More than 675,000 registered interstate motor carriers move 65 percent of the freight in the United States today. The opportunity for theft is at an all-time high. Experts agree the trend lines are going up, but concede that solid figures are difficult to pin down.

For example, the $25 billion cited by the National Cargo Security Council is a middle-ground estimate. Other industry experts estimate that the value of stolen cargo is closer to $50 billion because of under-reporting and fragmented statistical tracking. A federal law passed in 2006 requires the FBI to track cargo theft as a separate crime. Unique data captured in the last several years illustrate details:

In 2008, thefts of full truckloads across the country increased 13 percent from the prior year, according to FreightWatch International.

• During the first 10 months of 2008, Florida alone reported 221 cargo thefts valued at $37.4 million. That compared to about 180 thefts and $22 million for the same period during 2007.
• High-valued cargo loads skew the average data numbers. FreightWatch International cites pharmaceutical thefts as an example. Loads of this product only accounted for seven percent of the cargo loads stolen in 2008. However, since their average loads are valued at $1.5 million, it led the list for value of goods stolen last year. This ultimately skewed the overall average.
• The FBI estimates that the value of freight on a truck ranges anywhere from $12,000 to $3 million, which gives thieves incentive to move to this area of crime, as it can be a potentially large payoff for only one theft.
• A statistical examination of all documented cargo thefts from January, 2005 through June, 2008 found that consumer electronics, food, and clothing are the three most-often stolen goods.
• The same report found that more than half of thefts occur on a Friday, Saturday, or Sunday. Truck stops and rest areas are the site of 39 percent of thefts, followed by modal yards (also known as ship-to-truck or rail-to-truck yards) at 27 percent, with unsecured areas such as motel and restaurant parking lots at 25 percent.

Experts agree that cargo theft is generally viewed by thieves as a low-risk/high-reward crime. With inadequate security procedures and the potential for large profits, cargo theft is an enticing opportunity for thieves. The goal for claim professionals and risk managers is to change the equation so that cargo is a less-tempting target.

“If you can package it, crate it, and ship it, there is likely a criminal enterprise that wants to steal it.” That perspective is offered by the FBI in an article posted on its Web site describing cargo theft as the number one priority for its Major Theft Unit.

The FBI notes that, increasingly, thieves are not opportunists making off with one television set from the back of a truck. Instead, there are sophisticated operators with well-organized hierarchies who set their sights on whole truckloads of goods. Their organization includes specialists who get around anti-theft locks and fences and can move stolen goods quickly on the black market.

In addition, these cargo theft rings are adept at creating temptation for others. Truck drivers, unscrupulous shippers and brokers, and warehouse personnel are occasionally involved in heists. Complicit involvement can range from providing specific load information to thieves to intentionally not following the appropriate level of security procedures, such as not locking the trailer at a drop lot.

What Risk Managers Can Do

Risk managers of companies involved in shipping goods should establish programs that help make trucks and their cargo considerably less vulnerable to theft. Insurance risk control experts can help companies set up best-practice procedures, including:

Employee Screening. Screen all warehouse employees, drivers, and other employees who will be handling cargo. Conduct criminal background evaluations, check all references from previous employers, and review motor vehicle driving records.

Cargo Security Program. It is important to train all drivers to be alert and aware of security concerns and measures. This includes educating drivers on properly securing their tractors and trailers while en route to their destinations, locking all equipment while parked, and not leaving tractors and trailers unattended in unsecured locations such as truck stops, unauthorized trailer drop lots, rest areas, shopping center parking lots, or the driver's personal residence. They should also be trained to maintain regular communication with dispatchers, avoid stopping in unpopulated or dark areas, and using reputable rest stops whenever possible.

Supervising Loading and Unloading. Drivers should be required to supervise the unloading and loading process. It is the driver's responsibility to verify that the condition of the cargo is satisfactory and the quantity of the freight is correct. Drivers are responsible for ensuring that the cargo is loaded properly to prevent damage during transit. Although some companies will not allow drivers to be on the loading dock, drivers should require shipping personnel to sign the bill of lading to verify that the load is correct. If the driver is involved in a drop-and-hook operation, then a trailer-seal program should be implemented to provide evidence of break-in after the driver has left the cargo.

Seals and Locks. Trailer seals provide some protection against cargo thefts. Shippers should provide trailer seals and note the seal number on the bill of lading. Locks need to be sufficiently tested and should be a product that the insurance carrier offers as a recommendation.

Assisted Global Positioning Systems (A-GPS). Using A-GPS technology, companies can track loads through the entire process, from the time the doors close, through all stops and temporary holdovers, all the way to the final destination. Some companies that transport high-value commodities are even placing small, self-contained A-GPS systems inside individual crates. In one recent Florida case, a truck driver reported his load as stolen after he disabled a tracking device. What he did not know was that a second hidden device showed that his movements did not match his tale of thievery.

The Role of Claim Professionals

To combat the problem of cargo theft, assist law enforcement organizations, and help keep retail costs down for the public, several insurers are building internal organizations of experts trained to specifically handle truck cargo issues. An insurer who has underwriters, risk control consultants, investigators, and claim personnel acting jointly as a team that is focused on the transportation industry will be well-positioned to make a difference for businesses that need to protect their cargo.

On the front-end, an experienced logistics team is best organized to support an investigation of a theft, when time is of the essence in attempts to recover cargo. They have access to documentation such as police reports, bills of lading, driver manifests, and weigh-station receipts. Gathering this information gives them the ability to “see” the crime scenario, helping to minimize the number of hand-offs between parts of the team. This timely sharing of information — not simply details about the specific loss but also about area trends — allows more opportunity for a successful recovery.

On the back-end, an experienced logistics team has the opportunity to impact the overall direction of how new accounts are underwritten and how existing accounts that have a logistics component are assessed. When they combine data provided by law enforcement with information provided by those who file claims for stolen cargo, trained claim adjusters have the ability to create underwriting maps that show causes of loss by region, regional claim trends, and local law enforcement resources. In providing this information to experienced underwriters and risk management experts, claim agents are helping their companies make well-informed, data-driven business decisions.

In addition to providing risk control insight and claim-handling expertise, some insurers are going the extra mile by offering additional services to companies targeted by cargo thieves. For example, the Travelers Inland Specialty Investigations Group employs investigators with law enforcement backgrounds who are experts in cargo theft investigation and prevention. Their industry expertise and strong networking relationships enhance recovery efforts. These professionals also meet with customers to review security and management practices, offering recommendations on the latest products and technology used in theft prevention.

Working Together

Reducing cargo theft is imperative at a time when businesses are already under severe pressure and consumers can ill afford the added costs that ripple through the economy when goods are stolen.

By working together, businesses and their insurers can create conditions that make such crimes much less attractive to thieves. Risk managers can help their companies by initiating effective controls with help from resources their insurers provide. Claim professionals can use their knowledge and skills to speed recovery efforts, identify critical trends, and serve as a vital connection between businesses and insurers.

Tim Tuller is the second vice president of inland marine claim lead for Travelers. He can be reached at 860-277-9089, [email protected].