Hi, welcome to today's webinar, Cargo Theft and Emerging Tools to Assist Underwriters, hosted by Inland Marine Underwriters Association. I'm Eileen Monreale, Education Training Specialist for IMUA. Thank you for joining us today. We have over 200 registered and we look forward to a great session. A few technical tips before we begin. You'll find your attendee control panel on your screen that may minimize by default. At any point, you can right-click the orange arrow to bring it back. Also, you can select view on the top of the control panel and uncheck auto-hide option and this way it will stay open for you throughout the webinar. There is a copy of the presentation that may be downloaded under handouts in your control panel. There's also a question box where our presenters will answer questions that you ask and you just send them in through the question box. At the end of the presentation, they look forward to your questions. That is their favorite part of the presentation to engage with you, so they look forward to your questions. And to encourage questions, IMUA will email a $25 Amazon gift card to the most slash best engaged attendee. It's like a combo algorithm to that. And we appreciate your attendance and we just want to try and keep it fun where we can. So let's get started. I want to share the IMUA statement and the traveler's statement. It is good to be aware of them. And I am now very happy to introduce today's presenters. We have Scott Cornell, who is National Practice Leader, Transportation, Inland Marine Crime and Special Dept Travelers. He has been involved in the insurance industry for 20 years with travelers and is currently the leading cargo transportation division. Prior to his current role, Scott conducted investigations specializing in cargo theft and transportation, internal theft, embezzlement, and corporate investigations. He helped create a fully dedicated cargo theft unit for travelers known as Special Investigations Group, SIG. He currently serves as the Vice Chair for TAPA, Transportation Asset Management Protection. Scott has been an instructor and speaker regarding cargo theft and prevention for organizations too many to list. He is a nationally recognized cargo theft expert and has appeared in CBS Money, VICE TV, NBC News Now, Yahoo Finance, and the New York Post, to name a few. Also we have Sal Marino, who is Vice President of Business Development at CargoNet. Sal has over 10 years of supply chain experience with DHL and UPS and 11 years of cargo security solutions via Varis CargoNet. He is a certified cargo security professional, CCSP, and sits on multiple advisory boards and committees including ATA Security Council, IMUA Transportation and Loss Control Committee, TIA's Fraud Framework Committee, and of significance to many members of IMUA, Sal is a 45-year New York Yankees and Giants fan. Very important fact. We also have Keith Lewis. Keith is Vice President of Operations at CargoNet. He is responsible for managing CargoNet's operational efforts including supervising the staff and providing investigative support and systems training for CargoNet. Keith has over 20 years experience. He's also worked for the task force agent for the Georgia Bureau of Investigation. He's still an agent with that agency. He is a post-public supply officer, certified general instructor. We also are happy to have a fourth presenter today at last minute, Ralph Pepe, who is Varis Senior Crime Analyst. We're honored to have all four of these diversified and talented presenters with us today. So welcome to all of you gentlemen. The floor is all yours. So I think I'm kicking it off here. You can go to the first slide, whoever has the controls. We're going to talk about our agenda today. Recent supply chain cargo theft statistics, route analysis, crime mapping, types of supply chain crime, straight cargo theft, full tractor trailer theft, pilferages, fictitious pickups, also categorized under strategic cargo theft, other identity theft scams, criminal methods and operations, law enforcement collaboration, and some case studies and tips and best practices. And then we'll have a section in the back for questions. So before I start, thank you for the opportunity. You don't see me on this traveling. I'm at a training class myself here in California. We have a policy that we don't allow our crime analysts, Ralph Pepe's on the call. Ralph, our crime analysts are involved in criminal investigations and they testify in court all the time and we don't post their photos. We don't put their addresses on their business cards and we do that for their safety. So just to kind of clear some things up, I'm a post instructor. It's called a peace officer standards and training. I'm a national instructor, so I can teach law enforcement training anywhere in the United States. So that's what I do and that's why I'm in California today and I'll be here tomorrow doing the same thing. So just kind of get moving on here. The FBI classifies the cargo theft as the taking of any cargo. I don't need to read this verbatim. Every