_12 3.21053 1.18223 0.27122 0.7762 (Continued)
Table 34.1 (Continued) Survey question Arithmetic mean Std. dev. Std. dev/ n t-statistic e_12 3.31579 1.20428 0.27628 1.1430 f_12 3.15789 1.16729 0.26780 0.5896 g_12 3.42105 1.12130 0.25724 1.6368 h_12 2.94737 1.02598 0.23538 0.2236 i_12 2.68421 0.94591 0.21701 1.4552 a_13 2.89474 1.19697 0.27460 0.3833 b_13 3.36842 1.21154 0.27795 1.3255 c_13 2.63158 0.95513 0.21912 1.6813 d_13 2.89474 1.19697 0.27460 0.3833 e_13 2.73684 0.99119 0.22739 1.1573 f_13 2.47368 0.84119 0.19298 2.7273 g_13 2.89474 1.10024 0.25241 0.4170 h_13 3.10526 1.19697 0.27460 0.3833 i_13 3.00000 1.15470 0.26491 0.0000 a_14 2.78947 1.13426 0.26022 0.8090 b_14 2.47368 0.96427 0.22122 2.3792 c_14 3.36842 1.21154 0.27795 1.3255 d_14 2.78947 1.18223 0.27122 0.7762 e_14 2.94737 1.07877 0.24749 0.2127 f_14 2.94737 1.12909 0.25903 0.2032 g_14 2.89474 1.19697 0.27460 0.3833 h_14 2.52632 0.90483 0.20758 2.2819 i_14 2.47368 0.84119 0.19298 2.7273 a_15 3.05263 1.22355 0.28070 0.1875 b_15 2.78947 1.03166 0.23668 0.8895 c_15 2.89474 1.10024 0.25241 0.4170 d_15 3.26316 1.28418 0.29461 0.8932 e_15 2.89474 1.10024 0.25241 0.4170 f_15 2.68421 1.05686 0.24246 1.3024 g_15 2.84211 1.16729 0.26780 0.5896 h_15 2.84211 1.01451 0.23275 0.6784 i_15 2.57895 0.90159 0.20684 2.0357 a_16 3.52632 1.26352 0.28987 1.8157 b_16 3.31579 1.24956 0.28667 1.1016 c_16 3.42105 1.21636 0.27905 1.5089 d_16 2.68421 1.15723 0.26549 1.1895 e_16 3.52632 1.17229 0.26894 1.9570 f_16 3.73684 1.04574 0.23991 3.0713 g_16 3.73684 1.04574 0.23991 3.0713 h_16 3.31579 1.20428 0.27628 1.1430 i_16 2.94737 1.17727 0.27008 0.1949
PORT SECURITY AND SERVICE QUALITY 711 of significance for 18 degrees of freedom (sample size minus 1) for one - tailed tests at the.05 and.01 levels of significance are 1.734 and 2.552, respectively. Note that for all sample means for questions 8 through 10, the t - statistics are negative and statistically significant at least at the five percent level, suggesting that improvements (or increases) in container port quality of security service do not result in improvements in the quality of interchange service where the latter is measured in terms of container port loading/unloading service rates for ships, for road and railroad vehicles, and for port cargo - handling equipment. In question 11, on security service operating options, for frequency of berth and channel security inspection the t - statistics are negative and significant at the one percent level, suggesting that improvements (or increases) in these measures of quality of security service do not result in improvements in the quality of interchange service measured as the reliability of port entrance and departure gates. The t - statistics for the remaining security service operating options in question 11 are statistically insignificant, also suggesting that improvements in these security service operating options do not result in improvements in the reliability of the port s entrance and departure gates. The t - statistics for question 12 and its security service operating options are statistically insignificant, suggesting that improvements (or increases) in the quality of security service will have no effect on the quality of interchange service via the accident damage cost to port cargo. For question 13, the t - statistic for an increase in the frequency of departure gate security inspection is statistically significant, suggesting (with a negative t - statistic) that an increase in this inspection will not result in an improvement or the lowering of accident damage cost to ships in port. For question 14, the t - statistics for the security service operating options ships are security - inspected, frequency of berth security inspection and of channel security inspection are statistically significant, suggesting (with negative t - statistics) that an improvement in these security operating options will not result in an improvement in the quality of interchange service via the accident damage cost to road and railroad vehicles. For question 15, only the t - statistic for an increase in the frequency of channel security inspection is statistically significant, suggesting (with a negative t - statistic) that an increase in the frequency of this inspection will not result in an improvement or lowering in accident damage cost to port cargo - handling equipment. For question 16, the t - statistics for the security service operating options throughput is security - inspected, frequency of entrance gate security inspection, of departure gate security inspection and of storage yard security inspection are statistically significant, suggesting (with positive t - statistics) that improvements (increases) in these security operating options will result in an improvement (a decrease) in port cargo theft. These results provide evidence that improvements in the quality of container port security service can result in improvements in the quality of container port interchange service. Specifically, the empirical results suggest that increases in certain container port security inspections can reduce port cargo theft, thereby improving a container port s quality of container port interchange service.
