An increase in both the sophistication and frequency of cargo thefts in 2013 has been highlighted in statistics released by TAPA (Transported Asset Protection Association). Interestingly - and in line with general expectation - the average value of reported cargo thefts continues to rise globally, notably in excess of US$300,000 in the EMEA region. This would suggest that the trend of highly targeted efforts by organised criminals continues, systematically identifying higher value cargoes. Unsurprisingly, the results in 2014 continue on the upward trend.

The methodology and technology behind crimes are constantly evolving and becoming more sophisticated. Typically, advanced technology 12 months ago may today be accessed through a freely downloadable application. Systematic tracking of certain cargoes and container units enable criminal organisations to identify the weakest link in the supply chain and strike with minimal risk. Gone, it might seem, are the days where thieves would risk detection by walking around a truck stop under the cover of darkness cutting curtains to see whether there was anything valuable on the trailer. However, despite broadening opportunities for crime, never forget traditional essential security awareness and precautions.

"despite broadening opportunities for crime, never forget traditional essential security awareness and precautions"

Virtual contractors

The way criminal organisations take advantage of web vulnerabilities is constantly changing. The TT Club has highlighted previously how criminals have simply posed as legitimate carriers, waiting for other operators to be in a 'fix' for the movement of time sensitive shipments. Should appropriate due diligence not be performed, commonly due to time restrictions, the lack of legitimacy of the fraudulent carrier may not be revealed. Cargoes continue to disappear in this way; the criminals regenerate themselves. This practice is prevalent across continental Europe as well as in the United States.

The increased use of internet cargo clearing or truck broking sites is affording criminals unprecedented opportunity to identify and steal high value cargoes. Investigations have revealed that often criminal organisations have legitimately purchased small failing haulage companies with a recognised brand name. Immediately after the sale, the company will continue to operate under a legitimate VAT and registration number, often for a number of months still recorded as having the old directors on the board and having valid memberships to the recognised freight exchange sites, all the time operating in a state of virtual insolvency. They lie dormant awaiting an attractive cargo and present themselves offering their services at an opportune moment. Such internet based portals allow such organisations to 'fish' for their intended cargo over prolonged periods until the desired opportunity arises, often without question.

"Subcontracting is always a complex issue, causing greatest vulnerability"

Subcontracting is always a complex issue, causing greatest vulnerability not just when something pressing arises but also as logistics operations involve unfamiliar geographical areas and new contract opportunities stretch existing resource capability, Meeting customer expectations, particularly regarding time, can lead to short-cutting established procedures. However, the risk of commercial damage as a result of theft should not be ignored, easily outweighing failure to achieve an isolated time delivery. As ever, straight-forward communication with customers is likely to maintain relationships - and reputation - in the long term.

Contractor due diligence

The inherent risks of using internet facilities can be successfully mitigated in a number of ways. First and foremost is a robust and operationally appropriate approved subcontractor policy. The effective and consistent implementation of such a policy, even in times of highly time sensitive movements, is fundamental in mitigating the risks associated with the use of such web sites. Successfully managed, such checks will empower operators to assess their risk exposure prior to the engagement of a subcontractor, allowing commercially informed decisions to be made regarding such appointments.

Typically, hosts of such websites will exclude liability for fraudulent activity of suppliers. However, these hosts do have a duty of care and will often set out recommendations and loss prevention advice on the website, in order for users to manage their risk exposure. It is important that such instructions are fully understood and applied wherever possible.

In terms of evaluating a potential supplier, be alert to warning signs, such as the use of free email accounts such as Hotmail, Gmail and Yahoo to correspond, or facilities such as Skype. Such accounts can be easily opened and closed, with limited information, leading to difficulties in tracing perpetrators post incident.

When requesting documentation, especially insurance documents, be wary of electronic documents. It is very easy to create imitation documents; always seek to verify the legitimacy of documents with the issuing party, whether an insurer or other organisation - and use independently sourced contact information. If any corporate or insurance details cannot be verified, it may be wiser not to proceed, despite the operational consequences. The additional time and inconvenience in performing effective due diligence will all too often prove worthwhile.

"If any corporate or insurance details cannot be verified, it may be wiser not to proceed, despite the operational consequences"

Be aware

There will always be opportunist thieves, so thorough physical risk assessments of any supply chain are still necessary. Further, whatever the need to sub-contract, deliberate and consistent due diligence is critical - TT Club's experience suggests that theft is four times more likely whilst goods are in the custody and control of a contractor. However, the internet has multiplied the potential for organised crime to expose vulnerabilities in the supply chain. Crime trends demonstrate that it is lucrative; where the returns are good, greater investments are made. Awareness of such risks means that operators need to consider regularly effective mitigation strategies.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club

Staff Author

TT Club