state has a different cargo theft statute. The FBI is the only one that calls it goods, chattels and things like that. Also, if you read the unannotated version of the cargo theft statute for the FBI, it does include fraud, which covers fraudulent pickup, strategic cargo theft. So the cargo theft problem, cargo theft thieves are highly sophisticated. As time goes on, they're getting more and more sophisticated. Scott, who's on the call today, asked me to do a past, present, future, and I've got some talking points later. But if you lay the generations of cargo thieves over the generations of people, you'll see how things started off with the straight up armed hijackings, as they called it back in the day, to the bolt cutters, the slim jims, the ignitions, hot wiring, and we moved into the technology phase. So cargo thieves are getting, as technology emerges, the cargo thieves are getting better. And with the emergence of technology, they can do it better and they can do it faster. I talked to someone a couple of days ago about a cargo theft. And I'm talking, I think I'm talking to somebody in Oklahoma because of their phone exchange. And long story short, the fellow says, well, it's getting late in the day for you. It's really late for me. I'm like, well, where are you at? He says, I'm in Serbia. So the dispatch office for these cargo thieves is now anywhere in the world because they can spoof numbers and do all these things. So think about from a from a prosecution and investigative standpoint, how am I going to go to Serbia and investigate, you know, a boiler, a boiler room of criminal criminals working over there? So they're getting super sophisticated penalties for cargo theft thieves. The federal the feds have the best every state. You'll get 50 different penalties, 50 different ways that it's laid out. Victims hesitant to report. I don't want my insurance to go up. It's a cost of doing business. The old thing while we call the police all the time and they do nothing. Well, there's maybe not anything they can do because it's a whodunit. There's a whole whole reason that people have that perception of law enforcement. We actually really do care. And law enforcement has a lot of training on their own to to to do this. Collaboration is fragmented. Law enforcement does not have a national database. And that's where cargo net comes in and takes over for law enforcement because we can share all that information with law enforcement. They can go into our system. And if I'm in Georgia where I worked for a long time and I I'm looking at a stolen load, I can see if that load's been reported to cargo net and it was stolen in the state of Illinois. So I can I can I can use cargo net to better my investigation. I'll just kind of skip through this here. Limited training and awareness. There's there's very few certified law enforcement instructors that do this. And there's very few task force agents left. Now, when I first started doing this, we had probably 200, 250 folks around the United States and Canada that were cargo thefts specifically. We're now down to probably under 50. Go to the next slide. So this is a cargo theft heat map. We put this out for our members. We put it out for the public. And if you look at this map compared to 10 years ago, there's not going to be much difference. You may see a hot spot in the middle Midwestern United States around the Nebraska, Iowa, where all of a sudden we started having a lot of meat pork thefts out there. But I looked at a report that was done for President Ford back when he was the president, obviously, and was done on cargo theft. In the heat map, then what was very rudimentary heat map is the same as it is today. So there's no difference at all. Last year, we we reported we had we had seventeen hundred and seventy eight thefts reported to us. It was a tremendous increase from the prior year or even up from the covid year, which was a was a very high year for us this year. It's it's even increased more where we usually we're taking in one hundred, one hundred and thirty a month, something like that. This year, we're over two hundred a month so far in the lion's share of these are cyber. They're fraud, fictitious pickup, strategic cargo theft. Where technology is being used and the bad actors aren't even in the United States, so it's getting more and more difficult to handle. But if you look at certain areas of the country here, you can't even see Florida on the map. You can't even see the Atlanta area in California is the same way. It's just it's just a hot spot. And the price of goods going up on the cargo theft as far as the dollar value. If you look at if you've bought anything lately, which I'm sure everybody has, you look at the value of goods stolen today. It's the same product, but the prices have gone up. The manufacturing cost has gone up. So therefore, it drives the prices of goods up and go to the next one. I think the one thing I would add on that, Keith, is I think if you compare this year's map to last year's map, you are seeing a little bit more of