BRAVO BRAZIL!

For businesses in Brazil, violent and costly attacks on their supply chains are an every day threat and crime statistics suggest the situation is out of control. But have they given in? No, sir. Their commitment to defeating the problem is greater than ever and a new strategic partnership with TAPA EMEA is only going to strengthen their resolve …

On 9 June 2018, 15 armed criminals invaded a facility operated by one of the world’s biggest logistics companies, using a truck to knock down the main gate. Two more trucks and seven cars sped into the yard while another truck was used to block the street and employees of the logistics company were lined up alongside the vehicle in what was described as a ‘human shield’.

The thieves ultimately escaped with $1 million of products, mostly mobile phones. Local police confirmed it was the second raid on the facility in little over two months.

On June 18, an estimated group of 30 heavily armed criminals invaded another logistics hub and forced employees to load four trucks with electronics goods. A law enforcement response was activated by the external CCTV monitoring system and officers confronted the criminals as they were leaving the premises. One policeman was shot and all the criminals escaped with an estimated $10 million of electronics, including phones, laptops and televisions. Once again, police later confirmed this was the second crime at this location in two months.

 In most parts of the world, such dramatic crimes might have received far wider publicity – but these incidents occurred in Brazil, where cargo crime is now so rampant, it is hardly news anymore.

 Quite simply, the facts speak for themselves:

·        Data for 2017 showed a total of 25,950 cargo thefts in Brazil, up 5.7% year-on-year

·        This is equal to some 71 new crimes every single day

·        Over 85% of incidents occurred in Rio de Janeiro and Sao Paulo in the wealthier south east of the country

·        The direct loss value of cargo thefts in 2017 was reported to be R$1.5 billion - $750 million

The statistics, however, only tell part of the story. Reports suggest that food prices for some goods in Rio have doubled as losses from cargo thefts are passed down the supply chain to consumers. With around 70% of crimes involving the kidnapping of truck drivers and the use of ‘severe violence’ in criminal attacks, companies are struggling to recruit staff because the risks are simply too great, especially in Rio where a truck is hijacked at a rate of approximately one every 50 minutes. Many SME trucking companies have been forced to file for bankruptcy, while others are struggling to get insurance because some risk providers won’t cover goods on certain routings. Logistics providers forced to pay higher insurance premiums, as well as for additional security guards, are having to implement security surcharges of up to 1% of the value of the goods being transported to recover their rising costs.

Some manufacturers of products such as Phones and Pharmaceuticals are trying to reduce the time their products spend on Brazilian highways by using air cargo to transport goods point-to-point but that comes at a higher cost, and goods still begin and end their journeys by road.

Media statements from weary business leaders are blunt, to say the least:

·        ‘You are always running a risk. It starts the moment you put cargo in the truck and travel across Brazil’

·        Brazil presents ‘a very different reality for companies that prosper elsewhere’

·        ‘Cargo robbery is just as profitable as trafficking drugs’

·        ‘Unfortunately, it has now become fashionable to rob cargo trucks’

It’s not only logistics warehouses and trucks that fall victim to cargo thieves. Even heavily secured airport perimeters have been breached, as highlighted in the theft of $5 million in cash from a freight facility at an airport near Sao Paulo in March. The thieves reportedly adorned their vehicle with the logo of the runway security company and completed their raid in just six minutes.

Most recently, the overwhelming level of these crimes has resulted in strong measures by the Brazilian authorities, including the deployment of over 3,000 troops in Rio to work alongside police officers trying to stop cargo thefts from occurring. In 2015, the country’s president and congress also approved a bill to create the National Committee Against Cargo Theft, which regulates all the activities of the Federal and State law enforcement agencies and the coordination of Operations and Intelligence under the direct management of the Brazilian Minister of Justice.

One of the best examples of industry’s response to the problem is ABINEE, the Brazilian Electrical and Electronics Industry Association, which is now engaging closely with TAPA EMEA to share incident intelligence and best practice. Both parties are looking to build a strong, long-term partnership that benefits their respective members and associates. For TAPA, working with ABINEE provides its first real foothold in Brazil, a market where most of its members have supply chains they need to protect.

ABINEE is not new to this. It was founded in 1963 to support the needs of its associates to build sustainable business growth in Brazil. Today, it has around 650 associates, mostly manufacturers, and, not surprisingly, most of its focus is now given over to risk management and supply chain resilience. Helping to lead this initiative is Fabio Barbosa of HP, Head of LATAM Supply Chain Security, and now also acting as ABINEE’s Director of Loss Prevention.

