Take cargo theft. The most common incident is the stealing of a vehicle left idling at a truck stop, while the driver uses the rest room or grabs a bite to eat.
You’d think that drivers would be more careful about protecting their valuable loads. Don Hsieh, director of commercial and industrial marketing with Tyco Integrated Security, is eager to disabuse you of that notion. “Ninety percent of cargo theft happens on trucks in transit,” he says. Guns, masks and violence are rarely required.
We’re paying a huge price for what frequently amounts to simple negligence. According to Tyco, nationwide cargo theft racks up an annual loss of $35bn – and that’s just the incidents that are reported.
Breaking down that number yields some surprises. If you thought that electronics items were a major draw to thieves, you’d be right. They account for 18 percent of reported cargo theft, costing an average of $998,000 per incident. (That amount, by the way, shot up 95 percent in 2011, says Hsieh.)
Historically, electronics has been the sector most vulnerable to theft. More recently, it has been edged out by food, which now represents 19 percent of reported incidents. (The two other big categories are base metals at 9 percent, and apparel at 8 percent. Together the four account for 54 percent of cargo theft, reports Tyco.)
The growing number of food thefts might seem odd, given that they tend to yield far fewer profits per incident than electronics – a typical load might be worth less than $100,000. As Hsieh explains it, however, the bottom-line disparity in value isn’t as wide as it appears to be. Thieves are drawn by the potential for reselling branded food products into the legitimate supply chain. In the event, they might end up getting 70 cents on the dollar, versus only 30 cents for electronics items.
Hsieh says the potential risk to a brand’s reputation is greater than the mere loss of product. Food and beverage items, especially perishables, are highly vulnerable to contamination when mishandled in transit. An improperly managed cold chain can result in the sickness or even death of consumers.
Thieves don’t limit themselves to stealing trucks that are conveniently left unattended. Another ploy is to pretend they are the legitimate party hired to pick up cargo at a dock – then simply drive off with the load. Often the trick requires the participation of an inside confederate, who knows when and where the valuable shipments will be available.
Violence does occur from time to time, says Hsieh, but classic hijackings are more common in Mexico than in the U.S.
So what can be done? The obvious answer is never to leave an idling truck unattended. (Driver teams make that rule a lot easier to follow, although Hsieh says they often leave the vehicle at the same time.) Beyond that, there are a number of technology solutions that can help to prevent theft.
Basic access restrictions can lock down a vehicle. As with a computer, new security systems require the entry of a personal identification number to move the truck, even when it’s idling. Should the unit be stolen, the driver can hit a “panic alert” button that can relay a signal up to a mile away. The driver can remotely slow the vehicle in five- to 10-mile increments, until it’s forced to a stop. Law enforcement can then be informed of its position.
GPS tracking has long been available to locate units in transit with pinpoint accuracy. But the technology is more effective when coupled with a system that can remotely control and stop a stolen vehicle, says Hsieh.
Although the system isn’t cheap, the price is coming down. Right now a state-of-the-art remote security setup can be purchased for under $5,000 a truck, says Hsieh.
Truck owners need to weigh the potential benefits against the risk. It makes sense to install the system in lanes where theft is most prevalent. California, Florida and Texas are the states with the highest number of reported incidents, according to Tyco.
To guard against deceptive pickups, companies can deploy scanners to verify a driver’s identification, with the ability to detect counterfeit licenses for all 50 states.
Photographic technology has evolved to become a valuable weapon against theft. Video cameras can be set to activate when container or trailer seals are broken, and can even allow for facial recognition.
Drivers can further reduce the risk of theft by observing operating best practices that cost nothing: Turn off your engine when you leave the vehicle. Make sure all seals are properly applied. And, if possible, don’t stop for the first 200 miles of a trip. Some criminal gangs will follow a truck from the moment it leaves the dock, hoping for a quick score.
By hewing to the proper security regimen, truckers can greatly reduce their operating costs. Insurance rates are generally lower for those who install the technology and can show a history of fewer cargo losses. (Too bad that most insurance companies won’t grant an automatic discount merely for having the technology in place, but that could become industry policy as security systems prove their worth over time, Hsieh says.)
A good security program yields the side benefit of better control over one’s supply chain. Companies that know precisely where their trucks are, and how efficiently they are being driven, are in better position to control their inventory and respond to service needs of the moment.
Supply-chain security and risk professionals know the importance of remaining vigilant against cargo theft. The trick lies in spreading that level of awareness throughout the organization, most of all to drivers. In a time of tight operating margins, the cost of slacking off is simply too high to bear.
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Keywords: supply chain, supply chain management, supply chain security, cargo theft, truck theft, transportation management, inventory control, supply chain risk management