NEWSWATCH

Layers Of Security, New Technologies
Support Cargo Theft Prevention Efforts

California Ranked Highest In Nation For Cargo Theft

By Tiffany L. Rider - Assistant Editor

November 19, 2013 – With so many variables in the way cargo theft may occur, multiple layers of security are clearly necessary. And, with technologies becoming more compact, more powerful and more affordable, businesses at all points of goods movement are investing in GPS tracking devices and other security, to tackle a multi-billion-dollar, industry-wide problem.

An estimated $30 billion in cargo is stolen in the United States each year, according to survey data from logistics security services company FreightWatch International. Meanwhile, the California Highway Patrol’s Cargo Theft Interdiction Program estimates that losses from cargo theft-related crimes impacts the trucking industry, railroads and insurance companies is more than $10 billion.

J.J. Coughlin, vice president of LoJack Supply Chain Integrity (SCI), based in Texas, told the Business Journal that, while no one has really been able to produce a solid quantification of the economic impact of cargo theft, the industry is well aware of the problem.

Cargo Theft Chart A

LoJack SCI, which provides asset and cargo tracking, Web-based monitoring and intelligence services, has been conducting research on supply chain security for six years, producing quarterly reports on cargo theft in the U.S. According to the third quarter report, California had approximately 69 incidents of theft – 46 more incidents than Florida, the state with the second-most cargo theft occurrences. The majority of all incidents occur Friday through Monday, according to the report.

And, while one might guess that electronics are the most likely item sought in these thefts, LoJack SCI reports that food has been the most-stolen item over the past 12 months nationwide. “It’s important to understand what commodities are being targeted, and the risk of operation,” Coughlin explained.

It starts at the point of origin, which is overseas. Various agencies are involved, from federal agencies like the U.S. Customs and Border Protection and Coast Guard, to port security agencies like the Port of Long Beach. Randy Parsons, director of security for the port, told the Business Journal that, while most of the federal agencies focus on counterterrorism, they are also helpful in cargo theft and other criminal activity aboard vessels.

Cargo Theft Chart B

“While they are in transit, there are some things that can be done to keep a watch on the vessels to see if the vessels themselves engage in any suspicious activity while in transit,” Parsons said. “This is when the Port of Long Beach gets involved – when they come through Queens Gate and enter the harbor to go to the berth.”

The port’s layers of security involve patrol officers, closed circuit television surveillance and other technologies to create better situational awareness of what’s happening when containers are being offloaded from their ships. Those containers, Parsons said, either go directly onto a rail car to be taken off the port, out through the Alameda Corridor, or leave the port property by truck.

The specific location of the theft occurrence is not as important as how the theft happens, according to the LoJack SCI report. Opportunities for theft occurs when trucks and trailers are left unattended or are hijacked by an individual or group of thieves on lots, yards and truck stops – the top three locations based on LoJack SCI data.

“About 40 percent of the nation’s cargo comes through Los Angeles and Long Beach [ports],” Parsons said. “We’ve got more containers than anybody else, so it might logically follow that we would have more theft.” Parson said between five million and six million containers come through POLB annually.

Each of the terminals and businesses at the ports of Long Beach and Los Angeles have facility security officers (FSOs) who carry out facility security plans mandated and monitored by the U.S. Coast Guard, Parsons said. The terminals follow what ships are inbound, what cargo they are carrying and how much cargo is being carried to determine how many rail cars or trucks to order.

If the terminals under-order trucks or rail cars, cargo may sit at a yard for a while. Each cargo container has a basic sticker across the seam. FSOs monitor those stickers to ensure they remain intact.

“Every container has a high security seal on it,” Anthony Otto, president of Long Beach Container Terminal, told the Business Journal. “We keep track of the integrity of that seal while it is in our custody.” Cargo containers may also be locked with either a simple lock or more advanced locks that are harder to crack, Parsons said. Once cargo leaves the terminal, it becomes the responsibility of the carrier.

Based on the kind of cargo in the container, its value and the risk of someone wanting those goods, a carrier will decide whether or not to install a tracking device. These devices are typically no larger than a cell phone and are built with a global positioning system (GPS) that may be accessed wirelessly, according to Damien Skipper, m2m (machine to machine) solutions sales manager with Sprint.

Skipper works with Sprint’s partner, Omnilink, to provide customers with asset-tracking devices and software for monitoring cargo in transport. “Cargo theft is a huge issue,” he told the Business Journal. “These asset-tracking solutions are there to help with recovery and can have a positive impact.”

Users may access the GPS device data through a secure Web portal from any mobile device wirelessly. Users are alerted based on specific protocols designed by the carrier. For instance, a carrier may program the device to send an email alert to designated users when a truck deviates from a planned route for more than three minutes.

Tony Williamson, director of corporate compliance for Total Transportation Services, Inc. (TTSI), handles all safety and compliance, claims and accidents for the Rancho Dominguez-based company that serves the ports of Long Beach and Los Angeles. According to Williamson, TTSI trucks are equipped with these GPS devices to be able to locate a truck anywhere in the country.

“Once the driver of that vehicle turns the key on, the unit activates,” he told the Business Journal. “It records when the truck is stationary, when it’s moving, where it’s at and even when the truck is shut down for a certain period of time.” The company also has a similar product for its trailers, installed with a solar panel to power the device.

TTSI first began using asset-tracking around 2008, Williamson said, and started using this technology in April through Qualcomm’s company Omnitracs. “Fortunately, we don’t experience that much theft of the cargo,” he said.

Since TTSI has this technology on its equipment, the company can call law enforcement as soon as a notification has been sent. “The first . . . two hours [are] critical to recovery of cargo and equipment,” Williamson said. “Within the next couple of hours, the truck is in transit to wherever the thieves are going to transfer the load or get rid of the cargo. We can call the authorities to intercept while in route to that destination.”

While the costs for these systems can run between $20 and $30 per month per device plus the cost of the device and set-up fees, Williamson said Qualcomm’s overall cost was $800 to $3,000, depending on the technological needs. Both he and Skipper agreed that having the systems in place is a worthwhile investment.

“We work with these companies to try to show them a financial return on investment in a short time period,” Skipper said. “We mention the obvious ways that you can show savings – asset optimization – but we try to show them other ways they can save to offset the cost for this type of solution.”

“It eases the minds of our customers when they know their freight is being tracked,” Williamson said. “The insurance companies love it too because it minimizes some of the risk of the freight being stolen and raises the risk of it being found. I don’t see how business can survive without it, to have that peace of mind. The assets cost over $100,000, and to be able to recover that with this technology is awesome for the business and awesome for the customer because they may be able to recover their freight and avoid insurance claims. It helps reduce operating costs.”

Even with asset-tracking technology and security agency efforts, there isn’t a magic bullet solution to cargo theft. And, more recently, with more online platforms offering cargo-matching services for shippers and transporters, fraud associated with cargo theft is occurring.

According to Coughlin, it is possible to register as a carrier, get insurance and do everything online without anyone ever working with you in person. “[They] bid on and are assigned loads, and then never deliver,” he said.

The most important action that businesses in the supply chain can take is to enhance security, not by just putting the GPS device on the load, Coughlin said, but by making the protocols for the load that include contract guidelines and freight security requirements.

“Then you can actually evaluate the data from the device to make sure they are doing what your guidelines require,” he said. “We don’t want to get into recovery. Our whole goal is to do these processes and procedures and use technology to prevent having that problem.”