a spread of those dark areas into some of the nontraditional areas where we really haven't seen. A high propensity for cargo theft in the past or or reporting of it, and I think that's notable, I think part of that is due to the strategic thefts and the ability for them to work remotely and basically steal cargo anywhere. Yeah, that's a good point, Scott. And if you look at western Arizona, where I live. Just in the last few months, we've had five just in the right when you cross into Arizona from California, and those are tied to organized crime rings that are operating out of southern California that have followed trucks from southern California over to western Arizona, where obviously the drivers are going to take their break. They're running out of hours. So they're smart. The bad guys are pretty smart. They know they're going to stop when they get to they get to the pilot at exit nine in Arizona, because the diesel fuel is cheaper there than it is in California. Parking is better and there's better places to eat. So the bad guys know that's probably where they're going to stop. And that's a little bit of a change, too. You know, we talk quite often about the use of a red zone as a preventive method like that. And we do that because traditionally cargo thieves wouldn't follow loads more than, let's say, 50, 60 miles. They would hope to get them, you know, shortly after they take off. But we have been seeing this over the past six months or so where they are following them these greater distances. So that's something we have to keep an eye on. And again, technology is coming into play. Yep. I'll go to the next slide. So this is just a breakdown by quarter. So if you look at our COVID year, go back to 2020, we saw a significant spike in 2021. It's continuing to go up. If you look at quarter four of last year, which is what I want to highlight on this, we've got a half a dozen crews or so, maybe more, working in the California area. All of a sudden, we started seeing loads of solar panels, energy drinks and those type of goods being stolen out there. It's so easy to do. And there's so little chance of being caught, which is one of the biggest problems right now with this. But there is some good news. I don't want to be all doom and gloom. Over the past couple of months, Ralph's on the call if he wants to talk about a little he can. There's been numerous search warrants executed in the California area, the SoCal area, and numerous loads have been recovered and there's been a lot of arrests. So as the bad guys get bigger, they get sloppier, they get more greedy and they start making mistakes. So there is some good news here for us. I think, you know, a little bit of this ties into the golden rule, which is cargo thieves are always going to steal what they know they can sell. So the solar panels is a prime example. The solar panel thefts may have come as a surprise to some people as something we haven't really seen a ton of in the past. But when you really look at the demand around that type of a resource, it makes sense. It fits the pattern of we're going to steal what we know we can sell. And to your other comment, Keith, in general, I think some of what we're seeing lately that's led to some of the success at some of the warehouse searches and things like that is the fact that they're actually stealing so much right now that they're not able to move it as fast or as quickly as they have in the past. So we're seeing them store it for longer periods of time and maybe in a little bit more concentration, which has allowed for some good recoveries. Right. So thanks, Scott. So the the reason my personal thought is on the reason we're seeing such an increase in solar panels in Southern California is the push to electric everything in California. All of a sudden, we realize that in a few years, we're going to have an electric car, we're going to have an electric lawnmower. Everything is going to be electric and it's going to be powered by either solar or it's going to be powered by the power company. And the power grids right now can't substantiate what they've got. They can't support it. So I've got to go get my own power. So that drives up the demand for solar panels and solar panels are not trackable. Yeah, they do have serial numbers on them, but nobody tracks them. Nobody's enters them in NCIC and a solar panel is a solar panel. Once it's out of the off the original conveyance, just like any other cargo sitting on a job site waiting to go on somebody's roof. It's it's it's nearly impossible to prove that it was stolen. Go to the next slide, unless Ralph has any comments. I guess this is a poll question here. Historically, what what commodity is targeted more than the other? So I'm assuming this is a question folks in the audience can answer. Anyway, I don't know when to move off the poll, so. Okay, I guess we can go to our... Oh, okay. Wait, wait, wait. Stay with the poll. Ali, are you going to launch the poll, or should I launch the poll? It's been launched. Okay, okay. So when you share the results, everybody