56th annual NDTA transportation and logistics Forum and Exposition.

Greensboro, NC

September 28 - October 2, 2002

WRAP-UP

Forum Keynote Speakers Wrap-up

Forum Educational Program Wrap-up

Forum Expo Exhibitor Promotion

Forum Photo Album Supplement sponsored by US Airways

FORUM KEYNOTE SPEAKERS

Commencement Keynote Speakers

Frederick W. Smith -- Chairman and CEO, Federal Express

General John W Handy, USAF -- Commander in Chief, USTRANSCOM

Luncheon Keynote Speaker

Admiral James M. Loy, USCG, (Ret.), Acting Under Secretary of Transportation Security

Good afternoon. NDTA members and guests, LTG Honor, LTG Wykle, General Handy and Chairman Crowe, it is an honor and pleasure for me to participate in your conference today. As a former Marine and Vietnam veteran, I appreciate the challenges our military and their industry partners face today and have always faced in providing warfighter support. I also appreciate the chance to speak to you today since last year's NDTA conference was not held due to 9-11. However, as tragic as the events of that day were, what emerged was a nation committed to homeland security and recommitted to the American way of life and commerce.

So we are gathered today to consider the global changes, challenges and solutions in a post 9/11 world. The changes and challenges dramatically affect not only the businesses of FedEx Corporation, but all US trade and logistics as well.

Decisions made about cargo security will have far-reaching influence on our economy and standard of living, so we must ensure that the right decisions are made. Before discussing that, however, I am sure this audience will have no trouble imagining with me the busy hum of trade on a typical day in the United States.

Some 20 thousand ocean containers arrive daily in US ports. Another 25 to 35 thousand truckloads each day pour in from Canada and Mexico. From the skies, about 15 thousand containers and pallets and hundreds of thousands of small, individual shipments arrive at US airports in both passenger and all-cargo planes each day. Similar scenarios, with different statistics, occur daily in Europe, Asia, Latin America and the Middle East--creating a worldwide trading system of about 10 trillion dollars per year, about one-fourth of which affects the US. What keeps all these planes flying, trucks rolling and ships sailing? The answer is found in four macro-economic trends that drive global commerce, whether you manufacture car parts in Tokyo or sell high-fashion garments in New York.

The first trend is the increase in high-tech and high-value-added goods as a percentage of total economic output. These types of goods can be roughly defined as any product with a relatively high value-to-weight ratio or a high value-added content. As Alan Greenspan often notes, the weight of the United States' economic output has barely changed in the past half-century while its value has increased fivefold. For example, international air cargo accounts for only about 2 percent of the tonnage moved, but over 40 percent of the total value--even more when petroleum and agriculture products and surface NAFTA trades are factored out. The DLA/FedEx Premium Service Program, begun in 1994, is a great example of moving high-volume goods through the supply chain.

Our warehouse in Memphis maintains an inventory of high-value goods that support such projects as the Tomahawk Missile program with critical electronic components for military readiness and deployment. These high-tech goods are delivered in the continental US within 24 hours and outside the continental US in 48 hours.

The second macro-trend is globalization. With global sourcing and selling, companies can streamline their supply chains and open new markets, and they have. In 1970, about a dime per dollar of US GDP was related in international trade. Now it's 25 cents per dollar and growing.

Globalization is not just a buzzword to the military. It's the reality of having to deploy equipment and supplies to the ends of the earth on a regular basis, including readiness to deploy to two theaters simultaneously.

In future conflicts, global sourcing of combat commodities such as food, fuel and construction materials could become a reality. FedEx has the most far-reaching global network, in terms of both physical and technological infrastructure, so we are quite proud of our partnership with the military that allows you to better serve the warfighter.

So, in general, the air cargo/air express industry has become the leading facilitator of trans-continental trade in the high-tech, high-value-added sectors. Why? Because people all over the world need things fast. That brings me to the third trend--fast-cycle logistics.

As the economy has become increasingly global, it has also become more fast-paced. Organizations such as the US military cannot wait weeks to source hightech, high-obsolescence items such as weapons and parts. So companies of all sizes depend on the delivery of just-in-time inventory to help them compete faster and more efficiently. For our military, compressing the supply chain improves readiness.

An example of fast-cycle logistics is the CRAF program, which we have participated in since 1984. One hundred percent of our wide-body aircraft fleet--111 MD-11s and DC-10s-is available for CRAF participation. The last activation of our fleet was Desert Storm, in which we flew 633 missions, the most of any carrier. The CRAF program is a critical factor in the security of our nation and the success of our military mission. That's why I think it's appropriate for the AMC to require CRAF participation of anyone entering into a military transportation contract.

Adding to the need for fast-cycle is the fourth trend--the growth of e-commerce via the Internet. In the old, industrial economy, a warehouse was used to manage inventory at rest. In the new, information-rich, networked economy, companies such as FedEx can help customers such as DLA manage inventory in motion.

The visibility of goods in motion is enabled by electronic commerce, which has been fueled by the growth of the World Wide Web. The genesis of e-commerce began during the Berlin airlift, when the military needed to move airplanes from one part of Germany to another so fast that people literally couldn't speak quickly and accurately enough to make sure that no mishaps resulted from transposition errors or miscommunication. And so electronic data interchange or EDI was born. Over the next 45 to 50 years, it was adopted by many major companies all over the world. The technology that began in those early years has now evolved into the Internet, which is so important in our daily lives that some people can hardly imagine a day without "going online." Now, for the better part of three decades, FedEx has been a technology leader. Our Web site, fedex.com, averages 4 million hits per month. Our automated transactions, including those on our Web site, generate more than 2 million shipments a day or about two-thirds of our domestic express volume. In fact, FedEx interfaces with multiple military shipping systems such as DSS that produce both the FedEx shipping label and the military shipping label. In addition, we provide logistics data to the DoD's Global Transportation Network several times a day. On a corporate level, we invest over $1 billion annually on the most sophisticated information technology and the best IT people we can find. It's this combination of networks--the physical, information and people networks--that enable FedEx to connect our customers with the global marketplace.

These four trends--the increase in high-value goods, globalization, fast-cycle logistics and e-commerce--have set the rhythm of modern commerce. Despite setbacks and slowdowns, they will continue to do so in the foreseeable future. But to ensure the momentum of these trends, we must meet the challenges posed by new security requirements. Certainly, one of the terrorist's goals on 9/11 was to attack American citizens, and the tragic loss of human life that day was a sad testament to their success. But their bigger goal was to cut the very fabric of American commerce, to stymie the infrastructure that connects our businesses to each other and the world. And in the short term, they were successful. Passenger air travel shriveled, and the economy, which had been showing signs of recovery, slumped.

However, there were some positive outcomes: a long-overdue tightening of passenger airline security, and The Aviation Security Act, which stipulated that all-cargo airlines must screen, inspect or otherwise ensure the security of goods aboard their aircraft. The challenge, of course, is to improve security in all modes of cargo transport without interrupting supply chains based upon the fast-cycle logistics so ingrained in today's environment, and to prevent security measures from becoming so time- and cost-intensive that they do not corrupt our business cycles--this would be letting the terrorists win after all. And we cannot let that happen.

