Shining A Light On Cargo Theft

How many dollars can be swept under a rug in a year? How about 10 billion? How about 25 billion? How about no one knows for sure because no one knows how many cargo thefts go unreported in the U.S. Since deregulation forced over-the-road trucking to re-invent itself a quarter century ago, the industry has rightly gained a reputation for being upfront about many systemic problems, as well as forthright

How many dollars can be swept under a rug in a year? How about 10 billion? How about 25 billion? How about no one knows for sure — because no one knows how many cargo thefts go unreported in the U.S.

Since deregulation forced over-the-road trucking to re-invent itself a quarter century ago, the industry has rightly gained a reputation for being upfront about many systemic problems, as well as forthright about attempting to solve them.

That goes for making truck operations environmentally cleaner and more productive and for making trucks and their drivers more efficient and safer.

Nonetheless, there's this one issue that few truck operators want to speak of and many more will not discuss at all. Yet the trucking scourge that is cargo theft isn't going away by itself. No one may want to hear it, but a number of factors now at play threaten to make it even a bigger monkey wrench for truckers and their customers seeking nothing more than to move freight safely and profitably.

HIGHWAY ROBBERY

“Highway robbery” is nothing new. It's just that never before in this country have the targets been so plentiful and the goods so moveable and the chance of getting caught so slim to make cargo thieving in all its forms a truly promising career for criminals.

The California Highway Patrol (CHP) says it's estimated that combined losses suffered by the trucking industry, insurance companies and railroads surpass $10 billion in the U.S. annually.

CHP adds that “no financial total can adequately quantify the actual cost of cargo theft-related losses, which includes jobsite downtime, replacement of stolen commercial vehicles, time spent on additional paperwork and increased insurance costs.”

The Annapolis. MD-based National Cargo Security Council (NCSC) estimates cargo theft is responsible for over $10 billion in merchandise losses each year. This estimate is based on confidential data provided to the NCSC by both freight carriers and insurance groups, so may well be the most accurate available.

Hard to fathom but that cost figure may reach even more stratospheric levels. Statistics compiled by the Washington, DC-based International Cargo Security Council (ICSC) indicate more than $25-billion worth of goods in transit are stolen annually in the U.S. Still other experts contend the total bill could be 10 times that thanks to many thefts going unreported or simply being reported as other types of property crimes.

A 1999 study conducted by the Dept. of Transportation's John A. Volpe National Transportation Systems Center argues that chronic under-reporting of cargo theft masks the true extent of the problem.

“The rule of thumb used by law enforcement in estimating property theft is that only 40% of businesses or individuals actually report theft,” the report says. “The FBI also readily acknowledges that its estimates may not reflect the losses of smaller transportation facilities and cargo stolen in regions not affiliated with the FBI's cargo criminal apprehension programs or task forces.”

And if indirect costs of cargo theft are included, states the report, total losses would run between $20 billion and $60 billion a year. This figure includes the cost of filing, investigating and paying claims, but does not take in all law enforcement and security technology expenses.

REAL WORLD

It's doubtful any truck driver separated from a load while at or near the wheel would feel he was the victim of just a “property crime” — even if a gun is not pointed at him. Funny, then, that the average person's view of cargo theft is mostly informed by pop culture, what they see in the movies or on TV.

But if everyday folk think cargo theft is nothing more horrible than say an enterprising kid selling stereo speakers that “fell off a truck” or is anything like the coolly causal 1960s hijacking depicted in Martin Scorsese's “Goodfellas” mob flick, then small wonder this crime gets little attention.

Come to think of it, the last time a major cargo theft really made headlines was the $6-million cash-and-jewelry heist — the largest cash haul in U.S. history — from the Lufthansa air cargo terminal at JFK back in 1978.

Maybe no one steals that big anymore, but somebody has got to be stealing something for cargo theft losses to be mounting in the double-digit billions. More likely, very few victims of this crime want to make a public fuss of it, lest they call attention to the fact they were — for whatever reason — unable to protect the goods entrusted to their care.

More shocking still is that as the general rate of cargo theft is climbing, so is the level of violence accompanying these crimes. In Southern California, according to CHP, armed hijackings and terminal robberies have increased in the last five years.

For its part, CHP breaks armed cargo theft down into three main scenarios:

TERMINAL ROBBERY

Organized groups enter a trucking facility, hold security guards or employees hostage and steal one or more loaded vehicles (this is not unlike the big Lufthansa job except those crooks furnished their own — stolen — Econoline van to haul the goods away).

HIJACKING

Occurs when a truck driver comes to a stop. Cargo thieves will conduct surveillance on the target after receiving “inside” information on the load. Once the driver stops, one or more gunman will enter the cab, detain the driver and transport the load to a pre-determined destination. A percentage of these hijackings are staged and involve the drivers.

