LAST… BUT NOT LEAST
Take a quick glance down the monthly TAPA Incident Information Service (IIS) data for the last two years and one of the most glaringly obvious new trends is the growing number of criminal attacks on Last Mile deliveries.
This raises many questions:
- Having seen a major shift from criminal attacks on facilities in recent years to incidents targeting loads onboard trucks because they are easier and safer for offenders to enact, are smaller, less protected delivery vehicles now an even more appealing focus for cargo thieves?
- Is this the work of organised crime groups or are we seeing the re-emergence of a new generation of opportunist, ad hoc cargo thieves out to earn a ‘quick buck’?
- Are companies doing enough to protect Last Mile delivery drivers and their vehicles?
- With the smaller loss values involved in these attacks, are the potential penalties for offenders seen as a sufficient deterrent?
The answers will vary from country to country and industry to industry but one fact is crystal clear; attacks on Last Mile supply chains are here to stay and are highly unlikely to do anything other than grow substantially in the coming years.
Last Mile is big business for all concerned – a fact being recognised more than ever in the current global ‘lockdown’ as businesses and consumers come to depend on home delivery revenues and goods respectively.
A new report this month estimates that the ‘Europe Last Mile Delivery Market’ will be worth US$2,491.8 million by 2027, a 16.1% compound annual growth rate.
So, what do we currently know about Last Mile cargo thefts?
To find out more, TAPA’s IIS team joined forces with BSI’s SCREEN Intelligence Team and BSI Principal Consultant, David Fairnie, to conduct a survey of companies and provide a detailed breakdown of these new challenges and the risks associated with them. Vigilant looks at their findings…
While the definition of “last mile” varies throughout the logistics industry, the traditional definition involves a company shipping a full load of a product to a central distribution center, which then breaks down that load into shipments destined for distribution hubs in individual countries or regions which will breakdown those shipments into boxes of product to be delivered to individual storefronts. Using this definition, “last mile” or “final mile” is the journey from the last distribution center in the chain to the storefront. The company and third-party logistics providers involved define the standards for ensuring the load is transferred securely and accounted for throughout each change of custody from company to distribution center and final distribution center to storefront.
So, a “last mile” cargo theft would be the loss of that shipment as it travels from the final distribution center to the storefront.
An analysis of BSI and TAPA last mile theft data reveals several significant trends;
- In 2019, thieves involved in last mile thefts most frequently stole goods from mixed loads, highlighting the degree to which vehicles that are a part of the eCommerce supply chain are affected by the problem
- Tobacco products and food and beverages were the most targeted goods, a trend which continued from 2018
- In 2019, thieves participating in last mile theft most commonly pilfered goods from vehicles, representing about 46% of all recorded incidents
- In around 26% of incidents, thieves stole the entire vehicle
- Most cases, however, involved intrusion into vehicles
- In 21% of these crimes, thieves used violence or the threat of violence to carry out thefts
- In some 15% of crimes, some form of Deception was another common tactic
With the growth in eCommerce, the definition of “last mile” is shifting. Companies still send shipments to a distribution center, which in turn may ship those loads, broken down by country or region, to further distribution centers before delivering the individual product directly to the end customer. In this instance, thefts can occur not only while shipments are in-transit via delivery vehicles but also from the customer’s doorstep.
An increase in the volume of packages traveling directly to consumers has led to numerous stories of theft. Each holiday season, media outlets report on outbreaks of this brand of “last mile” theft with so-called ‘porch pirates’ - both individuals and gangs of thieves - opportunistically stealing packages from doorsteps. The scale of the problem is hard to quantify. Given the sporadic nature and the way that these thefts are typically reported, it is difficult to accurately gauge the scope and value of these types of “last mile” losses.
In the traditional logistics model, packages are generally tracked and controlled through the supply chain to the storefront, and losses are clearer to account for in each stage of the process. Whereas if an individual customer has a package stolen, that customer will typically complain to either the company it purchased the product from or the final delivery service that was ostensibly responsible for delivering the item. The customer will most likely lodge the complaint with customer service personnel and not necessarily security or loss-prevention personnel and, in most cases, the company will often quickly send another replacement package in order to retain the customer’s loyalty. Often, such thefts are registered as simply isolated customer complaints.
