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Holiday season brings flurry of heightened cargo risks
Anticipation of the holiday season generally ushers in great excitement for celebrating with friends and family and enjoying special gifts. Unfortunately, this time of year sometimes presents cargo-related hiccups that can prevent the holiday magic from arriving on time. In this blog, I’ll explore common seasonal cargo risks and pain points and offer guidance on steps shippers can take to protect their goods and financial interests.
‘Tis the season for theft
We typically see an uptick in cargo theft claims towards the end of each calendar year. There are a few factors to blame. First, there is simply more cargo available for the taking during this time of year as sellers aim to get their goods delivered to stores and customers in time for the holiday shopping rush. Second, many feel additional financial pressures leading up to the holidays and are looking for a timely payday to fund their festive gift and meal purchases. In light of current economic conditions and countries around the world (including the UK) experiencing a cost-of-living crisis, these pressures are even greater and could lead to higher rates of illegal activity this year.
A third contributing factor is inclement winter weather. The resulting floods in warehouses can cause shipping delays and leave stored cargo vulnerable to theft. Further, black ice and other dangerous road conditions may prompt delivery drivers to make unanticipated stops on their route and put them at higher risk of burglary. In the UK and elsewhere in Europe, there have been alarming reports of drivers getting “gassed” in their cabs so they’d sleep through their haul being ransacked.
The naughty list
Cargo theft claims encompass both crimes of opportunity — like passersby grabbing small items from cargo containers — and organised crimes that often involve large quantities and/or high-value merchandise. In today’s complex supply chains, goods are rarely transported from point A to point B by a single carrier; more often than not, transport carriers subcontract parts of the journey to other carriers — and without shippers even knowing. These additional exchanges to companies that may not be thoroughly vetted create more layers of cargo risk, more opportunities for theft and more complexities in determining liability for a loss.
Thieves are getting very clever at capitalising on vulnerabilities. In a good number of the cargo theft claims we investigate that involve organized crime, the perpetrators have “insiders” helping them out somewhere along the supply chain. Oftentimes, they’re ex-employees of freight carriers and storage lots who are familiar with the security protocols of their former workplaces.
Bells are ringing
Stakeholders in the claims process can take proactive steps to protect themselves from cargo losses. Goods owners have the option to stipulate in their shipping instructions that cargo not be subcontracted in transit. Doing so can reduce the risk of theft but also lead to shipping delays; owners should weigh these two concerns and decide what is higher priority for them. Either way, shippers are advised to read the fine print on all cargo agreements. Additionally, they must make sure they’re adequately insured for the full value of shipments (as some carriage conditions include weight limits for liability) and familiarise themselves with the clauses in their applicable cargo insurance policies.
Freight carriers can also implement supplemental security measures to deter losses. One such tactic is the use of hard-to-break seals to secure containers. Regrettably, some thieves have learned to replicate these seals using 3D printers to hide their illegal actions. Others have figured out how to remove container doors and reattach them after stealing the goods inside; new bolts on a container are often a telltale sign of tampering. Another approach gaining popularity is the installation of security cameras on truck trailers to deter thieves and assist law enforcement in identifying them. But the technology can be expensive and contribute to already rising freight costs.
For cargo insurers, upticks in theft mean they’re obligated to pay out more claims. In an effort to keep costs in check, many insurance companies are partnering with experts in marine and transport claims adjusting, surveying and investigation to ensure accuracy in policy interpretation and assessment of losses.
If Sedgwick’s team of over 200 marine and transport specialists around the world can be of service to your organisation, please contact us.
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