By some estimates, cargo theft amounts to $30 billion annually on a worldwide basis and may range as high as $12 billion to $15 billion annually in the US alone. The National Cargo Security Council and the FBI say this is a conservative estimate. Typical items targeted for theft include prescription drugs, clothing, computers, jewelry and other high value freight. That certainly includes much of the freight handled by truckload carriers of refrigerated goods, says Charles Robertson, executive vice-president of FFE Transportation Services in Dallas, Texas.
Some experts believe these estimates to be much too low. Some consultants in the field suggest that the cost of cargo theft has tripled from the most recent published reports. They say the problem may be as large as $90 billion to $100 billion worldwide and possibly as high as $30 billion in the US alone, Robertson says.
An additional problem facing carriers as they attempt to avoid cargo theft is that drivers are involved in much of the crime, either with direct involvement or at least by facilitation. Erik Hoffer, president of CGM Security solutions, a manufacturer of seals, locks, and other products such as trailer kingpin locks, says that drivers are responsible for up to half of cargo theft problems. “The going rate is about $14,000 to walk away during the theft or to meet somewhere in route to unload the trailer and then claim to have been robbed,” he says.
Many of those involved in cargo theft see it as a victimless crime, Hoffer says. One way to help combat the problem is to spread the word that such theft simply is wrong, he says.
Two training refreshers annually
Constant training can help prevent drivers from becoming involved with theft. Security and safety are critical subjects covered in driver orientation at FFE, Robertson says. In a continuing process, all drivers at FFE get orientation refreshers twice a year. Drivers get constant reminders to be aware of their surroundings. All drivers are asked to carry cell phones. The company will provide phones to drivers if needed, he says.
Training has to go beyond drivers; operations personnel must be trained as well, says Richard Durst, president of Arctic Express in Hilliard, Ohio. “For instance, we have a company rule that forbids dropping a loaded trailer,” he says. “A loaded trailer not hooked to a tractor is an invitation to theft. The driver cannot make the decision to drop a trailer; that has to come from operations — not from a dispatcher, but from an operations manager. Luckily, we had only one cargo theft in all of 2004.”
Keeping loads connected to tractors is an important way to reduce theft, says Corey England, vice-president, operations support, at C R England Inc in Salt Lake City. He says England uses its tracking and communications network to monitor trailers. The system automatically runs a disconnect report whenever a trailer unhooks from a tractor. Company policy prohibits dropping loaded trailers unless they are in a secure yard. Even on secure company property, loaded trailers are kept locked, he says.
Buy high quality locks
C R England has a lock policy for all equipment. The company buys high quality locks and issues them to drivers. When a trailer is dropped, it must be in a secure environment, because the lock stays with the driver instead of staying on the trailer. C R England secure yards are equipped with a supply of locks. Each lock uses a discrete key but the company can open any lock, England says
Prime Inc, Springfield, Missouri, also uses its tracking system to monitor trailers. The operations department gets a disconnect report for high value loads.
FFE pays special attention to trailers dropped in high crime areas, Robertson says. No trailer can be dropped in a high crime area without management approval. In addition, FFE works to ensure that loads can clear the point of origin safely. Drivers dispatched for outbound loads must have at least three hours of service available at the time of pickup to ensure equipment doesn't stop after being followed only a short distance. “We want drivers to run at least 300 miles from the pickup point before stopping for any reason,” he says.
Arctic Express tries to maintain security by placing some of the responsibility for loads on the driver. The company's lease operator contract makes an owner-operator personally responsible for the first $3,000 of any loss, Durst says. “We also want thieves, especially if they are involved with one of our drivers, to know that we will spend whatever is required to make sure they go to prison,” he says.
Robertson concurs, saying that FFE prosecutes all cargo theft to the limit of the law.
Recovery remains difficult
Recovery following a theft presents a problem as well, says Harry Norris, president of Howell's Motor Freight in Cloverdale, Virginia. He says it is difficult to get help from the authorities. This echoes a complaint from many carriers that many states designate cargo theft differently and that some do not have a specific definition of cargo theft.
FFE takes two immediate steps in the recovery process, Robertson says. The company wants to clear the company driver, if possible, as soon as it can be done. This usually involves the use of a polygraph, he says. The second step — actually done at the same time as clearing the driver — is to report the crime to police and to get the theft listed on the National Crime Information Center.
The company immediately offers a reward for recovery of the load. Rewards at FFE range from $5,000 up to $25,000 depending on the value of the load. Company employees are eligible to receive a reward, Robertson says. To spread word of the reward as fast and widely as possible, FFE maintains a list of 165,000 fax numbers for law enforcement task forces, local police, cab companies, bus stations, public and private warehouses, and other trucking companies. Timing is everything, he says, so the company sends out a blast fax using that list to provide information about the equipment stolen and the cargo, including the UPC codes on the cartons, if possible.
Hire an investigator
Police and the FBI must be contacted immediately. FFE also hires a private investigator. As a result, recovery performance has been remarkably good, Robertson says. In 2004, the company had six loads stolen and recovered five of them. “The best result — if losing a load can be called good — is that the five recovered loads all had six-figure values, while the single load that was a complete loss had a value less than $20,000,” he says.
Durst says that reporting stolen equipment to tractor, trailer, and refrigeration vendors works well. “We've got back at least one trailer when the thief took it to a refrigeration dealer for service,” he says.
Carriers say that shippers need to become more involved in the theft prevention process. “They certainly need to be more involved than simply putting a little 15-cent plastic seal on the door hardware,” Durst says. “Such insignificant measures do little to discourage cargo theft, and because refrigerated trailers are such tempting targets, we may actually be inviting thieves to make us a target.”
Simple seals are great if all a shipper and receiver want to know is whether or not a trailer has been opened. Carriers say that more is required. Shippers need to invest the money in cable seals or bolt seals to protect product that belongs to them. In addition, shippers could protect themselves and the public from the possibility of product tampering by providing better, more tamper-proof seals, carriers say. This is particularly important, because some shippers have begun to reject loads if the carrier cannot show the seal integrity necessary to prove a constant chain of custody for the loading dock to the receiving dock.
Shippers and carriers can work together to prove that chain of custody. The first step takes place when the driver accepts the load. It now is imperative that the load in the trailer matches the description on the trip manifest, Robertson says. The seal numbers must be on the paperwork as well. If possible, and it's a costly proposition in terms of fuel and time, shippers and carriers should agree to vary the routes used between common points, he says.
Avoiding the potential for terror attack is a vital part of controlling equipment and loads. If a load can be stolen, it can be contaminated or discarded so that the equipment can be used to transport terrorists or explosives. The new anti-terror regulations for handling hazardous materials will soon have the effect of squeezing the driver population. If drivers qualify prior to May 31, 2005, they can renew their HazMat endorsement to their commercial drivers license for an additional four years. After that initial renewal, drivers will have to qualify again with the potential of being denied the endorsement, so the full effect of those rules will not be felt for about five years. Removing drivers who cannot qualify for hazardous materials will make the driver shortage even worse at a time when drivers are sorely needed. At the very least, the new HazMat rules are going to require substantial rate increases, as carriers are required by the market to pay more for drivers with the necessary license endorsements.
