Cargo Security: Industry, Law Enforcement Coordinate Efforts to Counter Criminals’ Growing Sophistication

This story appears in the Aug. 30 print edition of Transport Topics.

With cargo theft on the rise, trucking companies such as Schneider National Inc. and Con-way Inc. are relying on the latest technology — as well as increased collaboration with security consultants, insurers, shippers and law enforcement — to fight criminals who have become more sophisticated.

“In the past, we saw more shopping where [thieves would] open up five or six boxes at a truck stop. Now we’re seeing a natural progression of what would be their business plan,” said Walt Fountain, director of enterprise security for Schneider National, Green Bay, Wis.

During the first six months of this year, cargo thefts have increased 5% over the same period of 2009, according to FreightWatch International USA, a consulting firm that focuses on security management.

Moreover, thieves are becoming more organized and actively targeting loads, resulting in multi-trailer thefts, higher losses and increased warehouse theft, the firm said in its Bi-Annual Cargo Theft Report.

For years, thieves have targeted electronics and pharmaceuticals, but they’re moving more into other commodities, security and insurance companies said.

Food and drinks were the most common items stolen in the first half of 2010, said FreightWatch, with U.S. headquarters in Austin, Texas.

Another security firm, LoJack SCI, Forney, Texas, said clothing and accessories, tobacco and alcohol, and housewares are among the most frequently stolen items.

“I tell my clients that anything you and I buy at a grocery store, a discount store or a flea market is something people want in this economy,” said Herbert Mayo, vice president of risk control for Lockton Cos., a national insurance broker based in Kansas City, Mo.

These days, some crooks are “more or less ordering specific products from thieves,” said Dan Burges, director of intelligence for FreightWatch. The thieves “then find out where the product is being moved from and conduct surveillance to determine which load they want.”

A large amount of information available online makes it easy for thieves to determine where products are distributed, he added. After finding the loads they want, thieves wait for drivers to make a mistake that will leave the load vulnerable.

Schneider National said it has instituted several protocols for its drivers to minimize risk, such as ensuring those assigned to high-value loads have enough service hours and fuel to travel at least 200 miles after the pickup. Drivers also talk with their managers and the customer service representatives to review the details of the load and ways to ensure a safe delivery, the company said.

Despite the increased losses nationally, Schneider National said it has cut freight thefts year-over-year since 2007, when thefts dropped 22%. Thefts dropped 31% in 2008 and 75% in 2009. Fountain attributes the fleet’s success, in part, to more communication between drivers and shippers.

To ensure it has the latest data, Schneider National said that it cooperates with private groups — including FreightWatch, LoJack SCI and CargoNet — that collect and disseminate theft data. That information helps the fleet stay on top of trends and high-risk areas.

Con-way, San Mateo, Calif., relies on a wide variety of technologies and an informed workforce to minimize its risks.

“We utilize everything from biometrics for access control, trailer tracking and locks,” said Curtis Shewchuk, senior director and chief security officer of global security for Con-way, “but a qualified and well-trained workforce that knows how to use those tools is the key.”

Con-way said it has weekly communications with all employees

to alert them to thefts. Drivers also undergo online training that Con-way updates based on theft trends, the company said. The fleet reported that it did not see an increase in cargo theft in 2009.

CargoNet, Jersey City, N.J., launched a national database earlier this year that is designed to get all parties on the same page by sharing theft data with shippers, law enforcement and insurers. The national insurer Chubb Corp., Warren, N.J., was one of the charter members of CargoNet and said it hopes to see a decrease in losses as a result of the coordinated effort.

“A national database will make it easier to spot cargo theft trends and develop effective loss prevention techniques,” said Pat Stoik, vice president of insurance underwriter Chubb & Son. The company is a subsidiary of Federal Insurance Co., which is a unit of Chubb Group of Insurance Cos.

“Any time you get a central touch point, it speeds the response, and that is critical in cargo theft. The longer the time period between the theft and the actual response, the less likely the recovery of the goods,” Stoik said.

Shipper LG Electronics USA Inc., Englewood Cliffs, N.J., also is working to cut its thefts by taking part in CargoNet’s database and is working closely with carriers, which can include reviewing their financial records and requiring driver training programs and annual background checks.

As a result, Robert Auld, LG’s manager of supply chain management security in the Customs-Trade Partnership Against Terrorism Enforcement and Appeal Process, said the company has seen a decline in year-over-year losses, despite an increase in the value of the goods it ships.

“It all begins with ensuring that your carriers have a well-rounded security program that they can share with you and can be audited over the course of the relationship,” Auld said.

