B.C.’s new cargo examination centre faces tough smuggling test

Analysis: More container traffic through West Coast ports means more opportunities for smugglers

Canada Border Services Agency’s new marine container examination facility will operate in the Deltaport logistics centre development adjacent to the Port of Vancouver’s Roberts Bank | Rob Kruyt

Containerized cargo shipped through B.C.’s ports continues to increase. That’s good for the economy; it’s also good for smugglers.

In Vancouver, now the world’s 45th-largest container shipping port, the exportation of stolen goods and the importation of illicit drugs and other contraband continues to be a major challenge for port operations and enforcement.

The complexity of the challenge is increasing because opportunities to move stolen goods through major trade hubs like the Port of Vancouver multiply with the number of shipping containers they handle, and the rise in transpacific trade points to a continued expansion in container movement via B.C.’s West Coast.

Smuggling through Canadian ports is not new.

A January 2011 Public Safety Canada report prepared by Presidia Security Consulting concluded that Canada’s three largest ports – Vancouver, Montreal and Halifax – are the most vulnerable to inbound and outbound smuggling. 

The report cited container traffic volume as a key reason for the three ports’ appeal to smugglers. Another factor in their value as smuggling conduits, according to the report: “sophisticated criminal groups have become well entrenched in the host cities (in the cases of Montreal and Vancouver) and made the ports essential to their smuggling operations.”

Government and law enforcement officials have provided little evidence to suggest that much has changed in the seven years since the report was released. 

However, a new Canada Border Services Agency (CBSA) marine container examination facility is being built on Tsawwassen First Nation land adjacent to the Port of Vancouver’s (PoV) GCT Deltaport container terminal at Roberts Bank to improve container inspection efficiency on the West Coast. 

It could also increase the odds of intercepting stolen cargo and uncovering smuggling operations.

The facility will join two similar centres on the coast, one in Prince Rupert and the other in Burnaby. It will eventually displace the latter.

Delays in CBSA inspections of cargo containers moving through Canadian ports, especially in Vancouver, spurred complaints from the Canadian International Freight Forwarders Association and other shippers last year about higher costs and stalled goods shipments (“Shippers Irked over Canada Border Services Agency Container Inspection Delays,” Business in Vancouver issue 1448; August 1-7, 2017).

Those concerns included inspection holdups of up to four weeks in the Port of Vancouver compared with three to five days in the Port of Montreal.

The Delta container examination facility, which is scheduled to be operating by the fall, will have 15 shipping container examination bays. But considering that the Port of Vancouver alone handled approximately three million containers in 2017 and that the trend in container cargo fleets is for larger ships carrying more containers that need to be unloaded faster, it would be an understatement to say that the new examination centre will have its hands full.

And while the CBSA maintains that it “risk assessed” 1,177,007 marine containers coming into B.C. during 2016-17, it declined to provide a number for how many outgoing containers leaving the province’s ports were risk-assessed, let alone opened and examined during that time. 

The CBSA declined Business in Vancouver’s request for an interview. But in an emailed response, Joseph Chayeski, the CBSA’s director of the Pacific region’s Metro Vancouver district, stated that the organization conducts “random and risk-based examinations on exports.” His email maintained that disclosing the number of export containers searched could “compromise our investigative techniques.”

The Presidia report estimated that the CBSA’s resource limitations mean that only between 1% and 7% of all shipping containers are ever inspected.

So while it noted that the proportion of high-risk containers inspected is much higher, the report added “it is widely acknowledged that only a small fraction of drugs and other contraband hidden in containers are discovered at marine ports in Canada due to CBSA interdiction efforts.”

A 2015 federal auditor general’s report agreed.

Controlling Exports at the Border concluded that the CBSA “did not fully have the necessary authorities, information, practices and controls to implement its enforcement priorities and prevent the export of goods that contravene Canada’s export laws.”

The auditor general’s report found that the CBSA had prevented the illegal export of about 700 stolen cars between April 2013 and December 2014.

But it noted that the agency failed to examine around 20% of the “high-risk shipments that had been identified by its centralized targeting units.”

The report also found that “the number of export shipments that the CBSA placed on hold or detained was very small compared with total exports.”

