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Articles and Publications November, 2012

An introduction to cargo theft in Canada:

Reaching the breaking point and moving forward

First presented at an MB Marine Law Seminar

1) Background

Cargo theft: not a victimless crime1

Cargo theft has become a widespread and major challenge for transportation industries in many countries around the world, including Canada. Cargo theft has its roots in a $65 billion Canadian industry—trucking is responsible for transporting 90% of all consumer products and foodstuffs as well as 75% of the goods traded with the USA.2 The trucking industry also employs hundreds of thousands of people.

As a result, the repercussions of cargo theft are felt not only by direct stakeholders, but also by consumers and suppliers, governments and even the Canadian economy as a whole, as the losses created by cargo theft can create higher prices for consumer products and deplete tax revenues.3 Aside from the financial impacts of cargo theft, there is an increasing level of violence being used against truckers.

Cargo theft has also found a place in organized crime, which provides a network of criminals to steal and distribute stolen cargo typically through illegal markets.4 As a result, revenues of legitimate businesses are shifted to criminals and are also used to fund further criminal activities, such as smuggling.5 Unfortunately, cargo theft appears to be an enticing venture for criminals. It offers high profit margins and is relatively low risk, but can generate enormous rewards and has minimal criminal sentencing.

Cargo theft is allegedly under-reported in Canada for a number of reasons, including the negative impact on reputation, business and customer confidence for consumer and trucking companies, the perception of cargo theft as a low-level crime, increased insurance premiums and the cost of paying deductibles in the event of a claim. Further, almost all of cargo theft reporting is provided by police agencies in the GTA area, which "is known for having the highest rates of cargo theft in Canada, rivaling the major supply chain crime areas of the United States, including Los Angeles, Dallas/Fort Worth and Miami".6

Over $500,000 of property disappears daily in the GTA;

As a result, reported statistics have been criticized for being inaccurate as they do not reflect the true rate of cargo theft, which is likely much higher. Nonetheless, it is clear that the amount of reported theft is itself staggering, as shown in the following statistics:

  • In Canada, cargo theft is a $5 billion problem;7
  • In 2008, $22 million worth of cargo was stolen in the Peel region in the GTA;8
  • Each year, Canadian carriers have over $1 billion in losses and claims;9
  • Over $500,000 of property disappears daily in the GTA;10

Forms of cargo theft and high-risk cargo: indiscriminate thieves

Cargo theft occurs in freight forwarding yards, carrier/terminal lots, truck stops, warehouses and especially, during transportation. Infiltrating companies through identity theft is a common method used. For example, a cargo thief will fraudulently assume the identity of a carrier and make what seems to be a legitimate pickup of cargo at a dock or shipyard; any suspicion of the theft is not raised until the load fails to arrive at its intended destination or the actual carrier arrives. At that point, the stolen cargo could be anywhere.

Another common method of cargo theft involves collaboration between a truck driver and warehouse employee who steal the cargo while shippers and receivers are in the process of loading and unloading.

Cargo theft is also no longer confined to high-value items, such as cigarettes, alcohol, computer components and electronic products,11 which are easy to move in black or underground markets. Now, criminals will steal anything from coffee and meat, to clothes and toys, to metal scrap and plastic pieces. Items, such as meat, imply pre-planned infiltration and coordination with buyers. Metal scraps, such as copper, can be extremely valuable where there is a high volume. Further, "pharmaceutical cargo theft has not only steadily increased since 2009" in Canada but may be "responsible for more incidents involving violence than any other."12 It also raises significant concern of whose hands these drugs fall into and suggests that they are destined for a pre-determined market.

2) Current challenges and recent efforts to combat cargo theft

The above mentioned issues and obstacles can be attributed to, among other things, law enforcement challenges, the lack of public awareness and the perception that cargo theft is a victimless crime, the lack of funding and measures taken by main stakeholders in addressing cargo theft,and until recently, the lack of a central reporting or recording system.

Law enforcement challenges

Law enforcement agencies have faced significant challenges in combating cargo crime, particularly because of the shortfalls in legislation.

In the Criminal Code, RSC 1985, c C-46, cargo theft is not differentiated from general property theft (Section 322). For theft exceeding $5,000, a person is guilty of an indictable offence but will, at most, face a penalty of imprisonment of 10 years or less (Section 334(a)).

On November 18, 2010, Bill S-9, an Act to Amend the Criminal Code (otherwise known as the Tackling Auto Theft and Property Crime Act) was given Royal Assent. In relation to cargo theft, the offences of trafficking in property obtained by crime (now Section 355.2) and possession of property obtained by crime for the purpose of trafficking (now Section 355.4) were created. The new offences under Sections 355.2 and 355.4 cover property valued at $5,000 or more and are indictable offences subject to imprisonment for a term of 14 years or less (now Section 355.5).

Recent efforts

CargoNet pass(es) the theft data to drivers, gas stations, rest stops, law enforcement systems, which in turn pass the data to investigators and police officers.

