Individual negotiations are essential One of the frustrating things for cargo shippers is the lack of a standard list of services provided by carriers and warehousers. You will likely find that each shipment has to be negotiated individually and each contract contains specific provisions regarding liability. These idiosyncrasies make tailored insurance and specified security protocols crucial. Your risk manager and insurance professional are essentially your financial guardians, and they should be working together hand in glove to coordinate all coverage from departure to destination. Cargo policies are quite specific as to the: Mode of shipping – Are the goods going by truck only? Will they travel by rail then by truck? Will they need to be carried on a ship at any point? Route – Is this a land-only trip? Will cargo be shipped on a river or across one of the Great Lakes? Is it local or long haul? Value and type of goods – Are there perishables involved? Are there hazardous materials and/or high-value items on board? Is freight weight-based or enumerated by parcel? Types of perils covered – Are you seeking all-risks coverage, which covers everything except risks that are specifically excluded? Or can you live with a tighter list of hazards that are specifically covered by insurance? Frequency of trips – Is this a single delivery or one of a repeated series, such as weekly deliveries of canned beverages to a retailer? This list covers just a few of the many details that must be addressed to get proper cargo insurance coverage. And there are other issues outside the actual movement of freight, such as packing, warehousing, and transfer from carrier to purchaser once at the destination (via forklift, light rail or other mode of offload). In general, the freight carrier has, by law, the burden of proving by a preponderance of the evidence – meaning, more likely than not – that it was not responsible for shortage, damage or unreasonable delay. There are basically only five events that get the carrier off the hook: 1. an act of God 2. an act of a public enemy 3. an act of the shipper 4. an act of the public authority, or 5. something in the nature of the goods themselves (they were prone to decay, for example) Therefore, it is extremely important for carriers to take the utmost measures to prevent theft. Scams and heists – you can prevent them In today’s market, most freight carriers know the basics of keeping trailers and cabins locked, minimizing the room thieves have to offload when parked, and avoiding dangerous routes that at times are more prone to robbers. But as carriers increase their vigilance against standard methods of theft, criminals find new ways to steal cargo and sell it on the black market. Thieves in the United States are getting more sophisticated as organized crime increases its role in cargo theft. While some thieves are still criminals of opportunity – taking a truck that is left idling and unlocked, for instance – a growing number are employing cyber methods to fool truckers or divert freight. As the bad guys get wilier, carriers must get savvier. Fictitious pickups Scams called “fictitious pickups” use a variety of means to make it appear a criminal is a legitimate driver or has a legitimate order for cargo transfer. Here are two common ones: Email infiltration – Thieves spend a good deal of effort replicating legitimate company documents, including email. Once they can duplicate official communications, they begin contacting company staff via email, often sending links that, when clicked, allow the hackers full access to company networks. Sometimes the emails provide phony documents or false instructions. They typically look perfectly official and appear to come from a known authority. If you unexpectedly get an email with instructions, it is a good practice to phone the purported sender to verify they sent it. Otherwise, you could end up transferring cargo or crucial information to a criminal. If your company isn’t insured against such an event, you could face terrible financial losses. Fraudulent documents at pickup/drop-off sites – If hackers have ongoing access to shippers, receivers, warehouses, or other stakeholders along the route, they can create documentation from those companies that falsely directs carriers to drop off or transfer loads to illegitimate recipients. These are very difficult frauds to detect. It’s a good idea to verify all changes to orders by calling a known person at the authorizing organization. Smishing A new technique is to send a text (SMS) message with an embedded link or phone number. The message may say something to the effect of, “Here’s the code you requested. If you did not request this code, contact COMPANY X’s fraud department immediately.” A real company phone number or URL is highlighted in the text message, but it is a mask for an underlying hyperlink to a different number or website. If the text recipient hits the embedded link, they will be directed to a false representative or website where they may be asked for important information about their cargo, the delivery schedule or other security data. Even simply hitting the link in the text could allow tracking software to be installed on their mobile device. Truck communications hacking Some crime organizations use coordinated surveillance to gather information on cargo and drivers to maximize their opportunity for theft – creating potentially dangerous incidents for haulers as well. Already mentioned is the potential for cyber criminals to install tracking software on carriers’ mobile devices, but tracking can also be accomplished by hacking onboard internet-enabled communications installed on carriers’ trucks. That includes Bluetooth, Wi-Fi and satellite connections. These kinds of intrusions are very hard to detect, so the carrier’s company should have some way of scanning onboard software regularly or monitoring it on an ongoing basis for hacks. Criminal surveillance can also be done at the corporate level if cyber criminals have access to company networks. This exposes all cargo shipments handled by that carrier to theft. SAFER profile tampering Another hack shippers and carriers need to protect against is the compromise of a carrier’s SAFER profile. Just as a financial criminal can steal your credit card number and use it to buy online goods, hackers can get into a carrier’s SAFER profile and change personal and company information to theirs. If the false carrier is set up to collect a load and someone on the loading end checks to verify the carrier’s SAFER phone number or other information, they will see the bogus data and assume all is well. Carriers should check their SAFER profile and all other online information regularly. Where possible, they should have alert notifications set up so they are warned when any activity takes place on their account. False carriers Shippers should always verify that the carrier doing the pickup intends to take the load to the address on the bill of lading. Sometimes, a phony carrier running a scam will work through an unsuspecting broker to gain business from a shipper. Once the freight is tendered, the false carrier will rebroker the job to another, unwitting carrier who is directed to deliver the goods to an address that is different from what is on the bill of lading. An alert broker and insurance agent may spot this scam by paying close attention to all requests for certificates of insurance. No cert should be issued for a load a carrier isn’t contracted to pick up. Smart technology is increasingly indispensable Even taking some of the most basic anti-theft measures can help tremendously in protecting your cargo and avoiding costly losses. Carriers should already be doing the absolute essentials, like locking and blocking all windows and doors, vetting drivers, screening and training all employees, and having appropriately vigilant security, both in person and online. So what are the next steps? Smart technology is becoming an indispensable piece of your theft prevention toolbox. Intelligent routing – By sequencing deliveries intelligently, this software minimizes touching of items that aren’t being unloaded. Alarms – Alarmed surveillance should be installed on all points of entry, even the smallest. Insist on a check-off for every alert. Telematics – Typically associated with driver behaviors, telematics can do much more, including recording of trailer temperatures, arrivals/departures, location and door status, among many other details. Such data can reveal irregular or illicit activity. Real-time monitoring – This offers similar information as telematics but in real time so problems can be spotted instantly and corrections made fast. Geofencing – These programs set geographic perimeters for permissible cargo movement. Companies can track where a trailer or even pallets of items are in the transport process. If they breach a set “fence,” the cargo monitor will receive an alert so remedial action can be taken. Immobilizers – Heavy-duty anti-theft locking devices along with advanced security seals should be installed on every truck. Chain-of-command protocols – By automating chain-of-command documentation, stakeholders can see exactly who had custody of cargo at each point in shipment. Irregularities can be spotted quickly if handoffs are submitted electronically for approval/verification. Eventually, blockchain technology may be widely applied to track custody. Biometrics – You don’t need to scan someone’s iris to use biometrics in your anti-theft measures. Simple high-resolution photographs of faces and license plates or the use of thumbprints can suffice. Your anti-theft program should include an escalation and response plan. These plans can be activated in any irregular situation, not just emergencies. They ensure that someone with higher-level views of operations and elevated authority can intervene when something on the ground isn’t going to plan. Your insurance professional is your secret weapon Count your insurance adviser as a vital part of your security team. They not only can help place the best insurance protection for your company to protect you financially against cargo loss but also can serve as one more firestop in the event someone is trying to bilk your company out of valuable freight. While self-service insurance certificates may be convenient, they can cut out an important piece of oversight. Your insurance provider may also have risk management advice or even free planning services that can aid your company in improving cargo safety. Finally, some insurance contracts may come with crisis response options, which may include salvage or even kidnap/ransom coverage. Talk to your insurance professional about these extended protections. This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.