For cargo thieves, it is back to business as usual in the waning days of the pandemic economy.
2023’s inflation factor might make it better than usual for organized crime and other dark forces that target containerized cargo.
The most recent numbers for North America from Verisk Analytic Inc.’s CargoNet data base show cargo theft up 31.2 per cent in 2022’s fourth quarter compared with the same quarter in 2021.
That number, according to Keith Lewis, CargoNet’s vice-president of operations, “was a watershed moment for us that we hadn’t seen since the early 2010–11-time frame. Cargo thefts are on the rise. They're significantly higher than last year. And when we had COVID, they jumped up to an all-time high.”
New Jersey’s Verisk is a multinational analytics and risk assessment company. Since January 2012, its CargoNet business has been collecting property crime data from North American insurance companies. Its data is then used by shippers, freight forwarders and other supply chain operations to pinpoint theft hotspots, trends in what products are being targeted and potential threats to the secure movement of their cargo.
Those threats are significant.
CargoNet pegged the value of goods stolen in Canada and the United States at $58 million in 2021. The average loss per theft today is US$214,000. However, those numbers are based on reported thefts only; many go unreported. Large gaps in reporting cargo theft make it difficult to accurately estimate the number and value of goods stolen once they leave any of Canada’s major ports of entry.
According to the U.S. Homeland Security Investigations, cargo theft annually accounts for between US$15 billion and US$35 billion in losses. Estimates for Canada range around $5 billion.
Garry Robertson, special investigations unit manager for Toronto-based Northpidge Insurance, said that dollar total could be more, or it could be less, “but it is a big number.
“It all depends on what we’re talking about year by year, and especially the product that’s being stolen. It doesn’t take long with some of these high value products to start adding up pretty quickly.”
Inflation and market demand dictate which high-value products are atop the shopping list for cargo thieves.
At the beginning of the COVID-19 pandemic, Robertson said the most sought-after goods for thieves were wood and building materials because they were in short supply in the market; today inflation has made food a prime target. Robertson added that metals and alloys are high up the list.
The pandemic multiplied cargo theft opportunities. It also complicated the theft business.
Goods movement ground to a halt during the initial shutdown of supply chains and the subsequent supply chain congestion. That was good for thieves because moving targets are harder to hit.
More boxes filled with goods in more terminals, more parked trucks in unsecured locations and more idled railcars in rail yards meant more opportunities for organized crime and crimes of opportunity.
But border closures and business lockdowns also temporarily slowed criminal activity because the sudden drop in container ship arrivals and departures meant that thieves had nowhere to load stolen goods and fewer sales outlets.
The boom in demand for consumer goods that followed the initial pandemic shutdowns of factories and trade lanes also increased goods movement velocity.
In its Understanding Current Cargo Theft Trends in Canada posting, Northpidge, which is a major insurer in Canada’s transportation and logistics sector, noted that many carriers consequently started using just-in-time delivery, which meant that loads were not sitting long between deliveries.
Scott Creighton, Northpidge’s director of risk services, pointed out that consumers were buying products “as fast as they hit the shelves, which was good for carriers, because they [didn’t] have to worry about [products] sitting in their yard or in transit overnight.”
Fewer vehicles on roads accelerated delivery speeds for truckers.
So, where does the cargo theft business stand now that the worst of the lockdowns is over and the demand for goods has dropped significantly, especially on the transpacific trade route between Asia and North America’s West Coast?
It is back on track with digital technology providing a helping hand, said Lewis.
“The bad guys are now using the internet to do what they used to do with a lead pipe and a gun. It’s easier, it’s faster, and they can do it more efficiently … they can steal more because they can do it with the click of a button versus having to go to a truck stop or a truck yard and steal freight. … The problem is the bad guys are playing chess and the good guys are playing checkers.”
Lewis pointed out that tech-savvy crooks can exploit internet load boards, which are used by the trucking industry in North America to match drivers with freight carriers.
Fraudulent misrepresentation, fake insurance certificates, identity theft, fictitious pickups, bogus emails and other digital deceptions can divert containers to warehouses used to offload stolen goods rather than to their intended destinations. That makes a freight fraud far easier than a cumbersome truck hijacking or messy container peak-in, especially when thieves target smaller freight carriers and companies that do not have the personnel and security savvy to catch inconsistencies and other signs of fraud when they are swamped with orders.
“In one weekend, one organized [crime] group had two loads out of Quebec, two out of Ontario and two out of Alberta, all on the same time period, all over the same long weekend, all involving the same fake IDs, fake identity and fake certificates of insurance,” Robertson said. “You had poultry. You had cooking oil. You had metal. You had meat, beef, and you had hot tubs.”
