IMC’S Lemm says cargo theft is getting worse

The rise of cargo theft in the American supply chain has reached a crisis stage that urgently needs tougher federal legislation and more crime-fighting resources, according to Donna Lemm, Chief Strategy Officer, IMC Logistics, based in Collierville, Tennessee.

IMC boasts that it is the largest marine drayage provider in the United States.

Lemm addressed the issue at the Agriculture Transportation Coalition Annual Meeting in Tacoma, Washington on June 17th.

Lemm’s presentation drew many comments from AGTC attendees, who agreed the problem is getting worse.

Lemm has also campaigned in support of ocean carriers providing better accountability for the location of shippers’ containers. She says improved accountability will help fight cargo theft, and implies that lack of accountability has made the problem worse.

Lemm has been particularly outspoken about current U.S. chassis practices. She notes that two decades ago, “Intermodal transit times from the U.S. West Coast to markets like Memphis, Dallas, and Chicago were just five days, but today, that same transit time exceeds 10 days.” She blames current chassis practices: “This is due to an insufficient supply, quality and accountability for chassis provisioning.”

As a result, Lemm has developed a reputation as a champion of the underdog.

Cargo theft on the rise

In an interview with AJOT, Lemm said: “The rapid rise of cargo theft and fraud over the past few years is so real and so prevalent throughout our supply chain, that yesterday we had questions and comments from every aspect of our industry sharing recent experiences. The need for federal enforcement and prosecution was shared and reiterated by AGTC members. What is happening is that strategic theft of high-value goods has grown exponentially over the past couple of years. Statistically, it's hard to zero in on what that real number is because so much of this crime is not reported.”

She referenced a complaint from one AGTC speaker whose product has been targeted by cargo thieves: “This whole concept of rising theft was validated yesterday by a prominent Ag shipper that has been strategically targeted on the rail these past couple of years (and who said) ‘I never had a problem until these past couple of years, but I have been strategically targeted because I'm moving a product, they want …and who is they? They are likely organized crime members who have been able somehow to glean confidential information on shipments and then target shippers, truckers, rail, and ocean carriers when containers are in transit or sitting idle.”

Better cargo tracking

One hopeful outcome of fighting cargo theft should be to force ocean carriers to provide better accountability for where a container or shipment is located: “Yesterday, one AG shipper was talking about: ‘Where's my freight?’ And can you believe there are times an exporter cannot confirm whether their containers are on board a vessel or not? Just thinking, could you ever imagine that maybe safety and security will mandate that we have exact locations of our containers and, in turn, will fix our documentation problem of not knowing what has sailed and what has not? If our focus is (improved) security, we will finally know where our containers are because we have to! We can't afford to have a container on the water headed to Asia or anywhere, for that matter, that has been pilfered!”

Lemm is also concerned about the impact on the trucking industry: “How are smaller motor carriers going to survive these claims? It’s just not sustainable. MC’s are struggling already with the current economy, if you add these theft claims, we will see motor carriers going out of business.”

Legislation not tough enough

Currently, Lemm believes federal laws are not tough enough: “The $1.5 M (federal legal) threshold is the cargo value amount stolen needed to prosecute criminals at a federal level, not a state level. The issue, of course, is that this threshold of $1.5M is too high. We need legislation that will move this threshold to $100K or lower, ideally classifying cargo theft as a standalone federal crime if it crosses state lines. The proposed CORCA bill (Combating Organized Retail Crime Act) would allow aggregation of multiple crimes to meet the threshold.”

Lemm added that: “The Combating Organized Retail Crime Act has been introduced in the Senate with a companion bill in the House to crack down on cargo theft at the federal level and to create a central location within the Department of Homeland Security to coordinate local, state, and federal response to organized retail theft … There is also the Household Goods Consumer Protection Act introduced by Senator Deb Fisher (R-Nebraska) with the goal of protecting consumers and giving FMCSA (Federal Motor Carrier Safety Administration) authority to levy civil penalties on these fraudulent bad actors attacking our supply chain.”

Bad actors are gaining access to Ocean Bills of Lading to target theft, and since “Our Ocean Bills of Lading documents share everything about shipments … perhaps we might want to think about encrypting this information. Bad actors have found a way, in some cases, to steal this manifested data and actually know what to target for theft before the vessel arrives.”

Lemm noted that “Ken O'Brien at Gemini Shippers Association yesterday highlighted this huge problem with theft and fraud for importers and urged collaboration from both the import and export community to work together to tackle this growing challenge.”

Lemm is urging an importer/exporter collaboration to fight cargo theft.

Railroads

Railroads have also been targeted: “There was testimony in February at the Senate Commerce Committee Subcommittee on Surface Transportation. The first testimony was the Burlington Northern Railroad’s Chief Johnson. It was a powerful and informative testimony on the rise of cargo theft. He shared how trains are being sabotaged, how air brakes are being cut, and so at the moment that the train stops, it is vulnerable.”

As a result, the Union Pacific Railroad is offering a special service: “The UP announced a program that will offer special services in stowage and security, as well as a higher liability threshold for high-value cargo for a $100 fee. In turn, the shipper must perform higher security and approved seals with a picture at the origin. The UP is correct in saying, we must do something about the issue of rising theft. We must be stronger in our security measures, but it's costly. Nothing in life is free. We must make these investments, all of us, because what is going on impacts all stakeholders.”

Trucking

Trucking companies are also a target: “What else do you do as a motor carrier? We start with our security process. We continue our focus and investment on security for our drivers, our people, and the protection of our customers’ freight. We are diligent about our vetting processes and our driver hiring processes. We need to be as proactive as possible. We are constantly educating and training our team to be on guard for the red flags of bad actors.”

In addition, the theft of motor carrier identity codes has led to more sophisticated theft and fraud: “Bad actors are stealing SCAC (Standard Carrier Alpha Code) codes …The SCAC code is a 4-digit identifier of the motor carrier and is critical for identification in and out of terminals, and is essential for tracking shipments. This allows bad actors to enter terminals as legitimate carriers. There is this issue of double brokering. Also, a rising problem with smaller motor carriers for sale with their SCAC codes and all other valuable information for sale on Facebook marketplace, for heaven’s sake! This is dangerous when a bad actor can buy a motor company for minimal dollars, then work out of the backroom thousands of miles away with ill intent to steal.”

Conclusion

Lemm said that tougher legislation will help. There is also the need for more education and collaboration within the industry and better tracking of cargo: “How do we get the resources to address these huge transnational organizations … that have infiltrated our supply chain? Where do you start? There are so many stakeholders that are impacted. Coalitions must be built. Education, advocacy for best practices and a priority for legislation with stronger federal resources, enforcement, and prosecution seems like a great start.”