will see it. Sorry. Give one minute, and we'll share the results. The results are being shared. Okay, do you see them? To our Marist team? I can see that people answered electronics, Keith. I see it, too. Do we want to go to the... So do I give out the answer here? Is that how I do this? Yeah, make it a teaching moment. It's on the next slide, Keith. It's on the next slide, so we can go to the next slide whenever you're ready. So with household, so those that have been paying attention to the cargo theft reports would probably got that right. Household goods, appliances, and those type of things are leading the way now. Scott, any comment before I go down the road and talk about one of the other columns here? You know, I would just say that, you know, we've seen a lot of shifts, especially over the last couple of years. I think, you know, one of the things that is pretty significant is coming into the beginning of this year, the top three categories were pretty much neck and neck. They were only a little bit off of each other. And I think your chart here, you know, shows that there's not a huge difference in those three main categories. We did see household goods in that number one spot from 2010 to 2019. So that had a long time running in that number one spot. And then we saw the shift in 2020 to the household goods and then immediately after electronics. And now we're starting to see shifting back to food and beverage and really all three of those top categories. And I think that's what we're going to see for some time. Yeah, I think when you and I first started working this, Scott, it was food and beverage. Or I'm sorry, electronics back in the 2000s. And we're going to see these things move. And my only comment on this slide is self-explanatory unless anyone else has comments. But what really jumps out is vehicle accessories. And so if you think about that, I was talking to somebody with Nissan the other day. And we were talking about this actual number going up. So if anybody's bought a new car lately, you see the price of vehicles is tremendously inflated with a market value adjustment. So new cars, the lots are empty. It's a whole different way of buying cars now. You get what you get. If it comes in, you get it. If it doesn't, you don't get it. So a lot of folks are keeping their older cars, fixing the older cars versus trading them. And they're buying more automotive parts, starters, generators, tires, and those type of things. So what does that do? Just like Scott was talking about earlier, people steal what people are buying. And the price of automotive parts has gone up, batteries. We're seeing it all the time. I know we don't talk generally about the car haulers that deliver vehicles to new dealers. But they're seeing a big surge in vehicle theft. They show up to make a delivery of a couple of cars at a dealer. The driver unloads the car. And while he's unloading that car, somebody's on the trailer stealing the car off the trailer. So it's an emerging trend. Probably we'll see a little more of that over the next few years. And lastly, Keith, this kind of ties back into one of the earlier slides where the average value is up to 214,000 now. But keep in mind, food and beverage is not going to hit that number. And a lot of times, household goods is not going to hit that number. So quite often, you and I have been doing this for a long time, and we've seen the HVL perspective, meaning people pay attention to high-value loads. But really, when you're looking at what's being targeted most frequently, it's a mix. It's a mix of that high-value load versus that lesser-value load. The average food and beverage load is not going to be as close to that 214,000 mark. So really need to be looking at high-target loads, not high-value loads. What is being stolen most often, most frequently? That's a great point. If I may jump in real quick. So obviously, we know electronics are being targeted for obvious reasons, right? The cost, the value, the demand. Food and beverage, very difficult to track, especially once it's consumed. We know that. But, Scott, I've heard you talk before, and Keith, about household goods. And why are we seeing that spike on household goods? What are your thoughts? Well, it's more what the consumers are buying. Washers, dryers, refrigerators, and those type of things is driving the market on that. I'm spending more time at home. I'm working from home. So, you know, when we saw this change with COVID hit, Sal, and all of a sudden, I'm buying a big-screen TV. I'm buying all these things for my kids because they're not going to school. And it's just continuing. I think once we get addicted to buying things, it just continues until we run out of money. So that could be why. Yeah, I agree. We saw that shift in 2020. And really, you know, Keith's statement, we're all spending more time at home is the key part of that, right? So we're building home offices. We're building home gyms. We're spending more time at home. People were making modifications to their home. You know, that category