UPS cargo planes rested after the discovery of two explosive packages headed for the U.S. Friday.News that two explosive devices were found in packages on U.S.-bound cargo planes Friday has set off a new round of alerts worldwide. It's also raising new questions about security in the air-freight industry -- and its potential cost.

The companies directly affected by the suspicious packages are, unsurprisingly, saying very little about the incidents except that they are cooperating with authorities and handling the crisis.

FedEx spokesman Jim McCluskey says his company has developed a good reputation over the years for its planning for contingencies ranging from natural disasters to political unrest. "If you look at the flexibility we have with our hub system, with our aircraft, with our ground fleets," he says, "we are able to adjust our network accordingly to mitigate any effect to service anywhere in the world."

But industry observers say they've anticipated this threat for some time now. "With cargo we have quite a porous border; we're quite dependent upon globalization of products from around the world," says Professor Scott Johns, a former airline pilot and special assistant for the U.S. Department of Homeland Security who now teaches at the University of Denver's Strum College of Law. "If there's any place we want the 100% [security] all the time, it's in the aviation industry. And the fact that things are getting through raises questions."

Much Less Scrutiny for Cargo

Individuals and organizations sending air cargo are usually subject to background checks and packages are screened before flights, but air shipments still come under much less scrutiny than most airline passengers and their luggage, Jones notes.

Part of the issue, he says, is logistics: It's very time-consuming for companies and government agencies to carefully examine every piece of air freight, which often includes expensive perishable items. And cargo is an important contributor to revenue. "What sort of keeps the airlines afloat in rough times is the cargo in the belly of the jet," Johns says. "You've got the U.S. Mail, you've got flowers coming up north from South America."

The aviation sector has been trying to find ways to keep air-cargo security cost-efficient. Earlier this year, British Airways World Cargo and DHL Global Forwarding agreed to share information and standardize procedures for high-value and high-risk air cargo.

"Both parties can now combine their expertise to contribute jointly making the supply chain more secure," DHL executive Michael Schaecher said in a press release in March. "The close cooperation with our main partners in the airline sector is an essential part of our strategic direction to our customers with the best-in-class security approach."

The Cost of Keeping Cargo Secure

While there's no public data about the price of keeping air cargo secure, it probably still costs the industry a lot less than expenditures for fuel, maintenance and manpower. Air-cargo companies like FedEx and UPS have a track record of profitability despite hard times, "because we're a society that likes to have today's goods today -- and people are willing to pay for that," Johns says.

The air-shipping industry has done well in the recession, with world demand growing since 2008 and 2009, notes Ron Rizzuto, a professor of finance at the University of Denver's Daniels College of Business. But as the global economy recovers, he says, this recent terror alert will create significant additional security costs and could even hurt the current financial uptick.

"Every layer of security creates additional financial burdens," Johns says."What price do we want to pay? And people have decided there's a level or risk that's acceptable. Do we need to adjust? Are we using the wrong criteria to inspect the wrong cargo at the wrong times?"

Those are the questions the industry -- and authorities -- will be working to answer in the postmortem of this latest incident.

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Increase the cost of shipping from "terrorist" countries. Photograph / fingerprint the person with package showing full address of sender and to where it is being sent and have on file.

October 31 2010 at 9:31 AM Report abuse +1 rate up rate down Reply
1 reply to Karen's comment

Oh, if my mail box was jam packed with "junk/advertising" bulk, that the postal workers have to lug around, there would be sufficient time to inspect mail against threats to our citizens. Would it be a job shift from junk mail creators to inspectors? Maybe more jobs created?

October 31 2010 at 9:41 AM Report abuse +1 rate up rate down Reply

God Bless Barack Obama and the Democrat Party for standing up for what is right. ALL of you thumb downing anti government posters here are all bought and paid for the drug addict Rush Limbaugh and the Bimbos at Faux News. We know who you all are and know you stay up day and night taking over these boards. The American people know how untrustworthy the Republican Party is. We threw the bums out 2.5 years ago and will continue to fight for ALL Americans not just the few. Republican obstructionism will be the downfall of America. All of you who go to the polls on Tuesday to reelect the Party of NO will reap what you sow. I forsee the Republicans trying to do away with Social Security, Medicare and All Unemployment Insurance citing them as Socialist in nature. All of you loudmouths out here would cry foul if they took one dime of your entitlement away. Let's face it boys and girls you all are nothing but loud mouths who would never put their money where there mouths are. Just big bags of hot air, whining like children and pointing fingers. Remember for every finger you all point 3 are pointing right back at you. JUST SAY NO TO HATRED AND RACISM ON TUESDAY. YES WE CAN AND YES WE WILL. God Bless the United States of America and ALL AMERICANS NOT JUST REPUBLIAN CHRISTIANS. Enough is enough and too much is beginning to become sickening.

