The FBI estimates that cargo theft cost anywhere from $15 to $30 billion and the average freight on a trailer was worth anywhere from $12,000 to $3 million. Unfortunately, cargo theft largely goes unreported. The good news is that government agencies and law enforcement are catching up and more manufacturers are joining the fight to help prevent cargo theft.
“Cargo theft was lumped into multiple classifications, but there were no specific laws in place to deal with cargo theft. In the last few years, the U.S. government has been working to incorporate a uniform crime reporting system, but it will still take a few years before it is implemented,” says Mary Aftanas, National Insurance Crime Bureau, Director of Property/Casualty Investigators.
Cargo theft is a low risk crime (imprisonment time is minimal) with a high profit. In most cases, it is a highly organized criminal group behind the theft, taking advantage of the lack of information sharing between law enforcement agencies.
“Statistics show that based on the number of recoveries, Florida, Texas, Georgia and California remain hot spots for cargo theft. Florida, Texas and California all have ports that are highly targeted. However, because Florida did a great job creating an effective, state-wide task force to curb cargo theft, criminals moved to the neighboring state, Georgia,” says Aftanas.
“We have done a good job securing our ports in recent years, but the result of that is cargo theft has been pushed to land transportation, making many of our trucks and railways potential targets for cargo theft,” Aftanas warns.
Despite local task force’s efforts, cargo theft often goes unreported for two main reasons: inconsistencies regarding how law enforcement should report it, and lack of awareness.
When manufacturers hire a company to transport goods to a destination, whether it’s by ocean liner, truck or rail, there are often multiple insurers involved. A tractor, trailer and the cargo can be insured by three different companies.
“For instance, the actual truck is insured by Company A, the trailer is insured by Company B, and the load is insured by Company C. If law enforcement recovers a stolen trailer, and it is empty, they may not know that Company C is missing their goods. So there are a lot of inconsistencies,” says Aftanas.
“Then, if you have your shipper arrive at its destination and reports there is a load missing, is it really theft? All they know is the load is missing. Law enforcement may be reluctant to take a report if they are unsure it is theft,” she adds.
Tracking stolen goods is also difficult. Each product has a serial number, but if a load is stolen, law enforcement can look at the manifest which includes the model and lot number, but the serial numbers are not logged anywhere until they reach the final destination. So if a product is stolen, there is no way to identify it.
“In addition, some companies consider cargo theft a competitor advantage and don’t want people to know they lost a load, so they will eat the cost,” says Aftanas.
There are also high deductibles, and smaller companies may only be able to afford the minimal insurance -- particularly in this economy.
“For example, if a manufacturer is carrying a $1 million load, and the deductible is $100,000, instead of having premiums go up, they often don’t report it,” says Aftanas.
There are additional costs also of business interruption, brand equity risk and other liabilities when a load is stolen.
Why you should report it
While financial issues may force some manufacturers to avoid reporting cargo theft, liability issues should prompt them to take action and report the stolen goods.
“For instance, if a manufacturer is transporting food, and the food is stolen and later turns up on the shelf contaminated, that is a huge issue and threat to the public. The manufacturer may not have been involved in the transportation or the contamination of the goods, but it is still a liability to them as well.”
Electronics, food and beverage, pharmaceuticals and many other industries are at risk of being tampered with when stolen.
“In addition, cargo theft increases the cost to the American public because it increases the cost for the manufacturer. If a manufacturer is working with just-in-time inventory and a load is stolen, reproducing that product and getting it shipped on time is a lot of money, so it affects both the public and the manufacturers.”
Learn more about your shipper
Manufacturers that hire a company to move their product need to trust their mover. You want to be sure the carrier has anti-theft technology in place. Not only is it important to know who your shipper is, but also what security is in place around their warehouses. Be sure to ask what anti-theft technology is used to keep track of the load.
“If you’re shipping a load of money, most money carriers actually have ongoing services to protect that money, but if you’re shipping a product that is worth just as much as the load of money, many manufacturers miss looking into ways to protect that load,” elaborates Aftanas.
Manufacturers and their shippers should also improve documentation, labeling, packaging and come up with other ways to mark and create a system to help track goods that are stolen.
Working together to prevent theft
The National Insurance Crime Bureau works along side law enforcement in a collaborative effort on insurance fraud and vehicle crimes. NICB also works with the National Cargo Theft Prevention task force. Members of the task force include small and large trucking companies, law enforcement agencies around the U.S., insurers, self-insurers and manufacturers. NICB also partners with insurance offices to create a national network of all the other smaller databases currently utilized out there by industries and entities to share information regarding cargo theft.
Consider joining organizations such as NICB, the National Cargo Theft Prevention task force, and your local task force to keep informed and share information. A pro-active approach can help increase recoveries and deter future theft.
“Joining NICB and other cargo theft organizations can help manufacturers increase collaboration, improve data reporting and information sharing tools, increase awareness and support for legislation,” adds Aftanas.
To learn more about the National Insurance Crime Bureau and how to join the National Cargo Theft Prevention task force, visit www.nicb.org.