Fabio has over 20 years of experience in Supply Chain Security & Brand Protection. Before HP, he worked in security leadership positions in companies such as Motorola, DHL, and Dupont and his expertise encompasses Operations Security, Investigations, Loss Prevention, Asset/Executive Protection, Compliance and Counterfeiting. Consequently, he is now called upon to act as ABINEE’s representative before the Brazilian Government and has also been named as Security Advisor for the Sao Paulo Estate Secretary of Security and the Ministry of Justice on the subject of cargo theft.

With the high-tech sector alone suffering direct losses of $250 million per annum in Brazil, ABINEE’s goals are clear:

·       Influence State and Federal Government to strengthen cargo crime legislation

·       Promote State and Federal Government support to prioritise Law Enforcement efforts towards cargo crime

·       Develop Cargo Loss analytics and an Industry Benchmark

·       Define Industry Security Standards

·       Deploy new technologies to defeat cargo theft

Fabio is in little doubt of the impact cargo crime in having on Brazilian businesses and the country’s economy. “If you try and calculate the indirect cost – including additional security and other preventive measures – saying it surpasses $10 billion a year might still be considered a conservative estimate. In the last five years, cargo crime in Brazil has risen by 80%.”

He sees real potential for ABINEE’s partnership with TAPA EMEA, adding: “ABINEE initiated its Loss Prevention Committee in 2014 and several positive results have been achieved during the course of our journey so far, with much more still to come. One perfect example is the strategic alliance with TAPA EMEA and the introduction of the Incident Information Service (IIS) database. I believe the TAPA Security Standards can also be widely adopted in the LATAM region. We also see opportunities for networking, intelligence reports, the analysis of loss statistics and the deployment of new technologies.”

Thorsten Neumann, Chairman of TAPA EMEA, agrees. “ABINEE is highly respected and well established in Brazil and has a clear level of loss prevention expertise. TAPA has not had a presence in Brazil but because it’s a major market for trade and it has such a prolific rate of cargo crime, we need to understand the risks companies are facing in order to provide our members with the intelligence they need to protect their goods in transit. Working with ABINEE means we don’t have to reinvent the wheel and both associations will benefit each other. This is a model I am confident can also work for TAPA EMEA with other trade associations in other markets around the world. The progress we aim to achieve together in Brazil will help to leverage those future relationships,” he says.

It’s not difficult to get a grip on the types of cargo crime or the products most targeted in Brazil. Truck hijackings present by far the greatest threat, while the main goods targeted by cargo thieves are:

1.     Food

2.     Tobacco

3.     High-tech

4.     Pharma

5.     Fuel

6.     Beverages/spirits

7.     Auto parts

8.     Textiles

9.     Chemicals, seeds and fertilisers

Unfortunately, as seen in other parts of the world, the penalties facing cargo criminals in Brazil are considered to be far too soft by business leaders, and probably by the offenders too. This only makes freight theft more appealing given a combination of the rich rewards it can offer to organised criminals alongside the very manageable penalties for those arrested and, subsequently, prosecuted. “ABINEE is working hard with the Brazilian Congress to modify the penalties for anyone involved in stealing goods. Another idea is to remove the operating licenses of any stores/resellers which are caught selling stolen goods. However, it is very difficult to track products,” Fabio states.

For regions of the country where the recording of cargo thefts is not done correctly, ABINEE is working with the Ministry of Justice on the creation of a guide for local law enforcement agents to help them register these incidents accurately, and provide relevant and vital intelligence.     

TAPA EMEA will also benefit from ABINEE’s growing relationships with other industry groups which are keen to work under the Association’s ‘umbrella’ to defeat cargo crime. These include groups in the logistics/carriers, pharmaceuticals, consumer goods, tobacco, and food & beverage sectors.    

Technology also has a big part to play in protecting supply chains in Brazil. Initiatives include the potential ‘game-changing’ use of smart packaging as well as radio frequency solutions, drone surveillance, and the greater use of technology-enabled armoured trucks.

On the face of it, the statistics would suggest that the war against cargo crime in Brazil is already lost but that would be misleading. At every level – government, law enforcement, business and consumer – there is a shared desire to bring about change, and a groundswell of initiatives designed to either prevent cargo thefts or make the penalties for it far more severe.

It is going to take time, money and a great deal of resilience from every supply chain security stakeholder to achieve a sustainable improvement. ABINEE is determined to make that happen and in TAPA EMEA it will enjoy the full support of a like-minded strategic partner.