What can we do then? I suggest several measures, some of which are already underway, to help us manage the need for increased security without choking the flow of trade. First, we must consolidate a variety of government functions under one banner and those functions must be able to share cross-functional databases. We applaud the proposal to integrate Customs and the INS to facilitate the international movement of people. That's a good start. We believe, longer term, however, that even more integration of information regarding the movement of goods will be required to address both security and trade facilitation needs.

Second, we must deploy much of the security and the Customs processes to the shipment's source of origin. The responsibility for security is not at the border, but at foreign points of consignment. The goal, as noted by US Customs Commissioner Robert Bonner, is to "push the cargo screening process outward, to make our border or seaport the last line of defense, not the first." Bonner suggests we do that by establishing criteria for high-risk containers, pre-screening containers for high or low-risk before they are shipped to the US, and then use technology to screen those high-risk containers.

Third, we must require complete visibility of all shipments in transit, including those in trailers and containers. At FedEx we have a system to provide our customers such visibility. It's called InSight. With it, our customers can track the status of their inbound, outbound, and third-party shipments and get status information about their shipments, anytime and anywhere, in order to better manage their supply chain. In-transit capabilities for military transportation are important, particularly in regard to surge capacity and re-deployment of supplies and parts. The Navy, for instance, often must ensure that goods-in-motion catch up with fleets-in-motion.

The fourth measure is to deal with shipments from known and unknown shippers differently. The definition for known shippers has been established by the TSA for cargo shipped on passenger airplanes. We need to apply such standards when establishing security procedures for cargo, whether by air, ground or water. Known shippers must be required to have adequate security systems in place, and these procedures must be periodically monitored by government authorities. Once established, such a system frees up transportation companies as well as Customs to scrutinize unknown shippers very closely.

The fifth measure we believe will be needed is a system that maintains positive control of all commercial vehicles and containers within the US. In other words, it won't be enough to track the shipments themselves but also the locations of the trailers or containers transporting the shipments. The techniques to do this range from simple to sophisticated. Here are some options, several of which are already in use: dispatch records or highways checks; radio frequency devices on vehicles that electronically record movement; satellite tracking devices called transponders; or simply 24-hour cell phone contact, currently common on planes and boats, but not on trucks.

Combining known, pre-approved shippers and satellite tracking of trucks is part of a new, cooperative border-crossing program the Customs Service is piloting to boost security at its commercial cargo checkpoints while eliminating inspection bottlenecks. Companies participating in this pilot program equip their trucks with transponders that allow the trucks to be waved through checkpoints electronically in seconds, subject only to occasional spot checks by Customs. In return, the companies have agreed to implement new precautions that make them partners in government security. The companies make extensive employee background checks, limit access to loading docks and plants, and conduct a special company review of security procedures and undergo one by Customs. The program allows the US to treat these companies as known shippers whose individual truck inventories can simply be beamed electronically. A major advantage of this program is that it will allow Customs to focus more on cargo they consider high risk. F edEx will be among the first to be certified when this program is formally extended beyond the pilot stage.

The sixth and last measure is more extensive employee background investigations. Most companies conduct some form of background investigation on employees they hire, but some do none at all. Other companies consider it a cost without payback, so they go with the lowest bidder and minimum checks. What we need in the transportation industry is the ability to conduct national, criminal history checks using the resources of the FBI's National Criminal Information Center. Such checks would include every county in every state as well as the watch lists published by various Federal agencies.

Many of the precautions that I have suggested today have been standard operating procedures at FedEx. We believe that shipper profiling, random screening based on such profiling, extensive employee education and the ability to track and trace shipments to the time and place of consignment are the security practices that make sense for cargo airlines. Of course, because cargo planes do not carry passengers, all-cargo operators have greater control over those who have access to aircraft. Therefore, the security issues regarding air freighters are quite different from those needed for passenger and combination aircraft.

Going forward, the airline cargo industries must embrace the notion of greater security in our post 9/11 environment. But those security needs must and can be accomplished cost-effectively through the use of technology, well-designed, focused processes, and effective cooperation and coordination between responsible government agencies and transport companies.

In conclusion, commerce around the world has been dramatically affected by the macro-trends I mentioned earlier and by heightened security requirements. Since the US Government worldwide is our single largest account, FedEx wants to ensure that the US Military is well positioned to thrive on the macrotrends and benefit from the increased security. What's more, we know our customers--military, corporations and small business--will continue to reward those carriers that consistently find new, technology-smart methods of moving materials and managing information to add value, shorten distance and optimize time.

You have our commitment to work with you to pioneer technology and systems that will keep our military strong.

I don't need to tell you the feeling I am sure we all had on 9/11. And to see the tools of our trade used as weapons was almost unfathomable. But what started as the darkest of days has turned into a shining testimony to the will of our people and the strength of our transportation team. Air Mobility Command, for instance, flew 4- airlift missions moving 2,867 personnel and 445 short tons of critically-needed rescue and recovery supplies in the three days immediately following 9/11. Urgent air defense measures protecting America's major cities required extensive aerial refueling support to sustain both fighter and airborne early warning and control aircraft. This marked a significant overall increase in tanker OPTEMPO, ultimately requiring 453 aerial refueling missions through the end of September 2001 alone. Our support to NOBLE EAGLE continued throughout the year, providing one of the highest operational tempos within the continental United States that USTRANSCOM has experienced.

Realizing that America's response to the terrorist attacks would ultimately require worldwide deployment and sustainment of US forces, we immediately began orchestrating the modal planning necessary to facilitate the movements required. Such planning, as you know, must be a collaborative effort, and so we worked hand in hand, day by day, hour by hour with our supported commands, the "warfighters", and our partners in industry, many of whom are represented here today within our audience. This historic response to combat terrorism ultimately became what we now know as Operation ENDURING FREEDOM. ENDURING FREEDOM efforts to date have been tremendous. The operation was, and continues to be, very complex. Not only has USTRANSCOM simultaneously supported five combatant commanders involved in worldwide operations in the War on Terrorism, but it was forced to operate in Afghanistan, one of the most austere operating areas ever experienced by modern military forces.

* Since 9/11, we've organized the transportation of 215,000 passengers and nearly 300 thousand short tons of equipment and supplies by air alone, and arranged more than 12,840 missions transporting troops, supplies, and equipment to Afghanistan. This would be difficult even in peace, and in war is an absolutely herculean undertaking.

* During an average week we schedule more than 1,900 air missions, have more than 25 ships enroute and complete more than 10,000 ground shipments.

* Because Afghanistan is land locked and the transportation infrastructure so undeveloped, Operation ENDURING FREEDOM quickly became a very air intensive operation. The operation is currently the third-largest airlift mission undertaken by the US military (largest was the Berlin Airlift, second largest was DESERT SHIELD/STORM).

But it is by no means an exclusively air mobility operation, and the team effort of our transportation network has made it possible. Our special operations troops had to move certain high tech equipment on the backs of pack mules. As the SECDEF has said, ingenuity is indeed transformational.

These are truly phenomenal accomplishments by our men and women in the Defense Transportation System. And I am more certain than ever that our success hinges on the close relationship between the military and our commercial partners in industry.

* The Military Traffic Management Command, working with the commercial trucking industry as well as its Reserve Component elements, has safely moved over 2,400 sensitive shipments, including critical munitions, throughout the continental US. This accomplishment, involving over 3 million mission miles while maintaining strict Intransit Visibility of cargo, ensured security of movements to a degree never envisioned prior to 9/11. What we long accepted as routine is no longer--the response to secure these shipments has been magnificent.

