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THE PERFECT STORM?

Using online freight exchanges to source trucking capacity is an everyday practice for businesses across Europe. Whilst most deliveries are completed as planned, using such platforms is not without risks…

As this issue of Vigilant went to press, German confectionery giant Haribo was issuing a warning to British consumers that it is struggling to deliver its sweets to shops in the UK because of a shortage of lorry drivers. To anyone in some way or another connected to the supply chain industry, this will obviously come as no surprise. This is a common and growing situation for businesses across Europe.

Demand for qualified truck drivers in Europe has never been greater and the gap between supply and demand is growing. In the UK, the Road Haulage Association estimates a shortfall of 100,000 drivers – a situation not helped by Brexit – while in Germany and France, corresponding figures of 45,000 and 20,000 too few drivers for the work available have also been widely reported. An already dire recruitment challenge has, not surprisingly, been further exacerbated by Covid lockdowns. In the UK alone, 30,000 HGV driving tests did not take place in the last year due to lockdown restrictions. Worse still, in its latest 2021 Driver Shortage Survey, IRU, the international road transport union, says road transport companies expect a 10% rise in driver shortages this year.

This disruption is having a far-reaching impact. As the IRU’s Secretary General, Umberto de Pretto, puts it: “Driver shortage threatens the functioning of road transport, supply chains, trade, the economy, and ultimately employment and citizens’ welfare.”

With truck drivers and, therefore, truck capacity is such short supply, more and more companies are naturally turning to online freight exchanges to find available and affordable ways to move their goods, and the vast majority are not disappointed. The major online marketplaces for Full Truck Load (FTL) and Less Than Truck Load (LTL) road transport capacity are awash with opportunities for companies to source much-needed truck space on routes across Europe. To say ‘awash’ is no exaggeration. On 15 December 2020, one leading freight exchange made available one million freight and vehicle space ‘offers’ in a single day.

It must be clearly and fairly stated that booking capacity through online freight exchanges works very successfully for nearly all users. But, as is the case in all dynamic, fast-moving business environments involving massive movements of money and goods, there is always a small minority of cases in which companies fall victim to rogue operators, and this has been the experience of several TAPA EMEA members. This is why, five years after our last major report in Vigilant looking at ‘Who’s carrying your cargo?’ we are returning to the topic of using online freight exchanges and the risks that can arise for companies that fail to conduct proper due diligence.

In compiling this report, Vigilant spoke to one of the latest TAPA EMEA members to suffer losses of goods after their logistics provider subcontracted loads to third parties found on freight exchanges. Whilst wishing to remain anonymous, they want to share their experience to revise the debate on the potential risks, as a warning to other companies, and to identify best practice recommendations that will support the safe use of online freight exchanges, which are clearly playing an increasingly important role in supply chains across Europe.

This is not a ‘finger-pointing’ exercise aimed at discrediting freight exchanges. It is to recognise that all stakeholders must play their part to avoid potential losses.

The following comments are from a senior security manager within the company:

“Covid has played a significant part in the reemergence of this type of crime. In the last 6-12 months, there has been a significant decrease in goods being made and shipped out. Now, as we start to emerge from lockdown and markets become freer, we have all that backlog of freight to deal with. If you combine this with the underlying issues around truck and driver availability, you almost have the perfect storm of opportunity for organised crime.

“The freight platforms say they do all they can do to protect companies, but the harsh reality is that it’s not just down to them. It’s also the responsibility of carriers and shippers/manufacturers to ensure they do sufficient due diligence before they assign a load. The reality, of course, is because everything is commercially driven, it is all about getting the product out and getting it shipped rather than thinking about any of the due diligence work that should be going on in the background.

“Criminals are entrepreneurial and no different to traditional business leaders, they just have a different agenda. They are constantly evolving and evaluating what they do. As seen in most forms of cargo crime, it’s no longer just about targeting products with high unit values. There is definitely a shift towards more commodity-based goods because there is an easily accessible black market for them out there due to the reduction in manufacturing and online demand.

“We have had conversations in which we’ve heard that during the same week we have had issues, 20-30 other businesses have been targeted also, but with different commodities. So, the targets are clearly a whole range of goods, and it certainly seems to be OCG (Organised Crime Group) activity. This isn't petty theft, it is well-planned with cross-border functionality and complexity, and there are networks to pass good on to once they’ve been stolen.”

Of course, some would argue that many companies invite crime by the constant pressure to lower costs and the lack of sufficient checks on suppliers. The security manager we spoke to acknowledged that shippers and logistics providers can, in many cases, do more to prevent cargo crimes from occurring. “Manufacturers seek to move their goods as cheaply and as quickly as possible. Therefore, in terms of the cost per movement, this is typically a race to the bottom. Criminal gangs can exploit the use of freight auction sites as well as the lack of due diligence, on the part of the auction sites and primary carriers, and bid the lowest price to secure the collection. The tight margins mean there is little appetite for carriers to support additional security mitigation measures or spend.”

They added: “From a manufacturing perspective, we work to contractual agreements with our primary carriers where they are able to sub-contract legitimately within the terms of our contract. Where the issue comes is because of the shortage of drivers, trucks, and lack of capacity, certainly on the long-haul European lanes, so those subcontractors are then subcontracting again. In our case, that is clearly a breach of our terms. We do raise awareness of this issue, but I have to say the main interaction we have with carriers is typically after the event with insurers when it all comes to light after a cargo loss. That needs to change, and we need to be more proactive.

