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Cargo theft: Charting the threats

Cargo theft: Charting the threats

The risks facing freight moving through supply chains at home and especially abroad are on the rise, with direct cargo thievery only one of many threats.

Once per week somewhere around the world, there is what’s considered to be a “terrorist attack” on the global supply chain – with cargo trucks and trains carrying Western-branded goods the main targets.

“It’s not seen on CNN but it’s happening,” explained Jim Yarbrough, direct of the global intelligence program for security firm BSI Supply Chain Solutions, during a panel discussion at the recent American Trucking Associations (ATA) Management Conference & Exhibition (MC&E).

“Those attacks are very high in parts of Asia and the Middle East,” he said. “We’re also seeing strong cargo theft activity in Italy by Mafia gangs, which often use heavy weapons to hijack freight.”

According to BSI’s data, cargo theft activity went up 300% in 2014 compared to 2008, with 1,726 “violent” truck thefts occurring last year as well – a number 269% higher than 2008, Yarbrough noted.

And that “violence” is occurring in some unexpected ways, he said.

“In Mexico, for example, a student protest occurred that blocked traffic – including freight trucks. Then the students turned on the trucks and started stealing the cargo,” Yarbrough explained – one reason BSI maintains a “severe rating” for cargo theft “across the board” for Mexico.

The supply chain threats trucking faces, however, are not just limited to cargo theft, he warned. There are issues such as “unmanifested cargo” or “UMC” whereby criminals attempt to smuggle drugs, weapons, and other illegal goods through the supply chain – often camouflaged as something innocuous.

Geoff Stephany (at far left in photo at right. BSI's Yarbrough is on the far right with Smith Moore Leatherwood's Robert Moseley Jr. in the middle), director of security for Old Dominion Freight Lines (ODFL), showed how a water heater became a “UMC” case for the LTL carrier during the panel discussion.

“We use what’s called ‘freight characterization’ to call out the ‘bad stuff,’” he explained.

In the water heater’s case, an unknown shipper tried to send a lone water heater on a pallet through the carrier’s network from California to the East Coast. That didn’t seem right to ODFL’s staff and their intuition provided correct, for the water heater’s interior turned out to be packed with drugs.

“It’s about taking a ‘layered’ approach to cargo security; not just the physical aspects of security but the procedural aspects as well,” Stephany noted.

BSI’s Yarbrough noted that Canada got labeled at one time as a “high threat area” for drug trafficking via truck freight, but that’s declining as traffickers move back to ocean carriers. “They are moving to Asia and Mexico so you are seeing a shift [in drug trafficking] away from purely freight trucks to ships,” he said.

Robert Moseley Jr., a partner with the law firm of Smith Moore Leatherwood LLP, stressed, however, that average claims for cargo theft seem to be on the rise in the U.S. noting that in the second quarter of 2014 that the average value of cargo lost to theft doubled to $321,521.

“Not surprisingly, alcohol, tobacco and electronics are major targets and half of all thefts occur over the weekends,” he explained.

Moseley warned carriers that they need to double and triple-check their cargo insurance policies to know exactly what situations are covered and not covered – especially if they offer their customers “extra security” for freight shipments.

“Because if you charge for extra security and it’s not provided – that is, if a load is fully or partially stolen – the liability limit gets waived,” he emphasized.

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