* Commercial shipping, both air and sea, played a major part in supporting the epic humanitarian relief airdrop missions undertaken by TRANSCOM last fall in northern and eastern Afghanistan. Chartered commercial aircraft flew 2 million Humanitarian Daily Rations (HDRs) to Europe for transload on to C-17 aircraft. Commercial sealift brought 1.3 million HDRs and 875 short tons of wheat across the Atlantic to maintain the flow of food, a monumental effort helping to ensure the relief of thousands of Afghani citizens from harsh winter conditions and bolstering coalition support throughout the country. And let me tell you, when those HDRs got in the hands of starving folks we won hearts and minds. So know that your efforts make a difference winning the war both on the battlefield and off!

* Close coordination with our merchant mariners crewing Ready Reserve Force and prepositioned shipping assets was critical to reinforcing USAF bombing efforts in Afghanistan. A total of 968 containers of critical munitions and 650 square feet of equipment were delivered to the area of operations. The ability to move this cargo quickly via surface was key in that it made available to CENTCOM and General Franks directly an additional 179 C-s sorties for use moving other, higher priority cargo to the area.

* The movement of significant US ground forces into Afghanistan exponentially increased sustainment requirements there. That country's landlocked location, coupled with the quantity of supplies required, exploring territory completely new to the command, we developed a limited partnership with the Russian commercial rail industry to move extensive quantities of bulk food, water and health supplies across Russia and portions of Central Asia. Such movements currently save nearly 40 additional C-17 airlift missions per month for use on more time-sensitive requirements.

* And because our operating locations put a premium on military aircraft, we shifted a huge percentage of our day-to-day lift of goods and personnel directly into the hands of our commercial partners. The shift was seamless and the response enormous. Our customers never knew the difference and that's exactly how it should be--what a marvelous team effort!

SECURITY CHALLENGES

Indeed, we are winning the war but we know it is a long one and requires vigilance, resolve, and courage. On 9/11 our world changed forever and how we view the world must also change. 9/11 collectively put us on notice that nothing is as it used to be. The ante has gone up dramatically, the risks higher, the consequences more profound. Our cooperative efforts over the past year have done much to identify security concerns within our transportation infrastructure, to include a significant report on transportation security published by this organization in recent months. Militarily and commercially, we've begun to take the steps necessary to shore up security. Although we've come far, we've got a long road ahead of us. It's a journey we must make and make together, and we cannot fail, we cannot loose sight, we cannot suffer from complacency or 9/11 will play out over and over and over again and we cannot have that happen.

I believe the initiatives outlined within the recent NDTA report on transportation security provide an outstanding framework within which to pursue exquisite transportation security. We all must answer the challenge to push these initiatives further, through our liaison with local, state, and federal agencies and within industry itself. We must move to eliminate outdated/unnecessary rules, and propose new federal standards to enhance and standardize safety and security practices for shipments from point of origin all the way to destination. Progress along these lines will facilitate more timely movement of surface cargo within the continental US and enhance safety/security of each load while in transit.

We can further facilitate the security of cargo moving within the transportation system by establishing industry-wide mandates for security seals on all containers, to include maintaining seal data integrity throughout a shipment's chain of custody.

While these initiatives go a long way towards securing cargo while it is in the pipeline, what is also needed is a process by which transportation organizations across the spectrum can actively manage the security risks inherent in daily operations. We will achieve that goal through the establishment of a formal system for sharing intelligence information with industry on potential security hazards. This is an area of key concern for us all, and one in which we are making definite progress. We are currently nearing operational capability on a system that will share available information from intelligence and law enforcement sources with organizations involved in defense transportation operations, both military and civilian. Still in the works is the formal process to get the information to the carriers on a timely basis. Another key part of the initiative involves reviewing our existing contracts with carriers to ensure provisions are included for carriers to support key Essential Elements of Information (EEI ), such as possible terrorist surveillance, or related unusual events, to a central reporting location or agency. It will indeed be a two way street, benefiting both commercial and defense sectors.

Significant progress in these areas will enhance overall security of the DTS and ensure our ability to support the warfighter around the globe, whenever and wherever this endeavor may take us.

THE WAY AHEAD

Our focus for the future is one that is undoubtedly shared by everyone in this room. We must continue to seek out and adapt best practices in order to streamline our processes and better interact with our customers, suppliers, and partners. At TRANSCOM, in particular, we seek to develop business and financial practices more in step with the commercial sector, making ourselves easier to work with. We must be flexible, responsive, and very capable. Our partnership with industry and the evolution of our process is at the leading edge of defense logistics transformation. It's important to our financial bottom line whether that's the taxpayer or the board of directors. And it's what really matters, what all of us here today are signed up to do and that is to provide exquisite support to our warfighters in the service of this great nation.

CLOSING

Let me close by thanking the Association and General Honor in particular for the opportunity to address this group of great Americans, patriots and friends. May God continue to bless each of you and may He continue to bless the United States of America.

Thank you Mary Ann for that kind introduction. It's good to be among those who share our vision for an efficient and secure transportation system that supports national defense as well.

At the outset, TSA (Transportation Security Administration) faced two major challenges: creating a new federal agency and taking on the responsibility for airline passenger and baggage screening activities. Nine months later, we're standing strong and are well on our way to meeting both of those challenges.

We have assembled a talented and dedicated group of senior executives and security professionals from all transportation modes who are building and operating the TSA in Washington, DC, and across the country.

TSA has announced the appointment of 150 federal security directors responsible for overseeing security at 400 airports.

So far, we've hired more than 6,000 federal security screeners covering 122 airports. We're on track to meet the congressionally-mandated deadline of November 19, when the symbolic TSA logo of nine stars and eleven stripes will be seen in 429 airports nationwide.

The nationwide face of TSA is that of a quiet professional: a man or woman, highly trained and motivated to provide excellence in security and customer service. That doesn't mean the process will always be easy or convenient. Sometimes the best security is neither. But it will be the best, using state-of-the art technology and treating people with dignity and respect.

TSA is also committed to having 100 percent explosives-detection screening of checked baggage by the December 31, 2002 deadline, also mandated by Congress. TSA will have baggage screeners and equipment deployed in more than 90 percent of the nation's airports by that time. In the remaining 10 percent, we will use other options--such as explosive sniffing dogs and portable screening equipment--to ensure the security requirements are met.

We recognize that every airport is different -- different base clientele, different geography, different security needs, space, size and capabilities. Our passenger and baggage screening systems will be responsive to these differences and strategically formulated to meet future needs, while ensuring consistency in customer service.

Implementing the security system in each airport is a team effort. It involves working with the local officials and experts in the aviation community to assess the needs and work towards a common solution for improving security.

We are committed to both excellent world-class security and customer service. We're doing everything we can using a common-sense approach and borrowing and adapting the best ideas from business and industry. The goal is not just to make people feel secure, but to ensure that they are secure.

Right up front, I want you to know some of the ground rules I've instituted in our approach to our many tasks.

First of all, involving our stakeholders in everything that impacts them is my modus operandi. I have established charter working groups to revisit some old issues and address some new ones. For each charter I insist on gathering input from the issue s most appropriate stakeholders. It's the only way I do business, and I clearly have set the standard.

