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Cargo theft: Connecting the links

Aug. 10, 2015
"We’re starting to see fake emails as part of fictitious pickup scams. [They use] legitimate-looking carrier information to change arrival times to allow thieves to steal specific loads. Cargo thieves use information to disguise what they are doing as well as to get around defenses carriers and shippers establish to thwart them.” - Scott Cornell, director of the Specialty Investigations Group (SIG) within the Inland Marine division at Travelers Insurance

Cargo theft is a booming business for thieves. According to the FBI, it is a $35 billion to $40 billion problem in the U.S. The most stolen commodities—food and beverages—accounted for 22% of all cargo thefts in 2014, reports CargoNet, a theft database and information provider. The firm also notes that the average loss value of pharmaceuticals increased by more than 23% in 2014.

Cargo theft risk analysis firm FreightWatch International (FWI) recorded 794 cargo thefts in the U.S. in 2014 with an average value of $232,924, a 36% increase over that of 2013. That translates into an average of 66 cargo thefts per month, or 2.2 per day, in the U.S.

Brian Bobo, vice president of enterprise security for transportation conglomerate Schneider, says that to effectively counter cargo theft, a fleet must take a holistic approach. Linking people, processes and technology together creates “defensive layers” that make stealing freight an extremely difficult endeavor, he says.

And while it might sound trite, Schneider’s holistic anti-cargo theft strategy achieved the ultimate marker for success last year: Out of 4 million loads moved by the carrier’s divisions, not a single one got stolen.

“To be successful, we can’t rely solely on doing one thing flawlessly,” stresses Bobo. “Yes, we have the right technologies in place, but it’s just as important that our drivers and operations teams are consistently doing the right things.”

Bobo believes that looking at the physical security needs of trucks, trailers, and terminals as well as those of information technology (IT) systems is a critical element to Schneider’s success.

“There is so much overlap today between physical and electronic security that we need to combine them,” Bobo explains. “Our customer’s freight and our assets aren’t the only things exposed. We have to realize that there are all kinds of data about us, our customer’s business, and their freight exposed out there as well. That’s why you can’t split the two because in today’s world, one is almost as important as the other.”

Longtime cargo theft expert Scott Cornell, director of the Specialty Investigations Group (SIG) within the Inland Marine division at Travelers Insurance, notes there are more cyber-related aspects to freight heists these days.

“For example, we’re starting to see fake emails as part of fictitious pickup scams. [They use] legitimate-looking carrier information to change arrival times to allow thieves to steal specific loads,” he says. “Cargo thieves use information to disguise what they are doing as well as to get around defenses carriers and shippers establish to thwart them.”

Cornell adds that some cargo thieves hack into networks to look over loads and then use that data to figure out when the loads are being dispatched and along what routes.

“It goes back to what kinds of information carriers and shippers are putting out there in public about their businesses,” he stresses. “That expands the battlefield we’re dealing with in terms of cargo theft.”

The most recent Travelers Business Risk Index report found that cybercrime as a risk category, particularly among large businesses, climbed from fifth place in 2014 to second this year.

The survey was conducted in May among 1,200 businesses across the country, including those from the transportation industry. Travelers’ poll found that nine out of all 10 industries surveyed report cyber risks and data breaches among their top five concerns.

Yet Travelers also found that when it comes to dealing with cyber risks, only 18% of transportation companies buy separate coverage for such events, while 36% believe they are already covered by other insurance policies.

Why cybercrime must be addressed by fleets

Though Cornell stresses that cybercrime and cargo theft are very different threats and must be addressed separately, electronic hacking and other nefarious cyber activity could bleed over into the cargo theft arena, and trucking firms should keep a watchful eye on this trend.

Schneider’s Bobo believes IT can be one of the more effective tools in the battle against cargo theft.
“It’s really about stepping back, looking at the high-risk areas you may be shipping loads through while also thinking about the simple things that can make cargo more difficult to steal,” he says.

“Take geofencing, for example. First, it’s a simple way to determine if the freight is staying on the proper route. Second, it can be used to ‘wall off’ high cargo theft risk areas so you know to avoid routing trucks through them.”

Tom Mann, president of TrakLok International, knows IT can serve as a shield for freight out on the highway. His company developed the TrakLok cargo security system to bring the needs of physical and IT security together into a single package.

TrakLok includes a hardened lock that withstands prying, cutting or impact tools; an integrated alarm that sends alerts when unauthorized attempts are made to access cargo; and a GPS tracking system with a cloud-based web portal that allows access to real-time information on location and cargo integrity.

“IT’s role is critical in the recovery efforts of stolen tractors and trailers,” Mann explains. “With GPS tracking, a trailer can be pinpointed at any time, providing someone is monitoring the location. But pinpointing the location of a trailer that has been emptied is a bittersweet victory.”

Mann believes visible, physical deterrents have a much larger impact on preventing theft. “Electronic and ruggedized locks are very effective at deterring and detecting potential thefts,” he stresses.

“The longer it takes a criminal to breach a load, the greater their risk. As such, they will move on to loads that are quicker to steal and easier to breach.”  

“Single layers” of security are eventually breached by patient thieves, he emphasizes. “Multiple layers of security are the most effective method to create overlay and protect against system failures that can leave an opportunity open to criminals,” he says.