HIJACKING VIA COERCED STOPS

One way to coerce a driver to make an unplanned stop is to have a female — sometimes scantily dressed — gain the driver's attention while he's driving. The female accomplice may falsely inform the driver something is mechanically wrong with his truck. Then the driver will pull to the side of the road to inspect the vehicle. Once the truck is stopped, armed thieves will arrive to grab the rig.

It's less dramatic — and less dangerous for drivers — but burglaries are also part and parcel of cargo theft. CHP says burglaries occur at truck yards, commercial parks and railroad yards.

A burglary is committed when a “theft group” enters a facility, posts lookouts and starts opening trailers and containers searching for a desirable commodity to steal.

And with criminal minds knowing no bounds, CHP can report there are other trends about which to be watchful:

DRIVER “GIVEAWAYS.”

Yes, this refers to when a driver actually participates in the stealing of a loaded rig. Drivers generally agree to turn over their rig to a gang of thieves for a substantial cash payment.

EMPLOYEE INVOLVEMENT

More of the same. Refers to when a company employee with advance knowledge of a specific trailer or container load provides cargo and transportation information to a group preparing for a heist.

COUNTERFEIT PAPERWORK

The special province of independent drivers who haul chassis/containers from container terminals. Drivers present counterfeit paperwork to security guards and ultimately make off with valuable loads.

“GRAB AND RUN.”

Technique favored by crooks targeting trucks loaded with high-tech equipment. Traveling in “family-type vans,” they follow a targeted truck. Once the rig stops, several suspects exit the van, open the trailer doors, and off-load as much as they can before the truck gets under way.

WAREHOUSING STOLEN CARGOES

A tad more sophisticated in that stolen rigs are brought to a pre-designated storage facility for off-loading and storage of stolen commodities. Such “warehouses” include, but are not limited to, industrial storage facilities, public storage facilities, restaurants, pallet yards, single-family houses, apartments and, why not, condemned buildings.

Interestingly, both the FBI and the NCSC indicate that the majority of cargo theft occurs in cargo terminals, transfer facilities and cargo consolidation areas.

Still, whether the goods come off trucks on or off site, NCSC says motor carriers experience 85% of all cargo theft today.

That cargo theft is much aided and abetted by insiders should not be dismissed by motor carriers. The extensive human infrastructure of freight brokers, truckers, and dock workers makes it difficult for law enforcement and transportation providers to get an exact handle on instances of bribery, extortion, or “purchased” information, as the Volpe cargo theft study points out. However, it's estimated that more than 80% of all theft and pilferage of cargo is accomplished by or with the collusion of persons whose employment gives them access to that cargo — or simply knowledge of it and its movement.

CHP notes that while it regards cargo theft as “in essence a form of organized crime,” in the Golden State this crime is “not generally committed by proverbial mafia families.”

As for state and federal government activity in this arena, it is crucial to bear in mind that, like politics, all cargo crime is ultimately local.

Because much of the criminal action takes place in certain locales — generally urban areas — various state and local police forces have become heavily engaged in fighting this crime in their backyards.

Once upon a time cargo thieves were also squeezed pretty hard directly by federal law enforcement efforts, but experts see much of that focus as having been redirected toward fighting terrorism since September 11, 2001.

But one can argue that as law enforcement agencies and even private citizens — including truckers who've enrolled in Highway Watch — guard against trucks, trailers and containers falling into the wrong hands, things become tougher not just for terrorists but for run-of-the-mill cargo thieves, too.

Hesitancy to report cargo crimes rests in part with motor carrier executives who may keep quiet rather than risk negative publicity, higher insurance premiums or even giving confidential business information (for whom they haul) away to competitors.

According to the Volpe study, a 1980 General Accounting Office (GAO) report found that underreporting of cargo theft in the '70s was due to shippers and insurance companies being “reticent about reporting losses that could result in publicity and inhibit customer confidence. As a result, the transportation industry often viewed it as less costly to absorb smaller claims and have insurance cover larger claims.”

More reasons for under-reporting identified by GAO include:

  • Carriers fearing shippers might shift business due to security concerns.

  • Carriers wanting to limit ability of competitors to disclose their security record to help gain market share.

  • Carriers being unable to determine the actual “point of loss” during a trip.

Yet another reason cargo theft is mounting has nothing to do with how the numbers get read or written down — it's a relatively low-risk route to larceny. Despite what CHP reports, overall, cargo is usually stolen with little need to resort to violence, which makes it a ‘safer’ crime for perpetrators and victims alike. On top of that, convictions for such nonviolent crimes usually carry lighter sentences.

Perhaps were a cargo thief asked why he does it, he might answer the same as bank robber Willie Sutton supposedly once did: “Because that's where the money is.”

NEW HEAT

But some new federal statutes may make cargo thieves a little less glib than ol' Willie.

