The Costliest Crime in America
by Steven Bowcut, CPP, PSP
Brilliance Security Consulting
Scope of the problem
Transportation security has been an increasing security problem since the 1970s. In 1970 a U.S. Senate Select estimated nearly $1.5 billion in direct losses due to cargo theft. By 1975 that figure had risen to $2.3 billion. By 1990 it was over $13 billion according to the FBI. In 2006 the FBI estimated cargo losses between $15 billion and $20 billion in the U.S. Often fueled by Organized Crime, it has been called the costliest crime in America, and is currently estimated to account for $35 billion in losses annually. Indirect costs, such as claims processing, tied up capital, and litigation could easily push that figure up five fold.
The FBI’s Major Theft Unit cites cargo theft as their number-one priority.
There are a few commodities that are specifically targeted by thieves. These “hot products” are in demand and are easily disposed of. The usual suspects are always near the top of the list – items such as technology devices, prescription drugs, cigarettes, and brand name clothing. Interesting enough, however, is that food and beverage loads are the favorite target of load-hijacking thieves; presumably because the cargo is not easily traced and is easy to move on the black market. Thieves can get 70 cents on the dollar for food and beverage merchandise.
According to the U.S. Department of Justice, as much as 80% of cargo theft losses are the result of minor thefts, or pilferage. Often perpetrated by dishonest opportunistic employees, these impulsive acts of thievery happen when the employee believes there is little chance of detection. A well designed electronic surveillance system at depots and terminal locations can often curtail much of this activity.
More thought-out techniques, such as purposely damaging a case of product to provide opportunity to pilfer a few items from the damaged case, require additional safeguards such as closely monitoring the repackaging of broken items.
While the use of sealed cargo containers has reduced opportunity for pilferage, load thefts have increased. Often the work of organized crime groups that specialize in this kind of load-hijacking, losses range between $12,000 to $3 million per load. Some reports indicate that large U.S. seaports lose an average of one containers each day. Thieves that target cargo on this scale need information. They might deploy or cultivate moles inside shipping companies to learn what kinds of cargo are available, when, and where so specific targets can be identified. These are often demand driven organization that look for specific merchandise to match a buyer/fence’s request.
Cargo theft is often the result of the classical “inside job” and is therefore best prevented by security countermeasures and processes implemented by the cargo carriers and transportation companies. Public law enforcement is best suited for apprehension and deconstruction of organized crime syndicates responsible for the load-hijacking variety of cargo theft. Cross jurisdictional communication and cooperation are critical to locating, identifying, and returning stolen property that is on the move.
A key to good cargo security is a well -organized cargo-handling system. The most important ally of the dishonest employee is confusion. From the movement of vehicles, to personnel access, to forms and paperwork – structure and organization are the keys to eliminating confusion and thereby reducing opportunities for employees, vendors, or outside bad-actors to circumvent the system for their financial gain.
GPS tracking can help us know where a shipment is at any given moment, but an equally important aspect of cargo security is developing a functional process of dynamic accountability. As cargo moves, accountability must move with it in a manner that ensures there is a clearly identifiable accountable party (preferably an accountable individual) each step of the way. Where feasible, an accurate inventory should be conducted at each change of accountability.
A routine of regular, unscheduled inspections of the operations and security processes can help avoid complacency. Regular and frequent inventories and audits will help identify problems quickly.
Pre-employment background checks and periodic financial position updates for employees with access to sensitive information can help stem the flow of information needed by organized crime groups targeting full loads of specific merchandise.
Similar to the way the actions and focus of corporate leadership can foster an effective safety program; a culture of honesty, integrity, and employee pride in the organizations reputation can create peer pressure to protect the cargo and make it more difficult for the insider ne’er-do-well to operate in secrecy.
Periodic ongoing security training for all employees should be provided. Honest dependable employees, if they know what to what for, can be your best security countermeasure against insider pilferage.
Security managers of freight terminals or companies responsible for shipping should be continually occupied with surveys of the facility under their stewardship. An initial survey is required to formulate the written security plan that governs security on the premise. Period surveys thereafter should be performed to evaluate the effectiveness of the established program, strengthen weakness that may be uncovered, incorporate new technologies as they become available, and react to new techniques employed by thieves. Often it is advisable to have an independant third-party perform periodic security surveys to provide a “second set of eyes” that may expose previously undetected vulnerabilities or, at a minimum, confirm the thoroughness of the existing security program.