Pharmaceutical cargo theft: a growing problem

There is a lot of attention given to counterfeiting and diversion of pharmaceuticals at the moment, but a third activity – cargo theft – is becoming an increasingly important supply chain security issue for the industry.

Cargo thieves get hold of freight in a number of ways, including burglaries of commercial premises, truck hijacking, theft of cargo from unattended vehicles or theft of the vehicle itself, and deception crimes, for example where drivers are deceived into delivering to the wrong location (commonly referred to as ‘round the corner’ deception).

There have also been cases where accidents have been staged to force a truck stop, and fake police officers have seized control of a vehicle. A recent trend is the creation of fake truck companies by offenders, who apply for freighting jobs and then steal the merchandise they are supposed to transport.

The latest figures from Freightwatch International (FWI) indicate that in 2008 pharmaceutical thefts in the USA rose by a third, with criminals actively targeting drug shipments “on an unprecedented scale.”

Thefts tended to occur in the vicinity of major pharmaceutical hubs such as New Jersey, Ohio, Tennessee, Western Virginia and Memphis, while the most common location to recover the empty container trucks is in South Florida.

While overall rates of cargo thefts actually declined slightly in Europe last year, there is a worrying trend towards an increased level of violent hijackings involving criminals carrying firearms, according to a report recently published by Europol, the European Police Office.

The UK is one country where the increase in violent crime is becoming more pronounced, and it remains the number one location for road trade theft in Europe, according to the report, which can be downloaded here.

That viewpoint is backed up by figures from other sources.

The UK’s National Criminal Intelligence Service last year reported an increase in the incidences of violence used in robberies from freight forwarders and bonded warehouses, as well as of vehicles in transit.

And a survey by the International Road Union and International Transport Forum, published in 2008, provides a clear indication of the personal risk taken on by drivers of freight vehicles. This found that between 2000 and 2005 17 per cent of drivers had suffered an attack, with 30 per cent of those attacked more than once. 21 per cent of cases involved physical violence.

Europol does not provide details of pharmaceutical cargo theft but notes that prescription drugs are among a group of “hot products” that also includes alcohol, computers, entertainment equipment, name brand clothing and cigarettes.

Meanwhile, other countries which are hot spots for cargo theft in Europe include Germany, France and Italy, while Spain and Austria are seeing strong growth in cargo theft activity.

Pharma: low-risk, high reward

Mark Harvey, director of security at NYK Logistics (UK) Ltd, believes that the UK’s prominence as a site for cargo theft is in part because so much (80 per cent) of the country’s freight travels by road.

London’s Heathrow airport serves as the hub of all cargo theft activity, and gangs have been known to travel throughout the UK, tracking high-value loads to seize them when an opportunity presents itself.

Pharmaceutical manufacturers are becoming increasingly targeted because of the high value of shipments, which outstrips that of other common targets such as electronic goods and tobacco.

For example, pharmaceuticals accounted for 16.6 per cent of all stolen truckloads in the USA last year, according to FWI’s latest data,  and the average value of the lost shipments was way ahead of all other industry sectors at $1.5m. The next-ranked target was tobacco shipments with an average loss value per load of around $800,000.

“This is a low-risk, high reward crime,” said Harvey. “It is very difficult for police to catch these people, as there are generally limited forensics and few witnesses.” There also tend to be low sentences for these sort of crimes, at least for those in which firearms and other weapons are not used, he added.

Goods that are stolen in this way often re-enter the legitimate supply chain via parallel markets, and in many cases are stolen to order, he continued.

Security measures

There are a number of measures that pharmaceutical manufacturers can take to try to guard against cargo theft, not least of which is working with logistics providers that are members of the Transported Asset Protection Association (TAPA), said Harvey.

TAPA provides a number of guidelines and recommendations to its members to help them tighten up security measures, including target hardening, which refers to measures designed to make warehouses or vehicles tougher to steal from.

These can range from relatively simple locks and alarm systems, to surveillance systems such as closed circuit television, infrared sensors to record personnel movements, visual gate systems with optical readers to record truck registrations and container numbers and photograph the driver, and seals that are difficult to re-secure on cargo containers.

There are also more mundane measures, such as storing containers with doors facing each other so cargo is difficult to remove, making sure merchandise doesn’t spend too long sitting on loading bays and storing empty containers in a separate area to cargo.

Tight control of staffing is essential, according to Harvey, who recommends developing reference standards for human resource departments, setting up training and awareness programmes so drivers and warehouse staff can recognise threats, and making use of confidential hotlines to report suspicions of illicit behaviour.

Europol’s cargo theft report points to studies estimating a high level of driver involvement in criminal activity – either voluntary or forced – but also points out they are the first line of defence so there is a need to train and educate them on cargo crime and personal safety issues whilst on the road.

Logistics providers should offer a closed, secure network with vehicle tracking, a gate departure access system that integrates with booking and satellite tracking systems, and monitoring of shipments via security control rooms which can also provide rapid response to incidents, said Harvey. Finally, there should be regular audits to assess vulnerabilities, he said.

More to come?

Meanwhile, the economic downturn is likely to spark an uptick in cargo theft, according to TAPA.

“We know from previous recessions that crime increases,” said Gilad Solnik, Incident Information Service Lead at TAPA Europe, Middle East and Africa division. 2008 figures indicate a 50 per cent increase in reported thefts from facilities after a downward trend in recent years, he added, and while vehicle hijackings are down, this may be the result of additional training companies are giving to drivers.

“Organised criminals targeting high value products moving in supply chains remain the greatest threat but businesses also need to be more alert to the risk of opportunist thefts from ad hoc and first‐time criminals,” said Solnik.

TAPA’s latest monthly newsletter carries an article suggesting that logistics providers are under such price pressure from customers that some are bring encouraged to reduce security measures.

“These ‘savings’ could be in the form of eliminating third party monitoring, cutting out an escort vehicle, parking in a lay-by rather than a secure truck park or not using slash-proof curtains on trucks,” says the article, which is authored by John Carroll, Regional Marine Loss Control Manager for AIG UK.

This is a risky manoeuvre, he argues, as there have been cases where manufacturers have sued freight forwarders for negligence in failing to have proper security measures. The full article can be accessed here.