“There has always been an issue with ‘fake carriers’ but we are certainly seeing more cases of this. I have spoken to various insurers and there is a trend to target collections moving cross-border or which take place right on the borders of countries. In such cases, it is very easy for criminals to get the load across into a different jurisdiction, making the reporting and investigation processes harder for victims of the loss as well as law enforcement agencies. We need to ensure the goods are shipped in the right way and that the right security is in place to manage that, and carriers need to ensure they abide by the contractual agreements and don't engage in multi-layer subcontracting.”

Evidence in recent years has shown criminals are infiltrating freight platforms in various ways; including assuming identities of legitimate carriers and making small changes, such as to email addresses, to divert and direct communications to secure a load. Another M.O. is to use identities of companies which have very recently have gone into administration or are no longer trading in order to bid for, and win, cargo loads for delivery.

“Industry has to take some responsibility because, having spoken with insurers and other companies and which have suffered losses using operators found on freight exchanges, it’s clear that a lot of the issues are self-inflicted. In our attempts to drive down costs, we are feeding the problem and creating the opportunity which exists for criminals. It’s a self-fulfilling prophecy. If companies are not managing contractors or sub-contractors properly, they have to shoulder a big part of the blame when cargo loads are stolen.”

Law enforcement engagement is another problem area. As stated, a lot of crimes are cross-border between countries whose police forces “don't talk or share data”. The security manager commented: “There is no level of collaboration to help understand the extent of the problem. Industry needs to start this conversation with law enforcement to showcase this issue. Proper engagement with LEAs will help us better understand what we need to do to support them in addressing this problem.”

In the meantime, for this company, engaging with LEAs continues to be frustrating, to say the least. “We work closely with insurers who collate similar issues over time. They have identified OCGs or individuals who they believe are responsible. The issue for us is we simply do not have the resources or capabilities to follow each one through. So, we support the insurance piece rather than doing any proactive engagement ourselves. From the law enforcement side, they take a report and that’s generally the last we hear of it. We rarely get any feedback.

“I think TAPA EMEA is a great conduit for raising awareness and a great forum through its articles and online briefings etc. TAPA can bring relevant groups together to get them talking and to understand the extent of the issue. The Association also has the reach to law enforcement to engage with them in a meaningful way. We go to individual police forces whereas TAPA can go to the broader collective, and that has more impact.

“I think the challenges we are discussing here reflect the simple fact that, in industry generally, we’re always chasing our tails. Criminals are always ahead of the game and exploiting technologies, and we are playing catch up. The traditional way of physical security was a silo approach, but as crime methodologies and technologies are advancing so quickly, we need to take a holistic approach to security which involves collaboration between all stakeholders to bring about a collective response.”

If you have intelligence to share on cargo crimes linked to operators sourcing loads via online freight exchanges, please send it to vigilant@tapaemea.org. All information will be treated in strict confidence.

STAY SAFE ONLINE

Vigilant spoke to another TAPA EMEA member which has successfully eradicated the issues they were suffering when buying capacity on online freight exchanges.

In their experience, the key to avoiding becoming a victim of this M.O. is to implement measures not only during transport planning, but also during loading and in regard to transport follow-up and escalation. For companies using online platforms to source truck capacity, their advice includes:

Transport planning

  1. Demand that insurance documents (CMR insurance) and operating licence are provided immediately and check for possible falsifications (i.e. check to see if the requested documents contain different text fonts, text sizes, mismatching „tabs“ or generally look like they are copy-pasted and/or modified using a copier. Fake documents often contain spelling errors or a combination of different languages)
  2. Always demand information on the driver (ID), truck, trailer to be provided immediately (no chance of sub-sub-contracting or pre-listing on another freight exchange)
  3. Make sure someone reads and verifies the documents provided (can read the respective language)
  4. Cross-check all details and verify by phone through the contact details listed in the exchange’s profile. Also check their website for professionalism and check the address on Google maps/street view
  5. Be cautious of companies whose ownership has changed recently (use online search engine)
  6. If in doubt, call the insurance company to verify if the policy provided is valid
  7. Communicate via phone and email; be extra cautious when dealing with freeware email providers and mobile phones (do not use messenger services such as Skype)
  8. New employees should only be working with freight-exchange platforms after a probationary period

During Loading

  1. Ask for the original transport order
  2. Do an ID-check on the driver; ensure that it matches with the pre-alert and the picture provided matches the person. Compare the signature on the CMR with the Driver ID
  3. Verify the truck/trailer licence plates with the pre-alert; in case of doubt, ask for the vehicle registration papers and verify the plate numbers
  4. Inform the driver that delivery address changes are never allowed
  5. If there is any doubt; hold the loading process

After Loading

  1. Always follow up on the delivery with the customer
  2. Time is critical - always take action immediately when the goods have not arrived and the driver/subcontractor does not respond to your communications attempts any more. A few hours can be the difference between getting the goods back or not
  3. Make sure you inform the relevant freight-exchange platform immediately

Be extra cautious

  1. When questions are asked about the value and/or specific details of the product
  2. When shortly before pick-up, the truck or driver is changed
  3. During holidays periods, bank holidays (unknown driver)
  4. With long distance linehauls that go over the weekend (this is preferred by most criminals to gain a time advantage due to the subsequent delay in discovery/loss reporting)
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