According to industry observers, cargo theft and loss estimates range from $10 billion to $30 billion a year. Yet, when we talk to logistics and shipping companies to offer solutions to deter cargo theft, the most common response is, “We don't have any theft problems and even if we did, our insurance will pay for it!”
If no one truly has a theft problem, insurance rates would still be affordable and we would have little need for the products and services offered by so many of today's cargo theft organizations and associations.
It's understood that cargo theft is an extremely sensitive issue. But it seems when people deny having a problem with cargo theft, it contributes to the problem and enables thieves to grow their lucrative business at our expense.
We recognize that once word gets out that products have been stolen, it could hurt a company's reputation. However, until people become more open about the subject, cargo theft will continue to thrive. As a group, we need to take proactive measures against cargo theft. In doing so, we will help bring profits back into our organizations, save time, reduce labor and most importantly, increase overall customer satisfaction.
Who pays the price for cargo theft?
Even though much of actual loss is recovered by insurance claims, that recovery is typically at the wholesale cost. And how many times can you really report a claim to your insurance company without ramifications? High insurance premiums and the loss of sales will eventually take a toll on a company's revenues. In addition, the inevitable resale of stolen goods on the black market tarnishes a company's good reputation. Seeing a $3,000 big screen television set at the local retail store, then finding the exact same unit being fenced through an internet site for $1,800 means you can be reasonably confident it's stolen goods. Having products sold through these channels not only hurts a company's relationship with its valued distribution partners, it also diminishes the product's perceived value.
Consider as well the cost when products are not delivered to the retailer on schedule. Time and additional costs to track, replace and reship the merchandise is never recovered. Potential charge-backs from the big box retailers will quickly transform potential profits into significant losses. How much does it cost the sales team to handle damage control with an angry customer? The beating the sales department takes includes lowered customer expectations, reduced sales, cancelled PO's, and if the customer can't get the needed product on time, they'll seek help from a competitor. Through the years, cargo theft and loss has managed to wreak havoc on even the strongest business relationships.
Lack of product availability and selection and a necessary higher price makes a path to the consumer's wallet. Unfortunately most retail manufacturers today have to build cargo loss into the price of the product. With soaring fuel and energy costs impacting every aspect of consumer goods along with increased transportation and insurance rates, how much more can the consumer bear? We all need to be smart and educate ourselves to the reality of cargo theft. Instead of pretending that cargo theft is not a “real” problem, companies need to establish the costs of losses and subtract that figure from the bottom line. With this amount in mind it's easy to calculate how much security an organization needs.
Take a stand against cargo theft
While technology plays an important role in security with GPS tracking systems, LoJack and security monitors, efforts should include a solid plan for internal security procedures and processes. Here are some tips that can easily be implemented starting today.
Know who's in and around the building
- Watch for unknown vehicles parked around gates and entrances.
Report any people using video cameras or taking notes outside the facility.
Watch for unauthorized persons on the grounds or near entrances.
Set up 24-hour security and cameras.
Look for vehicles that seem to be following drivers — thieves work in teams and may follow vehicles waiting for an opportunity to hijack driver and cargo.
Report suspicious activity immediately
- Criminals can move stolen goods quickly — contact law enforcement immediately.
Respond to alarms. Frequent “false alarms” could be a sign potential thieves are testing facility security systems and response times.
Manage information flow
- Share load information only with those individuals who have the need to know.
Warehouse workers should remain as such. There's no need to be in the front office with access to customer files.
Maintain strict inventory control.
Know your supply chain
- Know the carriers and drivers scheduled to pick up. Verify their personal ID. If they refuse to provide ID, do not tender cargo to them.
Monitor delivery schedules and routes.
Occasionally review security processes of supply chain partners.
- Screen and train employees.
Develop employee partnership and communication programs.
Spot check inventory control.
Start an anonymous tip line for employees to report suspicious activity.
Give your shipments some true identity
Preventing theft doesn't need to cost a fortune. Instead invest time and training to establish internal security procedures. For tractor-trailer rigs, implement high tech solutions such as surveillance monitors and GPS tracking systems. For individual packages and pallet shipments use low-tech solutions such as custom printed theft-deterrent labels, self-voiding seals and tamper-evident tapes.
Tampering and pilferage of palletized goods are usually crimes of opportunity so select a quality security tape or label that leaves a visual residue. This will make it virtually impossible for thieves to cover their tracks without visual detection at the point of transfer or delivery. This is important because most receiving operations do not take time to properly inspect inbound shipments. In many cases, thieves pull products from the middle of a pallet and put the pallet back together in a way that disguises their work. Using security products that make it visually obvious the load has been compromised helps recipients to quickly identify and refuse shipments that otherwise may have a concealed loss.
Concealed loss involves great effort in locating the point of theft. Worse it may lead to finger pointing and blame shifting between shippers and consignees. Properly identified pallets help to reduce these conflicts. When products are stolen, having good product identification will greatly assist police in their recovery efforts. Merchandise showing no evidence of tampering can be returned to the rightful owner and marketplace faster than pallets that have been compromised.
Avoid using “stock-off-the-shelf” security tapes. These items can just as easily be purchased by thieves and re-applied to shipments to make them look intact. Custom imprinted tapes and labels cannot be easily replicated in the field. Make sure to regularly change the imprint or tape color to keep thieves off balance. Prompt visual detection at the point of transfer and destination is essential to reducing theft and pilferage.
It's critical that customers fully understand and buy into security procedures. If they know how pallets are prepared at point of origin, they can identify tampering once the shipment is received at their facility. The faster they can identify a tampered shipment, the sooner authorities can be notified. Achieving supply chain security is simple when we all work together to implement sound procedures employees can follow on a daily basis.
Summing it up
When it comes to transporting cargo from one point to another, there are many occasions for security to be breached. For shippers and their third party logistics providers to overcome threats, the key is maintaining constant, thorough vigilance to ensure there are no weak links anywhere along the entire supply chain.
Rising fuel costs have complicated supply systems, and that makes the cargo easier to hit. It's going to be handled more times. More time, more handling, more hands in the game.
Don't sweep cargo theft problems under the carpet. A wide variety of organizations are available to assist with discreet and proactive security planning to ensure your company saves money, time and achieves a higher level of customer satisfaction. Get involved to combat cargo theft through various cargo security associations.
Jon Rodberg is vice president of Eden Outsource, the West Coast distributor for CGM-AST theft-deterrent products. Bob Frucci is CGM-AST Director for North America. To contact Eden Outsource please email [email protected] or visit their web site www.edenoutsource.com. For CGM-AST visit their web site www.cgm-ast.com.