The most significant trend highlighted by the Annual Cargo Theft report for 2020 is the relative shift in the location of thefts, with in-transit incidents and those involving vehicles showing a decline at 71 per cent compared to 87 per cent in 2019, though remaining the most dominant threat, and theft from storage facilities increasing to 25 per cent. The extent of the rise in the latter was variable from region to region, however this trend was reflective of the disruption to supply chains brought about by radical changes to consumer buying patterns as a consequence of the pandemic.
Podcast describing a project wherein a CSA client shipped sensitive, high value IT equipment to, and within, the People’s Republic China. The client was justifiably concerned that its IP, confidential information and trade secrets would be compromised. CSA developed a protocol to ensure the shipment arrived safely across a long, treacherous and uncertain chain of custody.
Elliot Brazil, host of the “Are You Shipping Me” podcast is joined by Walt Beadling, Matt Brazil, and Erik Hoffer. Walt is Managing Partner at both the Cargo Security Alliance and Cayuga Partners. Matt is a Research Fellow at the Jamestown Foundation. He recently published Chinese Communist Espionage: An Intelligence Primer with co-author Peter Mattis. Prior to the Jamestown Foundation Matt was involved in cargo theft investigations and intellectual property security in the corporate world. Erik Hoffer is a Cargo Security Alliance partner and President of CGM Security Solutions Inc. and Rig Secure, Inc., manufacturers of security products and technology designed to mitigate and prevent cargo theft incidents.
HDA Adds Pharmaceutical Cargo Security Coalition
PCSC founder Chuck Forsaith will continue to lead coalition and provide information aimed at ensuring the safety and integrity of the supply chain.
By Jim Butschli, Editor
The Healthcare Distribution Alliance (HDA) added the Pharmaceutical Cargo Security Coalition (PCSC) to its organization. This new service offering will go into full effect Jan. 1, 2018. PCSC’s founder, Chuck Forsaith, will continue to lead the coalition as Senior Director with HDA.
“Promoting pharmaceutical supply chain security is a shared mission of HDA and PCSC. We are thrilled to be bringing on Chuck,” says Perry Fri, Executive Vice President, Industry Relations, Membership and Education, HDA. “Chuck’s expertise, and the resources offered through PCSC, will give our members access to information vital to ensure the continued safety and integrity of the supply chain. We are pleased to welcome Chuck and the current members of PCSC to HDA.”
Founded in 2006, PCSC provides a forum for industry security and logistics professionals to exchange supply chain risk intelligence; network with peers, law enforcement and regulatory officials at all levels of government; and receive information that advances risk management and mitigation capabilities of all stakeholders. PCSC membership is now available to all HDA members.
“I am thrilled that I have been offered an opportunity to operate the PCSC on a full-time basis within HDA — one of the industry’s leading advocates for supply chain security,” says Forsaith. “This partnership will bring immense value to the HDA membership, coalition members and the industry.”
Forsaith has 40 years of experience in the security and law enforcement fields that includes work within the pharmaceutical industry and as a New Hampshire municipal and state police officer.
HDA represents primary pharmaceutical distributors, the link between the nation’s pharmaceutical manufacturers and more than 200,000 pharmacies, hospitals, long-term care facilities, clinics and others nationwide. The HDA Research Foundation, HDA’s non-profit charitable foundation, serves the healthcare industry by providing research and education focused on priority healthcare supply chain issues.
HDA’s PCSC offers supply chain security intelligence; access to contacts from industry, government, and vendor trade disciplines; as well as education. Primarily (but not exclusively) focused on the pharmaceutical industry.
HDA Adds Pharmaceutical Cargo Security Coalition
The Threat Environment
Logistics by all modalities is vulnerable to surreptitious theft. Without a proactive, deterrent and visually verifiable approach to protecting valuable cargo, shippers run the risk of substantial, on-going loss. It’s typically caused by the opportunistic theft of palletized cargo in such a manner that immediate detection is unlikely.
Pharmaceuticals, electronics equipment, luxury goods and other high value items packaged in cartons or small boxes are most susceptible to this form of theft. Thieves use box cutters and utility knives to quickly “slash and grab” a few items from boxed, often stretch-wrapped, palletized freight.
Carriers are responsible for theft that’s discovered prior to acceptance. Failure to note a breach when signing off on the BOL relieves the carrier from any and all responsibility, so a process that immediately exposes tampering and theft is essential.
Losses can add up rapidly. Considering recovery, replacement and customer goodwill, freight lost to cargo theft can cost shippers more than triple its retail price. Recovery of damages from insurance is rare.
