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EBN@C-Level: Travelers Exec Points to Cargo Crime Trends for Electronics OEMs

Theft is a problem in every industry. However, electronics provide an extra lure to would-be criminals so electronics OEMs need to be particularly aware of the trend.  EBN sat down with Scott Cornell, transportation lead and crime and theft specialist at Travelers Insurance to find out about the latest trends and best practices for protecting expensive electronics cargo during the transportation process. 

Scott Cornell, Travelers Insurance

Scott Cornell, Travelers Insurance

Cornell leads the transportation division and helped his company develop a special investigations group in 2005, back when few law enforcement personnel were focused on the topic. Today, Travelers is the only insurance company that maintains its own cargo theft group. Started to address thefts that had already happened, the group now has a strong focus on helping companies make themselves a less attractive target for thieves. Now, the company has ten full-time employees around the country who are experts in the topic.

EBN: How big a problem is electronics theft during shipment? Is it on the rise?

Cornell: Up until 2010, electronics was the number one stolen and targeted item for cargo theft based on industry reported numbers. Although the Uniform Crime Reporting program for cargo theft is not enforced or universally utilized, resulting in inconsistent statistics, we have been able to identify some clear trends. Until 2010, electronics was most stolen because we had a robust economy. People had the luxury of being able to spend money on flat screen TVs, smart phones, gaming consoles, or you name it. Cargo thieves steal what people will buy so then they were out stealing what they would buy: electronics. During the downturn of the economy, people tend to plan a little better and prioritize spending differently, and not spend money on luxury items as much. 

In 2010, we saw food and beverage take over that top spot. In some years, electronics slipped down into number three spot but mostly it remained number two.  Although the initial shift took place for economic reasons, the bad guys also learned a lot. Food and beverage are less traceable and, since they are consumable, the stolen goods disappear. That helped keep electronics in the number two spot. Further, with electronics that are activated or used on the internet, you have back door tracking capability. We know over the years of gathering intelligence in the field that that was some of the things bad guys were taking into consideration, trackability and traceability. Lately, we’ve seen a resurgence of electronics theft. 

Source: Freightwatch International

Source: Freightwatch International

Source: Freightwatch International

Source: Freightwatch International

At the same time, we teach our clients how to avoid cargo theft. There’s an increased availability of technology or hard locking security devices to help prevent theft. You need a layered approach. Good process and procedures need to be in place. Everything else is enhanced by that.

In addition to locks, there is also technology used for  covert tracking devices. The cost has gone down tremendously on these devices over the years. In the past, we didn’t have anything reasonable to use, since solutions cost thousands of dollars per unit. Now, prices are closer to $175 to $300 per unit.

Another area of opportunity we see is better communication between OEMs, shippers and the parties they hire regarding best practices and policies, as well as security devices and technology. Customers need to put those requirements in the contract.

EBN: How aware are people about this problem?

Cornell: In the electronics industry as a whole, there is a good awareness of it. I am a board member of Transport Asset Protection Association (TAPA) and I sit on that board with electronics people. I would tell you that the electronics industry as a whole has a good awareness of the theft threat and acutely aware of any losses they’ve had. But they are in early stages of the adoption curve. There are some computer manufactures that have been doing it for years. On an industry wide basis, however, there is room to grow. Awareness is always the first step with any crime. Once you have the awareness, then you can look at how to correct it. 

EBN: Ultimately, what is the impact of cargo theft?

Cornell: According to FreightWatch, the average value of a stolen load of cargo is $120,000, but the average value of an electronics load is $232,000, so there is a significant delta. If you look at it on a microeconomic scale, you will definitely see that anything that has that kind of financial impact is reaching the consumer. That’s where the average person’s awareness around cargo theft is not there. I’ve been doing it for 17 years, and when an average person asks me about what I do, they have never heard it.

Defining the cost of cargo theft has been a big topic of discussion for years. Is it just the value of the load, or is it the value of the load, cost to remanufacturer those products, and the costs the manufacturer suffers from loss of marketspace from not having those items on the shelf at the holidays? In my opinion – and in most experts’ opinions – these should all be added into impact of cargo theft.

EBN:  What are some common cargo theft scenarios?

Cornell: In the U.S., less than 3% of cargo theft involves violence. It is the complete opposite in other parts of the world, such as South America, Central America and Europe, where violence is a daily occurrence. There’s an old adage that cargo at rest is cargo at risk.  In the US, the amount of freight is huge so at any moment there’s a lot sitting still at rest stops and truck stops. Just in time (JIT) freight requirements have also had some impact on cargo thefts. Because of the requirements, you are pre-loaded. If it has to be there Monday mornings, they might be loaded on Thursday and Friday. They may not need to leave until Sunday, so it is parked and waiting, making it easy for cargo thieves to take without having any interactions with drivers.

There are two categories of cargo theft. First is straight cargo theft where they physically go out and steal the tractor and trailer, or just the trailer. They find it sitting somewhere and they physically go out and steal it. Then there’s strategic cargo theft, where thieves create fictitious pickups or ghost pickups. They trick you into giving them the cargo, without having to hunt it down. Together, these categories make up 85% to 90% of thefts. 

In straight cargo theft, there are methods we see related to electronics goods. Years ago, we had an idea that if a truck says “Crazy Eddie’s Electronics” that it will be targeted. Later, we found out that thieves actually don’t like labelled cargo trailers, because those are easier for law enforcement to spot than a plain white trailer. Instead, thieves will do surveillance on electronics warehouses and distribution centers to see who pulls in and out. They write lists of companies, times of loads and pickups, and then they start to target certain trucking companies in certain areas because they know that they do business with an electronics company.

They will also follow the drivers out of those locations and wait for them to make stop or park it for the weekend.  Most cargo theft is done by organized groups. They might get one member of the group hired as warehouse worker who can then give them information. For strategic theft, thieves go on load boards and bid on loads and pose as legitimate company, and make the goods disappear.  Sometimes they pose as the contracted transportation company with falsified paperwork and show up early to get the load. When the real company shows up, the load is gone. It’s like a game of whack-a-mole. We put something in place to address a problem and then they come up with a different scheme.  

We see ebb and flow on strategic and direct theft. This year, there’s been an increase in straight thefts and a drop in strategic. Before, strategic was on such a steep increase that it was the fastest growing method although not the most common. Over past several years, there’s been a big effort to target organized rings doing strategic cargo theft with a lot of high profile arrests. So now they are going back to direct cargo theft to avoid law enforcement.

EBN: What can OEMs do to manage the problem?

Cornell: Since thieves do surveillance on warehouses, OEMs need to teach drivers to observe a red zone. They should arrive for pickup fully fueled and having taken breaks so that it is easy to drive a minimum of 250-300 miles. There’s a certain average amount of mileage that thieves will follow a truck so you need to try to slant the odds in your favor. Nothing is 100%, but you have to make yourself the more difficult choice.

Also, avoid parking the truck on the side of the road or in a plaza or unwatched area. Don’t take the tractor off the trailer. Use air cuff locks so air brakes are engaged to prevent them from moving the tractor and trailer. Use landing gear locks even if the tractor is married to the trailer. Combine that with a rear security door lock, so thieves can’t get in and shop the trailer. You can also get into covert tracking, put sensors in the trailer or in the cargo itself since that’s what you are trying to recover. Cargo will be worth a lot more than the trailers.  Then geofence it to draw an invisible boundary and tell the tracking device it shouldn’t move outside the circle and, if it does, you get instant alert.

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