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Cargo Theft Seen on the Rise

Security experts believe the reason cargo theft is growing is that criminal rings have identified it as less risky than some other options.

NEW YORK — The Thursday discovery at a Pennsylvania highway rest stop of the three trucks that had been used in a May heist of Warnaco goods — emptied of the $1.2 million in Chaps Ralph Lauren sportswear they had contained — brought to light an increase in major cargo theft that is challenging security experts.

Officials at transportation firms said theft of cargo is a huge racket in the U.S., estimated to cost businesses from $10 billion to $30 billion a year. It’s also a growing problem — one source estimated that in recent years, the value of goods stolen has been growing by 30 percent a year.

The thieves who run cargo-theft rings focus on small goods that are easy to sell and tough to track, including apparel, fragrances, small electronics and cigarettes.

Security experts said they believe the reason cargo theft is growing is that criminal rings have identified it as less risky than some of their other options. It’s particularly a problem around the major port cities of Miami, Los Angeles and Newark, N.J.

“The drug cartels see it as a lower-risk business, which is what disturbs us,” said Jack Legler, director of trucking security and operations at the American Trucking Associations, an industry group based in Alexandria, Va. It’s viewed as less risky than drugs, he added, “for the simple reason that you can get life for transporting $1 million in [cocaine] and 15 months for $1 million in computer chips.”

John Hyde, director of security at carrier Maersk-Sealand Inc., based in Madison, N.J., said, “It’s almost looked upon as a victimless crime. No one’s been hurt…and the insurance company pays.”

Because of that perception and the other duties that law-enforcement agencies have been assigned since the Sept. 11, 2001 attacks raised concerns about the threat of terrorism, sources said the criminal gangs who focus on cargo theft — primarily by stealing loaded tractor-trailers — have been able to operate with the knowledge that even if they are caught, which observers described as a rare occurrence, they will face minimal sentences.

It’s unclear just how large a problem cargo theft is for several reasons. It is not broken out in the Federal Bureau of Investigation’s Uniform Crime Reporting system. Preliminary FBI crime statistics released Monday showed that the number of larcenies reported last year in the U.S. was down 0.7 percent from 2001, when there were 7.1 million incidents. An FBI spokesman said cargo theft would fall within the larceny category.

Another reason it’s hard to track theft rates is because both the companies whose goods are stolen and the carriers whose trucks and other vehicles from which they are taken rarely disclose their losses publicly. Word tends to get out only when law enforcement agencies announce they’re looking for something, as the FBI did early this month after the three loaded trucks of Warnaco Group Inc.’s apparel were stolen from a truck depot outside Pittsburgh. At the time, Warnaco offered a $10,000 reward for information on the whereabouts of the merchandise.

“It’s something the public winks at,” said Maersk’s Hyde. “If you walk into a flea market and get a pair of new top-brand sneakers for $15…everyone knows it fell off a truck, but no one’s asking.”

For the companies whose goods are stolen, the greatest concern surrounding a theft is often the logistical problems of being unable to fill an order.

Great American Knitting Mills was the victim of cargo theft in March 2001, when a truckload of its Gold Toe socks — 174,000 pairs valued at about $1.2 million — was ripped off from a Mebane, N.C., distribution center.

James Williams, the company’s president and chief executive officer, said since that incident — and following the loss of a couple of trucks en route from Mexico — the firm has stepped up its focus on security.

“We’ve increased our security dramatically on everything from Mexico and going back and forth, and also in our plants,” he said. “We’ve added additional lighting and fences, additional security [people].”

Williams said what he worries about most when a truckload of merchandise disappears is the effect on his delivery schedules.

“It’s one of those things, that when you lose a truck, it’s a lot of dozens,” he said. “That disrupts order flow. It disrupts fulfillment. That’s what we don’t like.”

Some security sources said they worried that top management at U.S. companies didn’t take cargo theft all that seriously.

“For the most part, the average ceo of a company just doesn’t have that reality,” said Erik Hoffer, president and ceo of CGM Security Solutions, a Somerset, N.J.-based maker of products intended to improve the security of cargo. “He doesn’t see the crime as that much. He sees it only as, ‘I lost some merchandise and I can make more.’ He doesn’t see the fact that it’s going out into the marketplace and when you don’t pay for something, you can sell it for a lot cheaper than if you pay for it.”

Hoffer, who also serves as director of education for the National Cargo Security Council, a trade group, said one of the attractions to stealing apparel is that it is easy for thieves to resell to unscrupulous distributors who in turn unload it at flea markets or sell it to legitimate retailers.

“They can get rid of it quick, usually they can presell it,” he said, referring to crooks who run what could be considered just-in-time theft syndicates.

While cargo thefts might appear like random, isolated incidents for apparel executives who have to contend with them from two to 10 times a year, experts emphasized that they typically are well-planned-out crimes.

“It seems to us that there is a great preknowledge [among cargo thieves] of what is going through in those shipments long before we [truckers] get it,” said Legler of the trucking association. “They know what’s being produced and when it’s going through the system.”

Once a cargo thief knows what truck is carrying the merchandise he or she intends to steal, sources explained, it’s just a matter of finding the right opportunity, typically when the load is unattended at a depot or truck stop. In some occasions, thieves might pay off a driver to leave the truck unattended for a while — one source said the going rate is $15,000 — while on rare instances thieves result to armed hijacking.

Thefts also often occur when depots are left unattended, as was the case in the Warnaco heist. Sources said that in some Midwestern depots there is no overnight or weekend security and morning workers may arrive to find 20 trucks open and cased by thieves, with one or more stolen.

While there’s been a lot of focus placed on ensuring that cargo containers are sealed for security purposes, as part of the effort to ensure that they are not used to smuggle terrorist operatives or weapons, those efforts mean little when thieves drive away with the entire truck.

Observers said another key way to reduce theft is to try to limit the number of people who know what’s going into a given truck, since in most cases that are solved law-enforcement officials find there was an employee inside the company providing information to thieves.

“You need to establish internal procedures on need to know,” said Hoffer of CGM, who said that many thefts begin “when you have a person in the company who is called up by another employee who may be a member of a gang, who says, ‘What dock are the flat screens [televisions] going out today?’”

But between advance notices to the Bureau of Customs & Border Protection to customers and to truck drivers, there are always going to be large numbers of people with access to information on what’s in a given truck, which sources said means that companies have to ensure that their employees are trustworthy.

Legler of the ATA said companies need to be “sure that their loading docks are well vetted, the people working there are well vetted. If the information’s getting out, then people can case the load.”

Part of the problem with solving cargo thefts, particularly in the case of apparel, is that garments don’t tend to carry specific serial numbers and can be widely distributed quickly. In many instances, the only thing being stolen that’s easy to follow is the truck, which is one reason that thieves try to abandon it quickly.

“Typically, they steal the entire vehicle, transfer the cargo out within 30 minutes and go,” explained Legler. “And then the truck is found empty.”