Palletized cargo is most often attacked from the sides or underneath, circumventing the wrapping and strapping that holds the cargo together. From the bottom, center boards are broken or cut off. Boxes just above the bottom slats are dropped through and replaced with weighted cartons to maintain the integrity of the cargo. This renders inspection by weight checking useless; the breached pallet weighs the same as it did when fully loaded.
Another method of stealing goods from pallets is to cut or shift the stretch wrap and remove the shipping carton and product from the outside without cutting the strapping, again replacing it with sand or like-weighted materials to reform the pallet. Once that’s done the perpetrator simply adjusts the stretch wrap to hide the entry point.
Compounding the challenge posed by these crimes of opportunity is the fact that palletized cargo comes in an infinite variety of shapes, types and sizes, and is vulnerable to a wide range of threats. Therefore a customized approach is needed; there’s no “one-size-fits-all” solution.
The Cargo Security Alliance solution: Pallet Security Kits
CSA works with its members to understand the threat environment and their unique cargo and shipping requirements to design a protocol that mitigates the risk of opportunistic theft.
The best way to protect palletized cargo is to establish a security protocol that considers and incorporates the packaging materials as an integral component of the process. Rigorous visual inspection combined with tamper-evident and resistant packaging and a procedure to establish and maintain the chain of custody are keys to creating a secure environment for goods in transit to reduce loss – without breaking the bank in costs.
Weight adds to shipping cost so it’s a major consideration in designing the solution, especially in air cargo applications; an effective protective barrier that adds as few pounds as possible is obviously desirable.
CSA offers expertise and a variety of lightweight, theft-deterrent packaging materials and tools to secure and track palletized cargo, crates and containers while adding a only a small fraction to shipping costs. Components of CSA’s Pallet Security Kit may include:
- Lightweight sheathing materials that are impervious to knives and box cutters
- Tamper-evident tape (TET), bags and seals
- The Topp Clip® pallet sealing system
- Covert GPS tracking devices and services to report location, motion and container openings to inform the status of cargo at all times, anywhere across the globe
- A customized packing and tracking protocol to establish and maintain a secure chain of custody, from end-to-end
Successful applications of CSA’s Pallet Security Kit include ensuring that a shipment of security-sensitive servers was not compromised during a datacenter move from the USA to China and deterring opportunistic “slash and grab” thefts of palletized cell phones destined for South America.
From seals to tapes, from cut-proof components to tamper-evident packaging and tracking devices, CSA has a customizable solution to secure your palletized cargo from a wide range of threats. For a free consultation contact us by e-mail at firstname.lastname@example.org or call us at: (941) 575-0243.
This volume presents new theoretical insights, practical strategies, and policy initiatives in the rapidly evolving field of global supply chain security. As businesses, governments, and society at large have become increasingly dependent on a global network to provide goods and services, protecting global supply chains has become an issue of vital importance for industries, nations, and regions. The “supply chain” encompasses all the links connecting a manufacturer to end users of its products. Links may take the form of plants, supplier warehouses, vendor facilities, ports or hubs, retail warehouses or facilities, and outbound shipping centers. Links also involve all the ways goods are moved—by truck, ship, airplane, or rail car.
A great deal can go wrong in the supply chain due to company or systemic mismanagement and inefficiency, criminal activity, employee or technology errors, or terrorism, to name just a few of the threats. Then there are government regulation, industry or association oversight, and security agencies (both public and private) keeping track. Globalization, stricter security regimes, and increasingly sophisticated criminal activity have made cross-border cargo movements more complex, putting the integrity of end-to-end supply chains at much greater risk. This is why the security of the supply chain has become such an important issue for business people: there is too much at stake to let problems proliferate or stagnate. It has been estimated, for example, that thieves now steal $50 billion in goods each year from various points along the supply chain.
Synthesizing the most current research, practical application, and policy, Global Supply Chain Security covers a range of emerging topics—from risk assessment to technology deployment to continuity planning—and will serve as a useful resource for anyone concerned with supply chain security issues, including scholars, students, business executives and policymakers.
Mitchell D. Silber and Arvin Bhatt, Senior Intelligence Analysts
NYPD Intelligence Division
Copyright © 2007 New York City Police Department. All Rights Reserved.
The NYPD’s understanding of the threat from Islamic-based terrorism to New York City has evolved since September 11, 2001. While the threat from overseas remains,terrorist attacks or thwarted plots against cities in Europe, Australia and Canada since 2001 fit a different paradigm. Rather than being directed from al-Qaeda abroad, these plots have been conceptualized and planned by “unremarkable” local residents/citizens who sought to attack their country of residence, utilizing al-Qaeda as their inspiration and ideological reference point.
