Various business and financial media reports have provided more awareness to the how extensive a problem that cargo and retail theft have become across various industry supply chains.
A Bloomberg BusinessWeek article highlighted how significant truck cargo theft has become in the United States, and how high value pharmaceuticals have become a top prize. In one example, an impacted pharmaceutical company was forced to incur a $47 million loss as a result of a $10 million theft. The article also notes how thieves, half of which stem from organized crime rings, exploit any and all weak links in the distribution and logistics aspects of supply chains. Interviews with federal and state law enforcement agencies reveal that for thieves, cargo theft can bring lucrative rewards with low risk. Groups of thieves travel in rental cars to track truck shipments and seize on opportunities to strike. Once a truck is heisted, the thieves quickly paint-over all markings and move the goods quickly through backroom and secondary market channels. Crime investigators have minimal resources for surveillance, investigation and tracking of stolen goods. The largest cargo theft in U.S. history which occurred in March 2010, which consisted of $76 million worth of pharmaceuticals stolen from an Eli Lilly warehouse in Enfield Conn., still remains unsolved.
CargoNet, a division of the ISO Crime Analytics unit of Verisk Analytics which operates a cargo theft information sharing network produces an annual cargo theft report. Total cargo theft statistics remain elusive because cargo owners are sometimes reluctant to share loss information. CargoNet pegs its statistics as 60 percent of total loss value on average. The 2010 report highlights interesting reinforcing statistics:
- Cargo theft incidents in 2010 increased nearly 48 percent to 1035 incidents. Significantly more thefts occur on weekends (Saturday, Sunday, and Monday) vs. weekdays because more loaded trailers sit idle in yards in queue for early week shipments.
- There is a strong correlation between incidents of cargo theft and the growth of the overall unemployment rate.
- In 2010, thieves concentrated targeting to retail goods, especially during the November-December holiday buying season. Five categories of goods accounted for over half of all cargo thefts: electronics (17 percent), apparel and accessories (10 percent), prepared food and beverages (13percent), base metals (7 percent), plastics and rubber products (6 percent). Interesting enough, many of these commodities originate in the Far East and travel by ocean container to U.S. destinations, which increase their daily exposure to theft opportunities.
FreightWatch International is another resource of cargo theft statistics.
Turning to retail theft, the Financial Times featured a printed article (paid subscription or free preview account required) this week that quantified theft losses among U.S. retailers to be in the range of $15 billion to $30 billion, a staggering number. FT in-turn noted the growing sophistication of criminal gangs, with 94.5 percent of retailers attributing theft loss to organized crime. Nearly half of retailers indicate that they have been victims of cargo theft. Of most interest, the growth of online commerce has also benefitted thieves and facilitated the ability of crime gangs to sell stolen material via the web for higher prices vs. traditional outlets of pawn brokers and flea markets.
Incidents of theft in the supply chain remain a significant problem. Supply Chain Matters featured a guest commentary by Rich Sherman back in March of 2010 which opined that companies will have to find their own means of avoidance and mitigation strategies since law enforcement id ill-equipped to deal with the magnitude of this problem. Smart companies are investing in cargo theft prevention and rapid recovery of goods when incidents occur. Telematics, infomatics and cargo theft tracking databases can go a long way. As Rich noted, the industry needs end-to-end information consolidators that can foster a “smart supply chain network” for in-transit tracking, monitoring, reporting and prevention.
Technology and social networks provide many important capabilities but we must all keep in mind that the ‘bad guys’ can be just as adroit in use of these technologies for other purposes.
Bob Ferrari
