‘Tis the Season for Cargo Theft

Nobody likes to get ripped off; but, experts note the holiday shopping season presents an almost irresistible opportunity for thieves. They roam parking lots looking for unattended packages in cars; they break into homes; and they steal whole cargoes. According to FreightWatch International, “The threat of cargo theft continues to grow in the United States due to increased organization and innovation on the part of cargo thieves.”[1] Christopher McLoughlin, Risk Manager at C.H. Robinson, notes, “Consumer goods of all kinds are making their way from manufacturers to distribution centers and retail locations across the country. As shoppers count down the days until they can score deals on the hottest products, cargo thieves are counting on cashing in on opportunities to swipe unattended trailers and shipments.”[2]

The Holidays are Prime Time for Cargo Theft

Sean Kilcarr (@trucksatwork) explains that the rise in holiday cargo theft is a result of both increased cargo volumes and relaxed security. “Cargo thieves,” he writes, “are beginning to more frequently target freight during the holidays as increased volumes combined with more demanding delivery times and tight capacity often results in a ‘relaxation’ of theft prevention protocols.”[3] Don Hsieh, director of commercial and industrial marketing for Tyco Integrated Security, told Kilcarr, “It’s because of those higher volumes relative to holiday demand that often leads to skipping over the basic cargo security checks.” Kilcarr adds, “Consulting firm FreightWatch International noted that the last four months of the calendar year have become a ‘prime time’ of sorts for cargo thieves, particularly due to how heightened supply and demand factors impact transportation operations.”

cargo-theft-01McLoughlin agrees with that assessment. “The industry experiences more cargo theft incidents when there is a higher volume of consumer goods moving through the supply chain,” he writes. “Holiday weekends and the weeks leading up to the Black Friday retail shopping holiday are prime times for organized crime groups to target the trucks, warehouses, and distribution centers that send or receive those goods.” Cargo theft is a huge problem. In fact, the staff at Material Handling & Logistics reports it was the top supply chain risk last year.[4] The staff writes, “Last year supply chains across the world faced a number of challenges. One of the largest issues was damages caused by cargo theft, an amount estimated at $22.6 billion, according to BSI’s Supply Chain Risk Exposure Evaluation Network.” That’s enough economic damage to dampen anyone’s holiday spirit.

In another article, Kilcarr explains there may be a third reason cargo theft increases during the holidays — weather. He notes that bad winter weather often scrambles a good portion of the country’s freight transportation network. “Such ‘supply chain disruptions’ due to weather or other factors,” he writes, “are also now being viewed as ripe targets of opportunity for cargo thieves.”[5] Sam Rizitelli, national director for transportation at Travelers Inland Marine division, told Kilcarr that lax security was a contributing factor. “What we’re finding, Rizitelli said, “is that when the supply chain gets disrupted such as by a massive blizzard or say a port worker strike, a lot of transportation companies begin doing things outside of their normal ‘safe’ practices due to excessive shipment backlogs, etc.”

What Can be Done

The fact that some logistics companies ignore or greatly reduce security protocols when the pressure to perform increases (e.g., from disruptions or increased volume) provides the most logical answer to what can be done to prevent cargo theft — always comply with best practices. Kilcarr writes, “By continuing to observe logistics security fundamentals, participants throughout the supply chain can minimize their chances of falling victim to cargo thieves.” McLoughlin offers three other suggestions:

Remember that freight at rest is freight at risk. The more time freight spends sitting unattended, the likelier the chances are for truckload theft. Try to keep the amount freight that’s shipped out over weekends to a minimum, or work with your carriers to avoid prolonged stretches in drop yards. Be especially mindful in traditionally active cargo theft areas like Southern California, the Dallas/Fort Worth Metroplex, Miami, and Atlanta.

Identify vulnerabilities and don’t let your guard down. Dig into operational controls to understand which protective measures are in place at every point in the supply chain. Additionally, know that all ‘secure’ drop yards are not created equal, so it’s important to verify and validate whenever possible. Is the drop yard gated? Guarded? Well-lit? Is it a spared space? You can also do a quick Google Earth search to see what those yards look like and to help determine if they meet your expectations and standards.

Leverage relationships with your third party logistics provider (3PL). Your representative should be engaging in proactive measures to keep your freight safe. Your rep can validate carriers; help them understand best practices to keep freight safe; and provide insight around your expectations, lanes, and supply chain.

