A single fragment of cargo crime reflects just how big supply-chain issues are becoming for retailers.
The battle with cargo thieves is as long as human history. The theft of yesteryear involved pirates attacking merchant routes—and it’s no different now. Trucks have simply replaced wooden ships and horse-drawn stagecoaches. International crime syndicates are today’s marauders.
Indeed, if you contemplate everything that shipments of retail goods go through—the threats they must avoid, the obstacles to overcome, the roadblocks to navigate—it can seem downright miraculous that packages ever get to where they’re supposed to go. Risk is a cargo shipment’s constant companion, whether it’s sailing on seas, flying in the sky, or traversing the roads and rails.
Previously, we peeked behind the curtain of supply-chain risk management, taking an overview of the myriad activities related to sourcing, procurement, conversion, and logistics—and the risks inherent in all of them. Here, we undertake a similar look-see into one extremely small segment of supply-chain risk: cargo crimes against domestic ground shipments while in transit.
Cargo relates to shipments via rail cars, planes, or trucks from the point of origin to final destination. If any merchandise is stolen in between—at a storage facility, terminal, warehouse, wharf, truck stop, or highway—then it is called cargo theft. Theft related to cargo during ground transport is perhaps the risk we’re all most familiar with, and yet—as with the supply chain more broadly—the closer you look at the risks, the more complicated security seems to be.
Data provides useful intelligence, certainly. By demonstrating that most cargo theft occurs on weekends, for example, extra precautions can be taken during that time frame.
But the risk picture is also a little murky. A complete and accurate understanding of cargo crime is hamstrung by limited reporting by the transport industry, fuzziness over exactly who is the “victim” when shipments are stolen, and by the absence of law enforcement systems to ensure consistency in reporting and tracking. While we know a lot about cargo crime—the when, where, and how—there is much we don’t know, especially exactly how often it occurs and how much value is lost because of it.
Cargo crime mirrors the broader supply-chain network in another way. Just as the supply chain is growing ever more intricate and fragmented, the tentacles of cargo crime continue to spread. A retailer’s risk today, for example, more frequently extends beyond the 53-foot trailer, and is now reaching all the way to the doorsteps of customers.
An Evolving Problem
The danger starts as soon as a load of cargo is loaded on a truck. It’s at risk from curtain slashing, pilferage, hijacking, vehicle theft, theft of full or partial truckloads, and last-mile courier problems. It’s even at risk during loading, in the guise of deceptive pick-up. Cargo endures additional risk because carriers often sub-contract with multiple other transportation providers, and it’s multiplied because shipments aren’t typically able to be received 24/7. Economic losses include those related to insurance, re-order costs, administrative costs, claims, and most noticeably, top-line sales.
While the universe of risk to ground cargo is expansive, the locations of crimes are rather narrow. The bulk occurs within relatively few geographic areas—typically near big ports and in states that are a logistic hub. Data show a vast majority of cargo thefts occur in a handful of states: California, Texas, New Jersey, Florida, Georgia, and Illinois. Most theft of cargo takes place within the first 250 miles from the point of origin or destination, and two-thirds of it has traditionally occurred on weekends.
The risk of theft is changing, however, along with the evolution of cargo delivery. Less-than-full truckload theft now comprises a larger slice of the theft pie. Trucking is becoming more regional as omni-channel matures the value of more numerous, smaller distribution centers that can get products into customer’s hands more quickly. Shorter transportation runs are taking up a greater share of the time that cargo is on the road and midweek thefts are creeping up. It’s one reason why a truck driver with a full belly and a full tank of gas are often a cargo load’s best fried.
Have a Winning Strategy
Distance and route planning are only parts of the equation when assessing the risk to cargo in transit. The type of shipment, including its value and exposure (such as whether it’s to be transported on an open flatbed truck) should directly impact carrier selection. Do you need a basic carrier with decent insurance and safety programs? Something more? Will the carrier be using sub-contractors? Just how many layers are in the transportation network?
Carrier selection is a key component of minimizing risk in ground transportation, which includes asking the right questions, and critiquing training programs and hiring standards of transportation partners. Properly assessing vulnerabilities requires identifying not only direct risks but risks to other entities, as well as those caused by the transportation linkages between them.
Contracts, too, require review from an LP perspective. Executives can help their companies ensure that carriers don’t just have the right insurance coverage but also the right security protocols; that they aren’t just available and cheaper, but are also appropriately risk adverse.
Of course, domestic ground cargo isn’t only vulnerable in trucks. There are bridges, including a handful in dominant rail spur areas, that are famous for providing easy access to rail shipments. Seals do often provide some level of deterrence at this point, but the volume of shortages in rail shipments is still both massive and frequently uncounted.
Ultimately, however, the impact of last-mile issues might dwarf those from security disruptions in trailer and rail shipments. When customer packages are late or stolen, companies can suffer losses and lose customers. Additionally, the potential for loss due to fraudulent claims of non-delivery can have a material impact on a retailer’s business. Today, competition more frequently takes place at the level of distribution—rather than at the level of production—and the winners will be companies that can satisfy the demands of legitimate customers without allowing fraudulent ones to eat away the benefits.
Today’s supply chain networks are growing in structural complexity. It’s making transport and logistics operations more vulnerable to many types of risks, including that of theft in ground transportation. The solutions are, naturally, as varied as the modes of transportation themselves, but they are often best derived in pursuit of common goals: collaboration and visibility.
In order to keep better control cargo shipments, companies have started to implement more layered and collaborative strategies across their networks. Shared visibility allows for appropriate mitigation by all parties, measures that can curb theft risk across transportation networks to the benefit of all stakeholders. From enhancing safety and security for those knights of the highway who crisscross the country on our behalf, to helping retail transportation and logistics teams sleep at night—with at least one eye closed.