CargoNet is a national cargo theft database and secure information sharing system in the USA dedicated to cargo theft prevention and recovery.13 The database is comprised of cargo theft data received through CargoNet's internal investigation and claims management systems or its 24-hour call centre from law enforcement, insurers, transportation companies, manufacturers, retailers and other theft victims. This data may contain the destination and serial numbers of the cargo, plate numbers, carriers and time of shipment. CargoNet is designed to quickly pass the theft data to drivers, gas stations, rest stops as well as statewide law enforcement systems, which in turn pass the data to investigators and police officers.

In Canada, a longstanding company known as TransCore Link Logistics continues to implement and provide leading transportation technology solutions to carriers, brokers, owner-operators and private fleets.14 In particular, the freight-matching program "Load Link" is a Canadian network and source of information available to carriers, transportation companies, owners-operators, freight brokers and intermediaries in Canada and the USA. These parties post shipments and trucks on the network on an annual basis, which allows them to keep their trucks loaded and shipments moving.

The program "LinkDispatch" involves dispatch management software and "LinkOpsCentre" involves both trucking and broker dispatch systems. The latter program is integrated with the LoadLink load board and the in-cab and satellite trailer tracking system used by TransCore. Both programs are designed to organize and maintain operations, orders and accounting functions of carriers and brokers.

TransCore's trailer tracking system, which is operated fully by satellite GPS, provides in-cab satellite tracking, messaging, engine diagnostics and "Slap & Track" trailer tracking devices, which are designed to strengthen fleet management and trailer security and provide fast response times. "Slap & Track" devices, referred to as the "bird's eye view of all your trailers at all times", provide features such as 24/7 visibility, flexible pre-scheduled reports, synchronized fleet reporting times, motion sensors, detailed mapping, location reports and history, dwell time reports and automated yard checks. TransCore also provides optional trailer sensors, such as reefer sensors to monitor temperature, door sensors to notify dispatch if a trailer door has been opened beyond set parameters and cargo sensors to notify once a trailer has been loaded or unloaded by a customer. Hook/unhook sensors immediately notify when a tractor has been hooked up to a trailer and confirms that the driver picked up the correct trailer.

The "Cablink" system is designed to provide two-way satellite GPS tracking and communication between dispatch and drivers throughout North America.

In other efforts, the Canadian Trucking Association has collaborated with the Insurance Bureau of Canada to create the "CTA Cargo Crime Incident Report" form to collect data on cargo crime incidents (see attached).

3) Moving Forward—tackling cargo theft obstacles and increasing industry-wide efforts of all stakeholders

Cargo theft in Canada, and particularly in provinces such as Ontario, British Columbia and Quebec, is a rising and major problem that should not be overlooked by any parties directly involved.

While extremely important, maintaining databases is only a step in combating the problem. To effectively combat cargo theft there should be industry-wide efforts, beginning with grassroots actors, such as motor carriers, trucking companies, yard owners and drivers as well as law enforcement and insurance companies.

Stakeholders should work together to develop a national strategy going forward. Collaboration, reasonable exchange of information between all stakeholders and the promotion of awareness of the issues and challenges faced by all stakeholders are essential. Standardized protocols that serve to prevent cargo crime or help maximize recovery and find those responsible when a theft does occur would also be of benefit.

Insecure yards, poor security protocol and lack of technology only facilitate the schemes of cargo criminals.

In particular, main players in the trucking industry should be proactive and implement heightened security measures. Insecure yards, poor security protocol and lack of technology only facilitate the schemes of cargo criminals.15 As such, these players should consider: having guards controlling access to the cargo; using technology such as tracking devices and GPS systems to monitor cargo and trucks; requiring employees to verify the identities of drivers and carriers; implementing a techno-based asset tracking or inventory control system; and, requiring carriers to implement measures, such as 5th wheel pin locks and electrical cut-off switches.

To validate that cargo theft in Canada is not a low-level crime, governments and law enforcement agencies should increase resource allocation, the education/training of those involved in combating the problem and the public awareness of cargo theft. Legislative tools that standardize or mandate security systems should also be considered.

Insurance companies should consider reasonable information sharing across the trucking and cargo community and tailoring policies to reflect the cargo theft problem. For example, insurance companies may implement standard forms or as a requirement to obtaining a policy or coverage, stipulate that insured trucking companies, yard owners or carriers must implement certain strategies or systems. At the very least, they should factor into premium ratings and deductibles, the equipment and strategies that have been implemented by their insureds.

Despite the foregoing, the burdens of cost, manpower and even lack of concern have offset efforts to implement necessary initiatives to combat the cargo theft problem. Particularly for small actors, the cost and manpower required to implement the initiatives may not outweigh what they perceive as a risk. Governments may also face considerable backlash due to the policy implications of putting heavier demands on main parties in the trucking industry. Even further, the idea of industry-wide efforts to combat the problem is negated where there are collusion and inside jobs at the grassroots level or with organized crime and black markets.

