The New Highwaymen
WHAT DO COMPUTERS, CELL PHONES, ASPIRIN, cigarettes, wine, energy drinks, steak and lobster, lawn chairs, appliances, furniture, and auto parts have in common? They are all in demand by consumers and easy to unload on grey and black markets. As a result, cargo thieves consider them among the goods worth plundering.
Today’s cargo thieves are smart, resourceful, and willing to travel hundreds of miles to steal whatever they have their eye on. Like all businessmen, they know their marketplace and target what’s going to fetch the most money. Cargo thieves also know their target’s supply chain and strike at its weak points.
But supply chain stakeholders do not have to succumb to the will of these modern-day highwaymen. With some vision, creativity, and effective management, even the most complex of supply chains can be made less vulnerable, reducing losses and increasing a company’s bottom line.
I have been tracking cargo theft for FreightWatch since 2006, creating a track record of the kinds of products cargo thieves steal, where the thefts occur, and the monetary losses that result from the crime. Whenever possible, I record the date and time of the theft, city and state of the incident, the location type, thieves’ modus operandi, the product stolen, and the loss value—with the ultimate goal of better understanding the trends relating to cargo theft. Companies can use this intelligence to mitigate risk and prevent future incidents.
Getting good data is not easy, however, because there is no universal product classification system in use by the supply chain industry or those who study it for cargo thefts. Some entities that track theft data, for example, list cell phones, televisions, and computers individually, while others don’t.
The system we developed at Freight-Watch keeps the size of the list manageable by grouping cargo into 11 product types: alcohol, auto parts, building/industrial, clothing/shoes, consumer care, electronics, food/drinks, home/garden, miscellaneous, pharmaceuticals, and tobacco.
Another challenge in trying to analyze the size and nature of the problem is that there is no centralized reporting system in the United States. Additionally, police and sheriff’s departments around the country do not share cargo theft reports with one another. And yet another problem is that many thefts are never reported to authorities in the first place. Whether for fear of negative publicity, a desire to avoid the hassle of police involvement, or other unidentifiable reasons, many victimized companies are averse to reporting cargo theft incidents. And yet professionals throughout the industry want up-to-date and accurate cargo theft data for their own purposes.
This dichotomy has led to the creation of a number of cargo theft data collection and distribution systems across the country. FreightWatch attempts to comb through these disparate sources to create a single all-inclusive database. The result, though not perfect, is reasonable and useful. The findings include theft trends and ratios of thefts by product type and locations. Cargo theft hot spots are identified as well.
In 2010, FreightWatch recorded 899 incidents of cargo theft in the United States. In each case, we categorized the incident by product stolen, city and state of the theft, location of the theft if known (for example, truck stop, parking lot, or terminal), and the reported value of the loss. That year, cargo thefts rose 4 percent compared to 2009. Final 2011 data was not available at press time, but the first half of 2011 evidenced an encouraging trend, with the number of thefts down by nearly 7 percent compared to the same time period in 2010.
We also analyzed the value of cargo stolen and saw an interesting trend with regard to the value of stolen loads. In 2006, 20 of the 310 incidents (6.5 percent) were reported as resulting in high-value losses exceeding $1 million. The magnitude of those individual losses made the logistics industry take cargo theft prevention seriously.
By 2010, just 3.1 percent of the total 899 thefts that occurred surpassed $1 million. It may be that protection efforts aimed at higher value cargo are the reason for the drop. Of course, in absolute terms, that’s 27 incidents of high-value theft, more than the 20 in 2006, but it’s a much smaller percentage of the total number of incidents, which have continued on an upward trajectory since 2006 (rising dramatically to 674 in 2007 and then more steadily in subsequent years, going from 768 in 2008 to 863 in 2009 and to 899, as mentioned, in 2010).