Some of these cases include:
- Madrid’s March 2004 attack
- Amsterdam’s Hofstad Group
- London’s July 2005 attack
- Australia’s Operation Pendennis (which thwarted an attack(s) in November 2005)
- The Toronto 18 Case (which thwarted an attack in June 2006)
Where once we would have defined the initial indicator of the threat at the point where a terrorist or group of terrorists would actually plan an attack, we have now shifted our focus to a much earlier point—a point where we believe the potential terrorist or group of terrorists begin and progress through a process of radicalization. The culmination of this process is a terrorist attack.
Understanding this trend and the radicalization process in the West that drives “unremarkable” people to become terrorists is vital for developing effective counterstrategies and has special importance for the NYPD and the City of New York. As one of the country’s iconic symbols and the target of numerous terrorist plots since the 1990’s, New York City continues to be among the top targets of terrorists worldwide.
In order to test whether the same framework for understanding radicalization abroad applied within the United States, we analyzed three U.S. homegrown terrorism cases and two New York City based cases:
- Lackawana, New York
- Portland, Oregon
- Northern Virginia
- New York City – Herald Square Subway
- New York City – The Al Muhajiroun Two
The same radicalization framework was applied to a study of the origins of the Hamburg cluster of individuals, who led the September 11 hijackers. This assessment, almost six years after 2001, provides some new insights, previously not fully-grasped by the law
enforcement and intelligence community, into the origins of this devastating attack.
For more download PDF attached
Cargo theft by fictitious pick-up is a growing threat to supply chain security. A proliferation of information technologies enable thieves to defraud shippers and carriers at multiple points across the supply chain. This paper seeks to better define the terms and scope of this new and rapidly evolving brand of “supply chain cybercrime”, and recommends 7 Best Practices that can help prevent it.
Fictitious pick-ups are criminal schemes that result in the theft of cargo by deception that includes truck drivers using fake IDs and /or fictitious businesses set up for the purpose of diverting and stealing cargo. Crimes of this type are also known as “fraudulent” or “deceptive” pick-ups, and the terms are used interchangeably. We’ve chosen to use the term “fictitious” because the perpetrators are picking up cargos using fake identification and/or fictitious carrier names, and (in most cases) fencing the stolen goods on the open market.
We further distinguish fictitious pick-ups from scams in which cargo isn’t stolen, but monies are taken from shippers, freight brokers, and legitimate carriers; for example, by “double brokering” loads and taking expense advances for cargo about to be shipped or in transit. From a legal standpoint, all crimes of this type are classified as “fraud”, “theft” and/or “identity theft”.
Our available data is from incidents of fictitious pick-up in which cargo has been lost and reported after the fact. Because victims are often reluctant to report fictitious pick-ups due to inadvertent failures to vet carriers and drivers properly, this crime is underreported, however, it now accounts for over nine percent of the reported types of cargo theft after stolen trailers, and is becoming increasingly more common.
What is Fictitious Pick-up?
Fictitious pick-up is a form of cargo theft that involves criminals posing as legitimate truck drivers to steal cargo directly from shippers, sometimes setting up fake transportation companies to do so. It is one of several types of identity theft crimes targeting the motor freight industry that include theft of advance freight payments by commercial wire transfer fraud (T-Chek, Comcheck, etc.).
In a fictitious pick-up, criminals fool companies into willingly turning over loads to them. They use on-line load posting sites to win transportation bids, or simply show up as drivers with fake credentials, claiming to be assigned to a load. Variations of this scam include a recently terminated driver arriving in advance of his former employer’s assigned driver.
The internet has increased the ease with which criminals can set up fake companies and acquire motor truck cargo insurance, and fictitious pick-up schemes are proliferating.
Fictitious Pick-up Data Highlights:
- Overall, reported cargo thefts in the US decreased in 2013, continuing the trend seen in 2012. In 2013, CargoNet recorded 1,090 incidents, down 9% from the 1,197 incidents reported as of the end of 2012. Cargo theft in the first half of 2013 decreased significantly from 2012 while the second half had a similar number of reported incidents. The overall decline may be due to the shift to cybercrime, which is far less risky, physically dangerous and demanding than stealing a tractor-trailer. Cyber thieves are harder to catch and much less likely to be arrested and prosecuted.
