Hands OFF!

Organized gangs of thieves want your freight. Here's what you can do to help keep them at bay.

By Toby B Gooley -- Logistics Management, 2/1/1999

Masked gunmen burst into a retailer's distribution center. They tie up dockworkers, then head for the high-value cage and open it with wirecutters. While they are loading one of the retailer's own trucks with valuables, one employee manages to free himself. When he runs for cover, a gunman shoots him to death.

A truck driver picks up a shipment of 550 cases of frozen seafood, then heads out on the highway. Later, he pulls into a rest area, sets up a laptop computer, scanner, and printer in the sleeping compartment of the cab, and goes to work. Soon he prints out new shipping papers showing 475 cases. En route to the consignee's warehouse, he makes a brief detour to deliver 75 cases to a "friend."

Sound like scenes from a movie? Unfortunately, they're not. They are based on actual incidents of cargo theft--just two examples out of thousands that add up to billions of dollars in losses each year.

Despite the prevalence of such crimes and their increasingly violent nature, few people recognize the extent of the problem, says Edward V. Badolato, chairman of the National Cargo Security Council (NCSC) in Washington, D.C. "At $10 billion in annual losses, the theft of cargo is one of America's most serious property crimes," Badolato says. Although government statistics show that overall crime in the United States is declining, he notes, cargo crime appears to be increasing.

There are several reasons for that. For one thing, computers have made it easier for insiders to gain access to shipment information, share it with accomplices, and create fraudulent documentation. "Any measure you take to secure something, there's someone else out there who can figure out a way around it or through it. You just hope your technology is ahead of theirs," says Bruce Roberts, chair of NCSC's cargo-security technologies committee and federal marketing manager for Encrypta Security Seals in Alexandria, Va.

Another reason is that drug traffickers have added cargo theft to their repertoire. "If you'd told me 10 years ago when I was with the FBI that Crips and Bloods would be stealing [computers] and components, I would have said you were crazy," says Steven Lund, Intel Corp.'s preventive programs manager for corporate security. They are attracted to cargo theft because it can be as lucrative as drug dealing but is far less risky, he says.

In fact, the chances of being caught and prosecuted for cargo theft are low, Badolato believes. With the exception of Miami, Los Angeles, and New York/New Jersey, cargo theft is not a specific priority for state and local authorities. Federal sentencing guidelines for cargo theft, moreover, are very weak in comparison with those for narcotics violations, so it's no surprise that drug traffickers--often violent gangs based in Latin America, Southeast Asia, and Eastern Europe--have joined organized crime to account for the majority of cargo theft in the United States, he concludes.

Pending legislation (S.1512) filed by Sen. Frank Lautenberg (D-N.J.) offers some hope. The bill would increase penalties for cargo theft and establish a national database of cargo-theft data. Such a database would allow officials to analyze local, regional, and national crime patterns and match thefts with recovered stolen goods, says Badolato.

Steps to Security

The changing nature of cargo theft means this problem will be with us for some time to come. But there's a lot shippers can do to protect their products--and the safety of their employees--right now, say cargo-security experts. Here are some of their suggestions.

* Strengthen physical security at cargo handling facilities. All warehouses, freight terminals, and shipping/receiving areas need theft-deterrent fencing and lighting, guarded entrances and exits, surveillance cameras, and alarms. A comprehensive security audit conducted twice yearly--the first one announced and the second one unannounced--ensures continued vigilance, suggests Rich Bernes, formerly an FBI special agent and now a cargo-security consultant in San Jose, Calif.

* Screen employees carefully. Criminal background checks for employees who have access to freight are vital, says Bernes. This can be done through law-enforcement agencies or through security consultants who specialize in pre-employment screening. "More than half of all cargo thefts involve an employee," Bernes notes. "Too many companies trust someone as soon as they start work and give them the keys to the palace."

* Minimize identifying marks on packaging. If you do nothing else, get rid of packaging that invites thieves to steal it. "At Intel, we found out long ago that if we put our products in nondescript boxes, it significantly reduced our losses," Lund says. Bernes tells of one client that had suffered frequent losses and finally agreed to eliminate identifying marks on its packaging. That paid off when thieves who robbed a freight forwarder's warehouse walked right by $3 million worth of the client's products and stole other, clearly marked merchandise. "They stole what was obvious to them," he observes.

* Control access to cargo, documents, and computers. Badolato recommends using devices like electronic security cards to validate and record entry into cargo and document processing areas. Make sure that only people with secure passwords and unique user IDs have access to shipment information. These are invaluable for tracing accountability and conducting post-theft audits, he says.

* Screen truckers and documents before handing over freight. All drivers should present valid identification such as a Commercial Drivers License (CDL) as well as a vehicle-registration certificate before they are given a gate pass to pick up freight. The gate pass should be returned when the driver leaves. Never let a driver "talk his way in" to a facility.

* Use effective cargo seals. "A trailer is really a rolling warehouse with no fences and an unarmed guard," observes Bernes. A trailer without security seals, he adds, is an obvious target for thieves. A wide range of security seals are on the market today, says Encrypta's Roberts. Traditional seals and bolts made of new, hard-to-cut materials offer excellent protection. Tamper-evident seals, including holographic materials that are impossible for thieves to reproduce, have gained popularity. Reusable electronic seals record the time and date a load was sealed and when doors were opened. Roberts' company now is developing a system that will transmit tracking information for individual packages of high-value cargo via radio-frequency tags.

