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Thu 1 Feb 2007 12:00 AM

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Ask the expert: Dr Guy Sadler

How can a sea freight company maximise trade whilst reducing the risk of diversion in a security sensitive marketplace?

Question:

How can a sea freight company maximise trade whilst reducing the risk of diversion in a security sensitive marketplace?

Expert:

Dr Guy Sadler

Founder and head of Boartes Strategic Services, based in Qatar.

Boartes has for the past two years been assisting governments and businesses to reduce the risk of inadvertent proliferation. As a senior Australian counter proliferation expert, Dr Sadler spent much of the last ten years working throughout the Middle East and Asia.

Answer:

The modern security environment dictates that companies involved in any aspect of “dual use” trade, including international shippers, must corporately embrace the doctrine of counter proliferation. This means quickly learning to recognise which of their cargo is sensitive and understanding how to mitigate the considerable corporate risks posed to their business.

Mass casualty terrorism and the international community’s failing patience with the ill-defined “rogue nations” have led to tighter controls over the export of dual use items and increasingly severe repercussions for even inadvertent transgressions. Transport companies face essentially the same corporate risks as the manufacturers and traders, but are typically overlooking the threat that has seriously compromised the viability of thousands of firms now included on various blacklists, that result in potentially crippling international sanctions, administrative fines, and criminal prison sentences for executives.

Because the vast majority of weapons of mass destruction (WMD) proliferation occurs openly amid the international marketplace, this makes almost every shipment potentially suspect - and therefore a risk, as governments take ever greater interest in companies that produce or transport dual use products that might end up as WMD in the wrong hands.

Actively confirming the legitimacy of the end user and end use is essential to protecting the commercial viability of shipping companies, ensuring they do not become known as the “shipper of choice” for irresponsible manufacturers or suspect organisations. The investigation of end user and use comprises physical inspections, interviews, monitoring, and detailed corporate research set in the context of regional and international security.

By developing a wider understanding of the complex modern security environment, companies can protect themselves from the harmful effects of even inadvertently supplying weapons-materials to terrorists or “rogue nations.” Cargo companies have access to both the producer and consumer, in addition to the shipping route, and with greater access to information than single manufacturers can develop a more sophisticated understanding of markets and clients. This means the shipper must understand the broader context of the market they service, such as the normal replenishment rates for specific facilities, process methodology, consumption rates, wastage rates, and sub-clients. This information could be essential to establishing the legitimacy of the end user and end use.

This is not espionage; just good business in the modern environment. Business must adapt to the new world or be left behind.

The ability to gather, analyse, and present meaningful data is crucial to avoid being blacklisted, but is such a highly specialised task that without specialist professional support it will add a daunting and bewildering additional complexity to the global marketplace. Seeking qualified expertise is therefore essential to insure against disaster as detailed proliferation risk analysis becomes a central part of international business.

Investigating and assessing the risk associated with exports, and developing appropriate safeguards inevitably adds some cost to business, but like other forms of insurance, the expense represents a wise investment in the future of the business when compared to the potentially enormous cost of failure.

Equally, companies should not underestimate the commercial advantage to be gained from demonstrating to governments, investors, bankers, partners, and clients their commitment to resisting proliferation.

Dual use

The term “dual use” refers to those civilian components and raw materials required to manufacture, maintain, or deliver chemical, biological, radiological or nuclear weapons, therefore affecting a wide range of industries that includes chemicals and petrochemicals, biotechnology, and advanced engineering materials.

“This is not espionage; just good business in the modern environment”

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