Sharing Information to Recover Stolen Cargo

In the past several years, cargo theft has evolved from a regional opportunistic problem to an organized national epidemic. From the 1970s through the mid-1990s, local gangs would target a high-value trailer here and there, and its contents would be distributed back into the local gray market. Nowadays, international crime syndicates use a more organized approach that includes taking orders from gray and black market outlets, conducting surveillance (and counter-surveillance), and executing thefts professionally and efficiently at a warehouse or while cargo is in transit.

Cargo theft costs the U.S. economy billions of dollars per year and is paid for by manufacturers, retailers, insurers and consumers. To combat this costly problem, the property/casualty insurance industry launched a CargoNet initiative in 2010 as a way to overcome the data-sharing challenges between the public and private sectors. Through collaboration between the National Insurance Crime Bureau and Verisk Crime Analytics, CargoNet helps to prevent cargo theft and to improve recovery rates using secure and controlled information sharing between theft victims, their business partners and law enforcement. The utility and security of the system encourages insurers and policyholders to provide quick, detailed information that can be quality controlled, shared with law enforcement, and made part of the CargoNet database.

At CargoNet’s core is a national database and secure information-sharing system managed by crime analysts and subject-matter experts. By applying a synchronized, layered approach, CargoNet exploits the weakness of cargo thieves at multiple points through integrated databases, a theft alert system, task force and investigations support, and a tractor/trailer theft deterrence program.

Since cargo theft incident data collection began in 2010, the amount of reported incidents has grown significantly each year. In 2011, CargoNet collected 1,215 cargo theft incidents from across the United States — a 23 percent increase from data collected in 2010. However, the increase in theft data collected does not necessarily indicate an increase in the cargo theft problem. Instead, it reflects the improved collaboration between the public and private sectors.

While data comparisons between 2011 and 2010 may not necessarily provide full insight into theft growth trends, the overall data is still telling. Following are statistics from 2011 and lessons that insurers should draw from the data.

Cargo Theft by Location

The top states where cargo theft incidents were reported in 2011 include California, Texas, Florida, New York/New Jersey, Illinois, Georgia, Tennessee and Pennsylvania.

Top States for Reported Cargo Theft Incidents in 2011

These states report more reported cargo theft incidents than others, first, because of their geographic locations; these states have a high flow of cargo because they include large cities, active ports, transit choke points and distribution centers. Second, most of these states have dedicated cargo theft task forces, so they are more likely to report cargo thefts than a local police department, although recoveries also are higher.

As public safety budgets shrink, such task forces will be under significant budgetary pressure, and the insurance industry must be prepared to find new and innovative ways of supporting law enforcement. Putting better policyholder and claims reporting mechanisms in place is a good starting point.

Cargo Theft by Day of Week and Location Type

The days with the highest number of reported cargo theft incidents in 2011 were: Friday, Saturday, Sunday and Monday.

Days With Highest Reported Cargo Thefts

Most theft likely occurs over the weekend because most businesses are closed and warehouses are unstaffed, forcing many drivers to hold cargo until the next business day. As a result, some drivers may leave full trailers unattended at truck stops (139 reported incidents), warehouses or distribution centers (122), public parking lots (115), and carrier or terminal lots (94). Understanding that the most critical time in a cargo theft investigation is the first 24 hours, insurers need to assess their capabilities to operate 24/7 to support policyholders.

Cargo Theft by Commodity

The top product types stolen in 2011 were prepared foods and beverages; electronics, base metals; and clothing and accessories.

Top Product Types Stolen in 2011

These four commodities have always been near the top of the list of most-stolen commodities because they are easily sold on the gray and black markets. The past two years have shown an increase in the theft of base metals because of the rise of base metal value within the economic marketplace. Different types and layers of security are needed for different shipments — one size does not fit all. Underwriters can influence such decisions.

Cargo Theft by Loss Value

The total loss value for cargo theft incidents reported to CargoNet in 2011 was approximately $123 million. Of that total, electronics had the highest total loss value at approximately $58 million; clothing and accessories had the second highest loss value at about $14 million; and prepared foods and beverages had the third highest loss value at approximately $12 million.

To effectively mitigate cargo theft losses, information sharing between theft victims, their business partners, and law enforcement must continue to improve. Information sharing not only helps recover stolen cargo, but it also helps transportation companies optimize security measures and prevent cargo theft.