Record container backlogs at U.S. ports and overstressed supply chains are creating conditions ripe for cargo theft, according to experts.
“The backlog across all logistics infrastructure is causing containers and shipments to sit idle, not just in the ports but outside the ports, increasing opportunities for them to be targeted by criminals,” Ron Greene, vice president of business development at Overhaul, told FreightWaves.
Overhaul is a real-time visibility and risk management platform based in Austin, Texas.
Cargo that finally makes its way out of backlogged ports is being aggressively targeted by criminals eyeing containers filled with everything from home appliances and electronic goods to apparel and more.
Union Pacific recently reported a rash of cargo container break-ins as shipments were being transported out of the ports of Los Angeles and Long Beach through downtown LA.
JJ Coughlin, owner of Corporate Security Solutions of Texas, said there’s an old saying: “Freight at rest is freight at risk.”
“Especially right now at places like the Port of Los Angeles, the trains come to the port and they take containers off of the ship and put them on the train, then those containers are sitting for days on end and not moving,” Coughlin said.
Coughlin recently worked a case for an electronics company that had about a $1 million theft from logistics facilities around the Port of LA.
“Somewhere between the ship and the train, most likely on the train once it got there, the theft occurred,” Coughlin said. “It was most likely to do with sitting for a long time.”
With train shipments, freight moving from the West Coast or East Coast to places across the U.S. will sit idle on single-track railways in certain places.
“Based on railroad protocol, certain trains have to yield to the other trains,” Coughlin said. “A lot of times they might be in the middle of the desert, but they have to pull over and let this other train going in the other direction pass. Once again, they’re sitting still and they get hit even out there.”
Not only does idle freight create more opportunities for thieves, it also complicates trying to protect freight in transit, according to Scott Cornell, transportation lead, crime and theft specialist at Travelers.
“Supply chain backups create more complexities around cargo theft too, when you have more of it sitting in more places,” Cornell said. “You also create more locations geographically where the thefts occur. You have a harder time pinpointing where you’re going to see it and where you need to protect yourself above all other areas.”
Watch: Scott Cornell discusses how to protect freight shipments by carrier vetting for cargo theft on this episode of WHAT THE TRUCK?!?
Goods in peril
Cargo theft statistics vary, but it is generally noted that cargo crime is a $15 billion to $30 billion problem each year across the U.S.
CargoNet, a Verisk business, which tracks supply chain thefts, reported a total of 359 supply chain theft and fraud incidents across the U.S. and Canada in the third quarter of 2021, a 2% decline compared to the same period last year.
There were 294 incidents involving tractor-trailers or cargo vehicles during the third quarter of 2021.
According to Keith Lewis, CargoNet’s vice president of operations, cargo theft skyrocketed during 2020 amid the pandemic.
“Last year was kind of an anomaly and we’re starting to see pre-2020 numbers again,” Lewis said.
CargoNet reported 1,502 total theft events last year when the pandemic began disrupting supply chains. That compared with 1,106 total theft events in 2019 and 1,181 in 2018.
During the height of the pandemic in 2020, the supply chain was in a “push-pull” market with freight surging as the country tried to get back to work, Lewis said.
“People were buying so much because they were working from home, working online,” Lewis said. “Everybody’s doing everything they could to get freight out, then not only really trying to get it out, but there was nowhere to take it. You had a lot of trailers being stacked up at e-commerce fulfillment centers. Then we had a lot of people taking advantage of what was going on last year.”
Texas was the biggest hotspot for cargo theft during most of 2020 when the pandemic was disrupting supply chains, Cornell said.
Cornell is also the vice chair of the Transported Asset Protection Association (TAPA Americas), a nonprofit coalition of manufacturers, shippers, carriers, insurers, service providers, law enforcement and government agencies aimed at tackling cargo theft.
“California has traditionally been No. 1 in the nation for cargo theft for as long as I can remember, but for the first time we saw Texas pick that No. 1 spot in 2020,” Cornell said
“Texas has a large port, Texas has a big economy and a big population. There are main arterial highways that go through the state, so there is more freight you’re moving, which creates more opportunities. Now, California is back in the No. 1 spot in 2021.”
During the third quarter of 2021, thieves made off with products valued at greater than $5 million in supply chain thefts in California. Cargo theft reports along the West Coast increased 42% year-over-year during the quarter, and in terms of individual states, California (75 thefts), Texas (61) and Florida (50) were targeted most.
The No. 1 target for cargo thieves during the third quarter were truck stops, followed by distribution warehouses. The average value of cargo thefts during the quarter was $144,438.
The most highly sought after shipments were consumer electronics, household goods and food during the third quarter of 2021.
Cornell said criminals usually steal what they know they can sell.
“If it’s popular or if it’s in high demand or if it’s in shortage, they’re going to go after it because they know they’re going to be able to get rid of it quickly, and get a high dollar amount for it,” Cornell said.