Product type. From 2006 through 2009, electronics were the most targeted product type, variously accounting for 19 percent to 38 percent of the total. In 2010, however, that changed, with the food and beverage product type accounting for 21 percent of all cargo theft incidents, while electronics dropped to second, with 19 percent of all incidents. Building and industrial products accounted for 10 percent, while miscellaneous loads (trailers filled with a variety of products) accounted for 9 percent. This trend has continued through the first half of 2011.
The rising price of precious metals has had an impact on what was stolen in recent years. In 2010, for example, 43 cargo theft incidents targeted metals, for an estimated $17 million in direct losses. Over the 2010 Labor Day weekend alone, one group of thieves entered the S.H. Bell Company yard in Baltimore, Maryland, and made off with six trailers loaded with high-value metals, including nickel and copper, valued at $2 million.
Modus operandi. Cargo thieves were far more opportunistic in the late 1990s and early 2000s. In those days, most thieves were content with the “potluck” approach at truck stops, stealing any accessible rig and determining later whether the product inside could be fenced. While not terribly efficient, this method posed minimal risk to cargo thieves and required virtually no preoperational efforts on their part. The drawback, however, was that loads were often sold for minimal profit or were simply abandoned because they could not be sold.
Today, cargo thieves are increasingly selective in the products they steal. Instead of readily available products that may be generic or of lesser value, cargo thieves target more expensive name brands that consumers highly desire and that, therefore, bring higher prices on the grey and black markets.
Demand, therefore, is another variable that thieves consider. The products people desire because of multimedia advertising campaigns are the exact same products that cargo thieves steal. This is especially clear in markets in which new products emerge regularly, such as the electronics industry. As new cell phones and computers hit the market, thieves, like consumers, quickly lose interest in yesterday’s models and seek out the new.
Additionally, cargo thieves are becoming more sophisticated, conducting preoperational surveillance, learning where products are made and stored, and acquiring inside information through various methods. This has increased the distance that thieves are willing to travel once a load has left its origin, due to the increased confidence that their efforts will result in a larger payday. After significant effort has already been put into finding and traveling to the load’s origin, following loads for longer distances is less of a drawback for cargo thieves than it was in the past.
One indicator of how sophisticated cargo thieves have grown is that they now target product launches as a prime opportunity to make more money. When a new cell phone or gaming console is set to hit the market, cargo thieves often increase their operations in and around areas where new products are stored and shipped, with the goal of being able to steal a full truckload of the new items and then get it on the black market before or during the official launch.
Targeting versus pot luck. Active targeting refers to the method used by professional cargo criminals to steal a particular product or type of product through supply chain theft. The process works like this: first, the broker or buyer places an order with the cargo criminals for a product type or a specific item. Next, the theft gang conducts research to determine where the product is manufactured or distributed. The gang then chooses which facility to target, assembles the necessary team, and travels to the location, usually in a rental car or two acquired by an acquaintance of the team.
The gang will rent a room at a cheap motel near the targeted facility. Surveillance of the facility then commences to determine the flow of goods in and out of it, shipping schedules, and other intelligence that will help them select the trailer that contains their desired target.
During the intelligence-gathering phase, cargo thieves will often seek inside information from the facility. It can be gained through a number of methods, including fishing for or purchasing information from employees, walking into facilities pretending to be lost and seeking directions, and attempting to be hired as a temporary employee. On rare occasions, more elaborate methods have been used, such as placing hidden cameras near doors to record entry codes.
Once the intelligence-gathering is complete and a specific load is targeted, the thieves begin trailing the rig. Historically, they would trail a load as far as about 200 miles before giving up and targeting another load. In recent years, however, thieves have been known to trail a desired load in excess of 500 miles before they find an opportune moment and pounce.
Since cargo theft continues to be a nonviolent crime, criminals generally wait for the driver to stop and leave the load unattended. They then move in to steal the entire tractor-trailer.
Once stolen, the rig is driven a short distance to an out-of-sight place, and the tractor is detached and discarded. Then another tractor, generally stolen a day or two before the job and swept clean for any form of tracking device, is attached to the trailer, and the load is moved to the destination of choice for the criminals.
