IUMI CALLS FOR INDUSTRY, LAW ENFORCEMENT AND THE AUTHORITIES TO UNIFY THEIR EFFORTS TO TACKLE ‘SURGE’ IN CARGO CRIME

IUMI, the International Union of Marine Insurance, which represents over 40 national and marine market insurance and reinsurance associations, last month called for a concerted effort to improve security throughout the supply chain to address the ‘surge in criminal activities.’

In a special ‘Cargo Theft Prevention’ position paper, the Union stated: ‘Insurers are concerned that authorities in many countries are still not doing enough to support the fight against cargo crime; possibly because cargo theft is perceived as a victimless crime and there is a lack of public awareness. Investigations are often delayed due to a shortage of staff, lack of specialised knowledge, and inadequate cooperation between authorities and across borders. These delays are aggravated by ill-defined responsibilities of police and judicial authorities.’

It also references the increasing inability to pinpoint where a theft occurred, preventing the application of the lex loci delicti (“law of the place where the delict or “wrong” was committed”) and the territorial principle – a prime consequence of stolen cargo being quickly taken across borders and the requirement for immediate cross-border police intervention. 

While IUMI acknowledges much is being done by shippers and the insurance industry to tackle cargo crime, measures are also necessary from relevant authorities to help prevent these losses, it says, while also recognising various law enforcement operations to fight against transport crime as well as new initiative such as Project CARGO.

Commenting on the challenges for companies, IUMI stated: “Today, there seems to be a market for almost any kind of stolen merchandise. These are no longer traded in a separate ‘black market’ but increasingly through open electronic trading platforms. This has a huge negative impact on the economy.

“Cargo crime is encouraged by a low risk of detection and limited law enforcement resources to stop the perpetrators. The punishments imposed are not a sufficient deterrent, especially when compared to the potential ‘profits’ gained from the thefts. In many cases, cargo crimes are not committed out of opportunity or as single incidents. The perpetrators or groups of perpetrators are proceeding in a well-organised and highly professional manner. The organisation of their operations often covers every detail from the gathering of information by insiders to sales planning in case of ‘theft to order’. The criminal structures behind the thefts are increasingly transnational and online communication is becoming fundamentally important for the planning and execution of these operations. The misuse of online freight exchange platforms is an example where criminals take on the identity of legitimate freight carriers, using their employees’ names, companies and logos to organise thefts of cargo offered for transport on those electronic freight platforms.

“In most cases, such well-organised groups have committed other similarly serious thefts before. The perpetrators use different tactics such as direct thefts from trucks or storage facilities, robberies, hijacks and fraud or deception based on fake identities and social engineering. In the latter cases, cyber related tactics are often used to facilitate the theft.

“Given that companies need to compensate for theft-related losses and additional expenses for security measures, the costs arising due to cargo theft eventually trickle down to the consumer via higher prices. The consequences of cargo theft are all-encompassing, affecting not only the stakeholders directly involved in the supply chain but also consumers, suppliers, as well as governments in the form of higher prices for consumer products and depleted tax revenues.”

IUMI also urges a variety of actions for the prevention of cargo theft:  

Law enforcement agencies:

· Relevant authorities should develop an overview of the cargo theft situation, including the theft of trailers and containers, in their respective country or region. Based on these findings and in discussion with insurers and other industry stakeholders, decisions should be made on how to deal with the aforementioned hotspots and future measures against cargo theft.

· Exchange of best practices across borders on local initiatives has proven to be successful and should be continued.

· Improve law enforcement through transnational coordination and cooperation between countries and national law enforcement agencies. Dedicated cargo theft taskforces should be established to allow law enforcement agents to work with their peers in other states or countries to develop effective networks and to solve cross-jurisdictional cases. The private sector should be involved in such task forces.

· Create special police units and specialised departments of public prosecution dealing with cargo crime.

· As criminals use the internet, there should be specific attention given to cyber fraud, such as with bills of lading and permits as well as fake carriers.

· Increase police presence in commercial truck parking areas and cargo storage facilities, especially at night, weekends and during holidays.

· Create a network of high-security, accessible and affordable truck parks.

Industry:

· Identify security risks and implement countermeasures to lower those risks in the supply chain. Consider the implications of decisions taken in relation to the security of the cargo.

· Shippers, logistics/transportation companies need to ensure due diligence when selecting their agents and staff.

· Training with specific emphasis on cargo theft awareness and prevention should be offered to staff.

· Insurers should be working closely with shippers and transportation provider clients to develop viable loss prevention tactics focusing on the problems presented in this paper.

Introducing these measures would facilitate the safe and secure flow of goods within the global supply chain and increase the safety of people working in the transport sector.

Vigilant asked Håkan Nyström, a Member of the IUMI Policy Forum, and Hendrike Kühl, Policy Director at IUMI, to tell us more…

One of the biggest challenges in terms of raising the profile of cargo crime at governmental and law enforcement levels is trying to put an accurate value on the true cost of freight thefts. What are the barriers to intelligence-sharing from the insurers’ perspective and is IUMI working to change this situation?

The importance of data is a key issue for insurers, and it is well known that the whole industry is trying hard to collect reliable data and interpret it accurately. This is fundamentally down to two key reasons: first, because not all thefts are insured; and second, we cannot provide information on all cargo thefts as each individual insurance company has its own systems and databases. The reality is that to collect data from all insurers globally by trying to identify cargo theft ‘as defined’ cannot be achieved due to different languages, loss codes and, of course, confidentiality clauses. 

