Cargo theft: Mitigating risk requires game plan

Look up how many air cargo thefts happen per year worldwide.

You won’t find the answer.

You will find news stories such as the 3,600 iPad minis that were taken from JFK International Airport in November 2012, or the cargo that was stolen and thrown over the perimeter wall at an Indian airport in April 2012.

Cargo security professionals interviewed say air cargo is the most secure mode of transportation, in terms of theft, because of the difficulty of stealing cargo midair.

But airfreight isn’t always in the air.

Trucks often take cargo to the airport. That cargo may sit around before or after a flight, sometimes unattended.

That’s where air cargo is most vulnerable to theft.

“Our industry, transporting high value goods as we do, is a potential target,” Oliver Evans, chairman of The International Air Cargo Association, says.

‘A system that actually works’

Cargo travels through many hands: airlines, ground handlers, trucking companies.

That’s why it must have a chain of custody, Walt Beadling, managing partner at logistics security company Cargo Security Alliance, says.

“What that means is at any point in time, you know who has a particular piece of cargo, whatever it may,” Beadling says. “You may not know where it is, but you know who has responsibility for it. And at each point where the cargo’s transferred, there’s a handoff, a formal handoff, where custody is transferred from one entity to another.”

Erik Hoffer, vice president of CSA, says someone must design a logistical plan in order to create that chain of custody and have as few handoffs as possible.

“There’s always going to be that one point where nobody’s watching the store,” he says. “Without having the ability to have a chain of custody throughout the different modalities, you’re not going to get anywhere. You’re just going to have a problem always.”

Most air cargo theft happens during these points of consolidation, JJ Coughlin, chairman at Southwest Transportation Security Council, says. Coughlin published a book called Cargo Crime: Security and Theft Prevention in 2012.

“When it’s in the plane flying is the safest it gets,” he says. “When it’s being handled at those points of consolidation is when it’s as risky as it gets.”

He says in order to fight theft, document each point of handling.

“If you take care of the small things, the process and the procedure, and you do things correctly as far as the freight handling, it makes your security issues a whole lot easier to resolve,” Coughlin says.

Hoffer says without a plan to create a chain of custody, the carrier or trucking company doesn’t know that a box contains valuable cargo, and they may not protect it in the appropriate way.

“The further into the supply chain you get with the less people have knowledge of what to look for and what to do, the whole system continues to break down further and further,” Hoffer says.

That’s why the owner of the cargo needs a game plan.

“If he can establish how to do it and it can be implemented by the receiving carrier, then by the receiving airline, then by the delivering carrier,” Hoffer says, “now you have a system that actually works.”

It is also imperative to screen anyone who handles cargo.

Coughlin estimates that 85 percent of the theft that happens during consolidation is internal.

Evans, who is chief cargo officer at Swiss International Airlines, says companies should screen warehouse and office staff and anyone else involved in the supply chain. Employers typically check police background, he says. Evans also stresses the importance of screening staff as they enter and leave the premises.

People can secure the supply chain by choosing business partners with care.

Charles Forsaith, Providence, R.I.-based director of supply chain security at Purdue Pharma Technologies, ensures the security of one of the company’s principle products, a sought-after opioid pain medication. The ingredients for the medication mostly come from Tasmania, Spain and Turkey.

In order to bring the raw materials into the U.S., the company uses airfreight almost exclusively.

Forsaith, also chairman of the Pharmaceutical Cargo Security Coalition, says Purdue, along with many in the pharmaceuticals industry, complies with U.S. Customs law by vetting all business partners. Forsaith interrogates people Purdue does business with at least once a year and also visits businesses physically.

He says the best approach to preventing cargo theft is a layered one.

“That layered approach doesn’t put all your chips on one square. Much like U.S. Customs requires, it says you need to know who it is you’re doing business with. You need to know what airline it is that’s going to fly your product. You need to know exactly how your product is being packaged or stored,” he says. “You have to physically go out and meet with these people, check those facilities, pay attention to the security that’s involved in the warehousing or loading of that aircraft and how it’s unloaded on the other end.”

Keep on trucking

Chain of custody, points of handoff and consolidation, layered approach – all these phrases point to the fact that air cargo goes through many people and entities before it reaches its destination.

Trucking companies are usually involved. If you want to talk about air cargo theft and security, you need to talk about truck security.

“Even if you handle your cargo as air cargo, the majority is still transported at the end of the leg or the beginning by truck,” Thorsten Neumann, Germany-based chairman of the Europe, Middle East, Africa region for the Transported Asset Protection Association, says. “This is clearly the weakest link within an end-to-end supply chain solution.”

TAPA provides a forum for its more than 300 member companies to converse about cargo security.

Beadling says knowing where to route trucks helps deter air cargo theft.

Neumann says logistics companies’ low margins present one of the biggest security hurdles.

“Many companies still do believe that security is purely a cost factor,” he says, “but if you take really a look and calculate your investment on security and compare that with non-secured trucks or non-secured routings, you will see that your returns in investment are tremendous.”

Cargo at rest

The saying goes that cargo at rest is cargo at risk.

Hoffer says thieves are less likely to snatch high-value cargo than general cargo because logistical hubs keep jewelry, cash and documents in cages. People take the general cargo that sits unattended, he says. He points to the iPad mini theft at JFK as an example of unattended cargo.

“If the cargo is at some intermediate point for any length of time, when it’s sitting, it’s vulnerable,” Beadling says.

Coughlin says air cargo is at the greatest risk for theft when it sits on the tarmac.

This presents a problem in Africa, Neumann says, where in some areas, the process flow is not controlled or even structured. He says high-value products can sometimes be stalled for days on the tarmac because of a lack of infrastructure.

It all comes back to having a well-planned supply chain for air cargo.

“Having an efficient and secure supply chain, those things go hand in hand because if it’s always moving, then the chance that something’s going to go wrong with it are minimized,” he says.

‘Beyond the loss of dollars’

Theft also presents another dilemma. If someone can get access to the cargo in order to steal it, that person can also put unwanted objects in the freight.

Coughlin tells of an incident where a cargo airline employee worked with drug smugglers to place pallets of marijuana into the airline’s system. The employee moved 15 or 20 of those pallets using a customer’s account.

“If you don’t control the freight handling, whether it’s theft or smuggling, it can easily happen,” Coughlin says.

But it can go further than drug smuggling, as the Yemen bomb plot in 2010 showed.

“I think it’s a real problem,” Hoffer says. “If that happened before, it can certainly happen again, and there has to be something in place where cargo in general terms has some mandate to be able to have an inspectable template for it so cargo that is moving through the supply chain can be looked at by every inspector.”

Beadling says since the Yemen incident, the scrutiny of air cargo security has improved, but Hoffer says more improvements must be made.

“My fear is really not as much the theft, but it really is on the other end when you have terrorists out there who find a way to get into cargo,” Hoffer says. “Now you’re talking about a serious problem way beyond the loss of dollars and cargo.”

Securing the chain

In order to prevent airfreight theft, Beadling talks about supply chain design, physical security and information sharing, such as knowing where the cargo is in real time and the identity of people handling the cargo.

Evans says the connected nature of the supply chain, with each company collaborating with another, makes it necessary for everyone to screen staff and choose partners carefully.

Neumann says many companies believe that if they experience a security issue, it must remain confidential. But theft and security aren’t company-specific issues – they affect the entire supply chain.

“Security is everyone’s responsibility,” Neumann says. “Security should not be a competition within our industry because we all face the same challenge every single day.”

This story originally said that Purdue obtains its ingredients for opioid products from Tanzania. It is actually Tasmania. Correction appended July 2, 2013 at 10:19 a.m.