Analysis: Bomb plot could raise costs, but who pays?



















Analysis: Bomb plot could raise costs, but who pays? 

The World Customs Organization distinguishes between screening -- risk assessment based on the origin and other information; scanning -- which involves X-ray or gamma-ray machines scanning closed packages; and full physical inspection.

Shanks said introducing full scanning globally would be unaffordable -- but authorities may toughen a two-tier approach:

"I think it will have to be affordable for packages of cargo coming out of countries that are known in the past to have caused problems. This will have to be a cost that is either picked up by the state itself or added onto the shipment."

FedEx (FDX.N) and UPS (UPS.N), respectively the world's largest and second largest carriers of air freight by volume, are just the tip of a multi-billion-dollar logistics industry responsible for keeping global supply chains running smoothly.

"In the past five or six years we saw logistics costs go up due to the movement of production plants to other areas in the world. A big security focus might put the costs up further," said Nicole Geerkens, top executive at the European Logistics Association.

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"Now there is a trend where people are considering whether to in-source," or repatriate production, she added.

Analysts say logistics represent up to 15 percent of the value of goods, depending on the type of business and economy.

"Depending on how you look at it, logistics probably cover about 10 percent of everyone's lifestyle," Sorgetti said.

The plot puts worldwide attention on security just as cargo companies struggle to maintain a recovery in air shipments seen over the past year.

Any lasting economic damage may be felt more widely.

"It's our response that achieves the true outcomes of the attack, not the attack itself," said Price.

"Recall the after-effects of 9/11. Economic recession, airline bailouts, the largest governmental bureaucracy created since World War Two. We now spend billions of dollars a year on homeland security, and the attacks have forever changed the way in which we travel." 

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http://www.reuters.com/article/idUSTRE69U1WL20101031?pageNumber=2

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