After his 2009 arrest in California, one suspected cargo thief told authorities he primarily targeted facilities that would preload trailers and leave them in their lots overnight, preferably over the weekend. By targeting these loads, the criminal was able to steal and move the cargo significant distances before anyone discovered that it was missing and reported it to the police. The suspect even acknowledged having interacted with police on several stops for traffic infringements and other reasons. In each incident, the suspect was allowed to continue on his merry way because the police had no way of knowing that he was transporting a stolen load.
As the supply chain security industry matures, new techniques and processes for securing loads on the road are being tested, refined, and found effective.
Onsite. The first step is to ensure that cargo departs from the point of origin without a bull’s eye on its rig. The key is to have measures in place to detect when criminals are conducting surveillance at warehouses and distribution centers.
To that end, supply chain and security professionals need to train staff in countersurveillance. For example, employees must be trained to notice when someone is lingering around the facility grounds or repeatedly showing up at a facility. They should be suspicious of “innocent” attempts to access the facility by unauthorized personnel as well as of vehicles repeatedly driving past the facility or entering parking areas. They should report all such incidents.
It is extremely common for cargo criminals to solicit information by asking simple questions of personnel working in the area. Employees should be consistently reminded not to engage in idle conversation with people they do not know, and they should be trained never to divulge any information about the facility, cargo, or transportation processes.
In transit. The most critical concept when developing an in-transit security model is to ensure that the program’s success does not hinge on a single countermeasure. Instead, the company should use a layered approach that combines people, policies, and technology. All three must be structured to work together so that cargo thieves cannot exploit a single point of failure to create the opportunity for cargo to be stolen.
People. Every person in the supply chain from logistics managers to dock workers to truck drivers must be fully aware of the risks involved in supply-chain operations and their role in ensuring the cargo’s safety and security. They should be taught how cargo-theft gangs operate, what these gangs look for when targeting cargo, and how to prevent their cargo from becoming easy prey.
Drivers should also learn how to determine if they are being followed—a critical step after leaving the point of origin—and what actions to take if they are. Providing drivers with written instructions, locations of state police along their routes, and emergency contact numbers to call can mean the difference between catastrophic loss and on-time delivery.
Policies. Senior management must establish a supply-chain security program through written policies and procedures. Management must also designate personnel who will be responsible for the oversight and execution of the program. Chief among the goals of the program’s managers will be seeing that policies and procedures are followed.
Having a written set of protocols serves many purposes. Beyond providing an established document for enforcement, good written policies provide clarity with regard to responsibility, scope, and requirements for the security of cargo.
Technology. Global Positioning Systems (GPS) tracking, often referred to as electronic escorts, is an emerging method for tracking cargo shipments. There are two primary forms of tracking that provide cargo with entirely different levels of security and transparency.
The first is on-board GPS tracking that is provided by the transportation company. This refers to GPS tracking systems installed on the tractor-trailer. Typically attached to the cab of the truck, these external tracking devices are the most common in the industry and provide trucking companies with a way to locate a truck, relay messages to the driver, and meet fleet management requirements.
The second is covert or embedded GPS tracking devices. These devices are placed inside of the cargo itself and provide the shipper with the ability to see where the cargo is at any given time, even if separated from the tractor-trailer. While these devices may not use actual GPS technology, they fall under the same umbrella.
Another countermeasure is to use a lock with GPS tracking capabilities. Some are available with electronic seals. Regardless of the method employed by the user, the goal is the same: to use technology for the purposes of knowing where the cargo is at all times and to have the ability to quickly respond in the event of a theft.
The key to success in a cargo security program is a sound risk-mitigation policy carried out by the right people with good technology. Shippers, logistics providers, and transporters who follow that model will increase the odds that their cargo will make it to the intended destination.
Dan Burges, CPP, is senior director of intelligence at FreightWatch and is the author of Cargo Theft, Loss Prevention and Supply Chain Security due out in the summer of 2012 from Butterworth-Heinemann. He is a member of ASIS International.