I believe in operating in a common-sense and risk-driven mode. We're looking at the logic in our approach to security, and we're weighing the benefits against the risks. We're also assessing the threats through our intelligence gathering, to consider how best to prepare and respond to them. Putting information pieces together not only helps determine what security steps we should take, but also what steps would serve little purpose for the amount of effort and resources expended.

I believe in measuring performance. All of TSA employees are accountable for their actions and their inactions. Doing the right thing every time is critical when your enemy only has to get it right once.

I also believe in measuring results against expectations. Did we get what we wanted from the program, the process, or the participation? For example, we're gathering baseline data where there are no federal security screeners yet, so we can compare that data against the airport security environment after federalization.

Our statistics demonstrate progress for the system as a whole. Of equal importance is identifying ways to improve the security process at the personal level by making it more efficient and less onerous for groups and individuals. I have charged TSA staff with taking aggressive steps to reduce the "hassle factor" at airports and eliminate "unnecessary rules." For example, passengers can now carry unsealed foam or paper cups through the magnetometers, rather than throwing that precious cup of coffee or giant cold drink in the trash. Also, airline employees are no longer required to ask passengers if they've been in control of their baggage and whether anyone has asked them to carry anything on a flight. TSA made that move as part of an on-going effort to balance security and convenience for air travelers. The questions are now unnecessary, as we implement improved security processes. In addition, we're supporting development of a Registered Traveler Program and are studying options for how best to implement it. Persons wishing to be Registered Travelers would submit to a detailed background check. We have concluded that such a program could reduce the hassle factor for registered passengers and improve the throughput rate. We've also published very clear guidance on our Website for the traveling public to use. This easily understandable yet comprehensive guidance lists prohibited items that passengers may not bring through security checkpoints and onto airliners, as well as items permitted in aircraft cabins. It contains travel tips for people with disabilities, guidelines on traveling with children, information on boarding, and general "Dos and Don'ts." We also have standardized signs at airports nationwide at the screening checkpoints to remind passengers of the prohibited items. TSA is also well down the road in implementing CAPPS II, another identity technology system, which uses large data sets to better select those travelers who should receive additional scrutiny at the security checkpoints.

Aviation security is just one of the areas of focus by TSA. What about the other modes? We've created the Office of Maritime and Land Security, headed by Admiral Dick Bennis, who the world now remembers as the commander of Coast Guard forces during the evacuation of Manhattan on September 11, 2001. Admiral Bennis and his staff are working in a number of areas involving security in the maritime and private sector, in conjunction with the Coast Guard, other DOT agencies, Customs, and domestic and international organizations. For example, we are nearing completion of a Memorandum of Agreement with the Coast Guard to better describe our respective roles in US port and maritime security.

Several initiatives are now underway in the maritime domain that involve: instituting enhanced security measures for training and qualifying transportation security workers; developing a credentialing system for transportation workers conducting vulnerability assessments; providing grants and physical security improvements to upgrade the security infrastructure; and establish standards for transportation facility and infrastructure security, including intermodal containers and transport of hazardous materials and food.

Having spent most of my working life in the Coast Guard, I learned firsthand the value of collaboration with the maritime industry. That kind of collaboration will be a key ingredient to success as we move into other modes.

We are working on a number of initiatives in rail cargo security involving intermodal shipping container security standards; hazardous material security standards; and food and feed stock security.

One initiative is focused on the shipment of hazardous materials using a system security perspective. This approach would integrate mechanisms that identify cargo and people involved in the transport of these products, pinpoint the origins and destinations of such cargo, and provide risk and vulnerability assessments in order to accomplish the following: tighten access to facilities by monitoring deliveries of materials and people involved in the transport; share information with law enforcement agencies and local emergency officials to keep emergency contingency plans current; and implement higher standards for shippers and carriers.

We will continue to move forward with these types of efforts to ensure security across the modes. None of the efforts I've just described have been done in a vacuum. Instead, we have actively involved stakeholders, conducted studies, consulted with experts, and applied that oh-so-important ingredient--common sense. In his State of the Union Address on January 29, President Bush emphasized that our first priority must be the security of the nation. He stated three goals that support this priority, to include winning the war against terrorism, protecting our homeland, and reviving the economy.

TSA is building a robust cornerstone for our nation's transportation security. Since 9/11, we have seen a renewed sense of patriotism in America. Our actions have been in reaction to the dastardly deeds that snuffed out the lives of thousands of innocent people and affected millions more. We've mobilized our collective strength to strike back against the forces of evil to defend our country.

But as we continue to work in securing our homeland and maintaining world peace, I suggest we remind ourselves of the ultimate reason supporting our cause. President Abraham Lincoln captured the essence of our higher purpose almost 150 years ago when he said, "America is the last, best hope for the world."

More than ever, I believe that's the case. We can't do it alone, but we're destined to lead the charge. Each of us, blessed to be Americans, has the responsibility to keep the light of liberty burning bright, now and forever.

We owe it to the legacy of our ancestors, to the quality of American life, and to the future of our children and grandchildren--the generations to come.

Transportation security today is better than yesterday, and will be better yet tomorrow, thanks to all of us working together to achieve our common aims.

Thank you for your interest and commitment to transportation security. You and many other patriots like you will ensure that the forces of liberty will ultimately prevail, and America will continue to be the "last, best hope for the world." We're working toward a security system for tomorrow that's better than today's. And I assure you that our system today is better than yesterday's.

RELATED ARTICLE: Four Macro-Economic Trends:

* Increase in high-tech and high-valued goods as a percentage of total economic output.

* Globalization.

* Fast-Cycle Logistics.

* Growth of e-commerce via the Internet.

Measures to Manage Need for Increased Security

* Consolidate government functions under one banner with cross-functional databases.

* Deploy security and Customs processes to sources of origin.

* Complete visibility of all shipments in-transit.

* Deal with shipments from known and unknown shippers differently.

* Maintain positive control of all commercial vehicles and containers within the US.

* Extensive employee background investigations.

TSA Mission: The Transportation Security Administration protects the Nation's transportation systems to ensure freedom of movement for people and commerce.

Vision: The TSA will continuously set the standard for excellence in transportation security through its people, processes, and technologies.

Values: Excellence in public service through: Integrity, Innovation, Courtesy and Respect, Competence, Customer Focus, Dedication, Diveristy and Teamwork.

FORUM EDUCATIONAL PROGRAM

THE FOLLOWING ARE SUMMARIZED HIGHLIGHTS OF THE 2002 NDTA FORUM SESSIONS

Session A

"Transportation Freedom"

Various topics covered such as: Transportation Freedom; Security Expectations; Rumor vs. Truth; The Travel Industry Perspective; and The Passenger Experience

MODERATOR: Lori Brooks, Director of Govt. Sales, Six Continents Hotels

PANELISTS: Denny Clifford, Northwest Airlines, Military and Govt. Sales; Kay Anderson Hager, Carlson Wagonlit Travel, Director Business Solutions; Rocky Mobaraki, The Hertz Corp., Director Govt. Sales; Mary Sarkis, Choice Hotels International, Regional VP Intermediary Marketing

This Session's panel was comprised of members of the NDTA Passenger Travel Services Committee. Each representative is from a different sector of the travel industry. The goal of the session was to inform and educate on the latest challenges and issues facing the Passenger Travel industry, along with a briefing on the state of the different sectors in the industry. The following are summarized highlights from each panelist's presentation.