Stolen goods are sold in a variety of ways by criminals, even sometimes the internet or flea markets.
“A lot of times they have a buyer already that they have arranged the sale prior to the theft,” Cornell said. “They’re basically on the shopping list for a buyer that they know and they’re going after specific things that that buyer has asked them to target.”
Lewis said the second half of the year is when things start “jumping” because of the Christmas rush, which starts with cargo shipments in July and August.
“That’s when the supply chain is pulling, it’s really not so bad,” Lewis said. “But when the supply chain is pushing, you’re pushing freight with nowhere to go. So that’s when you see a lot of it sitting in a shipper’s yard, a truck stop or at the side of the road, etc. That’s when you start to see the spike in cargo theft.”
In addition to the West Coast, thieves are also targeting shipments arriving at the Port of Savannah in Georgia, Lewis said.
“We’ve seen a significant increase in thefts there as well,” Lewis said. “It’s one of the larger ports, if not the biggest, on the East Coast. It’s where most of your seafood is coming in to service the Southeastern U.S. We saw a significant increase in seafood thefts — shellfish, shrimp, refrigerated goods.”
FreightWaves reached out to the Port of Savannah for comment but did not receive a reply prior to publication.
Lewis said most shipments are not being stolen directly from the Port of Savannah, rather they are being stolen off the carrier’s drop yards, the container company’s yard or other off-site facilities.
“A lot of these facilities were easy targets because a lot of them don’t have high-end security,” Lewis said.
Organized crime vs. pilferage
With cargo theft being a multibillion dollar per year problem for the global supply chain, the type of criminal activity involved usually falls into two categories: organized crime and pilferage.
Greene said trains or trucks sitting idle create “pilferage” opportunities for criminals.
“Pilferage — which is grabbing a handful of boxes off the back of a truck or train — is typically not organized crime,” Greene said. “That is typically small-time criminals looking to make an extra few bucks. They grab as much as they can carry or as much as they can fit in the back of a truck or a car and take off.”
Along with pilferage from random thieves, cargo theft also attracts highly organized crime rings that target specific goods, Greene said.
“Historically in the U.S., cargo theft is criminal groups, crime rings, it’s organized crime,” Greene said. “They get intel primarily through insider information from people who they come into contact with on the inside.”
Greene said thieves will target specific facilities like warehouses, where high-value products come from.
“They will case that facility, watch trucks leave out of the facility, such as how many trucks are leaving, what time of day they typically leave,” Greene said.
Coughlin said in his experience that more than 80% of cargo theft from trucks was committed by organized criminals.
“I worked for a company from 1997 through 2007 and we had two less-than-truckload companies and a truckload company, as well as an airline,” Coughlin said. “What I found over time is that about 85% of truckload crimes involved external people and a lot of that was organized criminals who followed trucks from the distribution centers and those things.”
Organized criminal groups often use “old school” methods to learn about which loads to steal, according to Cornell.
“They will sit and do surveillance outside of distribution centers, they will follow drivers out of those distribution centers,” Cornell said. “They do their homework on what’s being moved in certain areas and certain industrial or warehousing areas.”
Crime organizations will follow drivers leaving distribution centers often up to 50 miles or so, hoping they stop at a truckstop.
“Quite often what we see with organized groups, they will actually have somebody follow that driver into the truck stop and talk to the rest of the members that are outside waiting,” Cornell said. “The person inside following the driver will actually relay to the other members of the group outside a ‘yeah, he’s going to be in here for a while or she’s going to be in here for a while.’”
Cargo theft is considered a property crime, with thieves often facing less punishment compared to other criminal acts, according to Lewis.
“The penalties for commercial-type crimes are far less than crimes against a person,” Lewis said. “A home burglary is considered a crime of violence.”
Lewis said a lot of people think there’s no victim with cargo crime.
“The insurance company pays for it, then stores just add it to their cost and the consumer pays,” Lewis said. “Another problem is getting law enforcement to work cargo crime cases because they are usually so overwhelmed with crimes against persons, violent crimes and homicides. Property crimes take a back seat.”
Coughlin also said many cases of cargo crime go unreported because companies don’t know where exactly their freight went missing.
“A lot of times it can be really difficult just to get a police report made because you almost have to prove what jurisdiction it happened in,” Coughlin said. “And you need a police report nine tenths of the time for your insurance people to help you.”
Coughlin, a retired homicide investigator with the Dallas Police Department, is also the founder and chairman of the Southwest Transportation Security Council, a nonprofit that facilitates information sharing among law enforcement and private security professionals.
“I have a lot of members that are in the industry, we work together a lot because even though a lot of companies are competitors, when it comes to cargo crime, if they’re targeting one company, they’re going to target the other,” Coughlin said. “We work together and share information that helps everybody to be more successful.”
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