712 WAYNE K. TALLEY AND VENUS Y. H. LUN 34.6 Summary An increase in security inspections of containers at a container port may result in container inspection delays at the port, resulting in containers waiting in inspection queues, sitting idle or in storage for longer. Thus, the container inspection delays will have had a negative effect on the quality of the container port s interchange service requiring more time for containers to pass through the port or to be interchanged, all else held constant. Can an increase in a port s security inspections also have a positive effect on the port s interchange services, that is, result in a improvement in the quality of the port s interchange services? This question was addressed empirically by analyzing the responses to a questionnaire that was sent to container ports and marine terminals found in Containerisation International (2009). The questionnaire asked respondents to answer questions on whether increases (or improvements) in container port security service operating options would have a positive effect on container port interchange service operating options. The means by which a port can vary the quality of its security service are its security service operating options (e.g., container security inspection rate and entrance gate security inspection frequency). The means by which a port can vary the quality of its interchange services are its interchange service operating options (e.g., entrance gate reliability, loading service rate for container ships, and berth accessibility). The results of the empirical analysis suggest that increases in the security service operating options throughput is security - inspected, frequency of entrance gate secu- rity inspection, of departure gate security inspection and of storage yard security inspection will result in an improvement (a decrease) in the interchange service operating option port cargo theft. These results provide evidence that improvements in the quality of container port security service can result in improvements in the quality of container port interchange service. Appendix: Questionnaire Q1. Name of port or marine terminal Q2. Your name Q3. Name of your department/division/ section/unit Q4. Your job title Q5. Your phone no. Q6. Your e-mail address Q7. Your fax no. Q8. The loading/unloading service rates for ships at a port (i.e., the speed at which cargo can be loaded and unloaded to and from ships) can be improved if: security f. Frequency of departure gate security
PORT SECURITY AND SERVICE QUALITY 713 Q9. The loading/unloading service rates for road and railroad vehicles at a port (i.e., the speed at which cargo can be loaded to and from road and railroad vehicles) can be improved if: security f. Frequency of departure gate security Q10. The loading/unloading service rates for port cargo - handling equipment at a port (i.e., the speed at which cargo can be loaded to and from port cargo - handling equipment) can be improved if: security f. Frequency of departure gate security Q11. The reliability of entrance and departure gates at a port (i.e., the ability of the port s entrance and departure gates to process road and railroad vehicles at their designed standards) can be improved if: security f. Frequency of departure gate security inspection is increased Q12. The accident damage (in cost) to cargo at a port will decrease if: security f. Frequency of departure gate security
714 WAYNE K. TALLEY AND VENUS Y. H. LUN Q13. The accident damage (in cost) to ships at a port will decrease if: security f. Frequency of departure gate security Q14. The accident damage (in cost) to road and railroad vehicles at a port will decrease if: security f. Frequency of departure gate security Q15. The accident damage (in cost) to port cargo - handling equipment at a port will decrease if: security f. Frequency of departure gate security Q16. The theft (in cost) of cargo at a port will decrease if: security f. Frequency of departure gate security
