Tales of the Unexpected

  • Date: 14/11/2013
Tales of the Unexpected

The ingenuity of thieves has always caused a level of disbelief in unsuspecting victims. In this article Mike Yarwood, Claims Manager with freight insurance specialist TT Club hopes to forearm, or at the very least forewarn transport operators, against such surprises.

In recent weeks there has been an amount of publicity about the frequency of incidents of bogus Chinese forwarders establishing online relationships with agents here in the UK and sending container loads of cargo without the necessary bill of lading to secure the release of the container once landed at the UK port.  Ransoms have reportedly then been demanded by the Chinese agent in order to relay the necessary documentation.  Without this, the UK forwarder can find themselves with significant demurrage and storage bills, as well as large legal fees incurred in trying to extricate themselves from the situation.

This form of extortion needs to be publicised, as do a number of other devious forms of fraud and theft, in order to keep forwarders and other operators aware of ‘scams’ by which they may be taken advantage.  TT Club, by revealing some of the details of such incidents, aims to increase the care with which UK companies choose business partners abroad and the priority they give to the security of their IT systems, in order to reduce their losses.

Earlier in the year we drew attention to increasing trend in the fraudulent use of internet clearing sites.  We noted such occurrences, particularly on occasions when operators needed assistance in regions that they were unfamiliar with, especially at short notice.  In such circumstances operators could be tempted to use unfamiliar subcontractors sourced via such sites. 

We found instances where crime organisations purchased legitimate but failing transport operators and continued to trade in their name, predominantly on line and in a state of virtual insolvency, waiting for the opportunity to receive a valuable cargo before disappearing.  More simply in other cases, fraudulent road hauliers advertising vehicles available for backloads again hoping for an unsuspecting forwarder, in too much of a hurry to carry out proper checks, and with a high-priced cargo to move.

More recently, however TT Club has become aware of IT-based theft that does not just involve misleading operators into thinking they are dealing with legitimate sub-contractors via the internet.  Sophisticated criminals are now attempting to take control of operators’ IT systems.

In the last weeks a small but significant number of incidents have been reported which at first appear to be petty break-in's at office facilities. The damage seems minimal; nothing physically removed; more thorough investigations however reveal that the ‘thieves’ were actually installing high-tech electronic devices within the IT network of the operator.

Such devices placed between computer and mouse or keyboard, or between computer and server can record movements, key strokes and even download and print documents and screen shots to an external source.  The kind of information that has been reported as being targeted and extracted is release codes for specific containers from port facilities (thought to be linked to drugs). The use of such technology within freight forwarder and transport operators’ systems could easily provide access to trailers, cargo, CCTV equipment and even potentially to internal communication systems, perhaps diverting a driver to deliver to an alternative (unauthorised) destination.

 As TT Club has identified with other forms of theft, the trend is to target very specific, high-value cargoes, as well as contraband.  The perpetrators are minimising their risk of exposure through such selectivity rather than a blanket approach that has been more common in the past.

Such losses can give rise to some potentially very large exposures and the Club is keen to assist with preventative measures.  The increased sophistication of such ‘cyber attack’ of course makes it more challenging for operators to defend against.  However an increased awareness to such possibilities of theft and fraud should emphasise the need for vigilance in safeguarding day-to-day operational processes.  Increased physical security of IT installations is clearly to be recommended.  However, it would also be wise for operators to carry out a ‘cyber’ risk assessment and evaluate what greater protection from hacking and these data diverting devices may be available and appropriate.

Whilst technological advances undoubtedly provide greater operational efficiencies and opportunities for carriers and operators to mitigate their exposure to theft incidents through the use of locks, alarms and tracking systems, unfortunately the same advances are also benefiting organised criminal groups.  Such practices currently seem to be in their infancy. However, as invasive technology becomes more widely available and its cost inevitably falls, TT Club suggests that we are seeing what could be the next generation of strategy adopted by organised criminal groups to facilitate cargo theft.  

To be published in Freight Business Journal, November 2013

Through Transport Mutual Insurance Association Limited and TT Club Mutual Insurance Limited, trading as the TT Club. TT Club Mutual Insurance Limited, registered in the UK (Company number: 02657093) is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority. In Hong Kong, TT Club Mutual Insurance Limited is authorised and regulated by the Hong Kong Insurance Authority, in Singapore by the Monetary Authority of Singapore and in Australia by the Australian Prudential Regulation Authority. In the United States, TT Club Mutual Insurance Limited is approved as a surplus lines insurer in all states and is accessible through properly licensed surplus lines brokers. The registered offices are: 90 Fenchurch Street, London, EC3M 4ST.

Through Transport Mutual Insurance Association Limited, registered in Bermuda (Company number: 1750) is authorised and regulated in Bermuda by the Bermuda Monetary Authority. 

The UK VAT Identification number for Through Transport Mutual Insurance Association Limited is: GB 564 5244 35 and for TT Club Mutual Insurance Limited is: GB 564 3375 30. The Italian VAT Identification number for TT Club Mutual Ltd is: 03627210101.

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