Protecting High-Value Cargo: A Sense of Security

Tags: 3PL, Security, Pharmaceutical Logistics, Specialized Logistics, Transportation

Cargo security guards monitoring high value shipments

When moving one-of-a-kind artwork, luxury items, and high-priced electronics, call in the cargo cops. That's a 10-4.

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The driver arrived on time, the paperwork seems to be in order, and the truck has all the right markings. Soon the cargo is on its way—to the black market, where the criminals who drove off with it stand to make a tidy profit.

False driver credential scams are the latest scourge hampering movement of high-value goods such as fine art, jewelry, electronics, pharmaceuticals, alcohol, high-end apparel and food, and specialized auto parts. "When capacity is tight, shippers scramble to move their cargo," says Bill Boehning, director of corporate security at Springfield, Mo.-based carrier Prime Inc. "Shippers and freight forwarders may be forced to deal with carriers they're less familiar with, making it easier for thieves to slide in."

Sophisticated thieves can obtain government credentials, or use the name of a certified carrier that has recently ceased operations. They cultivate inside sources or observe patterns in high-value goods supply chains, then arrive at pickup facilities with enough information to appear legitimate, making off with whole shipments.

Combatting this technique is just one of many challenges shippers and logistics providers face when ensuring the safe movement of valuable cargo. They must take extra steps to achieve a careful balance between risk and cost. Security is a continuously moving target as opportunists seek new ways to circumvent prevention measures.

Heightened Risk

High-value goods have always required extra security, but recently several factors have boosted the risk. As the world's appetite for luxury goods grows, sourcing and marketing locations become more diverse. Longer supply chains add touch points and, therefore, vulnerability. And crime organizations are increasingly focused on goods in transit.

Cargo theft in Europe increased 24 percent in 2012, and rose in Asia as well, according to the 2013 Global Cargo Theft Assessment, a study conducted by Austin, Texas-based global logistics security services company FreightWatch International. In North, Central, and South America, theft levels remained consistent.

The greatest risk of cargo theft currently exists in Brazil, Mexico, and South Africa, often via hijacking. But every market presents its own risks, as well as varying cultural norms and business practices that security managers must understand. Localized disruptions such as severe weather, political unrest, and natural disasters also increase risk by idling high-value cargo.

Even everyday business decisions must be considered from a security point of view when the cargo is of high value. For example, data storage company Seagate Technology shifted its supply chain to meet customer needs by producing its high-value hard disk drives in locations in Asia, then stocking them at facilities close to customers, where the company can customize goods for quick delivery. The strategy—increasingly common in the high-tech industry—allows Seagate to shift much of its air cargo to ocean. But that means moving high-value goods over the road in Asia to reach seaports.

Local areas also have their own crime patterns, which can be difficult to monitor. "Each country reports different types of incidents," says Taya Tuggle, logistics and compliance manager at San Francisco-based freight forwarder Air and Ground World Transport. "But some companies do not want to report a theft for insurance reasons." This means local authorities may not get all the information about a region's cargo theft problem.

Sophisticated criminals continually adapt their tactics. For example, economic recession in Italy caused organized crime groups to branch into new areas, including cargo theft, says Dan Purtell, senior vice president, supply chain solutions, in the supply chain security unit of U.K.-based business services provider BSI Group. A crime organization sometimes will sell a load to a third party even before stealing it.

One strategy thieves currently favor is GPS jamming. They drive alongside a truck and use devices that block the vehicle's GPS signal, then hijack the truck and quickly reload the cargo onto a second vehicle. Motor carriers can counteract this technique through RF beacons, jamming detection, and other tactics.

Getting a Step Ahead

A variety of regulations, technologies, and best practices are helping high-value goods shippers deliver cargo where it needs to go.

The foremost facilitator is speed. Using expedited services and direct routes minimizes touch points and dwell time—the two most vulnerable areas.

Technological advances have also made a significant impact on security. "New technology provides security at lower cost, boosts efficiency, and facilitates container tracking," says Ron Greene, vice president, strategic global operations for FreightWatch.

Route planning and risk analysis tools, for example, help ensure shipments are assigned the right level of security.

"Instead of appointing an escort in all locations for shipments worth $1 million, shippers can determine their security needs based on risk," says BSI's Purtell. "Hijacking is less of a risk in some countries than others. Shippers can plan for the problems they are likely to encounter."

Predictive modeling—reviewing loss rates by shipment and product—allows BSI to forecast expected losses for protected versus unprotected cargo, so customers can allocate security resources accordingly. For example, one BSI customer was able to reduce escort costs in Poland in fourth quarter 2013 because the risk level had dropped.

