Cargo Theft: Is Your Warehouse at Risk?
By Robert G. (Gary) Bender on Aug 28, 2019
When companies are searching for warehouse space, whether it’s building new or looking for an existing warehouse, there is an understanding that certain security features are necessary to minimize and prevent the likelihood of theft. Companies often approach security for their product in one of three different formats, depending on the value of the product:
- No physical security measures;
- Security fence around dock areas;
- Security fence and adding a guard shack.
Obviously, price is a factor in choosing which, if any, security solutions you choose to implement. Some companies decide to evaluate the risk of theft occurring against the cost of the theft-deterrent. Physical security measures such as security fencing and guard shacks can cost anywhere from $200,000-$350,000, depending on the size of the property and the number of guard shifts. For this reason, it is helpful to dig in to the statistics for cargo theft, both by commodity and by region.
I recently interviewed Scott Cornell, Transportation Leader, Crime and Theft Specialist at Travelers, to learn more about the trends surrounding cargo theft and to find out about effective measures companies can take to combat the probability of cargo theft.
Cornell is a leading security expert on cargo theft occurring at warehouses as well as off the premises. With over 20 years of experience in the industry, he’s evaluated countless instances of cargo theft and has a deep understanding of the many factors at play when companies implement a plan to minimize their exposure.
Our interview focused on what data is available about cargo theft, and of the types of security measures to consider when entering into a new lease agreement for a warehouse.
How Prevalent is Cargo Theft?
Perhaps one of the most fascinating facts I learned is that official statistics about cargo theft don’t really exist. The federal government does not currently track cargo theft. Although the FBI does have a UCR (Uniform Crime Report) code for the crime of cargo theft, unfortunately it’s not widely used across the country and many thefts still go unreported.
There are, however, private companies like CargoNet and SensiGuard that track voluntarily reported cargo theft and by reviewing their data, you can get a pretty solid idea of current trends. There is some vulnerability to those numbers, which are usually based on 800 – 1,200 annual reported thefts in the U.S. (surely only a sampling of the actual number of incidents). Because this type of crime is highly variable depending on the type of commodity and economic conditions, it’s difficult to state that either cargo theft is “up” or “down” over the last 20 years. Cornell emphasized that it’s important to review the analysis behind these figures or talk to an expert who can provide further insight about the specific economic conditions in play at the time for the area of the country where you may be considering a warehouse lease.
What type of commodity is most at risk
Contrary to popular opinion, electronics are not the number one target for cargo theft, although they did hold the number one spot until 2010. Surprisingly, it turns out that the most stolen commodity based on CargoNet’s 2018 Year-end Report is actually food and beverage (SensiGuard’s report has food and beverage at the number two slot). Why the switch? Although electronics have a higher street value, you have to consider what has gone on in the wider economy since 2008. Cornell noted that during the 2008 recession, consumers shifted from a luxury-item mentality to one more focused on necessities.
Another factor that makes food and beverage an attractive target is that the evidence doesn’t last very long and is not traceable in the same manner as electronics. For these reasons, stolen food and beverage items are much easier to move. For example, a TV could be recovered long after it was stolen (a year or more), but a pallet of snack foods is going to disappear quickly. Electronics have serial numbers, and many are activated online and are therefore traceable, but there is no barcode or serial number on a pistachio! That doesn’t mean, however, that electronics are not also targeted; indeed, with the expanding economy electronics thefts have been making a resurgence, and the gap with food has been narrowing.
How do you Secure your Warehouse/Cargo?
You can break cargo theft down into 2 categories:
- Straight cargo theft (most common): Thieves physically go out and steal the load, wherever it sits, by breaking the locks on the tractor or trailer and physically stealing the contents.
- Strategic cargo theft: Not unlike online hackers, thieves use phishing techniques and identity theft to trick you into allowing them to pick up the cargo using fictitious credentials. The point of pickup is a very vulnerable period in the overall transportation of the goods. This type of theft is difficult to address, because “hard” security measures don’t typically protect against this type of crime. (What good does the guard shack do if the thief has legitimate paperwork?)
Are some parts of the country more prone to cargo theft than others?
In evaluating the probability based on thefts per year by geographical location, CargoNet identified the top five (5) U.S. markets for cargo thefts as: 1) California, 2) Texas, 3) Florida, 4) Illinois, 5) Georgia (as pictured below with the reported number of thefts).
Source: CargoNet 2018 Annual Cargo Theft Report
Next Steps Regarding Cargo Theft
As with any crime-prevention strategy, you may not be able to eliminate all risk, but with education and vigilance the risk can be minimized. Finding opportunities to strengthen weak links in the transportation of goods is a great place to start. By analyzing and optimizing your supply chain strategy, implementing training programs for employees on how to avoid phishing scams and recognize fraudulent documents, investing in physical security measures (fencing/guard shack), you can help minimize the likelihood of being a victim of cargo theft.
Travelers has its own Cargo Theft Special Investigation Group, which Scott Cornell helped found in 2005, and that team has 10 investigators dedicated to U.S. cargo theft recovery and prevention for their clients. They have had clients call them at the time of a suspicious cargo pick-up to request assistance with qualifying the identity and legitimacy of the person making the pick-up. They have seen warehouses or distribution centers with excellent anti-theft processes and procedures in place, which act to deter and eliminate theft. By learning about the types of crimes being committed, companies can better equip themselves to reduce the chances of falling victim to cargo theft.