* AIRLINE PERSPECTIVE

Denny Clifford, Northwest Airlines

The Status of the Airline Industry and Security Issues

THE STATE OF THE AIRLINE INDUSTRY

The airline industry is slowly rebounding from the impact of September 11th. The affects of this tragedy will be felt by the airlines and the transportation industry as a whole for years. The airlines were the most adversely affected industry. Economic and operating pressures are being felt in a major way.

As a result of the impact of 9/11, security has become a primary focus and important issue facing the airlines. The organization of the Transportation Security Administration (TSA) is an example of the major steps taken in addressing security issues. The airline industry is looking forward to a strong partnership with TSA. The intensity of it all in such a compressed timeframe is crucial. Urgency is Key!

The economics are very challenging. In 2001, the industry lost $8 billion before the so-called "bailout" of $5 billion dollars from the government. The bailout was a slow infusion of cash over a period of time, which covered the 5-day shutdown after 9/11. The airline industry as a whole expects to lose $7 billion dollars. In 2003, there is no expectation of a profit.

The challenge ahead is simply a lack of cash. When you don't make money, there is no cash available. When you don't have cash you can't invest in the future, thus impacting all plans.

The airlines have had to draw on its lines of credit, e.g., borrowing against the aircraft. As a result of this borrowing, the airlines have increased their amount of debt. The industry is not looking to ask for any more bailouts, but it is looking to be taxed less.

Insurance expenses have also been increasing. Fortunately, the cost of fuel has remained the same. However, most airline-related expenses have increased.

Airlines live and die on their yield. Yield is the number of cents-per-mile on passenger travel. Yield has been down since 9/11, however, it is slowly stabilizing. Revenue is the biggest challenge on the airline industry. The load factor has been increasing (how many people on the plane) steadily.

The key factor is business travel, which has not returned to the status it was before 9/11. Businesses are cutting back their budgets for travel and using alternative means such as teleconferences. The question that still remains is -- will business travel go back to the same level it was before 9/11? There has been a shift in business, and the industry is preparing for this shift to take hold in the business paradigm. As a result, there is aggressive cost cutting, i.e., layoffs, retiring aircraft, etc. -- all things necessary to increase revenue.

Travel agencies are affected when the airlines do poorly. Airlines are cutting agency commissions. There is also more of a push for e-commerce than ever before. E-ticketing and web fares also help to save the airlines money. Non-refundable tickets are being issued and charges are being incurred for paper ticket requests.

These are all means in which the airlines must resort to in order to survive, rebound and stay economically afloat. There will be more industry consolidation happening. Less airline mergers will happen due to the cost - they are paid for by debt. There will be several code shares arising. Code Shares are when airlines partner together to share aircraft and route networks. US Airways and United announced the most recent code share resulting in the response of a code share between Delta, Northwest and Continental.

SECURITY

Airline economics are a direct function that is tied to security. The fear factor as a result of 9/11 is now replaced with a "hassle factor." Our way of life has changed since 9/11. Security requires us to endure more hassles.

TSA is starting to be phased in at all airports. The cost of obtaining a strong security system is very expensive. Baggage screening machines cost in the millions of dollars. The level of scrutiny in passing through security checkpoints has increased.

How do we find the delicate balance between effective security and passenger convenience? This is a major dilemma for the travel industry as a whole. Who will pay for these expenses? Both the airlines and passengers have reached their limit on what they can fund. A fleeting security perspective starts another vicious cycle of economic turmoil. If passengers don't fly, there is decreased revenue for the airlines. This, as a result, trickles down to the other aspects of the travel industry and causes them to go into the red.

REGISTERED TRAVEL PROGRAM

The Airline industry supports this volunteer program. The goal of the Registered Travel Program is to reduce the problem of passenger hassles and provide a solution. The program intially calls for an extensive background check and then an ID card is provided which will help get travelers through security checkpoints with more ease.

* TRAVEL AGENCY PERSPECTIVE

Kay Anderson Hager, Carlson Wagonlit

Transportation Freedom -- The Security Travel Requirement to Fight Terrorism

"Those who expect to reap the blessing of freedom must bear the fatigue of supporting it."

--Thomas Jefferson

Freedom requires that we make sacrifices for the greater good. In the interest of preserving freedom, we must as individuals give up a few small rights. The new security procedures are here to stay for the foreseeable future.

THE ROLE OF THE TRAVEL AGENT

The travel agent will play an important role in providing information and communication to travelers. Agents are responsible to help prepare our clients, thus adding more value to the service we provide. The Internet has been key to information distribution and travel agents must use the Internet more and more as a means of providing added-value information to clients.

Freedom comes with a price. We can further minimize the impact of the price paid with good information and communication.

* CAR RENTAL PERSPECTIVE

Rocky Morabaki, The Hertz Corporation

The State of the Car Rental Industry

SECURITY

The car rental industry is limited in terms of what it can do on security. Rental companies rely on how well the airlines do since the airlines funnel business to car rental companies. In an effort to increase security, some Hertz locations have implemented the use of cameras and have been conducting random driver's license checks.

THE STATE OF THE INDUSTRY

Profit margins are low. Some agencies are facing bankruptcy. There are 150,000 fewer cars compared to 2001. Profit has not materialized so there will need to be more depleting of inventory.

The latest industry issues are increases in Loss Damage Waivers. The agreement between Hertz and MTMC has always included Loss Damage Waivers automatically in the contract.

MTMC CAR RENTAL PROGRAM

The Hertz MTMC Car Rental Program benefits are:

* Ceiling Rates -- MTMC is guaranteed a specific rate for liability coverage up to $300K.

* Free Loss Damage Waiver included in service.

* Under Industry Age Rental (18 and above).

* Leisure Discounts Worldwide.

* Upgrades.

* Last Car Availability.

* Minimum surcharge.

* Unlimited mileage.

TIPS FOR A HASSLE FREE EXPERIENCE WHEN RENTING A CAR

* Sign up for Gold Service or Frequent Traveler Programs.

* Book reservations in advance, but not more than 60 days ahead.

* Place your promotion code on free upgrades to give at the time of reservation.

* Use the pre-purchase program for fuel to alleviate additional charges if the car comes back empty.

* Take time to check the car for prior damage before leaving the lot.

* Use the Express Service if provided for returns.

* HOTEL INDUSTRY PERSPECTIVE

Mary Sarkis, Choice Hotels

The State of the Hotel Industry

There are 53,500 properties in the US with about 4.1 million rooms. The hotel industry has also been affected by the aftermath of 9/11. Labor is the most expensive part of the industry and plenty layoffs resulted after 9/11. A majority of the workers are foreigners who come into the industry looking for their first jobs. The weakening economy doesn't leave many choices for them.

Businesses have cut back on travel and people are more critical about what they do with their discretionary income for vacations, etc. Occupancy is in line with what is going on in the industry...there has been a 3.2 percent drop. These changes in occupancy affect the client. There is more access to a greater number of options, especially for the government and military client. The government and military traveler should take advantage of the options and negotiated deals.

Session A summarized by Susan Leigh, NDTA Public Affairs.