The recently reauthorized Patriot Act increases federal prison terms to three years for anyone convicted of stealing cargo with a value of less than $1,000 and to 15 years for anyone convicted of thefts totaling more than $1,000.

The law also now requires cargo theft be listed under its own Uniform Crime Reporting code used by the FBI. In addition, establishment of a national cargo theft database has been mandated.

It's one thing to recognize the scope of the cargo theft problem but it's just as illuminating to be aware of how these crimes go down.

Indeed, while the Dept. of Justice says cargo theft is “particularly acute” in the port areas of Miami, New York/New Jersey, and Los Angeles/Long Beach, “most other areas of the country also are severely affected. Typically, each of the major transportation hubs around the country suffers cargo theft losses estimated at $1 million a day.”

So, while contemplating how cargo is truly safe nowhere nowadays, consider how it is most likely going to be lifted.

Containerization is the key word and music to a thief's ear. As the Volpe report states, the “container revolution,” greatly increased transportation efficiency but “may have inadvertently encouraged increased organized criminal presence in freight transportation.”

The report's authors explain how up to the 1960s high-value cargo was moved using break-bulk techniques. In that era, high-value cargo was packed in cases or on pallets and loaded and unloaded on a piece-by-piece or pallet-by-pallet basis. This easy access “encouraged the theft of electronics, appliances, clothes, engine parts, liquor, cosmetics, and cigarettes from terminals (including warehouses, docks, and transfer points) and during loading, unloading, and shipment.”

That sorry state of affairs led the U.S. military to start experimenting with containers in the 1950s. By the mid-'60s, the containerization of commerce was under way.

Containerized shipping is now crucial to domestic and global trade but containers no longer offer any barrier to thieves.

Unfortunately, once criminals adjusted to the new container, other patterns of theft emerged, points out the Volpe report. “Containers, stacked in terminals, could be stolen as a whole, opened and made subject to pilferage, or serve as a conduit for drug smuggling.… [in addition] much larger ‘packages’ containing higher-value cargoes could now be spirited away with comparative ease and the spoils made it worth using more elaborate methods of deception and daring.”

Given these new patterns, the U.S. Coast Guard, the NCSC and the American Trucking Assns. estimate the value of single cargo thefts is on the rise, averaging approximately $500,000 in 1996 for a five-fold increase from 1970, states the Volpe report.

INSIDER THREAT

What's more, and not at all surprising, the study's authors go on to say that “substantial evidence supports the hypothesis” that most theft of containerized cargo is systematic. “Often, criminals act with apparent information about cargo manifests, suggesting that collusion is occurring with transportation employees. Cargo terminals are particularly vulnerable to employee penetration at intermodal transfer points, warehouses, rail yards and docks.”

And there's more than one way to steal from a container. The Volpe report mentions these winning ways:

  • Opening containers stacked at terminal yards or transfer facilities, removing goods, and transporting them from ports or intermodal facilities by personal car or delivery truck.

  • Falsely claiming a truck was hijacked leaving a port or warehouse, when the driver is actually complicit in the crime and receiving a cut of the profits.

  • Dismantling containers, removing key merchandise, re-sealing containers and continuing shipment.

  • Relying on an organized network for spotting, stealing, and fencing merchandise.

  • Driving off in a loaded tractor trailer via fraudulent paperwork.

  • Speeding through fences and security checkpoints.

  • Stealing loaded trucks off the street or from storage yards.

Once they've got the goods, the thieves will quickly repackage them in a nearby facility for transportation for out-of-state fencing or right out of the country.

And unlike the good old days when it was local wiseguys pinching the freight, now, according to the Volpe report, the thieves are more likely to be organized criminal groups that are becoming “transnational — facilitating the theft of containerized cargo in one country and trafficking of stolen goods in another.”

These organized criminals “enjoy the same efficiencies as legitimate transnational businesses, but can elude national efforts to restrict their activities.” Great news.

As big and ugly as it is, cargo theft can be thwarted to one degree or another with everything from common sense to high tech.

But there's no getting around that this unpleasant and incredibly expensive aspect of transporting goods should be news to absolutely no one running a truck fleet.

To comment on this article, email: [email protected].

Hot Spots

While theft of containerized and “loose” freight can occur anywhere, the FBI estimates that $1- to $2-million worth of cargo theft occurs daily in just three regions of the country but accounts for about 75% of the bureau's estimate for the nation's total cargo theft loss.

According to the Volpe report, the three hot spots as fingered by the FBI are:

  • New York/New Jersey

    More than $1-billion worth of cargo is stolen annually in this area alone.

  • Miami

    Cargo theft here is “tentatively” estimated as ranging between one-half and three-quarters of a billion dollars.

  • Southern California

    It's estimated that some $500 million worth of cargo is stolen annually in this part of the state.

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