* Keep cargo moving. "Cargo at rest is cargo at risk," is an oft-quoted maxim among security experts. Work with carriers, warehouses, and other service vendors to minimize the amount of time shipments and vehicles are waiting on docks and in parking lots. If driving straight through to a delivery point isn't possible, be sure the driver rests only at authorized truck stops, Badolato suggests. A lone truck pulled off the road in a remote area is an open invitation.

* Verify that vendors have adequate security programs. Intel and many other high-tech companies require carriers, freight forwarders, and other logistics vendors to sign contracts that specify acceptable security procedures.

* Track and communicate frequently with drivers and vehicles. Today's satellite tracking systems are valuable tools for solving cargo crimes. Not only can drivers alert dispatchers to emergencies instantly, but these and other types of tracking systems can pinpoint a hijacked truck's location.

* Join organizations that combat cargo theft. Shippers and carriers can benefit from the education, support services, and information sharing offered by these groups. NCSC is one example; another is the Technology Asset Protection Association (TAPA), formed in 1997 by security managers of high-tech products manufacturers and distributors. The members--including such heavy hitters as Sun Microsystems, Dell Computer Corp., Motorola, and IBM--have developed industrywide best-practices guidelines, vendor-contract language, and security-audit procedures.

* Cooperate with local, state, and federal authorities. Don't treat cargo theft as just another freight claim. Keep good records, be willing to provide them to police, and notify law-enforcement authorities immediately when an incident occurs. Lund also suggests sharing information. Before Intel opened a facility in Costa Rica, he and his colleagues met with state and local police in Miami to talk about products the company planned to ship from the airport there. "We educated them about our product, typical distribution channels, offered our assistance, and established communication channels," he recalls. "We asked, 'How can we help you help us?'"

Dramatic Improvement

As is clear from the steps outlined above, preventing cargo theft requires constant vigilance. The payoff for that effort can be enormous, all agree. Intel, which is widely acknowledged as having one of the most effective loss-prevention programs in its industry, has seen a steady annual decline in cargo theft over the last five years, says Lund.

Logistics professionals have a leading role to play in reducing cargo theft for their companies. To be successful, they must work together with other affected organizations within their companies. Ultimately, though, involvement must reach all the way to the top, says Bernes. "There are so many hidden costs of cargo theft. Not only do you have to pay to replace the product and spend time with police, prosecutors, and the media, but there's also a loss of customer goodwill and ... added cost for consumers and even stockholders. ... CEOs ought to take that into consideration."

Cargo Security Resources

For shippers that want more information about cargo-security issues, a number of resources offer help. We've listed a few of them below.

* The National Cargo Security Council. This organization dedicated to eradicating cargo theft acts as a national clearinghouse for information, offers training and discussion forums, and assists public and private groups with cargo-security initiatives. NCSC's Web site (www.cargosecurity.com) offers a wealth of useful information for shippers. Contact NCSC at 3421 M St. N.W., Suite 1240, Washington, DC 20007. Phone: (703) 821-7725.

* Guidelines for Cargo Security and Loss Control: How to Maximize Cargo Security on Land, Air or Sea. This 147-page book covers such topics as how to develop a cargo-security program, identification and control of personnel, protecting cargo in transit, and more. Checklists help readers assess the security of their operations. The book is available for $20 from the National Cargo Security Council at the above address.

* Technology Asset Protection Foundation (TAPA). This non-profit organization helps high-tech companies cooperate to reduce losses incurred during manufacturing, transportation, and distribution. Members include manufacturers of computers, semiconductors, software, and other high-tech products. TAPA's Web site is www.tapa3.org. Contact Secretary Rich Bernes at (408) 544-0518 or e-mail Rich@bernes.com.

* Western States Cargo Theft Association. This group develops and promotes training, education, and security standards to prevent cargo theft and hijacking. The group's annual conference will be held May 2-4 in Long Beach, Calif. Contact WSCTA at 215 E. Orangethorpe Ave. #292, Fullerton, CA 92632. Phone: (714) 449-2451 or visit www.wscta.com.

* Cargo Security Management Training Course. This intensive course, offered to shippers and carriers by NCSC and the U.S. Merchant Marine Academy's Continuing Education program, covers all transportation modes. Participants will learn how to develop cargo-security plans, conduct security audits and theft investigations, and more. To be held March 22-25 in Kings Point, N.Y. For more information, call (516) 773-5165 or e-mail ce@usmma.edu.

* Hijacking Prevention and Survival. This training video teaches truck drivers how to avoid hijackings and stay safe if attacked. Available in English or Spanish from the "Cargo CATS" interagency cargo-theft task force for $250 for the first copy, $50 for additional copies. Proceeds benefit Cargo CATS' education programs. Send checks payable to "Sheriffs' Relief Foundation Fund #248'' to Cargo CATS Video, 3010 East Victoria St., Rancho Dominguez, CA 90221. Phone: (310) 603-3137.

* Security Newsletter. This monthly newsletter on cargo security published by security-seal manufacturer E.J. Brooks Co. includes cargo-theft news, tips on prevention, and new-product announcements. Contact E.J. Brooks Co., 8 Microlab Road, Livingston, NJ 07039. Phone: (973) 597-2900 or fax: (973) 597-2919.