Session B

"Air Transportation Security"

MODERATOR:

Mr. Patrick V. Murphy, Jr., Partner, Gerchick-Murphy Associates

PANELISTS:

The Honorable Read Van de Water, Asst. Sec. for Aviation & Int'l Affairs, US DOT; LtGen Mac Armstrong, USAF (Ret.), Senior VP Operations & Safety, Air Transport Assoc. of America; Mr. James W. Hlavacek, Exec. VP & COO, American Trans Air

Air Transportation Security encompasses all aspects of the aviation industry. The airline industry has struggled to overcome the effects of 9/11 for the past year. Many industry observers believed that after a period of 6 to 12 months the industry would fully recover. However, traffic has leveled off, revenue and profits are down. Aviation security, the hassle factor, delays and dollars are all a concern. The following are brief summaries of what each Panelist presented.

* LtGen Mac Armstrong

Economic Impact on Aviation

We are in a crisis! The state of the industry is "survival." All airlines in the US are operating in a "Survival Mode." All carriers are pushing to stay afloat. Most of the industry is already operating in the red.

AIRLINE ECONOMIC SITUATION

The total impact of the civil aviation industry in the US is a full 9 percent of the gross domestic product. That is $900 billion a year -- eleven million jobs. We are in the worst economic situation ever!

The loss is about $7 billion. In the first half of this year, passenger airlines have already lost over $4 billion. Since deregulation, these losses taken together will mean approximately $0 net to the airline industry.

Going back to a regulated industry is not the answer. The net profit margin for the airline industry is less than one half of 1 percent. That's compared to the average of all industries in this country of about 6 percent.

Some of the airlines have debt amounting to at or over 100 percent of their capital. This is a result of retained losses that they can't get rid of and the problems with the stock market.

The hope for profitability return in 2003 is long gone. Losses are projected at $3-$4 billion. Every loss, fee, tax or passenger that chooses to travel by other means, all adds to the unsustainable debt burden of today, where companies owe more than they are worth and borrow more than they can afford to stay afloat.

In 2002, industry revenue was off by at least 22 percent from the previous year.

The airline industry drives a huge sector of the overall economy. All players must contribute to helping to resolve this huge problem and bring back economic balance. It is a serious threat to the economy's health and the needs of the nation.

The market drivers of today's dire situation are increases in taxes, rising insurance costs, security costs and revenue losses from well-intentioned government decisions.

Attention must be drawn to the consequences of the decisions made in effort to rectify this dilemma. The excessive taxation on the industry is a large portion of the problem.

The cutbacks made in the industry will contribute to the stagnation of the job market. The result is lost jobs and economic decline.

The "hassle factor" must be decreased to encourage travel and win back the business traveler segment, which has dramatically fallen since 9/11.

* Jim Hlavacek

The Vitality of the Airlines and the CRAF Program

Shutting down the U.S. airway system, while significant in and of itself, was only the first of many negative events seen in the airline industry -- lost revenue, industry-wide layoffs, bankruptcies, and the failure of several carriers, to name a few. As a result, there was a push for Congressional action. All of these events affected a principal component of the DTS -- the Civil Reserve Air Fleet (CRAF).

--Capt Jason L. Masciulli, USAF, DTJ, August 2002.

Our security system is transitioning from general aviation security to a federal screening system. The principle threat to aviation security is a terrorist attack using an airplane as a vehicle of destruction.

The task that TSA has been asked to fulfill is huge with a tight timeline. The new TSA system will need more than 60,000 employees. Congress has capped this to 45,000 until TSA can effectively justify their costs.

The nation's economic prosperity is the cornerstone of our nations defense strategy. Without it, we risk corporate failures, widespread unemployment, national deficits, restricted government spending and weaker defense. That in turn impacts our underlying defense strategy of promoting democracy abroad. The dismal economic effect on the airlines affects national security because of the risk in reduction to the CRAF fleet size.

The CRAF program is vital because of the help it provides in transporting troops all over the world.

The OSD has initiated a study of CRAF under the leadership of Mr. Earl Boyanton and the institute of defense analysis. Similar studies have been made periodically, but this new approach is likely to produce a landmark report.

* The Hon. Read Van de Water

DOT -- The State of TSA

DOT is working very hard to fulfill a mandate that was passed down from the US Congress last November, the sustaining of the TSA. The agency will eventually service 429 commercial airports in the United States. Each airport is set up very differently and the task of implementing a strong, consistent, and effective security system is a huge one.

There is no flexibility in meeting the end-of-December timeline. We have been working to stand up an agency in a year's time. These are the issues that TSA is currently working:

* Securing airplane cockpit doors.

* Guns in the cockpit.

* Deputizing state and local law enforcement officers to fulfill duties at the security checkpoints and not requiring that federal officers be present.

* 300 feet parking rule.

* Hassle factor.

* The "Stupid Rules" review -- getting rid of ineffective rules already in place.

We invite members of NDTA to join in providing suggestions to Admiral Loy. No matter how burdensome it is, the terrorist threat is still there -- "we have to be right every time, a terrorist only has to get it right once!"

The agency started with 13 employees and is now up to 32,000 federal screeners that have been hired, 149 officials that are in charge of security at airports covering over 300 airports, and a full headquarters staff.

We ask for your help and suggestions, the continued support is appreciated.

Session B summarized by Susan Leigh, NDTA Public Affairs.

Session C

"Maritime Security"

MODERATOR:

VADM David L. Brewer, III, USN

Commander, MSC,

Department of the Navy

PANELISTS:

Capt. William G. Schubert,

Administrator, MARAD, US DOT;

Mr. Raymond P. Ebeling, President and Chairman, American Roll-on off Carriers, LLC; Mr. John Reinhart, Chief Executive Officer, Maersk Line, Ltd.; Mr. Michael Sacco, President Seafarers International Union; Ms. Bethann Rooney, Manager Port Security, The Port Authority of New York & New Jersey

"12 days into my job, September 11th occurred...the impact of this tragedy clearly affected the maritime industry," stated VADM David Brewer, USN. "You don't miss your water till your well runs dry." The Maritime Security Session focuses on how different organizations must network to work towards a solution to our current maritime security issues.

* Capt. William G. Schubert

DOT Perspective for Maritime Security

Ports are the backbone of our economy. Port operations account for more than 95 percent of our nation's economy. Security of the ports is critical to our national defense and securing of the industry. We must all work towards the security and efficiency of cargo transportation domestically. Secretary Mineta has put $92.3 million towards the protection of our ports. The terrorist attacks have resulted in a renewed focus on our transportation security system.

We are aggressively meeting our challenges on several fronts. Port security dollars totaling $78 million are needed to fund enhanced security and operations. Congress provided the funding to TSA, which is responsible for security of all the modes.

The unique aspects of this grant program was the creation of a web-based tracking system allowing applicants to submit their applications electronically. All actions can be monitored via the web.

Following the terrorist attacks, the Coast Guard enhanced security in the nation's waters by tracking high interest vessels and requiring key information on people to make sure they did not pose a threat to the nation's security. The Coast Guard has increased its presence amongst bridges, port facilities and critical infrastructures adjacent to waterways. When necessary the Coast Guard is escorting vessels containing high-risk cargo, etc., and those traveling through security sensitive areas.

Recommendations have been made to secure cargo containers as they move through the intermodal transportation system. The DOT's Intelligence Transportation System Joint Program Office recently augmented the group's efforts by successfully completing it's effort to test new electronic seals -- a new technology that enables regulatory agencies to determine if a container has been tampered with. President Bush's 2003 budget includes key funding for new port security initiatives including port vulnerability assessments, US Coast Guard Maritime Safety and security teams.