Ostensibly, some companies, if receiving numerous complaints of lost packages from the same IP address or customer, have a fraud algorithm in place that will trigger the involvement of loss prevention personnel and stop more products from being sent to the same customer. Because of this phenomenon, it is likely that companies will not appreciate the amount and scope of losses in this final portion of the “last mile” supply chain at the doorstep of the consumer.
Taking meaningful steps to mitigate such losses is clearly important as a multitude of companies are reconfiguring their business models and how warehouses function in order to meet the demands of eCommerce customers.
Typically, in a warehouse, cargo arrives in pallets and is broken down into boxes and shipped to individual stores. However, in the modern logistics era, cargo arrives in pallets and is broken down in boxes, but then those boxes are kept at lower levels of the warehouse and sometimes in specific areas of the warehouse to allow employees to configure individual orders for individual customers from the warehouse inventory. The order is then no longer shipped in bulk but as an individual order to an individual customer straight from the warehouse. This reconfiguration is happening for individual companies as well as third party logistics providers (3PLs). Although not the product owner, 3PLs are acting on behalf of the product owner and have thus reconfigured their operations to provide that value-add and order fulfilment to the product owner, enabling the latter to focus on driving new orders.
In the traditional logistics model, if a load of a particular product is stolen somewhere within the supply chain, even during that “last mile” of travel from the final logistics hub or warehouse to a bricks and mortar storefront, that theft and loss is cataloged by loss prevention personnel and adjustments may be made to mitigate threats along that particular route or to those particular shipments. With the new eCommerce model, typically the delivery driver often leaves the package either on a doorstep or in a mailbox and there is no accounting for whether or not the intended recipient actually takes possession of the product. The only way that the company or delivery service knows of a loss is if a customer complains.
Not only that, but delivery services are frequently subcontractors, and possibly three or four links down a chain of subcontractors. It is not uncommon for a delivery driver to transport goods in a van or personal vehicle, delivering 100 or so packages at a time within a small area. The delivery driver is paid per package delivered or at an hourly rate and it is frequently unknown what sort of due diligence is done to ensure the driver is reputable, as opposed to when shipments of goods are transported to storefronts and stricter transportation security standards are in place.
At this point in the chain, warehouses and logistics hubs generally are not tracking losses by these delivery drivers since responsibility is transferred once they have handed the packages to the delivery subcontractor. Once again, the only way that the logistics provider or the product owner will know about the loss is through a customer complaint. For many items bought online, especially more expensive products such as electronics, some procedures may be in place requiring a signature for delivery. However, subcontracted delivery drivers may not always ask for that method of verification. Further, there is rarely any verification of the signature against any sort of identification. Consequently, there are a number of possible holes within the chain of custody for the package once it is out for delivery to the individual customer.
In such cases, the lack of attention to these delivery subcontractors exposes companies to theft risks that they are most likely unaware of. With any subcontracting, measures must be put into place to ensure that delivery drivers are credible, reliable, and secure when handling and delivering packages and that they can effectively account for deliveries. From a contractual and standards point of view, it is important to address what obligations these delivery drivers are under:
- Who within the supply chain takes on the responsibility for ensuring delivery subcontractors meet the standards set for distribution?
- What are those standards?
- How are those processes verified?
- What audit procedures are in place?
Typically, there may be only a minimum amount of due diligence, such as a background check upon employment, but the oversight likely decreases further down the subcontracting chain, putting companies at risk.
The big dilemma is how to effectively mitigate the risk of “last mile” theft. As of now, a principal challenge is understanding the size and scope of the problem. Examining how companies consolidate their customer complaint data and other loss prevention and security information in a manner that makes sense is key to shedding light on the issue. Data sharing and collation within a company and throughout a logistics chain from the customer service side to the security side is critical. With that information and understanding as a guide, professionals can then develop standards, measures, and logistics workflows to address the issue.