Preventing Cargo Theft from Freight Yard and Drayage Facilities

Client

Drayage companies handle high value goods that are often targets of cargo thieves. In 2010, 124 theft incidents from secured parking locations, such as facility yards and secured drop lots were recorded by FreightWatch International. Drayage and intermodal facilities are hotspots for cargo theft.

Challenge

Because these facilities are targets for cargo theft, drayage companies are seeking to improve security beyond traditional methods, such as armed guards and fences. One of the main challenges to improving security at these facilities is eliminating the human factor. Often because of human error or implicit involvement of an employee, cargo thefts are easily perpetrated. Eliminating this risk, along with cutting costs associated with traditional security, remains a challenge for drayage companies.

Stop Loss

If a load is stolen while it is in the custody of a drayage company, many times it is the responsibility of that company to cover the cost of the load. In addition, the drayage company loses the fees they charge for delivering the cargo.

Insurance

Stopping loss in the supply chain can lead to other economic motivation for implementation through insurance incentive and added operational efficiencies. Paying insurance deductibles on stolen loads and subsequent insurance rate hikes can be costly for victims of cargo theft. Deductibles can vary depending on the value of the load and who is the insurer. One source stated that the standard cargo insurance is $1000 while another source said a "cargo insurance policy deductible is 1% of the insured value with a $500 minimum." Another source stated that "marine cargo insurance cost is 1.5% of cargo value, subject to deductible of $1,000 per container."

Customer Protection

Dangers to the consumer revolve around the product being outside the legitimate chain of custody and the criminals' ability to adulterate, counterfeit or otherwise affect the product so that it is unsafe for consumption.

Customer Retention and Acquiring New Customers Through Competitive Advantage

The retention of customers by building loyalty and confidence is very important to a company's profits. This is achieved through customer and partner recognition of a firm's safe and secure movement of shipments. Cargo security efforts need to accomplish this by providing a means for stakeholders to access, on demand, information on the container shipment. This becomes a significant competitive advantage in a very competitive market. In turn this competitive advantage helps in acquiring new customers. A distinct collateral benefit exists for the carrier in cases where the company develops a secure operation and leverages this as a competitive advantage. Firms have used their security practices and orientation as a competitive advantage in capturing additional business in the marketplace.

Avoidance of Liability

Even if a stolen container of drugs are recovered, many companies don't want to assume the liability and typically, drayage companies end up having to pay to destroy these products because of the lost chain of custody.

Chain of Custody/ Product Integrity

According to a Stanford University study, the most significant levels of improvements from adopting cargo security solutions were related to product safety (38 percent reduction in theft/loss/pilferage, 37 percent reduction in tampering) which is logical since these benefits are most closely related to security investments.

The TrakLok Solution

TrakLok Corporation is a technology and service company focused on securing and tracking intermodal shipping containers. TrakLok's products, the GeoLokTM and TrakLogTM combine for unparalleled armored locking capabilities with worldwide visibility. The GeoLok is a robust armored "geolock" with access capabilities based on time, location and authorization code. The GeoLok affixes to and secures both retaining bars while reporting location, condition and security of the container. The ruggedized locking device is environmentally sealed and designed to take extreme abuse while insuring access control and cargo condition monitoring. The TrakLog web portal allows access to information provided by the GeoLok. Because of its open architecture, TrakLog can be integrated with other logistics software systems to provide seamless in-transit security visibility.

To ensure the chain of custody of a shipment, the TrakLok solution provides visibility into the movement and custody of a container as the container moves along it route, a record of its location and ownership is captured in real-time.

Viewing the chain of custody in real-time allows companies to answer questions such as where is a container currently, where was it on a specific date, and most importantly, who had access to the container at what points in time.

The TrakLok Solution provides adopters with the ability to:

- verify and maintain security of the container;

- provide chain of custody verification in real-time;

- insure that containers have not been tampered with or accessed ;

TrakLok's technologies provide a time-definite and controlled chain of custody that will help adopters improve product integrity. TrakLogTM shipment monitoring enables improved product safety, ensuring product authenticity, and protection of a client's brand name.

Bottom Line

Businesses involved in the shipping industry are profit motivated, therefore "the costs associated with enhancing cargo security should be offset by a system that provides economic benefits as well." By employing the GeoLokTM, those involved in shipping containers in the supply chain could realize significant cost savings associated with cargo theft. Stop loss, managing insurance rates, assuring the chain of custody are all very important to a drayage company's bottom line. Yet the most important factor may be keeping the customers they have and gaining new ones.

Retention of current customers and acquiring new ones through competitive advantage has the potential to show significant ROI. With security and visibility being in such high demand by companies seeking to implement cargo security devices those with the competitive advantage in these areas will be able to profit on such a demand. The TrakLok solution also allows customers to view their shipment in transit can help reduce personnel needed for carriers to relay information to the client. Drayage companies and their customers also receive status updates and alerts in real-time. The same benefits that aids in retaining current customers can be marketed to acquire new customers through competitive advantage.