October 31 2010 at 7:39 AM Report abuse -1 rate up rate down Reply
1 reply to Ron's comment

HAHAHAHAHAHA Face it.....the MAJORITY of Americans are against your party. The next pill you'll have to swallow will be Obama getting the boot in 2012. This is what happens when you pass bills the majority of Americans are against by ramming them down everyone's throats. They didn't listen then....but I'll bet they're listening now. HAHAHAHAHAHA

November 01 2010 at 12:06 AM Report abuse rate up rate down Reply

You bet. This is an opportunity to raise prices (get well money) by exacerbating the issue then reset the mark higher to recover from the bare bones competitive basement companies slug their way to in order to keep in business. By now a few companies have folded so the competition is less making it an opportune time to raise price. All they need is a good reason. And then blame the government for excessive regulation.

October 31 2010 at 6:15 AM Report abuse rate up rate down Reply

Why dont you kiss my butt! Nice way to salt the earth for price hikes! I hope you have a miserable life!

October 30 2010 at 11:30 PM Report abuse rate up rate down Reply

Does anyone believe this threat is real??..a terror plot foiled just days before an election.. Wasn't G.W. accused of this all the time?? Obama is a sham..Grow up and realize you've been had..

October 30 2010 at 10:56 PM Report abuse +1 rate up rate down Reply
1 reply to christophish6's comment

whatever........but the fact that cargo etc coming in from these places isn't even scanned / /checked for explosives is beyond belief-

October 31 2010 at 3:56 AM Report abuse +1 rate up rate down Reply

It's time to stop trading with the rest of the world and protect our jobs and our country. Bring back all of the jobs exported by Greedy American businesses. We don't need the rest of the world PERIOD. Charity begins at home. I fully support protectionism. We should have done it long ago. Seal the borders and shut the world out. God Bless America and our Commander and Chief Barack Obama.

October 30 2010 at 10:28 PM Report abuse +3 rate up rate down Reply

What a bunch of lies... you people faked this so that you could raise the prices...??/! How are we to know if there were REALLY bombs in some planes.??/! Besides, you created this whole mess anyway funding both sides of war to make money. What are you telling the people on THE OTHER SIDE?! Whats THEIR news (that WE DON'T HEAR) about THEIR planes having bombs on them ,,, so that YOU CAN RAISE THEIR PRICES too!! G.D. LIARS.. THERE were NO bombs.. ATTENTION AMERICAN CITIZENS: there were NO bombs on the planes. Its all a SCAM to raise prices, SOUND FAMILIAR!?!!

October 30 2010 at 8:49 PM Report abuse +1 rate up rate down Reply
1 reply to uli2liv's comment

Humanity stinks. It's hard to tell who to believe and trust anymore. Anything is possible nowadays. I trust no one, no politcal party and no news organization. THEY ARE ALL SCOUNDRALS AND LIARS. REPUBLICAN / DEMOCRATS / TEA BAGGERS and MOST OF ALL THE CAPITALIST GREEDY CORPORATIONS. Shame, Shame, SHame.

October 30 2010 at 10:14 PM Report abuse +1 rate up rate down Reply

There is no doubt about security for air cargo, but it still sounds like a combined scam from government to get votes from scared USA people and to raise a little more cash. I cannot begin to tell you how frustrating it is to receive a note from my Freight Forwarder that US Customs is holding up a package because they have "to inspect" entire container of inbound freight. Yes, they have X-ray machines, but how do you see through the layers? A freind of mine tells me that that is the problem; the clarity and depth is just not 100% and everybody in LTL containers gets hit with "Inspection" fee. What a racket! John Mournian

October 30 2010 at 4:27 PM Report abuse -1 rate up rate down Reply
1 reply to shimizu717's comment

Oh Fredie Smith, owner of FedEx, anti-union, $17,000,000 lobbist pimp-donor last year, just loves the extra $$$ for another terrorist threat. These gated community types just love the benefits of war.

October 31 2010 at 8:59 PM Report abuse -1 rate up rate down Reply


October 30 2010 at 3:07 PM Report abuse +4 rate up rate down Reply

Well that wont be the only thing that goes sky high. Everything but your average worker's wages. Wall street is doing very well and so are the banks and other big corporations. It will get so bad that your average individual wont be able to afford food or housing or gas etc., basic needs. Money system will collaspe and the 1 world order will be ushered in. Who will be the lead country? Looks like china or india where all of the american jobs went. WOW can you say"""""""""JESUS IS LORD"""""""""God Bless America""""""""""

October 30 2010 at 2:31 PM Report abuse +1 rate up rate down Reply