4) Trucking companies and carriers: avoid being a victim of cargo theft or minimize the impact when it occurs

There is no simple solution to cargo theft prevention and recovery, nor can the risk be completely eliminated. However, proper security, preventative action and theft control procedures are essential. As such, the following strategies, as are relevant and manageable, should be considered:

Internal procedures and organization

  1. Implementing cargo theft policies and procedures, and appointing a person or task force to administer and maintain the policies and procedures;

  2. Educating and informing all employees of the policies and procedures as well as the implications for theft and dishonesty within the workplace;

  3. Training all employees in theft prevention and appointing a loss prevention committee to investigate thefts;

  4. Creating an anonymous cargo theft tip line;

  5. Conducting background checks of all employees;

  6. Informing yourself of the value of your cargo, its attractiveness to cargo criminals, the locations and times of the week or year that it may be more vulnerable to theft.

  7. Strengthening contact with local police;

  8. Keeping your insurance company informed of the value of your cargo and the cargo theft policies and procedures being followed and ensuring that your insurance company adequately covers the value of your cargo and shipping contract obligations;

  9. Appointing a person to notify police and your insurance company as soon as possible when a theft has occurred in order to increase the chance of recovery;

  10. Keeping records of the carriers you use.

Business and procedures with third parties

  1. Encouraging third parties you conduct business with (ie. freight forwarders, load brokers, interlining carriers, shipping agents) to also implement cargo theft policies;

  2. Screening carriers you conduct business, and especially new carriers. Consider probationary periods with new carriers to ensure their performance and reliability.

  3. Even if it leads to slightly higher costs, arranging transport of your goods with reputable carriers and those that have worked successfully with you on previous occasions;

  4. Keeping regular contact with the drivers of the carriers;

  5. Verifying the identity and confirming the credentials of the carrier or its representative to ensure they are legitimate...

  6. Verifying the identity and confirming the credentials of the carrier or its representative to ensure they are legitimate and associated with the carrier. This is particularly important to prevent fraudsters who pretend to represent a legitimate carrier or pretend to be a representative of the carrier. For example, record a caller ID if possible, return phone calls to verify their authenticity, speak to the driver and ask for the name and number on the side of the truck, ask the shipper to check the name and number of the carrier before loading;

  7. Minimizing the transit and loading/unloading time of your cargo by coordinating both pick-up and delivery times with your shippers when possible; and,

  8. Limiting liability through your contracts with relevant third parties.

Security measures

  1. Implementing effective yard security measures and proper driver background checks;

  2. Restricting access to your shipping and receiving areas;

  3. Ensuring that your cargo is not left unattended for long periods of time and tightly regulating the loading/unloading time of your cargo;

  4. Securing storage areas;

  5. Increasing the use of technology (ie. GPS systems, products to track trucks remotely, implementing comprehensive IT systems to record your inventories, using digital signatures and encryption);

  6. Having security guards who supervise the trucks that are allowed in and out of the yards and refusing entrance to anyone who will not provide full documentation and photographic identification;

  7. Securing your facilities with fences and locks, restricted access to manholes, heavy doors at all passage points, closed-circuit video cameras, and visual gate systems with optical readers to record truck registration, container numbers and to photograph the driver;

  8. Using seals that are difficult to re-secure after breaking on all cargo containers;

  9. Securely staking, tagging and / spraying loose cargo;

  10. Storing containers close enough so that opening the doors make it difficult to remove the cargo;

  11. Requiring that all employee and contractor vehicles be parked outside the grounds or in designated areas.

Key steps to maximizing recovery in the event of a theft

  1. Report the event immediately to local police and provide full details of the cargo and equipment involved, the time and place of the incident and relevant license plates;

  2. Report the matter immediately to your insurance company; and,

  3. Have your documentation in order (ie. bill of lading, commercial invoice, load confirmation sheet, customs documents).

Also see attached, a security checklist for fleet operators, compiled by the Private Motor Truck Council of Canada, which is designed to help protect against cargo theft. As well as a Cargo Crime Incident Report form created by CTA.

1 Canadian Trucking Alliance, "CTA Announces Results of Groundbreaking Cargo Crime Study $5 billion a year problem has links to organized crime, more action needed", Canadian Trucking Alliance, citing a study on cargo crime in Canada (April 2011), which was commissioned by the Canadian Trucking Alliance and conducted by Lansdowne Technologies Inc.
2 Ontario Trucking Association,
3 Canadian Trucking Alliance supra note 1.
4 Ibid.
5 Ibid.
6 FreightWatch International, Study, "FreightWatch International Global Threat Assessment: Global Cargo Theft Risk (21 February 2011) at p 9 ["FreightWatch Study"].
7 Canadian Trucking Alliance supra note 1.
8 National Post, "Cargo thefts shift into high gear".
9 Ontario Trucking Association, initiative, "Best Practices to Prevent Theft", at p 1.
10 Jim Park, "Cargo Crime: Trucking's other dirty little secret", Today's Trucking (27 February 2010).
11 Ontario Trucking Association supra note 9.
12 Eric Palmer, "Pharma cargo theft in Canada violent and getting worse", Fierce Pharma Manufacturing (27 March 2012).
13 All information pertaining to CargoNet and its initiatives was collected from their website.
14 All information pertaining to TransCore and its programs was collected from their website.
15 Greg St. Croix and Scott Cober, "Highway robbery: Cargo theft reaches a breaking point", Canadian Insurance (Business Magazine) (October 2008) 24 at p 24.



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