Gateway Magazine: Cargo theft alert

Reports raise red flags over multibillion-dollar container goods hijacking threats

Rob Kruyt

There's an enterprising group in Canada other than retailers that annually mark their business calendars with holly and other Christmas cheer in anticipation of bottom-line bounty: the fraternity of cargo thieves and smugglers. And, as it does during any holiday, long weekend or other celebratory time of the year when social distractions abound, that fraternity is looking to cash in big time.

Reports released in late 2018 from major North American insurance companies and supply chain management auditors have underscored the need for better security and awareness all along goods movement networks, especially when it comes to the transportation of containerized cargo via trucks.

Canadian Cargo Theft Trends: What’s New, What’s Now, and What’s on the Horizon notes, for example, that annual cargo theft in Canada now runs into multibillion-dollar losses. That theft, it notes, is often linked to money laundering, terrorist funding and the drug trade.

The shipping sector’s incoming digital disruption revolution is but one factor opening new doors for organized criminal gangs and black marketeers whose logistics chains in some cases rival those of legitimate shippers.

The Northbridge Insurance report notes that much of Canada’s containerized cargo theft is concentrated around major trucking hubs in Eastern Canada such as Brampton, Mississauga and Toronto. But while meat is atop the menu of choice for cargo hijackers in the East, a growing percentage of thefts targeting lumber and heavy equipment are now occurring in B.C. and the rest of Western Canada.

The value of B.C. lumber is rising following the province’s record wildfire season and the shrinking basket of wood fibre left in B.C. in the wake of the pine beetle infestation.

One estimate pegs the annual cost of cargo stolen from containers in Canada at $5 billion, but reliable numbers for that cost remain hard to come by.

The good news, according to the Northbridge report, is that more cargo thefts are being reported to the voluntary reporting system launched in 2014 by the Insurance Bureau of Canada (IBC) and the Canadian Trucking Alliance.

In Western Canada, that’s helping put numbers to the severity of container cargo theft that previously have been unavailable.

Garry Robertson, manager of Northbridge’s special investigations unit, says that creating a common database of property stolen is a critical component in helping solve the cargo theft puzzle. It’s also fundamental to establishing the scope of the cargo theft problem and applying a dollar value to it.

Robertson helped set up the cargo theft reporting system during his 16-year stint as IBC’s national director of investigations. In its first year, Robertson says, it received about 600 reports. Well over 2,000 were filed in 2018.

The Northbridge report notes that mixed-load cargo is a favourite target of thieves because it can be broken down, separated and sold quickly.

Also atop priority lists for Canadian cargo thieves: metals and food products, especially meat.

Their preferences are consistent with those of other thieves in North America.

According to a global cargo theft report compiled by BSI Supply Chain Services and Solutions and the TT Club, the products of choice for thieves in North America in the first half of 2018 were food and beverage shipments. Consumer products, electronics and construction materials were also high on their lists.

The report estimates that the median value of cargo theft in North America is US$56,666, compared with US$77,940 in South America and US$14,582 in Asia.

BSI is a global supplier of supply chain intelligence and risk management services; the TT Club provides insurance and other risk management services to the international transportation industry.

The allure of a low-margin product like laundry detergent for the organized criminal gangs behind the majority of container thefts is simple, says Robertson.

“It’s easily sold, and everyone needs it.… It’s a low-margin [thing to steal], but if I have the distribution setup ... I can sell [laundry detergent] anywhere.… So easily sold, easily moved, easily blending in [with] all the other products that are being sold on store shelves.”

It’s also difficult to track once it has been stolen.

Electronics and other products that might have sexier allure in the marketplace also come with serial numbers and other traceable and identifiable complications for thieves all along the supply chain.

But, says Robertson, “how are you going to identify a load of laundry detergent?”

Knowing what’s inside a specific container is critical for organized criminal groups. It also requires detailed inside information.

Consider, for example, that the Port of Vancouver handled 3.25 million 20-foot-equivalent units of containerized cargo in 2017.

That is a lot of containers stuffed with a wide array of goods coming from and going to extremely diverse marketplaces.

So how do criminal gangs know which trailers to target when?

“It’s like anything,” Robertson says. “This has become such a lucrative job for them that they really do have sources on the inside in many cases.”

Digitization of supply chain information and the addition of artificial intelligence to the shipping sector in the form of radio-frequency identification sensors and electronic logging devices promise to remove much of the guesswork out of where a container is at any given time during its journey. But until the human factor is removed from vulnerable links in the supply chain, that technology leaves shipping databases vulnerable to hackers.

Robertson also points out that GPS and other technology is not much good when it’s not being monitored, especially over long weekends or during other breaks when a cargo container truck might be parked for several days in an unsecure lot.

But Robertson adds that another weak link in the shipping chain “is just talking – drivers stopping at truck stops and talking along the way.”

“It doesn’t take long before I can find out what you are hauling and where you are going and where you are stopping,” he says.

For that and other reasons, Robertson says, containerized cargo is most vulnerable to theft when it’s in transit on a transport truck.

The Northbridge report recommends a number of security precautions trucking companies and shippers need to institute to reduce cargo theft. They range from increasing trailer yard security and installing closed-circuit television cameras to improving background checks for employees and setting up better online password procedures.

Robertson says it’s hard to know whether containerized cargo theft in Canada is increasing or decreasing because the dollar value of cargo theft is largely unknown. It’s expected that the IBC reporting system will provide some base totals when it reaches its five-year anniversary in March 2019.

In the meantime, Robertson says, it’s critical for truck drivers and other shipping industry personnel to report thefts, suspected thefts or other suspicious activities to police and the IBC.

“As much as they know about what is moving, they also hear about what has been stolen, and having been in this industry for that length of time I can tell you that is where a lot of this information should be coming from.”