Remarkably, a debate exists over whether unattended transported cargo truly needs to be protected and secured. Documented losses through damage far exceed those from supply chain theft. In some industries, losses through counterfeiting, diversion and fraud also exceed quantifiable losses from theft. So where should businesses rank a secure supply chain in their budgets and corporate strategic focus, and what should they do about it?
Who’s Responsible for Loss?
Who will be held responsible for a cargo loss? Who is responsible for implementing the security necessary to prevent loss? The Carmack Amendment to the Interstate Commerce Act defines limits of liability to carriers and allocates cents on the pound for freight regardless of the commodity, its actual loss value or the collateral effects of the loss. Based on this protection, carriers can reduce their insurance coverage to bare minimums, and they may fail to implement security unless it is tangibly beneficial to their operational efficiency and collaterally helpful to their clients.
Law enforcement once worked to stem the illicit transfer of stolen goods. Today, however, most federal funds once earmarked for cargo security have been redirected to address other national security issues. Supply chain disruption, through an act of cargo terrorism, would bring the economy of the free world to its knees. Cargo security is clearly a component of national security, but it has somehow been left out of this equation.
Even when law enforcement does work to recover stolen cargo, recovery in some cases means more problems to shippers than the loss itself. For instance, ingestibles need to be destroyed if recovered by law, and the cost of destruction is then borne by the shipper, further compounding their loss.
Instead of relying on external remedy by carriers, third-party logistics providers, or law enforcement, shippers need to protect their own interests against any condition of loss.
The Real Value of Cargo
Some cargo losses are simply written off because the value of the goods is low. But vulnerability to theft, product contamination and economic terrorism is not related to the value of goods. In today’s economic climate, where a just-in-time supply chain is the norm, losses of any kind radically disrupt a company’s business logistic continuity and escalate the actual cost of the loss to many times that of the cargo itself.
It is as necessary to protect a truckload of chewing gum as a truckload of pharmaceuticals. An item’s desirability to thieves directly correlates to the speed with which the product can be fenced or absorbed into economic obscurity. Soap powder, diapers and toilet paper can be as desirable to thieves as computer chips in certain areas.
Everything from fire engines to pesticides can be used as terrorist tools. The less scrutiny a unit receives, the more valuable it is to terrorists; yet in the industry, the lower the cost of the item, the less attention is paid to protecting it. Meat, seafood and cigarettes can be targets for theft, while a container of lawn chairs can be a conduit for the introduction of a weapon into our country.