Janet Miller, a security expert, suggests seven other practical steps that can be taken before and during a logistics run. They are:

1) Don’t let your cargo’s destination be known. If you have ever heard the old saying that ‘loose lips sink ships’, that also holds true for cargo theft. …

2) Do an internal audit at the distribution center. Assessing your distribution center is a very important part of making sure the cargo doesn’t go missing. Unfortunately, internal theft is a big problem for distributors, so making sure you have adequate surveillance technology is key. …

3) Use trailer door padlocks. Even though it seems simple and low-tech, padlocks on your trailer doors will prevent cargo theft immensely. Using a satellite controlled locking pin will help. Huck bolted door hardware and frames in the rear trailer will also reinforce door locks.

4) Watch the hot spots and hot times. Cargo theft is highly concentrated in six states and in certain cities and truck stops. Thefts are more frequent on weekends and spike during holidays. So make sure you hone in your security efforts on times when theft is most likely to occur. …

5) Get rid of dishonest employees. Some employees are just plain dishonest and you need to let them go. If the employee has been exhibiting suspicious behavior, you need to be sure to monitor them. Try using anonymous tips to get information on possible deceit. …

6) Create partnerships and alliances. Forming an alliance with law enforcement organizations and other companies will help you stay up to date on the latest trends of cargo theft. By partnering with other companies and with security firms, you will improve your chances to staying up to date on the latest cargo theft prevention methods.

7) Park safely. One of the biggest causes of cargo theft is improper parking. Companies need to promote safe parking habits and make sure drivers know where they are allowed to stop for breaks. Companies need to know where safe rest stops are and ensure their drivers also know these spots.

Summary

William H. Anderson, Group Director of Global Security for Ryder System Inc., writes, “A well-executed cargo theft is pre-planned and highly coordinated. Stolen goods are often moved quickly to a warehouse, off-loaded, repackaged, re-manifested, and placed on another vehicle, often before the theft is even discovered. This ‘illegitimate supply chain’ is managed by organized crime operations that have the ability to move, transload, and distribute stolen goods within hours. Today’s virtual economy often works against legitimate businesses by facilitating the distribution of stolen goods through on-line marketers and auction sites.”[7] Just as much planning and execution needs to go into the movement of goods as thieves are doing to try and steal them. Salvatore Marino, Vice President of Business Development at CargoNet, explains there is a ripple effect caused by cargo theft that significantly increases the economic cost of a loss.[8] He writes:

“Cargo theft detonates a … wave of disruption in the supply chain. After a theft takes place, the toll in damages is just beginning, and direct losses from the theft often trigger other, indirect impacts that travel down the supply chain — call it the ripple effect. A study in 2011 was conducted around a stolen container carrying digital cameras with an estimated value of $200,000. It found that ripple-effect losses actually dwarfed the direct loss of cameras by a factor of 10, meaning it would take an additional $2m in sales to offset the initial loss. Those sales have to compensate for expedited shipping of replacement products, repayment of taxes and duties, and loss of consumer confidence, among other concerns. For any company — in any field – that’s quite a ripple.”

If you want a happier holiday season, take the necessary steps to ensure your cargo is safe.

Footnotes
[1] FreightWatch International, “Cargo Theft in U.S. in 2013 Keeps Pace with Record Levels,” SupplyChainBrain, 10 March 2014.
[2] Christopher McLoughlin, “Countdown to Black Friday: Are You an Easy Target for Cargo Theft?Talking Logistics, 20 October 2016.
[3] Sean Kilcarr, “Holidays becoming prime time for cargo theft,” Fleet Owner, 14 December 2014.
[4] Staff, “Cargo Theft was Top Supply Chain Risk in 2015,” Material Handling & Logistics, 28 March 2016.
[5] Sean Kilcarr, “Supply chain disruptions increasing cargo theft risk,” Fleet Owner, 11 April 2014.
[6] Janet Miller, “7 ways to prevent cargo theft,” Shipping and Freight Resource, 4 November 2015.
[7] William H. Anderson, “Guest Commentary: Preventing Cargo Theft in the Supply Chain,” Logistics Viewpoints, 10 November 2011.
[8] Salvatore Marino, “Cargo Theft’s Unexpected Ripple Effects,” SupplyChainBrain, 31 March 2015.

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