FreightWatch worries cargo theft in North America on the rise.
By Jon Ross
In early August, FreightWatch International sent a security bulletin to its trucking members warning of possible supply chain delays in Michoacan, Mexico.
Wracked with violence at the end of July, industry watchers had measured a level of calm with no cargo thefts or increased violence in the first few days of August, but still advised caution and warned those in the industry to exercise “extreme trepidation” in the area. Increased security and checkpoints were causing supply chain delays, but even with these additional checkpoints truckers, and their cargo, were still at risk of theft. Tracking and monitoring shipments, as well as ensuring enhanced security programs, are the name of the game.
This cargo theft warning from Mexico might play to a ready-made picture of the country being a dangerous place for truckers. The heavy media coverage of drug cartel violence along the border, where drug violence runs rampant, has often painted an unsafe picture of Mexico. But Ron Greene, vice president of global operations and strategy at FreightWatch, said the drug wars haven’t really led to increased cargo theft. Since cargo isn’t being targeted in these skirmishes, FreightWatch has only measured the occasional theft that can be tied to drug violence.
“The increase in violence in Mexico over the past several years with the drug cartels, which is well documented, hasn’t affected cargo theft rates significantly. There have been a few incidents here and there, but cargo theft is not a priority (for the traffickers),” he said. “The increase in violence has drawn a lot of awareness to supply chain issues in the area.”
Across the border in the United States, cargo theft is on the rise and has been growing by 5 percent to 8 percent each year. Currently, according to Greene, there are about 1,000 large-scale cargo thefts annually. There could be more, he said, because the number of reported thefts doesn’t always reflect reality. Sometimes theft data doesn’t make it all the way to FreightWatch; carriers might report it to local law enforcement officials who then don’t report it to federal authorities, meaning that FreightWatch is never able to enter it into its database. Greene characterized the amount of undocumented thefts as “a fairly large number.”
Cargo theft has been a problem going back decades, but Greene said it has never gotten the attention needed to really stem the problem because of the nature of the crime. Thefts are usually nonviolent and passive; the fact that property crimes don’t get as much attention from law enforcement is also a factor.
“It’s not a crime that hits headlines,” he said. “From a law enforcement perspective, there are higher priorities than property crimes in the U.S.”
The quest to combat cargo theft has seen champions come and go. There have been specialized task forces around the country put together by local police departments, but cutbacks in funding have led to these groups, no matter how successful they’ve been, being disbanded. Greene pointed to the former Miami-Dade Cargo Theft Task Force as a standout that has since been forced to fade away. The responsibility for protecting freight, then, has been placed on the shoulders of everyone involved in the supply chain, he said.
In the United States, these thefts usually occur at major cargo crossings like Los Angeles, Chicago, Louisville, Dallas and Memphis. FreightWatch recorded 194 thefts — with an average loss of $164,594 — in the United States during the second quarter. The result is a 12 percent decrease in the volume of goods stolen, but a 27 percent increase in value, year over year. Compared to the first quarter, the number of thefts dropped 15 percent, but the value of those goods rose 4 percent.
The most common items stolen during the second quarter included goods from the food and drink industry (31 percent of the total goods stolen), followed by electronics (11 percent). Thieves also targeted building and industrial supplies (10 percent), auto parts (8 percent) and metals (7 percent).
Pharmaceuticals only represented 7 percent of the amount of goods stolen, a testament to concentrated work by industry groups like the Pharmaceutical Cargo Security Coalition. The PCSC, Greene said, led the charge in getting U.S. manufacturers to beef up their security procedures, which reduced the amount of theft in the industry.
In the second quarter, most thieves went after unsecured parked trucks by a wide margin, with thefts also occurring at facilities or secured parking locations.
While electronic thefts were only the second most popular product type, FreightWatch noted in its quarterly report that this type of theft comes in waves.
“The hearty consumer appetite for new electronic gadgets, including such items as next-generation video game consoles, cell phones or tablets, and bigger and better televisions, typically puts these products in highest demand around their release date,” the firm wrote. “Always savvy to the marketplace, cargo thieves quickly pounce on these newly released products, capitalizing on their ease of sale and the higher prices they command.”
In the report, FreightWatch noted electronic thefts are likely to rise in the third and fourth quarters due to new smartphone, game console and tablet releases. The firm expects electronics losses for the year to top 2012’s numbers.
In fact, those in the supply chain are in for increased risk on all fronts. Cargo thefts, in general, usually spike in the fourth quarter as members of the supply chain are rushing to get goods on the shelves for the holiday season, Greene said.
“With that increase in throughput in the supply chain, there are opportunities for cargo thieves,” he said.
U.S.-based shippers also have to be aware of cargo theft when shipping internationally. FreightWatch recently released a report on Brazil and Argentina, finding that Sao Paulo, Rio de Janeiro and the Buenos Aires province are hot spots for cargo theft in Latin America. In Brazil, driver kidnappings and assaults were common during theft, and the report pointed to food and drink thefts as the most popular, with electronics thefts following close behind.
FreightWatch noted theft in Argentina is actually stabilizing year over year, but from the start of 2013, thefts have been trending upward. Thieves in Argentina look to the food and drink industry first, but then to clothing and shoes when choosing targets. In addition to securing their U.S. supply chain, shippers also need to pay attention to every country where their goods are going.
So how do members of the supply chain stop cargo theft? FreightWatch said one way is to actively monitor cargo by using tracking devices hidden in the cargo loads. Thus, if cargo is stolen, these devices can make recovery easier. Manufacturers also need to make sure data concerning thefts is reported properly. Trucking firms should invest in more procedures and training of drivers on how to mitigate risk, and may consider shifting shipping schedules so trailers don’t sit unattended at truck stops for long periods.
“It takes everybody involved — manufacturers, shippers, logistics operators,” Greene said. “It takes a combined effort to mitigate this risk.”