Additionally, the administration is working to enact maritime security legislation that will provide long-term tools for security planning and international coordination. We are anticipating a second round of port security grants to take place in the near future. With respect to future funding, congressional conferences are meeting to resolve differences between the senate version S12-14, Port and Maritime Security Act of 2001 and HR3983, Maritime Transportation Antiterrorist Act of 2002. Both bills will provide port security grant provisions in general terms. S12-14 will provide a 5-year funding mechanism for $390 million; HR3983, a 3 year grant program totaling $225 million. This needs to be worked out in the conference committees which is currently underway. Another important measure involves the security training at the Global Maritime and Transportation School at the US Merchant Marine Academy. This is also contained in at least the Senate version of the legislation to use that facility for port training .

RECENT SUCCESSES INCLUDE:

* GMAT trained 19 New York City Police department personnel and 31 members of the Florida Department of Law Enforcement who attended the marine terminal and seaport security course at GMAT, this was very successful.

* Law enforcement types are going out to get training in seaport security to perform in a marine environment. This course will add another check into our security efforts.

* Working on developing standards and regulations to determine who is coming in and out of ports.

* The Nationwide Transportation ID Card is another program that will institute standards and regulations. MARAD shares a lead role with the military in ensuring port security and protection in this critical infrastructure during mobilization.

* Bethann Rooney

Port Security

A new and urgent focus worldwide is maritime security. 11 percent of the gross domestic product is represented in the transportation sector. We must protect our facilities and cargo. The measures that have been taken by all the agencies are commendable to put together a system of systems that we will need to secure our industry.

Physical security is a challenging task; ports were not traditionally built to protect against a terrorist attack. The size, the complexity and their openness present issues. The ports in the US are estimating a minimum cost of $2 billion. The implementation of this is on hold because they don't yet know what the requirements will be.

The true cost to secure our ports is yet unknown. We do know the recurring costs of operations and maintenance are expected to double and even triple our security budgets.

Containers are an attractive target because they can bring global commerce to a grinding halt. 95 percent of goods are transported in the maritime industry. All delivery devices need to be secured.

We cannot eliminate the threat, but we need to take steps to reduce it. For example, we can identify cargo from the point of origin and track it all the way to its destination. Disruptions in cargo lead to disruptions in global commerce.

The port security bills need to be passed and put in motion. Minimum guidelines and standards need to be implemented at various port locations.

* John Reinhart

How Do We Design an Effective

Maritime Security Program?

7.8 million containers of cargo were handled in 2001. Just in cargo alone there is $1.3 billion in revenue moving through the ports of our country each and every day. 800 ocean liners are calling on this country. There are 22,000 port calls to the US each year -- this generates over 1 million American jobs, equivalent to $32 billion in wages for Americans. Our economy has been hurt by enough issues not to have the security of cargo transportation added to it. The scope of the problem is quite enormous so we have to enhance the security of our country. We have maintained the economic effectiveness that international trade has supplied our country.

The Customs-Trade Partnership Against Terrorism (C-TPAT) is a joint government-business initiative. The program encourages shippers to secure their supply chain and offers compliant shippers expedited cargo into the United States. For C-TPAT to be effective it must encompass the entire movement of cargo from point-of-stage to point-of-delivery. We have to actively promote C-TPAT by ongoing administrative efforts with customers, shippers, educating the sales force, educating logisticians working through the entire supply chain.

Maersk is working with C-TPAT. This strategy has to be unified amongst all the agencies involved. Maersk was the first carrier to enroll in 2002. Maersk educates their customers daily and emphasizes the importance of CTPAT with shippers they work with.

Maersk has put global security officers in place within the organization and regional security officers in each of the regions. They are a strong supporter of the program and will enforce full compliance with those they work with. Some of the actions Maersk has taken to strenghten port security are:

* Perform vessel and terminal security analyses.

* Reviews of the security in place in the current supply chain.

* Appointed security officers on each vessel and each port.

* We have looked at potential bomb threats.

* Vessel search checklists are in place.

* Effort to inspect all empty inbound containers coming in the US.

* Training drills for security.

* Automated manifest systems.

* Maintain active lists on all personnel.

* Place port liaison reps in each port.

* Implement Security systems for the vessel.

* Maintain high-security seals for all containers.

* Refine our documentation procedures.

* Expanded dangerous cargo handling procedures.

* Make sure vessels have current visa and ID procedures

* Ray Ebeling

Ideas for Consideration

The west coast disruption is costing $1 billion a day. The industry is so vital to our economy. Most manufacturing and distribution channels are dependent on just-in-time logistics. Shutting down ports is not a viable option. We must seek protections that won't dramatically impact our economy.

3 PRINCIPLE PROPOSITIONS TO ADVANCE

* Maritime Security is an international issue requiring an international solution.

* All elements of maritime security must be seen and secured as an integrated supply chain, e.g., a typical transaction can have at least a dozen parties involved.

* All security enhancements underway have a cost to be dealt with.

The Container Security Initiative is good. It is intended to identify high-risk containers at the point of origin, instead of destination. So far, C-TPAT has no specific requirements -- it's all volunteer based. It needs standardization (IMO standards should be out in December).

The Port and Maritime Security Act (Hollings Bill) doesn't address our integrated maritime transportation security system -- it views each port as an entity. This needs to be integrated. Port security is equivalent to national security -- taxpayer involvement and funding is necessary. The bottom line is we're making progress, but need to deal with the money issue. Who will pay for all this?

* Mike Sacco

Concerns, Improvements, Solutions

Maritime labor has security concerns, but they have taken steps and have come up with possible solutions. We need a means of solid verification.

CONCERNS

* How can we verify the identification of foreign mariners arriving in US ports?

- Need equal treatment of foreign crews here and US crews overseas.

- Whatever we do, we can expect reciprocity by foreign governments.

* IMO will adopt new regulations on anti-terrorism.

- No enforcement capabilities or authorization means in place.

* Use of tankers and roll-on roll-off carriers with vehicles as weapons.

- Vulnerable on the Mississippi and Great Lakes, too.

* Biggest obstacle is run-away flag shipping.

STEPS TAKEN

* New crew training at Piney Point.

- Anti-terrorist Level I for past 3 years at MSC request (VADM Holder).

- Small arms training courses.

- Other unions have followed suit.

* Flag of convenience shipping.

- Need total visibility of ownership -- who is responsible?

POSSIBLE SOLUTIONS

* Dramatically increase number of US-flagged vessels.

* Work toward more accurate crew lists/rosters.

* Use smart card technology for maritime worker IDs.

* Develop an international hiring hall with standardized background checks.

* Be consistent in enforcement of current and future rules/regulations.

* Provide for immediate and total transparency of ownership of vessels with flags of convenience.

Session C summarized by Susan Leigh, NDTA Public Affairs; Frank Randall, MSC Public Affairs; and William Talley, MSC Public Affairs.

Session D

"Surface Security"

MODERATOR:

Gary Hartter

President, Landstar Carrier Group

PANELISTS:

Mr. Daryl Deel, CEO, R&R Trucking;

Mr. George Rodriguez, Director of Security, TSA;

Mr. Charles E. Dettman, Exec. VP, Safety & Operations, Assoc. of American Railroads;

Mr. William Lucas, Deputy to the Commander, MTMC

The following is an article entitled "Innovation, Anomaly Review Necessary for Surface Transportation Security", that elucidates key points made during Session D of the 2002 NDTA Forum.

