Economics of U.S. Maritime Security

By Dennis L. Bryant

It is an immutable law of economics that there is no free lunch. Everything costs something, and maritime security is no different. The cost of enhancing security in the maritime and related industries will be high. For those on the front lines, such as ship and maritime facility owners and operators, the goal is to reduce the cost as much as reasonably possible. For costs that can’t be avoided, the goal is to either pass the expenses to a third party or structure the changes so has to achieve savings in other areas.

Maritime Security Plans

Both the changes to International Convention for the Safety of Life at Sea (SOLAS Convention) and the U.S. Maritime Transportation Security Act require owners and operators of most ships and maritime facilities to develop and implement maritime security plans. Changes to the SOLAS Convention are located primarily in the International Ship and Port Facility Security (ISPS) Code. The U.S. Coast hGuard estimates the first year cost of developing maritime security plans to be $963 million for facilities and $188 million for ships. The Coast Guard concedes, though, that its numbers are very soft, as it had little accurate data from which to work.

It appears that the amount estimated for enhanced security at port facilities is understated, probably by half. The figure for ships, though, is vastly understated, as it includes only U.S.- flag ships. It also does not include costs related to having security resources under contract or meeting other security requirements that are unique to the United States. It is unclear why the Coast Guard estimate for ships only focused on U.S.- flag vessels. One might argue that the agency felt no reason to include the costs associated with foreign-flag vessels, as those costs were somehow tied in with the international requirements. That argument is a thin reed, but is of little moment here, as this is an attempt to calculate the total worldwide costs to ship owners and operators of maritime security enhancement.

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