“There are many targets available, and organized criminals tend to be very patient and careful when stealing cargo. This is the reason that arrest rates are so low for cargo theft,” Mann points out. “That’s why pairing personnel (trained drivers) and security equipment (electronic locking systems) are the minimum layers of security a company should employ to effectively protect cargo.”

Real-time freight tracking systems also perform a valuable role in the effort to better protect freight in transit, explains Glynn Spangenberg, senior vice president and general manager for tracking software provider MacroPoint.

“In-transit visibility is the first line of defense when it comes to preventing cargo theft,” he says. “Not just visibility for the motor carrier, an obvious requirement to maximize asset utilization, but visibility for the shipper that owns the freight. After all, the target of cargo theft is the shipper’s product, not the asset hauling the freight.” 

Even if insurance covers the direct cost of the stolen cargo, it doesn’t cover the indirect costs of theft, including the damage to customer service, brand reputation, and product availability, Spangenberg stresses.

Simply put, the more eyes tracking a load and seeing movement, or lack of movement, the better.  
“When tracking capabilities were first introduced to the freight transportation industry in the late 1980s, carriers adopted the technology to improve productivity, efficiency and asset utilization—and profitability was the ultimate result,” he points out. “Now, shippers, 3PLs, and brokers with real-time freight visibility are deploying this important weapon in the war on cargo theft.”

Ted Wlazlowski, president and CEO of LoJack SCI, a majority-owned LoJack Corp. subsidiary, notes that, as with any other criminal activity, those who don’t understand the risks and use proactive protection will continue to be victimized.

“Cargo theft still continues to grow, despite recent data sources; however, by sharing intelligence, shippers and logistics providers are much more proactive in securing their supply chains,” Wlazlowski explains. “The key to the problem is getting more involvement [through] everyone sharing and understanding how to keep their lanes, risk management, and prevention processes performing positively.”

He believes that the combination of technology, training and strict policies will help mitigate the problem, although the industry will be dealing with it forever.

“Technology alone will not solve the issue [as cargo theft] is a problem where operators must have the awareness of the risks, the knowledge of how the perpetrators operate, and use that information to set up their operation to avoid the pitfalls of  being in the target zone,” he says.  

IT security tips

It should come as no surprise that ports and cargo terminals are being closely scrutinized by shippers and government agencies regarding their need to improve physical and information technology (IT) security.

While the benefits of improved IT security solutions are many, how to focus and integrate them to provide the best protection is the key. To that end, Vector Inc., an IT system integrator based in Torrance, CA, offers the following three key areas to focus on when it comes to IT security:

Active vs. Passive: To ensure that surveillance systems are effectively implemented, IT directors must decide whether to hire a full-time security staff, purchase an intelligent surveillance system, or use a combination of both.

An active surveillance security staff is typically on the ground looking for threats or unsafe activity on the video or CCTV (close-circuit television) monitoring system. A passive surveillance system consists of cameras that record activity for viewing later.

On their own, neither solution will be 100% effective in stopping threats or theft.

Network Bandwidth: To ensure the best video surveillance system, a robust network and people who monitor and manage the network are required. A “set it and forget it” attitude will lead to serious IT problems.

There must be an on-site IT team or managed services contract in place to understand the software and video data, as well as what the business is trying to accomplish so the experts can ensure the network will handle the needed bandwidth. The IT team should also be responsible for regular testing.

Integration of WiFi-Assisted GPS: Wireless and cloud computing solutions enable employees, regardless of their location, to maintain access to information, applications, and resources at all times. The ability to share information results in more efficient and effective business practices.

While cost is a concern, an IT director should consider downtime versus the cost of the infrastructure in a wireless design. In industrial areas, consider where access points are installed; if they are too sparse, coverage may not be strong on all parts of the property.

Cargo security tips

Brian Bobo, vice president of enterprise security for Schneider, knows a thing or two about the multidisciplinary approaches required to more effectively combat cargo theft.

A U.S. Army veteran, Bobo began his military career in counterintelligence, followed by stints in armored operations, logistics, and base security. After he retired from the Army, Bobo spent the initial phase of his private sector career in warehouse and retail security before joining Schneider a year and one-half ago.

He emphasizes that freight security really hinges on preparing and educating company drivers and owner-operators.

“We apply a three-prong approach,” Bobo says. “We address expectations during on-boarding; we regularly communicate the locations and types of thefts that are occurring; and we incorporate cargo theft prevention measures into our quarterly training sessions.”

Having such a program in place is essential for drivers and the information technology (IT) resources deployed to support them as well, points out Ted Wlazlowski, president and CEO of LoJack SCI.

According to Wlazlowski, there are five areas where fleets need to create what he calls “positive lane and logistics” performance. These are:

Visibility — real time cargo/asset location with environmental sensing capability for cargo integrity

Validation — chain of custody, regulatory compliance, loss and incident forensics

Performance — transit time, estimated time of arrival, destination acknowledgement, and notification

Risk mitigation — awareness and prevention of criminal activity, law enforcement engagement, and assistance with recovery

Efficiencies — least cost/time/risk routing, targeted areas for supply chain improvement, carrier evaluation, and shipment history and exception analytics based on the shippers’ business rules

“Keep in mind that it is not just knowing where the shipment is at any time, but how that shipment is performing according to rules, processes, and freight security requirements that is critical,” he explains. “Being able to investigate, interdict, and correct behavior quickly is the key to proactive cargo security.”

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