Cargo Theft 101- The simple problem and the simple solution

Cargo theft is an often discussed issue in transportation insurance. One of our companies has written a treatise to address the issue and prevention. While it is written with the trucking insured in mind, it should not be construed to be a comprehensive policy. In the end, prevention should dovetail insurance coverage. Note the article does not address the many technological solutions that are out there for truckers, brokers, and shippers. Even so, it gives a very nice overview of the problem and a solution.

Motor Truck Cargo Theft

Cargo theft is a crime of opportunity. Goods transported along our nation’s highways are abundant and easy to access, offering cargo thieves low risk of detection and a potentially lucrative career. Law enforcement and industry officials estimate cargo theft costs the U.S. shipping industry $25 billion a year(1.)
Trends
Pharmaceuticals, building supplies, consumer electronics, computers, food and drugs are the most frequently targeted cargos in the shipping industry. The rate of theft of these types of cargos tends to increase during a depressed economy.
Cargo theft occurs most frequently in cargo terminals, transfer facilities and cargo consolidation areas. Other high-target areas include truck stops, parking lots, warehouses and trucks parked on the street. Although cargo theft occurs throughout the U.S., the most highly targeted theft states are Texas, Georgia, Tennessee, California and Florida(1).

Methods of Cargo Theft

A variety of methods are used to steal cargo(2.):
• Terminal robbery - organized groups enter a trucking facility, hold security guards or employees hostage and steal one or more loaded vehicles.
• Hijacking - cargo thieves conduct surveillance on a target after receiving “inside” information on the load. Once the driver stops, one or more gunman enters the cab, detain the driver and transport the load to a pre-determined destination.
• Burglary - a “theft group” enters a facility, posts one or more individuals to act as lookout then opens trailers or containers searching for valuable goods.
• Driver/insider information – a driver or employee stages a hijacking using advance knowledge of a specific trailer or container load and provides cargo and transportation information to a group preparing for a heist.
• Counterfeit shipping documents - drivers, acting as independent contractors, present counterfeit paperwork to security guards and flee with valuable loads of cargo from terminals.
• Grab and run - favored by criminals targeting trucks loaded with high-tech equipment, an individual or group follows a targeted truck in a van. Once the truck comes to a stop, suspects exit the van, open trailer doors and off-load cargo before the truck takes off.
Methods used to steal cargo(2.) (continued):
• Warehouse stolen cargo - stolen rigs are taken to a pre-designated storage facility for off-loading and storage. Warehouses include industrial storage facilities, public storage facilities, restaurants, pallet yards, single-family houses, apartments and abandoned or condemned buildings.
• Stealth Technology - battery powered GPS transmitters are installed to track pre-selected trailer loads. Criminals follow the signal and wait for it to be detected "at rest” then advance toward trailer and either off-load cargo or move the trailer to a safe harbor for unloading.

What Is Being Done:

The US Patriot Improvement and Reauthorization Act, passed in 2006, increased prison terms for those convicted of cargo theft. Theft of cargo worth less than $1,000 is punishable by three years in prison and up to 15 years in prison for theft of cargo worth more than $1,000. The law also requires cargo theft be listed under its own code in the Uniform Crime Reporting System, a national database used by the FBI.(3)

Prevention Measures

Prevention measures play an important role in limiting opportunities for theft. Actions that should be taken to help limit exposure to theft include:
a)Personnel
Pre-employment screening can be the first line of defense against cargo theft. Informants within an organization are often a major cause of cargo and vehicle thefts. Follow these basic practices to avoid hiring applicants who are likely to engage in cargo theft.
• Require every applicant to provide a list of previous employers and contact information going as far back in their work experience as possible
• Look for employment gaps that may indicate attempts to hide unfavorable references or unemployment
• Require applicants to provide motor vehicle reports, credit history and criminal background investigations, or request an authorization to obtain such reports
• Require controlled substance and alcohol testing for each applicant
• Provide initial and ongoing employee training
• Use locks or other protective devices to restrict employee access
b)Operations
Unattended vehicles
• Vehicles should be equipped with alarm systems
• Lock the vehicle up to and immediately following departure inspection
Operating in high risk areas or transporting valuable cargo
• Security procedures and precautions should be elevated to the highest level feasible
• Unauthorized stops in non-secured areas should be prohibited
• Vehicles should be manned by two drivers
• Drivers should move in convoys
• Ensure two-way communication with a home base
– Consider the use of a security escort in the convoy
Route schedule
• Schedule the most direct route from point A to point B with a minimum number of stops.
• Give instructions never to leave the cargo unattended for any period of time in a non-secured area.
• Routing and scheduling considerations:
- Geographic scope
- Travel to/through known or likely theft and hijacking areas
- Equipment changes and driver or team changes
• Deviations from the specified route must be reported to the company
• Loads or shipments should not be sub-contracted to third party without written permission
Secure information
• Educate all employees about the dangers of sharing any information on cargos being transported
• Determine communication responsibilities among shippers and truckers
• Consider inviting a local law enforcement agency to assess security
c)Equipment
• Examine equipment for integrity and condition prior to use
• Seal/lock trailers or containers
• Seal trailers or containers which are loaded but not immediately picked up or offloaded and back them securely against a solid wall
• Document the cargo loading process with video or photographic files
d)Driving rules
• Require photo identification at all facilities before cargo is tendered
• Equip all drivers with cell phones or use of a two way radio
• Monitor communication from a base operation
e)Facilities
• Require adequate lighting around the loading/unloading areas and parking lots
• Establish fencing or other barriers to prevent unauthorized entry
• Utilize gate and automated yard locks
• Deploy automated fire, burglar and video cameras systems
• Provide security personnel, or a central station monitored alarm system, subject to periodic audit by carrier personnel or authorized agents
Preparation and prevention can mean the difference between cargo arriving safely at its destination or ending up in the hands of thieves. Take time to understand the risks and protect your business.

1 FreightWatch International, 2009 Global Cargo Theft Summary Report, FreightWatch International February 11, 2009.
2 California Highway Patrol, Commercial Vehicle Section, Cargo Theft Interdiction Program,
http://www.chp.ca.gov/programs/ctip.html, 2009.
3 Federal Bureau of Investigation, CARGO THEFT'S HIGH COST Thieves Stealing Billions Annually