IUMI is moving forward with its initiative to pilot a large major claims database. The aim of this is to create a large and consistent loss database (for hull and cargo) with standardised data from member companies in order to analyse the major losses (250,000 Euros and over) with respect to loss severity, frequency, location and cause.

Cross border cargo crime and the challenges associated with trans-national police co-operation make loss investigations even more difficult. IUMI has called for the setting up of a Cargo Theft Task Force, so who do you want to see participate in such a group?

It is important to look at all the stakeholders and who has the authority to do this, and that includes law enforcement on both a local and cross-border level. In Europe, the European Union is the natural institution to raise this and Project Roadsec was the initial starting point in getting this issue on the agenda. There have already been successful operations such as “Projekt Cargo” for example, where German and Polish law enforcement are working together, and this is something IUMI would like to see happening more globally. 

Your position paper highlights the ‘large burden on society’ and the financial impact for consumers stemming from cargo crime. Tell us more…

Cargo theft is a large burden on society and consumers are paying the price. This impact can range from the pure pricing of the products to delays in products being delivered to (potentially) empty shelfs in a shop. Additionally, society is also paying the price of this crime as cargo theft is financing other crimes. The perception that this is a victimless or hidden crime is wrong as it trickles down the supply chain and, at IUMI, we believe that this should be highlighted in order to help raise the importance and awareness of the issue.

One other important factor is the human element entwined here. Truck drivers are exposed to this particular risk as they are the first line of defence against cargo theft. They spend long days on the road, often struggle to find a secure spot to park their vehicles overnight, and may become victims of cargo theft themselves. Increasing violence against truck drivers in countries around the world is a worrying trend that puts the lives and wellbeing of the drivers at risk and makes the occupation less attractive. This is particularly problematic in times when experienced and well-trained drivers are in high demand. Cargo theft is anything but a victimless crime.

What more can insurers do to incentivise the highest level of supply chain security?

It is up to the individual insurance companies and the individual insurers about what they do. Some insurers today are putting up security warranties and security recommendations. Other companies conduct supply chain investigations and have specific loss control engineers. But it is ultimately down to the individual company/insurer. 

Is IUMI in favour of companies adopting TAPA Security Standards as a proven method to make supply chains more resilient?

TAPA is one of the leading Standards providers and we know that many of our members are using them as their security standards and a measurement on security. We are pleased to have the TAPA PSR (Parking Security Requirements) in our toolbox now and we look forward to the new TAPA Supply Chain Cyber Security Standard that is currently in the development phase.

Given the total volume and value of goods being shipped annually, it might be considered that cargo losses still impact only a very small percentage of supply chains. In which case, how can companies be encouraged to take a more proactive approach to theft prevention?

The overwhelming majority of companies in shipping have high theft prone products. Insurers are able to note these products and can put security requirements in place, but the reality is that anything that can be sold is being stolen. Cargo losses are similar to cyber losses in the way that only when a company is a victim of this crime do they start thinking about it. So, a proactive approach is very helpful.

One factor that is impacting companies when it comes to cargo theft is losing the integrity of their brand and product. Brand name recognition is very important, and companies are investing heavily here as they do not want to see their products being distributed via alternative channels.

Police resources are already stretched and focus on higher priority crimes, while the penalties for cargo thieves when they are brought to justice often tend to be low. So, right now, everything appears to be in the criminals’ favour. Do you agree?

Both the private and public sectors need to be looking at cargo theft more seriously and the campaign behind it because there are two key issues having a major impact on society. Firstly, there is the perception that this is a victimless crime, which in fact it is not, and it is a huge burden on society. Second, cargo theft is funding other operations of organised crime which has a very negative and dangerous impact on society. So, both the public and private sectors need to look deeper into this and how they can help with the fight against it.

You referenced examples of innovative criminal M.O. as well as cybercrime. How are these going to change the face of cargo crime in the future? 

We need to keep up with technological developments as the more connected society becomes, the wider the range of ways to steal things will be. A recent example is the freight exchanges that offer a new platform to potentially steal goods from. Cyber and cybercrime is an important issue to IUMI and one of the key concerns to mention is that cyber means different things to different people. Going forward, it will be necessary to have some definitions and a framework put in place for insurers to work under. 

Is there a frustration on behalf of the insurance sector that companies are not doing more to protect their supply chains?

No, we are working together with our clients to set up standards and to discuss the issues, and so there is good cooperation with our insureds about how to minimise the risks. The frustration is more towards there not being much willingness to invest to help minimise this risk and, in individual cases, you can see this when crimes might have been avoided.   

In your opinion, is the cargo industry fighting a losing battle against cargo crime?

No, it is an ongoing fight. The criminals are inventing new ways to steal cargo and we are keeping up by finding new ways to deal with this. Examples include putting security requirements and security proposals in place.

One can say that the issue is now more openly discussed and much more is being done about it. There are now many initiatives. TAPA is at the forefront in highlighting this issue, and this has been a huge step forward. There are now new solutions and ideas to combat cargo theft and innovation is helping companies to fight back. Not only are the thieves innovative but so are we!

What is the best advice you can give to companies storing or moving high value-theft targeted products?

The best advice is to have a business contingency plan and to have a back-up for when/if something goes wrong. Plan for the unforeseen.

To download IUMI’s position paper on Cargo Theft Prevention, go to https://iumi.com/opinions/position-papers