- Of 1,195 cargo theft incidents reported to CargoNet in 2012, 74 were described as fictitious pick-ups, a 27% increase over 2011. Fictitious pick-ups were over 9% of all cargo theft incidents in 2013, an increase of 50% over 2012, and 90% over the two year period from 2011. The average value of cargos stolen by fictitious pick-up was $154,134 vs. $159,376 per incident for cargo thefts overall in 2013, a 3% differential, not statistically significant.
- The commodities most frequently targeted for fictitious pick-ups are foods and beverages, electronics products and metals, however, a disproportionate number of fictitious pick-ups are directed at food and beverage – 60 % vs. 30% overall – suggesting these commodities are being deliberately targeted because they are easy to fence, but not necessarily a long-term trend.
- Over half of fictitious pick-ups occur at end of week, on Thursdays and Fridays when the main concern of shippers and brokers is in meeting a delivery date and satisfying the customer; this urgency to deliver causes some shippers, brokers and warehouse operators to slack off on driver and carrier screening and the due diligence processes to verify ID’s.
- Over 50% of all reported fictitious pick-ups from 2011 through 2013 occurred in California. Significant fictitious pick-up activity has also been reported in Florida, Texas and New Jersey. Interestingly, in some areas of the Midwest– including Indiana, Nebraska, Wisconsin– conventional cargo theft is relatively rare, but fictitious pick-up is occurring.
For additional informatiion, download full paper below.
Presentation by CSA Managing Partner Walt Beadling on the topic of best practices in access managment and personnel identification at C-TPAT Best Practices seminar sponsored by American River International 5/1/2014 [Power Point – subset]
Presentation to JFK Air Cargo Assn. on the subject of Truck Driver ID Fraud anb the unique requirements of the air cargo indiusrty (PowerPoint)
By Adina Solomon
Air Cargo World July 27, 2013
Look up how many air cargo thefts happen per year worldwide. You won’t find the answer. You will find news stories such as the 3,600 iPad minis that were taken from JFK International Airport in November 2012, or the cargo that was stolen and thrown over the perimeter wall at an Indian airport in April 2012. Cargo security professionals interviewed say air cargo is the most secure mode of transportation, in terms of theft, because of the difficulty of stealing cargo midair.
But airfreight isn’t always in the air.
Trucks often take cargo to the airport. That cargo may sit around before or after a flight, sometimes unattended. That’s where air cargo is most vulnerable to theft. “Our industry, transporting high value goods as we do, is a potential target,” Oliver Evans, chairman of The International Air Cargo Association, says.
‘A system that actually works’
Cargo travels through many hands: airlines, ground handlers, trucking companies. That’s why it must have a chain of custody, Walt Beadling, managing partner at logistics security company Cargo Security Alliance, says. “What that means is at any point in time, you know who has a particular piece of cargo, whatever it may,” Beadling says. “You may not know where it is, but you know who has responsibility for it. And at each point where the cargo’s transferred, there’s a handoff, a formal handoff, where custody is transferred from one entity to another.”
Erik Hoffer, vice president of CSA, says someone must design a logistical plan in order to create that chain of custody and have as few handoffs as possible. “There’s always going to be that one point where nobody’s watching the store,” he says. “Without having the ability to have a chain of custody throughout the different modalities, you’re not going to get anywhere. You’re just going to have a problem always.”
Most air cargo theft happens during these points of consolidation, JJ Coughlin, chairman at Southwest Transportation Security Council, says. Coughlin published a book called Cargo Crime: Security and Theft Prevention in 2012. “When it’s in the plane flying is the safest it gets,” he says. “When it’s being handled at those points of consolidation is when it’s as risky as it gets.” He says in order to fight theft, document each point of handling. “If you take care of the small things, the process and the procedure, and you do things correctly as far as the freight handling, it makes your security issues a whole lot easier to resolve,” Coughlin says.
Hoffer says without a plan to create a chain of custody, the carrier or trucking company doesn’t know that a box contains valuable cargo, and they may not protect it in the appropriate way. “The further into the supply chain you get with the less people have knowledge of what to look for and what to do, the whole system continues to break down further and further,” Hoffer says.
That’s why the owner of the cargo needs a game plan. “If he can establish how to do it and it can be implemented by the receiving carrier, then by the receiving airline, then by the delivering carrier,” Hoffer says, “now you have a system that actually works.”
It is also imperative to screen anyone who handles cargo. Coughlin estimates that 85 percent of the theft that happens during consolidation is internal. Evans, who is chief cargo officer at Swiss International Airlines, says companies should screen warehouse and office staff and anyone else involved in the supply chain. Employers typically check police background, he says. Evans also stresses the importance of screening staff as they enter and leave the premises.