He estimated the total value of the weekend heist to be in the millions of dollars.
Containerized cargo enters North America through major West Coast ports like Los Angeles-Long Beach and Vancouver.
But Lewis pointed out that most cargo theft does not occur in ports; it happens in rail yards in hotspots like East Los Angeles and from freight depots, storage yards, warehouses and from the backs of trucks.
The latter dominates last-mile goods delivery in North American. And cargo theft – good economy or bad – remains a significant concern in this province, said Dave Earle, president and CEO of the BC Trucking Association.
“And that depends, of course, on what you are moving.”
Higher value cargo carries higher threats of theft.
A 2021 cargo theft report produced by global supply chain intelligence providers BSI and TT Club noted that electronics [31.9 per cent] was No. 1 on the list of top commodities stolen in North America.
No. 2 on the list was food and beverages [17.9 per cent], and 40.5 per cent of food and beverage thefts involved cargoes of alcoholic beverages.
But products with less sex appeal such as laundry soap are also desirable targets because they can easily be sold.
“The thieves feed off what the consumers are buying,” said Lewis.
Although supply chain congestion has eased along North America’s West Coast, the pandemic boom in consumer goods flow has left excess inventory in warehouses. A shortage of trucks and truck drivers is also slowing the movement of goods while inflation is driving up the value of those goods.
Lewis added that inflation and the higher cost of capital are factors in higher rates of cargo theft because “when the interest rates go up, the quality of the carriers goes down, because nobody wants to go into market and spend [on] the higher interest rates for a truck. So, they leave the market, which opens the door for someone else that is buying a truck and doesn’t care what the interest rates are, because they’re going to go out and steal and make a heck of a lot more money.”
And that all adds up to increased cargo theft opportunities.
Reducing those opportunities and reducing thieves’ market share will require a wide range of supply chain improvements.
Upgrading shipping security procedures and improving digital cybersecurity education for companies and their employees is one. Other security holes can be filled by applying GPS technology to containers, instituting a system of team drivers so that trucks in transit are never left unattended and improving company vetting of drivers.
Maintaining truck anonymity and efficient cargo movement also reduce cargo theft opportunities.
“There are carriers that specialize in hauling retail electronics, that specialize in liquor and cannabis, [but] you are never going to know who they are. …,” Earle said. “I can tell you that all the booze that moves around B.C., you are never going to know what it is in. Because the best way to keep something secure its to make sure that nobody else knows what you are holding.” He said risk of cargo theft has been reduced “because of the sophistication of the industry, of [cargo] tracking and managing loads.”
Robertson added that the pandemic shutdown gave companies the time to reassess their operations and improve security.
But Lewis said the lack of mandatory reporting of cargo thefts “is the biggest problem we have in the industry.”
Without it, supply chain awareness of crime hotspots, theft trends and top targets will not improve.
Companies are reluctant to report cargo thefts for many reasons. They range from the time, money and complications reporting requires to the embarrassment of being defrauded of goods because of security oversights or inadequate prevention measures. Many shippers also self-insure their cargo, so they do not report losses to insurance companies.
But both Lewis and Robertson said communication and co-ordination of information east-west and north-south in North America is critical to reducing the amount of cargo stolen in Canada and the United States.
Lewis pointed out that CargoNet’s reach into Canada and the cross-border data it can provide to shippers, trucking companies and freight forwarders depends on the quality and quantity of the cargo theft reports it receives.
That data flow from Canada, he said, has dwindled significantly, and that helps cargo thieves.
“So, we would like to get back in up there. One of the biggest problems we see is when a shipment leaves the United States and goes to Canada, it goes into black hole.”
Cargo theft reporting and data collection across Canada, especially in B.C., also needs to improve, Robertson said.
Équité Association is the former investigative services division of the Insurance Bureau of Canada. Since it was launched in 2021, it has been spearheading that data collection and cultivating more interaction with local police operations. But most of that data today is still collected in Ontario and Quebec.
“I think to panch out and start to try and get a lot more research and information as to what’s actually transpiring in the West is important,” Robertson said. “I think that is an area that needs to be to be looked at a lot better.”
He added that communication on both sides of the border is critically important in the fight against cargo thieves.
“Awareness, from everybody from the consumer on down … that's making a difference when it comes to prevention, as opposed to having to react when these things are stolen. They're gonna be stolen, there's no question. But I think the more that we can get involved now in that prevention side and getting the word out is having an impact. No question.”
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