Contributed by James Lee, VP of Legal Affairs, Choptank Transport
A year ago this month, I wrote a short article for our newsletter which stated that “cargo theft is a growing problem." After having attended a recent conference, and hearing the statistics, I hate to report that instead of the issue getting better, it is actually getting worse. In fact, this topic was so hot at the conference that they devoted an entire plenary session to it, presented by Keith Lewis, Vice President of Operations for a company called CargoNet. So, I decided that perhaps it was time for a refresher article in order to reiterate the importance of taking steps in order to avoid being a victim, using information from Keith’s presentation as well as my own. First, the recent facts:
The locations of where cargo theft occurs has changed somewhat as criminals are getting bolder with their operations. In fact, much of the theft occurring today stems from criminals who are more equipped and more organized than ever before. While theft from a warehouse or DC (distribution center) is still the number one spot where theft of cargo occurs, the percentage of thefts from truck stops, as well as thefts from the side of a road, increased from 2012 to 2013. The percentage of reported theft from a secured yard jumped from 6% of all thefts to 10%. But, as Keith so eloquently put it, “If a theft occurred from a secured yard, the yard is not very secure, is it?” California was the leading state for the number of total cargo theft incidents reported, followed by Texas.Georgia,Florida, and Illinois rounded out the top 5.
When talking about the commodities that are targeted for theft, “food and beverage” is still the overall favorite, unchanged from 2012 to 2013. Perhaps, this stems from the fact that there are more food and beverage loads on the road than others, making it more favorable percentage wise, but it also likely that they are targeted because of the ease of “fencing” the product, or the ability to get rid of it easily and quickly. Within the food and beverage category, produce seems to be the hottest targeted item. Not only can you get rid of produce easily and quickly, but produce is perhaps the hardest commodity to track, once stolen. Behind food and beverage, comes electronics, and then metals.
As for days of the week, Fridays seems to be the preference of choice. Last minute loads being shipped for the week make easy targets for criminals, as most shippers, warehouses, etc., want to get these loads covered and/or out of their way before closing for the weekend. Friday loading for Monday delivery within a 500 mile radius or shorter only enhances the possibility. This means that sometime over the weekend, the loaded trailer with your cargo is going to sit idle for an extended period of time. It might sit in a parking lot while the driver goes home to family, might sit in a secured yard (see above), or it might end up sitting at a Truckstop at any point along the route. Keeping in mind that these are one of the top spots where theft occurs, your load is like a sitting duck waiting to be taken advantage of.
One of the most exasperating stats that were presented had to deal with FPUs (Fictitious Pick Ups). It accounted for about 9% of all reported cargo theft incidents, which amounted to over $8.4 million dollars in losses. This is definitely an increase from the previous year. California was by far the top state for fictitious pickups. Michigan and Florida tied for second place. FBUs can be performed in various ways.
Using information obtained from any one of the on-line posting boards, the criminal can pose as a legitimate carrier to steal your cargo, actually picking up the product using a truck they provide. Many of them do this by actually setting up a new dummy carrier or they can achieve this goal by reactivating a dormant carrier MC or DOT number. Keep in mind that since produce is an exempt commodity, a carrier does not actually have to obtain an MC number in order to transport it, thus escaping the scrutiny of the FMCSA.
Another way is to just steal a truck and trailer, pose as a legitimate carrier, slapping on a temporary placard or placing an additional carriers name on the side of a truck suggesting a “leasing” agreement. Blind shipments (shipments where the shipper does not know where the cargo is actually being delivered, and the receiver does not know where the cargo is actually shipped from) seems to make the fictitious pick up even easier.
Another deception that is right behind fictitious pick ups are the fraudulent or deceptive pick ups. In some instances, the criminal poses as a legitimate carrier, books a coast to coast load, and then carries out (no pun intended) one of a few options. He could double broker the load (hire another carrier to actually perform the service), have the brokered carrier actually deliver the cargo, invoice you (the customer), collect the money from you, but never pay the actual brokered carrier. In this instance, you probably have no idea that this is being done until you receive a nice little communication from a company who is representing the brokered carrier who was never paid. When you do your research and report that you have already paid the carrier that you contracted with, it is then that you find out that they took your money and ran.
Another option is somewhat the same, but with a little different spin. The criminal double brokers the load, has the brokered carrier actually deliver the cargo, BUT takes a cash advance from you (as many carriers do). In this instance, sometimes the load is actually picked up by a legitimate carrier, and sometimes it is never picked up, however, the criminal has provided you with information enough to convince you that it had. Either way, his only intent in this game is to take your money and run.
Yet another deception also has a few options to it, but involves the use of bills of lading. In one instance, the criminal doctors a bill of lading leading you to believe that your load has been picked up and on its way to delivery by providing you with copies of the doctored bills of lading. He then obtains a cash advance from you. A red flag is raised when either your shipper calls you to inform that the load was never picked up, or the receiver calls you to inform that the load has not delivered. Either way, the criminal has once again fled like a thief in the night leaving you holding the bag.
Another spin utilizing bills of lading calls for the criminal to set up an account with a factoring company. He doctors bills of lading, and then produces these bills to a factoring company as if the product had been picked up AND delivered. The factoring company pays the carrier, and then looks to you for final payment and reimbursement. Sometimes, the doctored bills of lading and invoice gets lost in the shuffle, and the factoring company gets paid. Other times, the scam is caught, the invoice not paid by you, and the factoring company ends up taking the loss. Either way, the criminal has successfully gotten what he hoped for, which is payment for something they did not do.
There are numerous other ways for a criminal to steal your cargo, or to scam you out of your money. Unfortunately, there are fewer solutions than there are problems. Looking solely to law enforcement is not an option. They are way overloaded with even more pressing issues, and cargo theft is not exactly their number one priority. That means that the solution has to begin with you; the shipper, receiver, broker, or whatever role you play in the supply chain. Some of the best practices that you can utilize include:
- Strict carrier vetting: know who the carrier is, or work with a reputable broker who has a strict carrier vetting process in place.
- Situational awareness: be aware that cargo theft (and scams) does take place, and have processes in place to prevent them.
- Provide a secure chain of custody: utilize GPS if possible, maintain seal integrity. Require best in class locks, as pilferage often occurs while carrier is stopped..
- Mandate that all employees follow protocol: (such as Friday afternoon scenario, verification of carrier, etc.
- Avoid shipping Friday for Monday: delivery within 500 mile or less radius.
- Be wary of carriers with temporary license plates taped in the window or temporary placard on the side of the tractor. If the name on the side of does not match the load tender, confirm with the carrier of record.
- Make a photocopy of the driver’s CDL, and attach to the shipping records. If driver is hesitant to provide, then use further due diligence.
For those interested, the CargoNet program is a multi-layered approach to cargo security via both proactive and reactive methods. Their 24/7 command center becomes an extension of your cargo security program. It is staffed with former law enforcement officers and crime analyst who have the contacts and subject matter expertise to assist its members with recovery and prevention.