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Supply Chain Risk: Cargo Theft

Friday December 2, 2016
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The holiday shopping season is in full swing, and retailers and distributors are working hard to meet customers’ needs. However, with more trucks filled with merchandise hitting the roads during the busy buying and shipping season, cargo theft is expected to “surge,” according to NBC Los Angeles.

Cargo theft is a year-round risk to supply chains. In the state of California alone, $30 million in cargo has been stolen off the highways and from distribution centers in 2016. One police detective, Gerardo Pachuca, told NBC Los Angeles that cargo theft is a “low risk, high reward” crime. “The bad guys laugh at the system because they don’t get punished severely enough,” Pachuca said. 

The detective describes how criminals hit distribution centers. First, the criminals tie up the guards. Then, they shop for what they want to steal. Within a few minutes, the thieves escape with $600,000 or more in goods. The thieves have guns and aren’t daunted by security guards or security cameras.

The US Federal Bureau of Investigation (FBI) reports that in 2014, the most recent year for which statistics are available, there were 547 incidents of cargo theft reported, with stolen cargo totaling $32.5 million. According to the FBI website, the bureau is involved in cargo theft reporting because the crime “can have significant impact on the U.S. economy and because it’s often described as a gateway crime that can lead to broader investigations in areas like organized crime, drug trafficking, health care fraud, terrorism, etc.”

NBC Los Angeles reports that the most common type of commodity targeted by cargo thieves is food and beverages, including energy drinks, meats, alcohol, and nuts, because they can be distributed and consumed quickly.

The scope of cargo theft is large, and Scott Cornell, crime and theft specialist for Travelers Insurance, said in the NBC Los Angeles article that the impact is large as well. “While cargo theft does not get the publicity that other crimes receive, it does impact shoppers across the country,” Cornell explained. “The cost of these thefts is baked into the cost of things that we purchase, so ultimately the consumer pays for the cargo theft.”

Earlier this year, STORES Magazine reported on cargo theft’s rise. STORES Magazineis published by the National Retail Federation. Liz Parks writes that these thieves are “some of the wiliest and most sophisticated criminals in the country.” Some retailers plan strategically and work with partners to ensure cargo security. Others, Parks reports, are not adequately protecting themselves.

Risk prevention

How is cargo theft a part of your overall risk prevention strategy? Are you working strategically with your supply chain partners in this area, or will you be caught by surprise if cargo theft happens to you?

Consider the definition of risk management from the APICS Dictionary, 15th Edition, “The identification, assessment, and prioritization of risk followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.”

Now think about how risk management processes have to be dynamic in order to be effective. Risks change and evolve. Cargo theft is just one example, yet it is a growing problem. Organizations need to contemplate a wide variety of factors for their overall risk management strategies to be effective.

With the addition of our Certified in Logistics, Transportation and Distribution (CLTD) program, APICS aims to educate supply chain professionals to think strategically about logistics and its role in the overall organization. Find out more about the APICS CLTD at apics.org/cltd
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