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Prepare to Stop Cargo Theft

Nov. 8, 2012
Logistics professionals need a combination of operational best practices and cross-organizational intelligence sharing to prevent, contain, and mitigate cargo theft along their supply chain.

Creating a state of readiness, or real-time situational awareness, is the first step in keeping thieves from making your cargo a crime statistic. That means understanding threats, assessing vulnerabilities, and responding accordingly with effective security measures.

This requires cross-organizational intelligence sharing, which starts with acting quickly to give relevant information to law enforcement and other specialists. Only then can these authorities recover cargo and apprehend those involved.  It entails a coordinated response among executives, corporate security officers, properly trained employees, law enforcement, and your transportation attorney.

Start with Stats

Successful real-time situational awareness first requires a technical statistical analysis to identify how to effectively allocate resources against crime.  During 2011, CargoNet reported a 17% increase in cargo thefts from 2010 to 2011.  FreightWatch International's five year analysis on cargo theft in the United States also reflected a statistical increase in crime for every year since 2006.

When the statistics are broken down by geographic region, operations in California, Florida and Texas pose the greatest security risk for manufacturing facilities, warehouses and motor carriers.  Aside from being populous states with numerous highway lanes and active industrial, manufacturing, processing and agricultural centers, California, Florida and Texas also contain numerous borders and ports which enable thieves to evade law enforcement by dumping trailers or fleeing across borders.

What Thieves Covet

Current trends indicate that thieves target certain commodities.  For example, electronics, food, beverages, tobacco, apparel, pharmaceuticals and metals are commonly targeted because they are valuable and tend to be resold more easily.  Understanding these statistics allows logistics professionals to protect their assets by first monitoring outside threats that specifically target their industry.

Subject matter expert Randy Ryan, a district manager for Allied Barton Security Services  and former chair of the American Society of Industrial Security's transportation security council, believes that effectively allocating resources involves conducting a vulnerability assessment to determine a facility's weaknesses.

Layered Security

After assessing a facility's weaknesses, one can effectively incorporate security measures specifically designed to protect its assets.  According to Mr. Ryan, manufacturing and warehousing environments typically require layered security built in concentric rings around the asset.  The outer ring is at least a seven foot tall fence with barbed or concertina wire.  A tall fence makes it difficult for intruders to enter the facility, creating a single point of entry through a controlled gate.

Gate systems and access control systems enable entry into a facility while preventing access to unwanted intruders.  Operational considerations must be taken into account when considering access control systems.  For example, biometric access control is highly secure and discreet; however, it is not practical if a facility requires truck drivers to deliver or pick up loads of freight.  Thus, in those environments, manned gates are often used.

For the actual building or warehouse, additional access controls should be installed.  Video systems are essential to deter theft and provide the forensics necessary to help law enforcement find those who perpetrated a crime.

Prepare Employees to Act

Assessing and analyzing vulnerabilities and implementing security measures based on such assessments are best practices that deter the risk of theft and heighten real-time situational awareness.  Unfortunately, security measures do not always serve to prevent brazen, resourceful thieves from stealing cargo.

Proper procedures and training are required to ensure that each employee who possesses critical real-time information acts quickly and decisively.

According to one of America's foremost experts on cargo theft, Agent John C. Cannon, Jr., special agent in charge of cargo theft for the Georgia Bureau of Investigation, it is essential to develop proper employee security procedures and adequately train each employee to effectively implement such procedures.  Properly trained employees following clear operational guidelines will know what to do and whom to contact if a cargo theft occurs.  They recognize when suspicious people are casing a warehouse or following a truck.  Ultimately, having diligent employees who are acutely aware of their surroundings will reduce the response time to an incident and increase your ability to protect your assets.

Solution in the Details

When first notified of a possible theft, quickly gather and process all pertinent information to provide yourself with the broadest context from which critical decisions can be quickly made.  Obtain a detailed description of the missing cargo, identify the location from which the cargo was stolen, formulate an estimate of the cargo's value, and determine whether an employee, third-party vendor, or transportation service provider was a witness to the incident.

If any employees, third-party vendors, or transportation service providers possess relevant information regarding the incident, question them immediately to ensure that no logical explanation exists as to why the cargo is missing.  Then require each such individual to write a brief summary of the situation including names, dates, and contact information.

The Usual Suspects

After gathering all available information, focus on creating a coordinated response to the security breach by sharing such information across different organizations and agencies.  Cross-organizational intelligence sharing begins by contacting law enforcement in the appropriate jurisdiction.  Which law enforcement agency to call will partly depend on whether you suspect a transportation service provider was directly involved in the theft.

Based on the data collected, if you have grounds to suspect that a transportation service provider was involved because they are acting suspiciously and are not cooperating with your investigation, file a police report in the jurisdiction located where the freight was picked up by the transportation service provider.  Theft, if it involves a transportation service provider, technically occurs at the location where the transportation service provider picks up a load with the intention to steal the freight.  However, if you do not suspect that a transportation service provider was involved, then contact law enforcement in the jurisdiction in which the freight went missing.

Agent Cannon also recommends designating a specific individual within your organization to coordinate and communicate with law enforcement.  This individual should provide the appropriate law enforcement agency with accurate, timely information including, if applicable, a detailed description of the truck, trailer, and missing cargo.

Another best practice is to provide law enforcement with prompt access to any truck driver or possible witness.

Most importantly, gather all possible information from access control systems, GPS devices, and video systems.  Provide this information to law enforcement during the early stage of the investigation.

Documentation You'll Need

While law enforcement conducts its investigation, simultaneously begin retrieving all relevant documentation such as bills of lading, insurance certificates, dock or delivery receipts, customs forms, invoices, photographs, emails and, if applicable, contracts with any third party potentially involved.  Determine your insurance coverage under any primary or contingent insurance policies.  You or your transportation service provider will need to provide documentation and information to the appropriate insurer including a notice of claim form, proof of insurance and, possibly, bills of lading or waybills, and police reports. 

Finally, contact your transportation attorney and task them with analyzing insurance coverage issues, drafting demand letters, and conducting due diligence.  Your attorney can determine whether any third party is contractually obligated to indemnify you for the loss.

Ultimately, to combat the growing problem of cargo theft, logistics professionals must emphasize operational best practices such as real-time situational awareness and cross-organizational intelligence sharing.  Training your employees to be ready, aware, and equipped to respond to any incident will provide the broadest data context from which critical decisions can be quickly made. 

Implementing these operational best practices will help secure your supply chain and increase your ability to successfully prevent, contain, and mitigate cargo theft.  Moreover, maintaining a secure facility will obviate filing insurance claims, save money on insurance premiums, decrease the risk of litigation, protect your property, and provide your customers with confidence regarding the safety of their assets.

Enan Stillman is an attorney with the law firm of Graham & Penman LLP. He practices in the areas of transportation and logistics, insurance, mergers and acquisitions, debt and equity financing, fund formation and investment management, land use and general corporate law and governance.  He may be contacted at (404) 842-9380.

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