By Erik Hoffer

Remarkably, the need to protect and secure unattended transported cargo, seems to be a debatable concept? Documented losses through damage far exceed those from theft. In fact losses in some industries and from certain products through counterfeiting, diversion and all forms of fraud, also seem to exceed those quantifiable losses from supply chain theft. So where should business rank theft, and a secure supply chain, in terms of a budgeted priority and corporate strategic focus against other known threats? Is it worth caring about this problem at all? Who is financially responsible for remedy and then who is responsible for the loss? Is it smart to seek remedy proactively or do you wait to become a victim before taking action? Does the same entity pay when goods are stolen as when goods are damaged? What role does the shipper have vs. the carrier in reducing or assuming risk? All of these questions elicit a variety of unrelated answers depending on who is being asked and what products they transport or ship. This array of answers defines the dilemma of where does cargo security fall in corporate strategic planning from a shipper or carrier prospective? Cargo losses can fall into a two main categories, those recoverable and those not. Losses through cargo theft can collaterally and exponentially escalate the actual cost of loss to many times that of the initial cargo itself through supply chain chaos and the consequential disruption of normal business caused by the initial event. Some cargo losses however are simply written off, based on the value of goods in question. Financial remedies such as insurance and litigation, in some cases, are ineffective in making a victim whole yet through leverage and carrier intimidation, some of these ‘unrecoverable’ claims miraculously get settled. The Carmack amendment defines limits of liability to carriers and allocates cents on the pound for freight regardless of the commodity, its actual loss value or the collateral effects of the loss. Based on this theory, carriers can reduce their insurance coverage to bare minimums. From their prospective why invest in security when the financial remedy to a loss to them is $.10 per pound? Simple employee infidelity on the part of anyone in the supply chain can negate an insurance claim completely, hence appropriate remedy to conditions of loss need to be established by the shipper and implemented throughout the supply chain. Because of the legal limits of liability, carriers are typically desensitized about theft losses and fail to implement remedy unless it is tangibly beneficial to their operational efficiency and collaterally helpful to their clients. The rule of thumb is that shippers need to protect their interests against any condition of loss (including theft) independent from any perception of external remedy by carriers, 3PL’s or their agents and certainly not from law enforcement. Law enforcement was once intimately involved with cargo theft as a means to control the illicit transfer of stolen goods. Recovery in some cases means more problems to some shippers than the loss itself. Ingestibles need to be destroyed if recovered by law. The cost of destruction is then born by the shipper compounding their loss even more. Today, most federal funds once earmarked for cargo security have been redirected to address National security issues although cargo poises one of the greatest threats possible to our economy. Supply chain disruption, through an act of cargo terrorism, will bring the economy of the free world to its’ knees. The relationship between cargo theft and cargo terrorism is exactly tangent, where you find one you will always have the propensity to find the other. Cargo theft therefore is clearly a fallout component in addressing National security but it has somehow been left out of this equation? In today’s economic climate, where a JIT (Just In Time) supply chain is the norm, losses of any kind radically disrupt a companies business logistic continuity. The severity of these conditions are typically based on the nature of your product. Many types of loss are more oriented toward consumer perception than short term economic fallout. For example the potential contamination of a food or an ethical drug can cause massive recalls and loss of consumer confidence which then exponentially exceeds the original value of the stolen goods. It is funny however that you rarely, if ever, hear of these conditions, yet there are easily $10+ Billion in cargo stolen annually moving through the domestic commercial supply chain, whether owned by the original shipper or not. Theft losses are typically suppressed from the public by businesses for obvious reasons. No one wants to air their dirty laundry and concede that their product is out of their care and control. Stolen freight presents a dilemma to both the owner and consumer of these goods because if it were known that certain goods in certain venues were stolen or potentially tampered with, sales would evaporate quickly and their stock values would soon follow. Vulnerability to theft, product contamination and now economic terrorism is not related to the value of goods. It is equally as necessary to protect a truck load of chewing gum as a truck load of pharmaceuticals or a tanker loaded with gasoline vs. a trailer of cameras. Millions of people could easily be exposed to tainted gum or aspirin and that tanker parked on a bridge can function as a weapon of mass effective shutting down a city for days. Chemicals, foods, fragrances, electronics, cigarettes and computer chips may be the most theoretically vulnerable items, but in reality an items’ vulnerability to the threat of theft, is a direct correlation to the speed with which the product can be fenced or absorbed into economic obscurity. The value of some products and vehicles as terrorist tools spans everything from fire engines and garbage trucks to gasses and pesticides. Soap powder, diapers and toilet paper can be as vulnerable to theft as computer chips in certain areas. Meat, seafood and cigarettes can be targets for theft while a container of lawn chairs can be a conduit for the introduction of a weapon into our country. Nothing in a container, rail car, air freight shipment or trailer is immune to any condition of loss or worse. The less scrutiny the unit receives the higher the probability of a problem; yet in industry the lower the value of the item, the less attention is paid to protecting it. Complacency seems to foster ambivalence at the board room level hence remedy to this form of loss becomes an economic obstacle rather than a mandate. The filtering process business management uses in selecting “cargo security” as a budgeted platform has been obscured because data brought up the corporate ladder is tainted. Decisions on how to couch theft loss data are administered by those unaware and not responsible for the threat or consequence and often protective of any facts that bode poorly against their own corporate function. The fear of domestic terrorism through the use of cargo containers, tankers and trucks is just making its way into the public eye, although that 911 reality has been with us for years. The change in our domestic business culture from a pure security department to a multi tiered venture between logisticians, HR, risk