“Cargo theft” remains number one security concern for supply chain professionals

August 16, 2006 by SwizStick  
Filed under 3PL, Contract Logistics, Supply Chain Management

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Rob from Riskape comments on an article from Supply Chain Review that reports “reducing cargo theft across the supply chain” as the greatest security challenge, based on responses from supply chain professionals in a report conducted by eyefortransport:

When asked which area of security is considered the greatest challenge for the respondents’ organisations, 41 percent said ‘reducing cargo theft across the supply chain’, compared to 35 percent in last year’s survey. This seems to reflect the apparent industry concerns about rising in organised cargo theft.

I wonder whether organized theft or standard run of the mill pilfering is the greater threat. Whichever, it is interesting to note that supply chain professionals still consider the somewhat mundane threat of theft to be their most important security challenge.

I don’t think theft can be considered a “mundane threat”. Cargo theft – increasingly becoming organized – can not only be a huge drain on company resources and profits, it can also be dangerous. Particularly when it comes to high value/high demand goods, which includes the hi-tech industry. Here in California, with its concentration of technology companies, there have been many instances of armed robberies of high end CPUs, hard drives, and other computer related parts and accessories. I know of one company that was forced to hire armed guards and implement draconian security measures for all vehicles and persons entering and exiting their facility after armed robbers shot and killed one of their employees while stealing a truckload of CPUs. In both the Bay Area and Los Angeles organized gangs have been known to scout freight forwarding companies and track pick ups and deliveries from well known customers, using this information to hijack the cargo during transit between companies warehouses. Warehouse facilities in and around major port areas have been robbed at gunpoint, employees tied up and locked in bathrooms or storage rooms, with the thieves targeting only specific cargo, which means that they not only knew what kind of cargo they were going after but when and where the cargo was being stored. The main problem with cargo theft is that it is increasingly becoming organized and violent, hence the increasing number of cargo theft task forces at numerous police organizations around the country.

As for why so many supply chain professionals still feel that cargo theft is the most challenging aspect of supply chain security, I can only say that in financial terms cargo theft is the more immediate threat in many companies minds as it can easily be quantified and impacts the bottom line in a more direct way. “We lost $10 million widgets this year due to cargo theft and pilferage representing more than $25 million in retail dollars lost.” It’s this kind of thinking from the top down that puts pressure on supply chain professionals to reign in cargo thefts and loss.

Unfortunately, most companies just don’t take terrorism and its risk to their supply chain and subsequent risk to the country seriously. In most companies minds, they just can’t picture the risk, partly because it’s difficult to quantify and analyze, while cargo theft is a more obvious picture and closer to home. Another problem is that most companies – and people – are reactive instead of proactive, taking measures only after the event. Companies that have never, or rarely, experienced cargo loss probably have pretty lax security, but once someone steals a truckload of their product or holds up one of their warehouses, they react by beefing up security up and down the supply chain. Since most companies have never been the victim of a terrorist act, they simply don’t see the importance of implementing anti-terrorist security in their supply chains. This is dangerous thinking.

A resilient and secure supply chain is a proactive one that prepares for every contingency, particularly disruption, loss, or damage due to a terrorist attack. It took 9/11 to wake a lot of people up about the global terrorist threat but unfortunately too many of us have been lulled back into a 9/10 mentality. While it may be easier to assess and analyze the threat of cargo theft, terrorism should be the number one concern above all when it comes to supply chain security. It would only take one incident to not only cause terrible damage and suffering to the public, but also cause enormous damage to your supply chain, bottom line, and public reputation. Hopefully the next time this report comes around supply chain professionals will have their priorities right.

Update:
I just read this report via Yahoo! News:

A nuclear explosion at the Port of Long Beach could kill 60,000 people immediately, expose 150,000 more to hazardous radiation and cause 10 times the economic loss of the Sept. 11, 2001 terrorist attacks, according to a new Rand Corp. study.
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In addition to the human casualties, such a blast might destroy the infrastructure and every ship at the ports of Long Beach and Los Angeles, which together handle about one-third of the nation’s imports, the study said. Damage at port-area refineries could create critical shortages.

And how could a nuclear device get into the port of Long Beach? Quite possibly smuggled into YOUR company’s container. Are we clear now?

Cargo theft is indeed a serious issue and is not to be dismissed, but the impact of a single terrorist event involving your company’s supply chain would be catastrophic.

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