Business analyst Mark Lacter joins KPCC once a week for an in-depth look at economic issues in Southern California.
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Bomb plots and security

KPCC business analyst Mark Lacter talks about what the recent cargo plane bomb plots in the UK and Saudi Arabia mean for Southern California.

Susanne Whatley: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, quite a scare over the past few days with bombs aboard cargo planes - what does this mean for Southern California?

Mark Lacter: In terms of stepped-up inspections, it could be quite a bit Susanne, considering that more goods pass through the Los Angeles Customs Direct than anywhere else in the U.S. We're talking about more than $32 billion worth of air cargo in 2009 - and that was an off year. Of course, international trade is one of the biggest industries in Southern California - actually an industry that has been showing signs of strength over the last few months, and that's why the prospect of tighter security is not great news for businesses bringing in merchandise.

Whatley: You mean it would slow things down?

Lacter: Potentially, yes, and it could lead to higher costs. You should know that L.A. is the primary arrival point for many of the goods being brought into this country: computers, medical instruments, seafood, fruits, vegetables, flowers, designer clothing, it's really a long list. The problem is that you simply can't inspect everything. And as we saw from last week's incident, cargo shipments often involve indirect routes, which mean more opportunity for tampering (a package going from Yemen to Los Angeles could easily involve four or five stops along the way). So you can see how complicated this becomes.

Whatley: Will the new federal requirement to screen all cargo that's shipped on U.S. passenger planes help?

Lacter: To some extent, yes, but that still leaves cargo arriving on foreign air carriers - as well as the air cargo planes - and not all that gets checked. And even if it does get checked, the equipment being used is often not very effective in detecting the more sophisticated types of bombs. Now, the Obama administration is expected to propose expanding the cargo inspection process, and a lot of security experts say the most sensible approach is to target certain types of shipments from certain parts of the world that pose the biggest risk. Obviously, that could leave other shipments more vulnerable, but there's really no easy answer on how to protect all this cargo without upending the entire economy. You just can't do it.

Whatley: Are the ports of Los Angeles and Long Beach just as vulnerable?

Lacter: In some ways, more vulnerable because many more imports arrive by sea, and the ports and logistics industries represent a huge labor force in Southern California. As for security, many of the problems are really the same as with the planes - it's impossible to manually inspect everything that comes into the ports (right now only about 5 percent of the cargo containers are opened and examined). The more realistic objective is to scan all the containers; actually, there's a new requirement that everything gets scanned by 2012, though the ports won't be able to meet that deadline.

Whatley: Is it easier to keep tabs on sea cargo?

Lacter: Well, scurity has been stepped up at both ports. When a ship gets close to docking, law enforcement comes on board to check the vessel for chemical and biological threats. Also, every container terminal has a radioactivity scanner. On the other hand, the ships coming in are massive - plenty of space to hide something.

Whatley: And there’s no guarantee that the equipment will pick up everything?

Lacter: No, and that’s one of the biggest worries – that the bad guys will become so adept at transporting these things that they'll get past security altogether, which is what happened with the bombs that were discovered last week in toner cartridges - and which apparently got through several air cargo security checks. So if there’s a limit to how much protection can be provided, what are the priorities, who pays for it, and what sort of economic sacrifices are people willing to make? Those questions really haven’t been resolved.

Whatley: Mark Lacter is a contributing writer for Los Angeles Magazine and writes business blogs at LA and at