Cargo theft continues to be a pervasive issue. Indeed, cargo theft recording firm CargoNet logged 836 cargo theft incidents in 2016 worth an estimated $172.9 million. Those thefts accounted for more than half of the 1,614 total freight-related thefts in North America, which includes tractor and trailer theft and supply chain fraud.


“It’s a known fact that high-value shipments are targeted well in advance by organized theft rings,” says Thomas Neumann, security manager at UPS Capital, in a UPS-sponsored article on the Wall Street Journal’s website. “They typically have a buyer in place to fence the stolen merchandise, which makes recovery even more difficult.”


There is an interesting dichotomy here: Executives know their businesses must protect vulnerable high-value products throughout the supply chain, even when the products are sitting “securely” inside a warehouse. However, unfortunately, many businesses take these risks for granted, rather than take advantage of available solutions that may mitigate risk.


In fact, roughly two in three executives describe their effectiveness at managing supply chain risk as “low” or “don’t know,” according to UPS. What’s more, UPS notes, few have assessed their end-to-end logistics risk in any way. That risk can prove costly: companies which had a major supply chain disruption often see sales drop significantly and operating income decline.


Consider high-tech cargo thefts, for instance. Despite being one of the most protected product categories, electronics accounts for nearly one in six cargo thefts in the U.S. The average loss is worth more than $370,000, making electronics the category with the highest average loss value in 2016, UPS reports. TVs, computers, mobile phones and other personal devices are targets of choice, since a stolen device can easily be resold for up to half its retail value in cash.


“Many of these high-value cargo thefts are carried out by organized criminal gangs, whose tactics are constantly evolving,” Scott Brown, Industrial Sectors and Multinational lead at AIG Client Risk Solutions, says in the article. These gangs may use portable 3D printers to create counterfeit security seals, jamming devices to interrupt the signal emitted by cargo tracking devices, even fake drivers or phony trucking companies to fraudulently pick up high-value loads. “Shippers and carriers stand a good chance of becoming just another statistic in the loss column if they don’t manage their risk of cargo theft effectively,” Brown says.


To mitigate the risk of loss for high-value goods, it’s recommended that companies take a “layered” approach which minimizes gaps in security with several layers of defense. Consequently, a lapse or weakness in one layer doesn’t easily allow a threat to become a loss. UPS notes that layers may include the use of:

  • Quality and prescreened carriers experienced in moving commodity-specific products,
  • Security partnerships with logistics partners, suppliers and experts, including law enforcement and insurance partners,
  • Visibility and tracking systems,
  • Physical security, such as advanced seals, immobilization devices and armed guards,
  • Defined cargo handover process to prevent fraudulent pickups, and
  • Contingency planning for security alerts or unforeseen incidents


Finally, the last line of protection should be some type of insurance to mitigate the financial impact in the event of a loss, according to UPS. Many executives believe their companies are covered by standard carrier liability, but reimbursement may be far short of the price of the goods. Then again, others believe the business owner’s policy covers losses, but they may be shocked to find there are limitations or that the company may be dropped after multiple claims. The best approach, UPS believes, is a cargo insurance policy designed specifically for the business, based on risk tolerance and supply chain characteristics.


Is cargo theft prevalent in your supply chain? What steps do your company, or suppliers, take to prevent this type of theft?