Cargo-theft databases, however, have a major flaw. Boyd Stephenson, manager of security and cross-border operations for American Trucking Associations, said that shippers and fleets sometimes are reluctant to report losses because of the negative publicity they can generate.

The lack of reliable national cargo-theft statistics has made it hard to gauge accurately the crime’s perceived rate of growth. For example, Chubb’s insurance claims and data from its other sources reported 725 cargo thefts in 2009, up 6.6% from 680 in 2008, and up almost 23% from 592 cargo thefts recorded in 2007. FreightWatch, on the other hand, reports 866 incidents of cargo theft in 2009, up 13% from 767 in 2008 and 29% from 671 in 2007.

Although an accurate annual accounting of cargo theft currently is unavailable from the federal government, the FBI finished changes to the Uniform Crime Reporting database in

late July, so it can collect cargo-theft data.

Stephenson said he hopes adding cargo theft to the database will cause the FBI to pay more attention to the crime.

“They are the ones with the resources and the mandates to fight interstate crime,” he said.

Although the FBI is ready to collect data in the UCR, the bureau said state law enforcement agencies need to update their systems. FBI spokesman Stephen Fischer Jr. said it likely will take 18 to 24 months for local law enforcement agencies to modify their record management systems and complete additional training before reporting to the UCR. The reporting also is voluntary, Fischer said, so states are not required to participate.

Having a national repository of information could help the trucking industry obtain a more accurate accounting of cargo theft losses, which currently range from $15 billion to $85 billion, according to ATA.

“That is a $70 billion swing. That says to us that no one has good data,” Stephenson said.

Auld said LG is working on a program to redefine how the electronics company manages its lanes, commodities and values of loads.

“We will be integrating a routing decision model with our security attributes that will then assist in mitigating risk more efficiently than we do today,” he said.

Fleets have several high-tech options to help track loads. Installing the Global Positioning System on a trailer is still an effective technique, but savvy thieves are familiar with the technology and know to disable it or to unload the goods onto another trailer. Some carriers are embedding covert tracking devices in their loads.

“Now you’ve got powerful transmitters in small packages that you can stick into the loads in various places,” Stoik said. “The tracking devices are now smaller than a cell phone, and battery life and signal strength have improved.”

FreightWatch and Qualcomm Inc., a communications technology company based in San Diego, offer covert tracking technologies that allow customers to maintain a constant view of cargo while in transit.

Carriers can track individual pallets or entire trailer loads covertly. LoJack SCI offers cellular and radio-frequency trailer-tracking devices and 24/7 monitoring.

Companies also can use electronic seals that alert a fleet if a trailer has been opened without authorization. For high-valued loads, some of the companies hire a trail car to make sure the load is safely delivered or run team drivers to reduce a load’s downtime.

Another option for carriers, geofencing, creates a virtual fence around a load’s scheduled route.

“We can create a geo-corridor in any shape around any given route.” said Brian McLaughlin, chief operating officer of People-Net, Minnetonka, Minn. “If a load deviates from that route, we can send out a notification that can go to multiple points across the supply chain.”

PeopleNet, a provider of tracking technology, gives fleets the ability to shut down tractors remotely if a security breech occurs. The truck will slow down in 10-mph increments. However, less than 5% of PeopleNet’s clients use the feature, McLaughlin said.

By the end of August, Schneider National said it will have Qualcomm MPC200 in-cab communications systems on each of its units, which Fountain said could further decrease thefts.

“We will have the ability to tie the right information at the right time at the right place to get it to the driver,” Fountain said. The system will identify truck stops and drop yards that have had recent thefts, so drivers will know which locations to avoid, he added.

Not all theft deterrents have to be high tech. Simple steps, such as using a lock or backing a trailer up to a concrete barrier can help.

CargoNet is also using a “Neighborhood Watch approach” that gives drivers a phone number to call if they see something.

But cargo theft creates unique challenges for law enforcement because it often crosses several jurisdictions.

“Local law enforcement is dealing with a crime that happened to a company that isn’t in their jurisdiction, and the shipper isn’t in their jurisdiction,” Mayo said.

LoJack SCI has a large law-enforcement database that can help fleets find the necessary contacts when reporting a crime. CargoNet also works with law enforcement to improve response time.

“If a driver walks out of a truck stop on I-80 in Indiana and sees his truckload of widgets is stolen, he can run in and call CargoNet if his company is a member. CargoNet knows exactly who to call in law enforcement in the area,” Chubb’s Stoik said.