Vanishing cargo

Losing billions of dollars in cargo has fleets fighting back. They have the rugged, camouflaged, can-do look of Navy Seals. They use the latest in stealth technology: night-scopes, digitally encrypted walkie-talkies, laptop computers linked to satellites, and intelligence-gathering networks worthy of the CIA. They have almost limitless funds for their covert operations, which take place all over the

Losing billions of dollars in cargo has fleets fighting back. They have the rugged, camouflaged, can-do look of Navy Seals. They use the latest in stealth technology: night-scopes, digitally encrypted walkie-talkies, laptop computers linked to satellites, and intelligence-gathering networks worthy of the CIA. They have almost limitless funds for their covert operations, which take place all over the world.

They are the bad guys, and they're stealing cargo worth billions of dollars annually.

Cargo theft has been a problem since the first stage coaches encountered masked riders who ordered that the strongbox be given up. Unfortunately, little had changed since those days of the Wild West -- until recently.

What has changed is that trucking companies are talking for the first time to each other and to law enforcement about their cargo thefts. "The biggest problem has been the lack of communication," says Gail Toth, executive director, Transportation Loss Prevention Security Council at the American Trucking Assns. "Companies didn't talk to each other, and they didn't talk to law enforcement."

Why not? For one thing, carriers believed that telling others about their thefts made them more vulnerable to future hits. Many carriers also didn't report thefts, fearing (and rightfully so) that their insurance premiums would rise. In addition, if the theft was near the deductible, many chose to eat the cost rather than spend time and resources filing a claim.

That has changed, however, because the problem has gotten so huge that it can no longer be ignored or considered a normal part of doing business. In addition, carriers are now looking at theft from a bottom-line perspective. With many carriers now self-insured it has become a balance-sheet issue.

Cargo-theft estimates range from a conservative FBI figure of $3.5 billion annually to those of industry groups such as the National Cargo Security Council, which suggests it's more on the order of $10 billion. Whatever the right number, it's increasing, and thieves are becoming smarter and bolder.

According to industry security experts, cargo theft isn't the work of small-time operators. Sophisticated "gangs" or "crews" are hitting cargoes with the precision and ?lan worthy of government and military operations. "Some Nigerian gangs have actually hacked into carriers' networks and rerouted trucks so they can hit them," notes one federal official. "Highly organized gang cartels are in on this, and it's not just here in the U.S., but everywhere in the world."

One reason crews focus on target cargo is that the profits are enormous. "We've heard of groups of fences offering a flat fee of $10,000 cash for one trailer," says Colleen Toebe, theft specialist for Schneider National in Green Bay, Wis.

The profits are especially high for computer and electronic equipment. In one instance, Quantum Corp., Milpitas, Calif., lost more than $7 million in hard drives from a truck that was hijacked near Dublin Airport. Stolen computer components are lightweight and can move quickly; they may show up on the other side of the world within 24 hours of their theft. Some thieves are so savvy that they can ship a container overseas using legitimate bills of lading.

Seemingly mundane items are being hit, too. Easily sold consumer goods such as soap, shampoo, detergents, dog food, and even perishable items such as meat and fruits are broken down and sold to small neighborhood delicatessens and convenience stores for cash. The markups are huge and the chances of being detected are small.

Law enforcement has been slow to respond to this burgeoning problem, and the industry's reluctance to come forward has been a major reason. But law enforcement must also take some of the blame. Until the appearance of well-financed, well-organized gangs, cargo theft was considered a 'victimless crime' and therefore given a relatively low priority. However, now law enforcement authorities realize that proceeds from cargo thefts may be funding drug operations, firearm rings, and terrorist group activities -- and they have begun to fight back.

Multi-jurisdictional strike forces like Southern California's CATs, Metro Dade's (Florida) TOMCATS, and the New Jersey State Police Cargo Theft Unit are making a dent, recovering millions in stolen goods every year. But it's still up to the carriers themselves to give law enforcement the tools they need to do their job -- and the most important tool is information.

CARGOTIPS (Cargo Theft Information Processing System) is an Internet-based network that allows law enforcement to check reports of stolen goods. "The key is data and sharing that data," says Curt Shewchuk, manager of corporate security for CNF Transportation in Fredericksburg, Va. "We must maintain a certain level of cooperation among the industry and with law enforcement."

Less-than-truckload carriers are an easy target. The most common spot for thefts is at terminals, but LTLs often don't know they've been hit until the trailer finishes its deliveries. "With so many people handling so much cargo in so many different terminals, it's hard to know where the theft occurred," says Toth. While TL carriers have a better handle on thefts (it may be as high as 12% of all loss claims), LTLs are still working on building accurate reporting methods. The rise in intermodal traffic only serves to increase a carrier's point of vulnerability.

Adds Shewchuk: "We need to focus on loss reporting and we need to share that information with carriers, law enforcement, and our customers, too, so they can understand the problem."

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