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Political Supply Chain Recommendation There are 1 replies:
James Matthew Maynard Love Students Author: James Matthew Maynard Love, Email: JMLove@owls.williamwoods.edu   Show MyInfo popup for James Matthew Maynard Love
Political Supply Chain Recommendation Original post: Sun 3/4/2012 at 10:45 AM

Due to the political instability and the security threat that allowing the United Arab Emirates (UAE) to run the U.S. ports would create, it is suggested that the U.S. government not pursue the deal that would allow the UAE to take over from Peninsular and Oriental Stream Navigation Co. (P&O) This recommendation is made for many reasons. First, the terrorist connections within the UAE would potentially have easier access to U.S. soil and could cause an increase in domestic terrorism. The potential disruption of the supply chain to these six major ports would cause a crippling effect on the U.S. economy and would end up creating panic. An example if this would be in oil. The UAE exports a significant supply of the world’s oil. By giving the UAE control of the major U.S. ports, they could artificially inflate the cost of oil and potentially cause the U.S. economy to grind to a halt. This inflation would and does happen now, but given that the UAE doesn’t have control of these six major ports, it doesn’t cripple the U.S. economy. This is because the UAE supplies the world market which feeds demand for everyone. The world market price changes with supply for everyone, so the U.S. may end up paying more for crude if the world supply is cut back and the UAE decides not to ship to the U.S. ports, but the other exporting countries would still likely ship to the U.S. and minimize this impact. Other supply chain factors could potentially be disrupted in the same manner if terrorist activities shut down these ports. Therefore, it is recommended that P&O remain in control of these major ports and if the UAE is to be considered for controlling any ports, they be given the opportunity to prove themselves on smaller ports that would be less inconvenient if shut down. If, in the future, the UAE has proven that they have been trustworthy, this issue may be reopened and we may consider sourcing these ports to multiple port operators to balance the benefits and risks of each. This plan would allow a trial run for the UAE, as well as risk management for the U.S. economy.

Jonathan Roy Wear Students Author: Jonathan Roy Wear, Email: JRWear@owls.williamwoods.edu   Show MyInfo popup for Jonathan Roy Wear
Re: Political Supply Chain Recommendation Posted: Wed 3/7/2012 at 9:05 PM, in reply to James Matthew Maynard Love

James Matthew Maynard Love wrote:

Due to the political instability and the security threat that allowing the United Arab Emirates (UAE) to run the U.S. ports would create, it is suggested that the U.S. government not pursue the deal that would allow the UAE to take over from Peninsular and Oriental Stream Navigation Co. (P&O) This recommendation is made for many reasons. First, the terrorist connections within the UAE would potentially have easier access to U.S. soil and could cause an increase in domestic terrorism. The potential disruption of the supply chain to these six major ports would cause a crippling effect on the U.S. economy and would end up creating panic. An example if this would be in oil. The UAE exports a significant supply of the world’s oil. By giving the UAE control of the major U.S. ports, they could artificially inflate the cost of oil and potentially cause the U.S. economy to grind to a halt. This inflation would and does happen now, but given that the UAE doesn’t have control of these six major ports, it doesn’t cripple the U.S. economy. This is because the UAE supplies the world market which feeds demand for everyone. The world market price changes with supply for everyone, so the U.S. may end up paying more for crude if the world supply is cut back and the UAE decides not to ship to the U.S. ports, but the other exporting countries would still likely ship to the U.S. and minimize this impact. Other supply chain factors could potentially be disrupted in the same manner if terrorist activities shut down these ports. Therefore, it is recommended that P&O remain in control of these major ports and if the UAE is to be considered for controlling any ports, they be given the opportunity to prove themselves on smaller ports that would be less inconvenient if shut down. If, in the future, the UAE has proven that they have been trustworthy, this issue may be reopened and we may consider sourcing these ports to multiple port operators to balance the benefits and risks of each. This plan would allow a trial run for the UAE, as well as risk management for the U.S. economy.

One of the items I believe is important to this discussion is the actual responsibilities of a port operator.  My understanding is that the operator is responsible for loading and offloading cargo ships primarily containing shipping containers.  The operator is not related to the goods that are being brought into the port outside of being temporarily in possession of the goods while they are being handled at the port.