managers and purchasing has moved remedy from prudent functional choices made by experts to economic based decisions by disinterested third parties. In many cases, purchasing decides what is bought to reduce risk vs. what is actually needed. Remedy to conditions of loss has changed in recent years to this knee-jerk approach after an event, rather than a more proactively planned security approach to supply chain issues. This attitude is pervasive in the truck, air and rail industries and with many shippers, although they are all equally linked to the fallout from a theft or terrorism related supply chain loss. Issues involving the vulnerability of intermodal freight have also been consistently ignored because of the lack of specificity to viable remedy outlined by our government officials. C-TPAT (Custom Trade Partnership Against Terrorism) is a tremendous preventative theory with no current viable benefit and no specific mandate for compliance. The promise of the carrot and the absence of a stick has made what was a credible program into a sham. With thousands of signators, all trying their best to do what is needed to protect our borders, DHS et al, in their collective wisdom, have failed to take any decisive action and, like many programs before them, fallen apart and been mired in bureaucracy. This nebulous logistic security plan has left many shippers and transportation companies with little to show for their compliance costs and no tangible results. Many remain using little or no viable protection technology for their sea cargo awaiting Big Brother to show them the way. Born and developed with the Countries best interests at heart CBP (Customs and Border Protection), TSA (Transportation Security Administration) and DHS (Department of Homeland Security) have all been radically remiss in allowing such a well intentioned program to be left out to dry with nothing behind it but words. Technology is available to secure cargo throughout any supply chain both from container losses and the introduction of contraband into cargo. Simple physical barrier technology such as container locking bars needs to be set as a minimum standard of care to control access to containerized cargo the world over. Appropriate security choices need to consider the level of potential loss, degree of risk and severity of the threat against the reasonableness of cost vs. benefit of the technology. Penny wise and pound foolish is usually the rule of thumb. What can business get away with to perceptively meet compliance vs. what they really need to do to secure their supply chain usually comes down to cost. In cases where no particular remedy is prescribed or known, industry best practices should be sought. Hardening the target to avoid theft is the best and most effective approach. Conditions of theft and terrorism CANNOT be stopped by seals, electronics, intelligence protocols, armed guards or even superman because a determined predator will always somehow win. He typically has the time, the skill and the expertise to wear you down and get what he wants. Remember you have to be perfect and he has to be just lucky. Creating a situation that dissuades him, moves him elsewhere but rarely mitigates the condition. Countermeasures reduce your risk. There are associations such as TAPA (Technology Asset Protection Association) and the ICSC (International Cargo Security Council) that have specific expertise in choosing the appropriate physical protection technology for you, your supply chain and your product. Many lazy shippers have looked to ISO standards such as 17712 to choose a protection technique because, like CBP, they choose to use a standard of care without regard to its viability of effectiveness. When choosing a seal, a shipping or inspection protocol, or a best practice to secure your product, vehicle, pallet, or supply chain, the best choices specifically address the threat head on, and not the particular physical attributes of the seal. A simple threat matrix will identify the severity and components of your threat such that you can make an informed choice of a seal or technique. ISO, for instance, recommends a bolt to secure a container, when everyone knows a bolt can be bypassed surreptitiously in seconds on any swing door trailer or container. By their very nature as a testing and not security organization, with no tie in or responsibility for any condition of loss, their product based recommendations have no real bearing on loss control but merely on the physical attributes of the seal type. Blindly following a program puts you at risk. This does not mean the bolt is not a viable physical seal, but it does mean that a bolt cannot effectively secure a trailer or container against a thief or a terrorist. You have to decide if this fits your plan or not. Hard wired electronics in the form of seals and entry detectors have been proposed to secure containers and domestic trailers, but in reality they cannot be effectively deployed or monitored. Domestic portable electronic truck and cargo tracking has come a long way and is ideal in many cases for certain cargo under certain conditions. The speed with which an effective response to a breach can be addressed is still questionable. Certain devices will help to possibly recover the cargo but not much else. Electronics used in a sea and salt environment is not viable, nor practical. Although there are situations where specialized military technology has been used effectively to secure sea cargo, the practical nature of this technology in the world supply chain is remote. RF Signals emitted through or on metals are attenuated and therefore not effectively read or able to be monitored. Deployment in a dynamic sense, world wide, is unlikely due to cost. (Just imagine how long and at what cost retrofitting millions of containers would take!) What would happen in the interim 10 years to cargo shipping? Who has used a secure container and who is not? Monitoring of these devices by handlers and ports is impractical due to the myriad of infrastructure requirements needed throughout the world. No one has chosen a recommended frequency much less a viable product. Recovery of the device, ownership and legal responsibility has yet to be worked out and of course there is always the battery going dead to contend with! Even the ethics associated with electronically monitored cargo has been brought into question. Who is the caretaker of the data and is the network secure to outsiders? Cargo theft as a quantifiable dollar amount is dwarfed against the issues of economic terrorism. Each of us needs to spend a few minutes thinking of what would happen if we had a massive seaport or airport closure due to another 911 tragedy resulting from tainted cargo. The costs of loss to all of us and our National economy would be massive, yet not many companies have adopted appropriate security countermeasures to protect us much less themselves. This ambivalence seems to be more denial based than truly a lack of caring or insensitivity to a potential catastrophe, yet inaction seems to be the rule. It is my perception that we as a country are slow learners and that without governmental intervention with specificity regarding cargo security processes and technology, that the domestic supply chain will remain fogged in, loss prone and remedy challenged.