They wanted it. Now they’ve got it.
But it’ll take years for cargo shippers, motor carriers, and cargo insurers to determine what, if any, benefits they will derive from the federal government’s new attention to cargo crime.
For years, those three groups have lobbied the federal government to take cargo theft more seriously, and to devote more resources to fighting it.
Their efforts bore fruit this year when Congress included cargo crime provisions in the reauthorization of the USA Patriot Act. Those provisions include:
- The introduction of a new code under the Uniform Crime Reporting system for reporting cargo theft;
- Enactment of a new requirement that the U.S. Attorney General issue an annual report detailing efforts made to detect and prosecute cargo crime; and
- New sentencing guidelines for cargo crime that are perceived to be tougher than those recently handed down by federal courts.
The cargo lobbying coalition did not, however, win congressional approval of $38 million sought to educate state and local law enforcement about the identification and reporting of cargo crime.
“We hit a triple and got thrown out at home,” says Ronald Thornton, president of the Inland Marine Underwriters Association (IMUA). Inland cargo is insured under several classes of inland marine insurance, including “transportation,” “trip transit,” “motor truck cargo legal liability,” and others, plus “warehouse operators legal liability” and other “bailee” classes.
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Who pays when a cargo spoils while it is delayed for inspection by public authorities?
The U.S. Department of Homeland Security (DHS) wants to know.
Michael Gresalfi, a DHS staff member, contacted AAIS in September about a case where a cargo entering the United States by truck suffered a loss while it was delayed and inspected for an unspecified “probable cause.”
The shipment was eventually allowed to pass into the U.S. but suffered a loss during the delay, prompting questions about who bore the financial responsibility.
In response to Gresalfi’s inquiry, AAIS Vice President Robert Guevara responded that motor truck cargo insurance forms typically exclude losses “caused by or resulting from delay” as well “losses to perishable stock caused by spoilage.”
In his response, Guevara added that “I am not aware of any avenue open to trucking companies to petition law enforcement officials for reimbursement for lost cargo.”
The matter may not end there, however.
“It is reasonable to anticipate some loss of perishable goods during interrogation,” Gresalfi responded to Guevara. “How the insurance industry handles these losses and the perturbation upon commerce and the marketplace are, to me, of great interest.”
In a perhaps unrelated development, the Inland Marine Underwriters Association (IMUA) notes that the U.S. Dept. of Agriculture has instituted new fees for agricultural shipments entering the U.S. from Canada.
The IMUA writes: “The money collected will be used to provide funds for more border inspection agents to screen more truck for illegal or questionable agricultural products or suspicious activity . . . thereby creating the potential for more delays.” |
With rare exceptions, cargo crime was viewed as a low priority for Congress and law enforcement as long as it was regarded as simply a property crime, especially since most cargo thefts involve “insider” corruption by drivers or others, and only rarely involve violent attacks.
That perception changed somewhat with the increased concern over terrorism following the Sept. 11th attacks, but even that concern seemed to wane as years went past and no major truck bombings occurred.
What seemed to inspire congressional action, says Thornton, was the fact that organized criminal gangs are apparently engaged in cargo theft to fund their operations, and that terrorists could do the same. (Hijacking and trafficking in contraband is believed to fund many of the insurgent groups in Iraq.)
Observers say that the principal value of the new cargo crime reporting provisions is that they will allow governments at all levels to get a more precise estimate of the size and regional severity of cargo theft.
“[Today], it’s really difficult to quantify how big the problem really is,” says C. Randall Mullett, Alexandria, Va.-based vice president of government relations for the Con-Way trucking lines. “Within 3-5 years there will be enough data to track.”
Current estimates of the amount lost due to cargo theft have ranged widely, sometimes up to $100 billion a year, a total discounted by most observers.
The most commonly accepted estimate is approximately $10 billion a year, a figure arrived at in a joint study conducted in the late 1990s by the RAND Corporation and the John A. Volpe National Transportation Systems Center, a federal research organization based in Cambridge, Mass.
Until now, cargo losses were indiscernible in standard crime reporting. For example, a stolen trailer would typically be reported as vehicle theft, and the case would be reported as resolved if the trailer was recovered, even if its contents were gone.
Similarly, cargo thefts from warehouses have typically been reported as grand larceny, and thus lumped together with other types of unrelated property crimes.
“Good data is the basis of good decisions,” says Mullett. “The UCR code will put a lot of questions to bed.”
Among the “good decisions” the new cargo theft reporting is supposed to facilitate are those regarding the allocation of law enforcement resources.
“By having cargo crime added to the UCR, it will capture details of where the cargo crime is being committed, the type of product stolen, and the geographic areas from which the thefts take place,” says Peter J. Scrobe, vice president of loss control services for AIMA, an ocean marine MGA Scrobe has testified before Congress on behalf of the American Institute for Marine Underwriters and the International Cargo Security Council.
“This will allow law enforcement to focus on where to allocate needed resources--funding and manpower,” Scrobe continues. “[It will also allow] the private sector to determine what measures can be introduced to effectively prevent or minimize exposure to loss from theft.”
Groups concerned with cargo security believe the current environment, with a lingering concern about terrorism, offers a promising but perhaps fleeting opportunity to establish public support for funding multi-jurisdictional task forces to combat cargo crime.
According to Scrobe, waning public funding has limited the effectiveness of the Los Angeles County “Cargo CATS,” one of the original cargo crime task forces.
“There is still not much emphasis placed by law enforcement and government on cargo crime,” says Scrobe. “It’s not considered a violent crime in most cases, and it’s generally paid for--through insurance.”
Scrobe and others argue that uniform, credible data about the scope of cargo crime is essential to sustaining public sector awareness of cargo crime and support for fighting it.
However vigorously law enforcement responds to cargo crime, the principal line of defense for shippers, motor carriers, and cargo insurers continues to be their own loss control efforts.
Given that most cargo crime is believed to involve insider information, those with a financial stake in cargo typically have identifying information on drivers and other potential suspects before law enforcement does.
Now that the U.S. Attorney General is required to issue an annual report on efforts to combat cargo crime, however, Mullett at Con-Way believes there may be more widespread use of wiretaps, warrants, and arrest powers to track more participants in cargo crime and recover lost shipments more frequently.
Also, while some cargo security lobbyists are disappointed that the new sentencing guidelines are not more binding on judges, Mullet says they at least start to address the problem of “catch and release” that plagues cargo crime prosecution and leads to an “unbelievable amount of repeaters” in cargo crime.
Due to intensely competitive conditions in the trucking industry, the private sector alone cannot bring cargo crime under control, says Scrobe.
“There is a cost associated with good security practices and process management, which in many instances is too expensive for some companies to take on,” he says.
“There is a shortage of drivers in a very competitive environment,” he adds. “If a [motor carrier] wants to maintain market share and doesn’t or can’t pay for background checks, you can have trouble.
“Not all transporters will adhere to best practices.”
What’s the problem, exactly? 
