Cargo security is the type of thing most people take for granted, and yet someone in the U.S. reports inventory has been stolen roughly twice each day, according to “2016 IIS U.S. & Canada Annual Report,” from Transported Asset Protection Association (TAPA). Furthermore, some commodities, such as pharmaceuticals and electronics, are often targeted while in-transit or wherever they can be found in large quantities.
“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 recent paid-content article from UPS on the Wall Street Journal. “They typically have a buyer in place to fence the stolen merchandise, which makes recovery even more difficult.”
For instance, although it’s one of the most protected product categories, electronics accounts for nearly one in six cargo thefts in the U.S. and a growing share worldwide—second only to “Food & Drinks” as the most stolen product type. The average loss is worth more than $370,000, making electronics the category with the highest average loss value in 2016, the article notes. TVs, computers, mobile phones and other personal devices are often targets of choice because a stolen device can easily be resold for up to half its retail value in cash.
The challenge is that businesses must protect their vulnerable high-value products all through the supply chain, even when the products are sitting “securely” inside a warehouse. Compounding the situation, many executives describe their organization’s effectiveness at managing supply chain risk as “low” or “don’t know,” according to UPS.
“Many high-value cargo thefts are carried out by organized criminal gangs, whose tactics are constantly evolving,” Scott Brown, Industrial Sectors and Multinational Lead—Client Risk Solutions, Industry Services Group, AIG Client Risk Solutions, says in the article.
The gangs may use portable 3D printers to create counterfeit security seals, jamming devices to foil the signal emitted by cargo tracking devices, a “cube” to defeat motion sensors and enter warehouses undetected, 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.
As the authors point out, mitigating the risk of this type of loss upfront can pay for itself many times over. To mitigate the risk of loss for high-value goods, many professionals recommend a “layered” approach which minimizes gaps in security with several layers of defense, the article continues. That way, a lapse or weakness in one layer does not easily permit a threat to become a loss.
The authors explain that layers should include:
- Quality and prescreened carriers—who have experience moving commodity-specific, high-value 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
- A defined cargo handover process to prevent fraudulent pickups
- Contingency planning for security alerts or unforeseen incidents
The last line of protection should be some type of insurance to mitigate the financial impact in the event of a loss, the article continues. Executives at many companies believe the company is covered by standard carrier liability, but reimbursement can be considerably less than the sale price of the goods. Other executives may think their business owner’s policy covers losses, but they may be shocked to find there are limitations or the company is dropped after multiple claims. The best approach, the authors write, is to take out a cargo insurance policy designed specifically for the business, based on risk tolerance and supply chain characteristics.
What are your thoughts on cargo security? Do you think goods move through your company’s supply chain securely?