* TSA Executive

George Rodiguez has a favorite story about his days as a trucking-line security manager.

Freight was disappearing off of the shipping docks of the carrier's terminals. Security specialists went to work reviewing video surveillance videos. They were in for a surprise. The missing freight was disappearing into what appeared to be one of the firm's own trucks. On closer review, however, the truck turned out to be an absolute counterfeit decoy.

"They had leased the truck and put on our decals," said Rodriguez, Director of Security for the new Transportation Security Administration.

Rodriguez used the story as an example in explaining the challenges of the new agency to members of the NDTA.

"The problem with law enforcement is the entire focus is to investigate something after it happened," said Rodriguez, whose career spans 30 years of law enforcement and security work. "When I went to work (for private industry) I found a very proactive attitude of prevention."

Rodriguez told association members that the proactive stance is one of the attitudes he is stressing at his new job. The task is daunting. "Nine million tractor trailers run the streets of the United Stated every day," said Rodriguez. "Think of that!"

A more secure transportation environment is going to be achieved by innovation. "Things are constantly changing. We need an infrastructure that can accommodate change. And, we do not want to put all the burden on one segment of the industry such as the carriers or the shippers. It is the responsibility of all. There is a tremendous amount of information available within the transportation community."

The solution will lie in part on a review of anomalies within the transportation system.

After the September 11, 2001, terrorist attacks, Rodriguez said he sent a message to his firm's terminal managers to be on the lookout for several anomalies, including false addresses and loading dock pickups. The result was the identification of 20 suspicious packages -- 17 of the packages proved to contain illegal narcotics. The trucking firm promptly turned the information and packages over to law enforcement officials. "We have to establish a system that reminds us of anomalies," said Rodriguez. "The final thing is the infrastructure that handles changes also accommodates new automation.

Some basic security features provide multi-faceted results. As an example, video surveillance cameras reduce external thefts and cut internal losses as well. "They provide a magnificent deterrence system," said Rodriguez.

Challenges in the future include a standardization of loading seals. Electronic seals cost $10 each while paper or tape seals costs a few cents each. "We have to make a decision. We have to keep security up but we also have to make a decision that all modes can accept as a good standard."

The transportation worker security cards are coming. "This is doable. There is a collateral cost. It will not occur overnight." The cards alone are not the solution, he said. "You have to have a person or system to check it."

* MTMC Munitions Shipments

The Military Traffic Management Command has taken a number of steps to reduce the vulnerabilities of its arms, ammunitions and explosives shipments. On average, the command has 42,000 such shipments a year -- mostly by truck.

"One of our goals has been to reduce exposure on the highways," said William Lucas. Shipment times of munitions have been greatly reduced. "We had a baseline of 89 hours per average (munitions) shipment time in April 2001," said Lucas. "We've cut it in half."

Army Reservists, who have been assisting MTMC operations in the shipments, are a part of that solution. The soldiers help orchestrate shipment schedules to reduce the time and distance of munitions movements.

Additional surveillance is provided by MTMC's Intelligent Road/Rail Server. The Web-based system provides instant access to numerous existing highway, traffic and weather databases. The server also provides in-transit visit visibility for the munitions shipments.

In addition, MTMC is requiring all munitions drivers to have secret clearances. "I'd like to say we have a national identification card check," said Lucas. "If we had, we'd probably default to them."

Currently 80 percent of munitions drivers have the clearances. "It's a constant challenge," said Lucas.

* American Railroads

The railroad industry has put a heavy emphasis on the security of its shipments, said Charles Dettman. "After 9-11, the chief executive officers (of American railroads) got together to look at vulnerabilities. We didn't know what we were up against."

While many risks were known, he said, the massive movement of chlorine by railroad cars had not been fully appreciated. The extremely caustic chemical is used extensively in water treatment plants and the pharmaceutical industry. Chlorine is "critical to the livelihood of and health of this country," said Dettman.

A key part of the railroad's solution to movements of such cargoes is their routing and monitoring over critical transportation nodes such as strategic bridges and tunnels.

Munitions shipments have also received additional scrutiny. "We have worked well (with the military), and we will continue to work well," said Dettman. The military has provided railroads with secure phones and e-mail. "We (American railroads) have created the Railroad Alert Network. It is 24-7."

"We are far more secure today than yesterday."

Session D article by John Randt, MTTMC Public Affairs.

Session E

"Transportation Security Issues in the Post-9/II Environment"

MODERATOR: Mr. Ronald W. Drucker Immediate Past Chairman, NDTA

PANELISTS: Mr. Patrick V. Murphy, Jr., Partner, Gerchick-Murphy Associates; Ms. Lori L. Brooks, Key Account Director - Government, Six Continent Hotels; RADM David L. Brewer III, USN, Commander, MSC, Department of the Navy; Mr. Gary Hartter, President, Landstar Carrier Group

The Wrap-up session included all of the 2002 Forum Session moderators who identified over-arching issues from the 56th annual NDTA Forum. At the top of the list were:

NDTA FORUM ISSUES

* Need to determine a means of securing all nodes of transportation.

* Need for a National Transportation Worker Card.

* Necessity to find a means to fund the security enhancements necessary to protect the US transportation System.

All of these issues will be high on the US Government's and US Military's agendas in the months and years to come. The truth is prevalent and speaks to all of us -- as the NDTA banner reads, "Transportation Protects The Nation." DTJ

Session E summarized by Frank Randall, MSC Public Affairs and William Talley, MSC Public Affairs.

* Helpful Websites for the Latest in Transportation Security and Safety News

Website of the Transportation Security Administration

tsa.gov

Website of the National Transportation Safety Board

ntsb.gov

Official Website of The White House

whitehouse.gov

Exhibitor Promotion

Certainly a highlight of every attendee's experience at an NDTA Forum is the time spent in the Exposition Hall. Exhibitors and attendees alike say that some of the Forum's most effective networking takes place during the exhibit periods. NDTA would like to publicly thank the great group of companies supporting its tradeshows. The time, money and effort that they expend benefits not only the sponsoring company, but the association and the attendees themselves.

Ever wonder how it all comes together in the Exhibit Hall? it starts with some very astute marketing people who know how to draw potential customers to their booth. Without a doubt, out food, music and fanfare brings the crowd into the hall, but it is the marketing know-how of the companies that gets an attendee to a particular booth.

Every exhibitor is faced with this challenge of how to stand out from the competition. The answer many times seems to center around the giveaway of some unique advertising specialty that is designed to attract attention.

NDTA'ers usually leave the Forum Exhibit Hall with an overstuffed bag full of promotional giveaways. And both the exhibitor's and the customers seem to love it -- the because presenting their item opened an opportunity for chatting with a prospective customer, and because their company logo and message on that small item will end up on a decision maker's desk, or in their car, company's branding in the marketplace; the attendees something neat for free!

On these two pages are a few of the many giveaways seen at the 2002 NDTA Forum in Greensboro. If you are an exhibitor, you might find a good idea here for your next show at the MTMC Symposium in Denver or the NDTA Forum in Kansas City. If you are an attendee, be sure to remember and thank our exhibitors the next time you see them.