As a logistics company or an organization that ships freight, transportation insurance is most definitely on your radar. You’re well aware of the risks inherent in the business of shipping, on any vehicle or vessel, and you understand the value of protecting your cargo in the case of loss, damage, or theft. While the ins and outs of cargo insurance (also known as freight insurance) vary by policy, it’s important to make sure you’re doing what you can to minimize your liability.
Cargo Theft Trends
As reported by the American Journal of Transportation, CargoNet logged 836 records of cargo theft across the United States and Canada in 2016. They recorded $114 million in stolen cargo across 554 of these incidents for an average loss value of $206,836.97; they estimate the total loss value (applying the average to the events with a missing value) at $172.9 million.
Here are some additional findings from CargoNet’s study:
- The most stolen category of cargo was food and beverage commodities, the most stolen items being alcoholic beverages, meat products, and non-alcoholic beverages, respectively
- Electronics were the next most stolen commodity as well as the most costly category, with well over $45 million in reported losses
- Cargo thefts were most common on Fridays and Saturdays
- Reported incidents were highest in California, Texas, and New Jersey
While New Jersey is the closest to home for companies operating in the Northeastern United States, cargo thefts can happen anywhere. An article in TruckingInfo notes that ever-more-sophisticated criminal activity moves around, comparing it to a large-scale game of whack-a-mole. The main takeaway is that companies, no matter what they’re shipping or where their freight is traveling, need to put cargo theft prevention protocols in place—but that’s just for starters. Let’s take a closer look:
Know How Criminals Operate
It’s helpful to have insight into the ways in which criminals go about stealing carrier shipments. Aside from targeting unattended vehicles at rest stops and busy distribution facilities or parking lots, here are some hallmarks of other often successful strategies:
- Posing as legitimate truckers, in disguise, to make fictitious pickups from unsuspecting drivers
- Hacking into supply chain systems to arrange pickups that, “on paper,” appear legitimate
- Getting help from an insider for tips and help orchestrating a steal
- Posting low rates on load-boards to “win” contracts—and shipments
These are truly at the tip of the proverbial iceberg, as criminals are becoming smarter by leveraging technology to aid in their deceptive practices. When you’re aware of how, when, and where your freight may be targeted for theft, it will become easier to identify areas of vulnerability in your processes.
Create Theft Prevention Protocols
To minimize the risk of freight theft, put preventive measures in place before your cargo ships out. Your employees, including logistics personnel and drivers, need to be well versed on their responsibilities as freight is prepared, loaded, and moved about. Specific protocols and processes depend on your business and existing systems, but they may include ensuring:
- Drivers travel in two-person teams
- Drivers maintain close contact with dispatchers regarding all stops, and they only stop at approved locations (e.g. certain rest stops)
- Freight remains in secured areas whenever possible
- Drivers have specific information about their trailer (e.g. license plate numbers) as well as any other drivers/carriers picking up their load
- Technology (e.g. GPS tracking, geo-fencing, electronic door monitoring) is in place to help track vehicles, cargo, etc.
- All personnel know what to do in the event of a theft (e.g. who to call, what information to share, and how to transmit that information)
- Periodic security audits are conducted
Educate Employees and Partners
All drivers, and anyone who comes in contact with your cargo, should be carefully prescreened during the hiring process and subsequently undergo regular background checks. Additionally, employees need to be educated on your policies and procedures and be given extensive security training so they can participate in hijacking prevention. These activities can contribute to maintaining a “culture of security” in which everyone plays a role in protecting company assets. Additionally, working in tandem with your logistics partners is another way to make sure your security standards are upheld at every stage in the shipment process.
Keep Your Insurance Up to Date
Every company is different, and your transportation insurance needs are likely to evolve over time as your company grows and laws change. Be sure to check in with your insurance agent on an annual basis to ensure your coverage provides the right levels of protection and continues to safeguard your most important assets.
Acadia Insurance is pleased to share this material with its customers. Please note, however, that nothing in this document should be construed as legal advice or the provision of professional consulting services. This material is for general informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness.