The Underground Supply Chain

By Erik Hoffer

Our transportation industry serves as the pulse of commerce, and the heart of our economy. Collectively we move food, clothing, and most other essential goods by truck, rail and air. The question I propose here deals with the transparent nature of logistics masking the fact that we are not alone in our efforts. There a black side to logistics and no one sees it. There are contra-logistic forces out there which replicate our processes for their personal gain. and commonly deliver stolen, diverted and counterfeit goods to clients right under our noses! Besides essentials, contraband drugs and illegal weapons are also commonly transported using commercial trucks and courier services. It is estimated that stolen goods have an annual world wide value of approximately $50 billion dollars, and they have to be moved to market somehow! There are billions in counterfeits filling our stores and pharmacies that have been delivered seamlessly along side legitimate cargo. There are also untold billions in illicit heroin, cocaine, ecstasy and even laundered currency which take same the distribution channels to market as any normal product. How is this done? Who is responsible? Who makes it happen? Who profits and who looses? How long has this been going on? More often than not, the same routes, modes, carriers and methods employed by legitimate businesses, transportation companies and supply chain participants are the conduit to market for these products. Unfortunately, this seamless system has been employed for years and defines the dark side of logistics. We do know that theft-based transportation is frequently masked by clever thieves who move these goods with reputable carriers in normal distribution channels. For example, a truck is followed from it’s Distribution Center and then stolen at a truck stop. The goods are rushed to a public warehouse, and they are quickly off loaded. A fictitious company account is set up in advance for the arrival and short term storage of these goods. That location is now used as the transship point. In this so called cross dock operation, goods are almost never repackaged as they are quickly reshipped as a full truckload to a port of debarkation or to another break bulk facility. In the latter case, goods will be further broken down and possibly blended with legitimate goods to mask any chance at traceability prior to re-shipping. In the first instance, goods may be trucked to Miami and loaded on containers destined for South America, Russia, India or other foreign ports in the world for further distribution. By now, the picture should be getting pretty clear. Stolen goods have suddenly assumed another identity and appear to belong to someone else. This makes them the newest members of the underground supply chain. At the same time counterfeit goods, poising as legitimate products, are moving to U.S. markets from foreign ports to be blended with prime product and resume their travels. This new dimension further complicates any chance to unmask the stolen shipments. Upon arrival they are distributed by otherwise authorized resellers to retailers or manufacturers just as if they were legitimate. They are then moved to their client’s locations by honest carriers, who are p[aid for their efforts, all the while abusing the system. Products traveling in this manner pose as authentic to carriers who would otherwise not touch them. Stolen goods in some cases may have to be repackaged or unpackaged but without an inspection template, defining these anomalies is impossible. In the case of meats and fish, they are repacked for a quick sale and rarely spend 2 days in transit after the heist. These time or temperature sensitive goods give a new meaning to “custom critical” deliveries. No cases are made by law enforcement after the evidence is eaten! If you cannot catch them doing it or dissuade them from taking the loads in the first place, these goods are long gone! Many of these products are ethical drugs which may have been out of proper storage conditions for a period of time making them potentially useless or dangerous, yet the packaging remains untouched and therefore the goods move normally. Because of the need for speed in illicit logistics chance planning is almost never a consideration. Thieves plan and execute these moves as well as any logistic provider ever could. There are many truckers who inadvertently provide this service unknowing that this freight is suspect. Many hands touch cargo but most eyes look the other way. Transportation providers, eager to satisfy a client or attract new ones, will take on freight moves without ever recognizing or analyzing the facts surrounding the cargo. As a prime example, imagine that I am a NJ trucker. I gave been asked to pick up a load of J and J products from a public warehouse in Baltimore and move it to Miami for export. Does this ring of a possible problem? Does he call the police who will probably not give him the time of day? Or, does he accept the move and get paid for his services and keep on truckin’? Other cases, where goods are imported and cleared at the port or border crossing, are actually in the process of be being diverted back to the USA, right under the nose of our Customs’ officials. A situation of low risk freight from a low risk shipper in a busy port puts time on the side of the criminal. The risk lessens based on his choice of ports. The more active the port the less likely an inspection opening. A thief’s overall risk is diminished by the fact that even if he is caught, or one load is detained, the legal remedies are light. There may be simply a fine and slap on the risk, making crime a profitable gamble. No one in our industry is immune and no one can be that vigilant all of the time. Regardless of their origin or ownership, freight will move through our normal logistic system and be delivered to markets throughout the country daily. The courts, police or government have not facilitated a remedy or dissuaded the criminal element from using the commercial supply chain for their ends. The underground supply chain is truly transparent to us all.