PORT SECURITY AND SERVICE QUALITY 715 Notes 1 For further discussion of US port security, see Pinto, Rabadi and Talley (2008). For discussions of EU and Asian port security, see Pallis and Vaggelas (2008) and Ng and Gujar (2008), respectively. 2 For a discussion of ports and technical efficiency, see Cheon, Dowall and Song (2010), Cullinane (2002), Dowd and Leschine (1990), Kim and Sachish (1986), Song, Cullinane and Roe (2001), Wang, Cullinane and Song (2005) and Yan, Sun and Liu (2009). 3 Discussions of port competition and quality of service are found in Lam and Yap (2006) and Yeo and Song (2006). 4 Source: https://mydoc.polyu.edu.hk/ mysurvey/public/survey.php?name = lgtjlauy_port_security_port_performance_ copy. References Bakshi, N., S. Flynn and N. Gans (2009 ) Estimating the operational impact of container inspections at international ports. Working Paper no. 2009-05-01, Wharton School, University of Pennsylvania. Cheon, S., D. E. Dowall and D.-W. Song (2010 ) Evaluating impacts of institutional reforms on port efficiency changes: ownership, corporate structure, and total factor productivity changes of world container ports. Transportation Research Part E: Logistics and Transportation Review 46 (4 ): 546 61. Containerisation International (2009 ) Containerisation International Yearbook. London : Informa. Cullinane, K. (2002 ) The productivity and efficiency of ports and terminals: methods and applications. In C. Grammenos (ed.), The Handbook of Maritime Economics and Business, pp. 426 42. London : Lloyds of London Press. Dowd, T. and T. Leschine (1990 ) Container terminal productivity: a perspective. Maritime Policy and Management 17 : 107 12. Emerson, S. D. and J. Nadeau (2003 ) A coastal perspective on security. Journal of Hazardous Materials 104 : 1 13. Ha, M.-S. (2003 ) A comparison of service quality at major container ports: implications for Korean ports. Journal of Transport Geography 11 : 131 7. Kim, M. and A. Sachish (1986 ) The structure of production, technical change and productivity in a port. Journal of Industrial Ec onomics 35 : 209 23. Lam, J. S. L. and W. Y. Yap (2006 ) A measurement and comparison of cost competitiveness of container ports in Southeast Asia. Transportation 33 : 641 54. Ng, K. Y. A. and G. C. Gujar (2008 ) Port security in Asia. In W. Talley (ed.), Maritime Safety, Security and Piracy, pp. 257 78. London : Informa. Pallis, A. A. and G. K. Vaggelas (2008 ) EU port and shipping security. In W. Talley (ed.), Maritime Safety, Security and Piracy, pp. 235 55. London : Informa. Pantouvakis, A. (2006 ) Port-service quality dimensions and passenger profiles: an exploratory examination and analysis. Maritime Economics and Logistics 8 : 402 18. Pinto, C., G. Rabadi and W. K. Talley (2008 ) US Port Security. In W. Talley (ed.), Maritime Safety, Security and Piracy, pp. 217 33. London : Informa. Song, D.-W., K. Cullinane and M. Roe (2001 ) The Productive Efficiency of Container Terminals: An Application to Korea and the UK. London : Ashgate. Talley, W. K. (1988 ) Transport Carrier Costing. New York : Gordon and Breach Science Publishers. Talley, W. K. (2006 ) An economic theory of the port. In K. Cullinane and W. K. Talley (eds.), Port Economics, pp. 43 65. Research in
716 WAYNE K. TALLEY AND VENUS Y. H. LUN Transportation Economics, 16. Amsterdam : Elsevier. Talley, W. K. (2009 ) Port Economics. Abingdon, Oxon : Routledge. Talley, W. K. (2011 ) One-hundred percent scanning of port containers: the impact on maritime transport chains. In K. Cullinane (ed.), The International Handbook of Maritime Economics, pp. 207 11. Cheltenham, Glos.: Edward Elgar. Ugboma, C., I. C. Ogwude, O. Ugboma and K. Nnadi (2007 ) Service quality and satisfaction measurements in Nigerian ports: an explora- tion. Maritime Policy and Management 34 : 331 46. Wang, T.-F., K. Cullinane and D.-W. Song (2005 ) Container Port Production and Economic Efficiency. Basingstoke : Palgrave Macmillan. Yan, J., S. Sun and J. Liu (2009 ) Assessing container operator efficiency with heterogeneous and time - varying production frontiers. Transportation Research Part B 43 : 172 85. Yeo, G.-T. and E.-W. Song (2006 ) An application of the hierarchical fuzzy process to container port competition: policy and strategic implications. Transportation 33 : 409 22.