Shipping containers continue to be the main conduit to international markets for cars stolen in Canada.

According to Insurance Bureau of Canada (IBC) data, the number of cars stolen in Alberta jumped 100% between 2012 and 2016 to around 28,000. Of that number roughly 15% fall within the stolen unrecovered vehicles (SURVs) category. 

According to Insurance Corp. of British Columbia data, the number of vehicles reported stolen in B.C. rose to 11,600 in 2017 from 7,000 in 2012, a 65.7% increase. 

Organized crime is behind most SURVs.

The vehicles it steals are dismantled and resold as parts, retooled and outfitted with new 17-digit vehicle identification numbers (VINs) and resold, or shipped out of the country in cargo containers packed in with mattresses, boxes of disposable diapers or other products to conceal their real contents.

It is a lucrative business. 

In an interview with Business in Vancouver prior to his recent departure from IBC as its national director of the Investigative Services Division (ISD), Dan Service estimated that a stolen vehicle that has been outfitted with a replacement VIN could net thieves between $50,000 and $75,000. 

A May 2011 study commissioned by the Canadian Trucking Alliance pegged cargo crime’s annual cost at $5 billion. It also linked cargo theft to organized crime, which it said uses the proceeds to fund activities such as gun and drug smuggling. 

Car theft is also expensive for insurers.

Service estimated that Alberta’s SURV count in 2016 was just over 3,600. With the average insurance payout for each vehicle at around $20,000, that totals just over $70 million. B.C.’s number of SURVs, he said, has increased from around 1,300 in 2012 to 1,900 in 2016. 

Applying the same formula to B.C.’s 2016 SURV count adds up to about $38 million annually in insurance payouts.

IBC estimates that ISD, working with local police forces and the CBSA, helped the insurance industry recover $28 million worth of stolen automobiles in 2016. That was up 17% from the $23.6 million recovered in 2015.

According to Steve Kee, IBC’s director of media and digital communications, IBC and ISD recovered approximately $24.6 million worth of stolen vehicles in 2017. Of that total, $12.4 million worth was intercepted at Canadian ports – $2.7 million in Halifax and $9.7 million in Montreal, but none in Vancouver, where there is no ISD ports program.

Kee said efforts are continuing to establish the ISD program in Vancouver.

Other vehicles and machinery recovered through IBC’s national cargo theft program in 2017 included trucks ($40.3 million), trailers ($11.9 million) and heavy equipment ($3.7 million).

While Chayeski’s email stated that his department has been working with IBC and local police since 2014 to intercept stolen vehicles being smuggled out of the country, the CBSA provided no estimate of the value of stolen goods seized at the Port of Vancouver.

It stated only that “all seizures are significant for the CBSA, regardless of quantity seized. The CBSA does not publicly assign a monetary value to seizures due to the variables that impact the associated value, including where a good may be sold/purchased.”

Transport Canada spokeswoman Annie Joannette noted in an emailed statement that the review of Canada’s port authorities launched in March by Minister of Transport Marc Garneau is aimed at improving the federal government’s response to a wide range of threats facing the country’s ports. They include “inbound and outbound smuggling, organized crime, unlawful interference, terrorist and extremist attacks and cyber-attacks.”

She said Transport Canada is therefore “keen to hear from stakeholders, communities and the public about safety and security challenges faced at ports.”

Findings from the port authorities review are expected in 2019.

Neither Public Safety Canada nor the RCMP provided information on what progress, if any, is being made in Canada’s fight against smuggling.

However, Public Safety Canada spokesman Jean-Philippe Levert noted that Bill C-21, which targets the unlawful export of stolen property, illegal drugs and other dangerous goods, is now at third reading in the House of Commons. The bill would make it an offence under the Customs Act to smuggle goods out of Canada; the current act prohibits only the smuggling of goods into Canada.

The bill was drafted in response to the 2015 auditor general’s report. 

The RCMP declined to comment on whether smuggling through Canadian maritime ports has increased or decreased since the release of the 2011 Presidia report or whether organized crime’s involvement in it has increased or decreased. However, Tania Vaughan, a staff sergeant with the RCMP’s national communication services, noted in an email that it remains a priority for the national police force. • 

– With files from Hayley Woodin