Security for goods cannot end at the gate.
Risk management expert Paul Langan of Fiducia’s adjusting partner Twenty 51 looks at why it is now more important than ever to ensure that your cargo and logistics clients have a risk management and security plan to protect goods when in transit.
As the UK looks to build post Brexit and as the economy rebounds from the COIVID-19 pandemic the level of goods in transit across the country is expected to rise as the year progresses. However, thefts of goods in transit remain high and as such owners and operators need to ensure they have the necessary systems in place to reduce the risks of falling victim.
The scale of the problem remains hard to define. The National Vehicle Crime Intelligence Service (NaVCIS) is a national Police unit and part of their remit includes maintaining a focus on vehicle freight crime. They have recorded the level of HGV, freight and cargo crime in 2020 as 4,574 crimes with a total loss value of £97.1 million.
The true value is likely to be far higher than this, given most losses are recorded on a cost basis and not sales value which can be three times higher. Inevitably there are secondary costs to consider including, when full orders are cancelled due to the shortage of stock to the amount initially ordered.
While the risks are real, we see well-managed shipments are successfully completed every day of the week and in truth, plenty arrive without the correct levels of security being in place. However, to understand the reasons why these crimes occur, we need to analyse the ones which are targeted and subject to significant loss. Having dealt with hundreds of these types of losses, it is clear there are common weaknesses which contribute to the reasons why these thefts occur.
A typical business has warehousing facilities with a good level of security in place to protect their goods whilst in storage. Physical barriers include high quality security gates and doors. Automated systems include internal and external motion detectors linked to CCTV cameras. Automatic intruder alarm systems are monitored offsite by alarm companies with a direct response capability from the Police.
While security is tight at the warehouse can you say the same when the goods leave the premises? There are a number of areas which need to be addressed when goods are being shipped or delivered namely:
Devolved control: Business owners contract preferred freight forwarders to organise their transit needs and devolve full control of the whole process to them and to subsequent contracted hauliers. Do you ask any questions around the security measures they will employ while the goods are in their care?
Sub-contracting: The principal haulier typically subcontracts the shipment to another haulier who then subcontracts it on to another haulier. The shipment can pass through 5 or 6 hauliers each of whom take a proportion of the profit from the original agreed price. By its very nature, the haulier who finally carries out the transport is usually the one with the lowest operating costs. Consequently, a large proportion of contracts end up with hauliers based outside the UK. Business owners and freight forwarders need to understand who is actually transporting your goods.
No route planning: The focus of the haulier is to maximise the number of shipments that can be completed. A load can be collected from the docks and within the hour the driver is parking up for an overnight sleep break prior to completing the delivery the following morning. This occurs even with journey time from docks to delivery being less than 6 hours. As a result, the security of the load is needlessly compromised when it could have been collected and delivered on the same day.
Insecure overnight parking: The hauliers undertaking the shipment do not have secure parking facilities available to them at strategic locations around the UK. There are not enough secure HGV trailer parks within the UK. Drivers often choose to park on the side of the road to save the cost of parking fees at secure lorry parks, if available. Service stations do not provide secure parking and a large proportion of the thefts occur at these locations. Do you insist that any overnight stays are carried out in a secure location?
Loaded decoupled trailers: Trailers are often loaded overnight and left decoupled in warehouse yards to await collection by the haulier the following morning. They are often left without any security device fitted to prevent an HGV tractor unit being driven into the yard, hitching up the loaded trailer and driving off. Again, is this an issue you address?
We believe business owners need to undertake a review of the transit processes they currently have in place, to identify if their goods are sufficiently protected. The question needs to be asked as to whether the goods could be vulnerable to attack because some or all the characteristics identified above, apply to their shipments.
This will enable owners to work with their service providers to remove the threats or seek alternative providers if current providers are unable to commit to this course of action.
As insurers we are aware of the exposures our clients’ face. Part of our role is to differentiate between inadequately managed and effectively managed risks. Insurers are now rewarding those businesses who can demonstrate they are in control of the risks with more favourable terms and benefits at the point of renewal.
Improving the standards of security for when goods are in transit will ensure you are better able to protect your valuable loads against these types of attack. For this to be successful there is a need to identify those freight forwarders and hauliers who can provide the required level of service to protect against these risks.
With Fiducia we are always willing to work with our broker partners and their clients to look to mitigate the risks of transit crime. Our expertise is on hand to support your efforts to ensure that goods do not fall victim to criminals as we understand the losses go far wider than the value of the items stolen.