People can secure the supply chain by choosing business partners with care. Charles Forsaith, Providence, R.I.-based director of supply chain security at Purdue Pharma Technologies, ensures the security of one of the company’s principle products, a sought-after opioid pain medication. The ingredients for the medication mostly come from Tanzania, Spain and Turkey. In order to bring the raw materials into the U.S., the company uses airfreight almost exclusively. Forsaith, also chairman of the Pharmaceutical Cargo Security Coalition, says Purdue, along with many in the pharmaceuticals industry, complies with U.S. Customs law by vetting all business partners.
Forsaith interrogates people Purdue does business with at least once a year and also visits businesses physically. He says the best approach to preventing cargo theft is a layered one. “That layered approach doesn’t put all your chips on one square. Much like U.S. Customs requires, it says you need to know who it is you’re doing business with. You need to know what airline it is that’s going to fly your product. You need to know exactly how your product is being packaged or stored,” he says. “You have to physically go out and meet with these people, check those facilities, pay attention to the security that’s involved in the warehousing or loading of that aircraft and how it’s unloaded on the other end.”
Keep on trucking
Chain of custody, points of handoff and consolidation, layered approach – all these phrases point to the fact that air cargo goes through many people and entities before it reaches its destination. Trucking companies are usually involved. If you want to talk about air cargo theft and security, you need to talk about truck security. “Even if you handle your cargo as air cargo, the majority is still transported at the end of the leg or the beginning by truck,” Thorsten Neumann, Germany-based chairman of the Europe, Middle East, Asia region for the Transported Asset Protection Association, says. “This is clearly the weakest link within an end-to-end supply chain solution.” TAPA provides a forum for its more than 300 member companies to converse about cargo security.
Beadling says knowing where to route trucks helps deter air cargo theft. Neumann says logistics companies’ low margins present one of the biggest security hurdles. “Many companies still do believe that security is purely a cost factor,” he says, “but if you take really a look and calculate your investment on security and compare that with nonsecured trucks or non-secured routings, you will see that your returns in investment are tremendous.”
Cargo at rest
The saying goes that cargo at rest is cargo at risk. Hoffer says thieves are less likely to snatch high-value cargo than general cargo because logistical hubs keep jewelry, cash and documents in cages. People take the general cargo that sits unattended, he says. He points to the iPad mini theft at JFK as an example of unattended cargo. “If the cargo is at some intermediate point for any length of time, when it’s sitting, it’s vulnerable,” Beadling says.
Coughlin says air cargo is at the greatest risk for theft when it sits on the tarmac. This presents a problem in Africa, Neumann says, where in some areas, the process flow is not controlled or even structured. He says high-value products can sometimes be stalled for days on the tarmac because of a lack of infrastructure. It all comes back to having a wellplanned supply chain for air cargo. “Having an efficient and secure supply chain, those things go hand in hand because if it’s always moving, then the chance that something’s going to go wrong with it are minimized,” he says.
‘Beyond the loss of dollars’
Theft also presents another dilemma. If someone can get access to the cargo in order to steal it, that person can also put unwanted objects in the freight. Coughlin tells of an incident where a cargo airline employee worked with drug smugglers to place pallets of marijuana into the airline’s system. The employee moved 15 or 20 of those pallets using a customer’s account. “If you don’t control the freight handling, whether it’s theft or smuggling, it can easily happen,” Coughlin says.
But it can go further than drug smuggling, as the Yemen bomb plot in 2010 showed. “I think it’s a real problem,” Hoffer says. “If that happened before, it can certainly happen again, and there has to be something in place where cargo in general terms has some mandate to be able to have an inspectable template for it so cargo that is moving through the supply chain can be looked at by every inspector.”
Beadling says since the Yemen incident, the scrutiny of air cargo security has improved, but Hoffer says more improvements must be made. “My fear is really not as much the theft, but it really is on the other end when you have terrorists out there who find a way to get into cargo,” Hoffer says. “Now you’re talking about a serious problem way beyond the loss of dollars and cargo.”
Securing the chain
In order to prevent airfreight theft, Beadling talks about supply chain design, physical security and information sharing, such as knowing where the cargo is in real time and the identity of people handling the cargo. Evans says the connected nature of the supply chain, with each company collaborating with another, makes it necessary for everyone to screen staff and choose partners carefully.
Neumann says many companies believe that if they experience a security issue, it must remain confidential. But theft and security aren’t company-specific issues – they affect the entire supply chain. “Security is everyone’s responsibility,” Neumann says. “Security should not be a competition within our industry because we all face the same challenge every single day.”