Heightened supply chain visibility helps logistics managers ensure high-value goods arrive where they should be, when they should be there. The ability to easily communicate with trading partners and Customs officials online makes it easier to spot deviations from expected patterns.

Air cargo guideline changes that followed the Sept. 11, 2001 attacks were a turning point in high-value goods security. The Customs-Trade Partnership Against Terrorism (C-TPAT) and similar regulations in other countries continue to enhance cargo protection.

Credit the significant progress in boosting security processes and protocols to shippers and logistics executives who are collaborating on the issue. One example is the Pharmaceutical Cargo Security Coalition, an organization of pharma industry professionals, law enforcement and government entities, cargo insurers, carriers, and risk management advocates dedicated to preventing pharmaceutical product theft. In fact, the pharma and high-tech industries have been so successful in preventing theft that criminals are now shifting their attention to apparel, health and beauty aids, and food shipments.

Another influential theft prevention group is the Transported Asset Protection Association (TAPA). The global organization offers sets of minimum security standards for various supply chain functions, and members can earn certification by proving compliance through audits. TAPA's standards reflect the way cargo theft has evolved. The organization originally focused on storage facilities, then addressed trucking security, then air cargo, revising each set of standards periodically.

"If a provider is certified through TAPA, member companies can trust that provider and save money by not having to audit security processes," says Anthony Leimas, senior manager, supply chain security, for Seagate, and a member of the TAPA Americas board. Seagate applies TAPA standards in several ways, including ensuring that warehouses outside its manufacturing locations are sufficiently secure.

Monitoring crime patterns through theft prevention and recovery services such as FreightWatch, CargoNet, and LoJack allows many high-value shippers to better allocate security resources according to risk. Prime Inc., for example, uses GPS to monitor the location of high-value loads in transit, and relies on theft prevention services to alert drivers to crime hotspots so they can avoid stopping in those areas.

Progress in combating theft of high-value goods means these supply chains can operate wherever the market takes them, regardless of the risk level involved.

High-Value Best Practices

A layered approach is the best way to secure high-value goods. The right combination of planning, processes, contract language, packaging, and monitoring helps ensure goods reach their intended destinations. Measures to boost security may include expedited service, dedicated trucks, team drivers, covert and overt GPS, split shipments, couriers, auditing partners, and careful timing, such as avoiding shipping during weekends and holidays.

Designing a secure high-value goods supply chain starts with mapping the supply chain to identify risk areas. Next comes assessing processes, assets, and facilities throughout the entire network, including logistics providers and suppliers. Then security managers can recommend tools that will best mitigate the risks. Monitoring and measuring security procedures is important to ensure successful results.

One key process is making sure high-value goods are properly prepared for transit. The traditional explanation that ill-gotten goods "fell off the truck" is more far-fetched than ever. Seagate, for example, uses corner boards, strapping, banding, and shrinkwrapping to protect its products in transit.

When Cedar Rapids, Iowa-based carrier CRST Expedited handles high-value shipments, it applies additional tracking, alerts logistics managers when conditions deviate from protocol, uses geo-location technology, outlines specialized procedures for its two-driver teams, and applies cargo seals to ensure goods stay secure. Some shippers also embed GPS devices in their cargo.

"Each driver receives strict security instructions," says Cameron Holzer, president of CRST Expedited. Driver training includes running through different scenarios, such as steps to take to ensure security when stopping for fuel.

Building Relationships

"Knowing your business partners is one major component of ensuring your commodities ship securely," says Leimas, who visits partner sites to ensure compliance with Seagate's requirements. He advises educating personnel at origin points to ensure containers have no false walls, cargo is loaded according to guidelines, and trailers are locked and sealed.

For Hopkinton, Mass.-based EMC—a provider of IT storage hardware solutions—security is all about predictability in its delivery model. "Flying as booked is a key metric for our customers, because they know the order is in transit," says Jerry Sheehan, director of international logistics for EMC.

In addition to monitoring shipments, EMC relies on quarterly business reviews using scorecards, along with a solid service level agreement, to ensure its logistics partners—including Houston-based third-party logistics provider Crane Worldwide — are meeting security expectations.

The combination of stringent practices and strong partnerships helps EMC avoid losses. Crane Worldwide ensures that success by regularly visiting partner facilities and assessing processes to confirm compliance with customer expectations. This approach enables EMC to safely move into new markets, such as its recent foray into Mozambique.

"To help shippers maintain security levels, 3PLs need to spend the time and energy visiting new countries to understand the language, infrastructure, and common practices," says Gerard Ryan, regional vice president, EMEA, for Crane.

As criminals continue to create new cargo security threats, shippers and logistics providers working together can ensure the safe movement of valuable cargo.n