The Insurance Report - December 2006

CARGO THEFT ON THE RISE
By Roland L. Enz - President, California Plus Insurance Service, Inc.

When I see more than one loss of the same nature, in a matter of a few short weeks, a light goes on over my head. If a small insurance agency such as ours is seeing an upturn in cargo losses, it must be happening throughout the state and the nation. Well, as it turns out, it is! From stealing cattle to consumer goods, transported cargo is a major target and it is on the rise.

I am convinced that 80% of all theft losses are the result of fraud and/or inside help. Vehicles stolen that were left loaded, unattended, on the street or in unsecured parking lots or terminal areas, are a major indication of someone knowing what is being hauled. Accomplices in cargo theft can take on many roles; sharing information and cooperating with theft rings, failure to follow standard operating procedures, and idle talk at the truck stop can all become factors in cargo theft.

You should review all employment histories as well as the MVRs of your drivers, substitutes, and independent contractors. Frequent job changes may signal that he or she has been responsible for multiple property losses. It is not uncommon for a driver to accept money to turn his back, looking the other way, as thieves make off with a truckload of cargo, unprovoked. In today’s global market, a local "fence" operation is not needed to dispose of product; containers move shipments quickly around the world. In many cases, stolen product is integrated into legitimate shipments, disguised and hidden from view. Keep in mind that there has to be an end user or demand; thieves have shopping lists and they steal to order.

The trucking industry handles every product that we use in our daily lives. From toilet paper to fur coats, the trucking industry is porous and susceptible to theft and deliberate pilferage. From a criminal perspective, the economics simply are too good. Rewards are high, and penalties for cargo thefts are significantly lower than that of other thefts with the same monetary potential. Annually, theft amounts to a six billion dollar a year business. You will continuously see this problem reflected in your insurance rates, and at the retail counter. It is estimated that theft adds $100.00 to each computer sold.

The most commonly stolen goods are food products, apparel, consumer electronics, pharmaceuticals, wine, spirits, baby formula and diapers. Simple items such as baby formula and diapers move south into Mexico with ease and then are easily sold on the street.

Loss control and loss prevention should occupy a major part of your transportation obligation. Whether you are an employee driver, owner-operator or a fleet operator, it is your responsibility to provide secure shipments for your clients. If you have hired drivers, or if you use owner-operators, you have an obligation to indoctrinate those that are hauling for you. Statistics show that about 61% of all theft losses originate at the truck stops or highway rest areas. A major percentage of thefts are also made from unsecured locations, which include streets, drop lots and even shopping centers.

There is no silver bullet to prevent cargo theft, but the responsibility rests entirely on your shoulders for loss prevention. An unattended loaded truck is a neon sign pointing the way to someone’s extreme problem and to another’s financial gain. Believe me, in any loss, whether it is a cargo loss, physical damage loss or a liability loss, you lose. A loss can cause you out of pocket expense, loss of revenue and higher insurance rates.

In the event of a cargo theft, your insurance may have significant short falls, such as a co-pay, loss limitations, and/or a “no coverage for losses from an unattended vehicle” stipulation. Again, this goes back to what I am continuously preaching – spend time with your insurance agent so you completely understand the policies that are protecting your means of making a living.

If you are a witness to or know of any information regarding theft, I strongly encourage you to contact your local police authority. If you are in the Southern California area, contact the Los Angeles County Sheriff’s office. They have a unit specializing in cargo theft called Cargo Cats. Cargo Cats (Cargo Criminal Apprehension Teams) started back in 1990 and through January 2006, the unit has been responsible for retrieving more than 213.5 million dollars in stolen property and they have made an amazing 1,275 arrests! To contact Cargo Cats, call (310) 603-3137.

It is important that you report any loss immediately to your insurance company or insurance agent. Timing plays a big part in the possibility of retrieval. If the loss is not found within 24 hours, chances of retrieval are virtually nil. As with any cargo loss, you have the responsibility to protect any of the remaining load from additional losses. There are many examples of this, and this should be understood and discussed with your insurance agent.

If you have any comments or if you would like to discuss any other insurance-related topic, please contact me (Roland Enz) through California Plus Insurance Service in Modesto, California by calling 1-800-699-7101. I hope you (and your freight) have a safe and wonderful Holiday Season and the most prosperous New Year ever.