With cargo theft on the rise, retailers must double down on protecting their goods

This article was published in the September 2016 issue of STORES Magazine.

Those in charge of security for cargo belonging to retailers are up against some of the wiliest and most sophisticated criminals in the country.

And the situation is getting worse, according to Anthony DiPasquale, senior vice president and U.S. marine cargo product leader for Aon Risk Services. This is particularly true during holidays, when retail cargo thefts have increased by as much as 40 percent versus non-holiday weekends.

DiPasquale’s responsibilities range from covering the cargo as it moves from overseas to distribution centers to retail stores, but also includes goods stored in distribution centers and on store shelves. “We refer to it as cradle-to-grave coverage,” he says.

The products he insures are owned by high-end retailers, department stores, jewelry, apparel, cosmetic, appliance, electronics and furniture stores, as well as mass market stores that carry a wide variety of high-value products like pharmaceuticals.

One thing that almost all of Aon’s clients have in common, he notes, is that they often have limited financial resources for cargo loss control. The choices they make about how to best provide cargo security must be very strategic and backed, whenever possible, by research and data that helps them react as proactively as possible to what cargo thieves are planning.

However, not all retailers are prepared to plan strategically, and some are not operationally adept at ensuring that security policies are well-known and well-executed throughout the organization.

Watching and waiting

Retailers with high-recognition brand names are “key targets for thieves,” DiPasquale says. “There is a lot of work that goes into protecting and developing a formal security plan.”

Although it can seem to some that cargo theft is random and opportunistic, the opposite is the case. “Cargo thieves are actually very sophisticated criminals and they tend to run in gangs. They are very organized, very specialized groups that go after cargo theft.”

In the United States, cargo theft is estimated to be between $12 billion and $15 billion a year, DiPasquale says.

One of the attractions for thieves is that products stolen from retailers are easily moved on the black market.

Retailers, especially those who haven’t given a high priority to cargo theft, perhaps because they have not been hit that hard yet, need to understand that “these very sophisticated criminals are watching the trailers while they’re on the move,” he says.

“They are watching specific facilities where they know there is desirable cargo. They are watching, and they are often a step ahead of the security people assigned to protect the cargo. They are planning and waiting for the optimal opportunity to get the goods.”

Holiday weekends are “obviously more vulnerable,” he says. “There are less people around and the thieves are ready for any opening.”

Based on their surveillance, the thieves know when guards are around; they know who comes in and out of the facilities and when the guards make their rounds — when the lights go on at night and off in the morning.

“They watch all these things and they develop patterns, and from that, they determine the best time to strike.”

But if a retailer has invested in a good security team, he says, “they know what’s going on around their facilities so surveillance maneuvers can be compensated for.”

‘Need-to-know’

Problems arise because retailers don’t always have good security, DiPasquale says. “A lot of retail companies are dealing with limited budgets so they do the best they can with the tools they have. It becomes a cost factor for what they can actually do.”

And retailers are vulnerable whether they manage their own transit or use third parties.

Retailers are vulnerable to cargo theft, whether they manage their own transit or use third parties.

DiPasquale describes one case where thieves tripped a security alarm “on purpose, just to see what the response would be,” he says.

“If the response is slow, they might hit next time. Sometimes, though, they will trip an alarm two, three or more times, just to make the guards think the alarms are false. Then when no one responds the third or fourth time, they hit.”

Between 70 and 75 percent of the time, DiPasquale says, “the theft is based on the help of an insider, some inside information that the criminals get. They may have learned where a particular load is going to be, or where the designated rest stops will be. Then they’ll be ready to hit those particular cargos.”

Retailers need to be scrupulous in protecting documentation. “Only the people who need to know should have documentation information,” he says. “Retailers don’t want the documentation touched by many people. Only on a need-to-know limited basis should people have that information.”

A good practice, he says, is to give drivers “just the information to get to their destination following a specific route and to let them carry further information within a sealed security envelope that can only be opened when they reach their destination. This way the drivers don’t know the specific contents in their trailers. They have only the information they need.”

This is especially important, he says, for cargo being transported across high-crime areas like California, Florida, Texas, New York, New Jersey and even parts of Tennessee and Kentucky, “any place where criminals know the goods are.”