encompasses a wide group of things, anywhere from laundry detergent to washers and dryers. So to me, that makes total sense based on what we're seeing. Yeah, I'll throw in there. I mean, what are your thoughts? And we've talked about this very lightly on the side, Scott. But, you know, catastrophic events, right? I mean, in the last several years, there have been several tornadoes and catastrophes that have created the need to rebuild and now buy new dishwashers and refrigerators and washing machines. Criminals know that that area just got wiped out and they're going to start rebuilding, right? So. So it's a great point. And it really affects two categories here. The insurance industry is very much aware of what's called cat events, catastrophic events, hurricanes, floods, tornadoes, you name it. Any of those types of storms that are going to impact certain areas. And so you'll see that impact cargo theft in both that household goods and the building materials categories. I would even say it has some impact on the food and beverage as well. But specifically that building materials and household goods category, you're going to see an uptick in some of that when we see some of those catastrophic events. So that's something to keep in mind when you're looking at that as a potential type of loss outside of that cat area. Anywhere within a thousand miles of that cat area, you're going to see things like building supplies and household goods targeted and brought into that area. Go to the next slide. Okay, what location type had the most cargo thefts in 2022. So, whole question here. All right, the results are up, Keith. 62% of the trucks stopped. Yeah, now we can go to my slide here. I can advance off that. Okay, so it's warehouse, and for the last three years, which we have on this slide here, warehouse has been number one. And the reason our thoughts are is people aren't breaking into warehouses and stealing stuff out of the warehouse. They do. We do have those thefts. They're far and few between. The last major one we had, obviously, was the Eli Lilly theft of a warehouse theft where they broke in. But what this is is the loaded trailer, the dropped trailer comes into an unsecured warehouse. The driver just goes in and takes it. But the more significant reason this leads the pack is, it gets back to what I was talking about, the technology being used to facilitate a theft, strategic theft, as Scott calls it. So if I'm doing a fraudulent pickup, fictitious pickup, we log it where the actual product was picked up because we don't know where the bad actor is. We don't know where that person is. We don't even know really who he is or she is. So that's where the crime occurred is where the product was tendered to the fraudulent carrier or the innocent carrier that was directed to go in and pick this up. So if you look at the numbers last year for fraudulent pickups, they increased significantly over the prior year. And that's where we're going to code it. So if you look at parking lot, that's just basically the shopping center where the driver thinks it's safe. I've heard that line so many times. My favorite line when I used to take the initial police report was, I've been parking here for years and I've never had a problem. So truck stops, yes. A lot of pilferages occur at truck stops. We do see full trailer load thefts and tractor and trailer load thefts, but a lot of those are pilferages. This has always been a problem for me, secured yards. And we're basing, I've always felt, well, there are some where they drive through the gate at secured yard and they put a gun to the guard's head. Those are far and few between two. But I've always felt that when the driver reports, I was at a secured yard, that's that person's, that reporter's, that reporting party or complainant, however law enforcement couches it, that's their version of where they parked. So that's how the report is written. And so that's how it's reported to us and the insurance company that the driver was at a secured yard when it was just an empty parking lot next to a restaurant or whatever. Side of the road, big, frontage roads. And a lot of these unsecured yards, they tie into the problem parking now, the problem with parking in the United States. If you, out where I live, if you come off Interstate 40 on Exit 9 any night of the week, you'll see trucks backed up on the off-ramp and the on-ramp resting. They've gotten to the pilot or the loves and they've got their fuel. They're getting back on the interstate, but they're out of hours. They've got nowhere to park. So they're sleeping on the side of the road or in a rest area. Rail or port, we don't see a lot of, it's kind of misleading there. We don't see a lot of thefts inside the rail yard. We see them along the railroad tracks. We don't see a lot inside the port. But we see them in that general area. The long, the draymen, they've set their facilities up to do the drayage work. They have a drop yard close by the port, a mile or so away, or the rail yard. So that's typically where it's going to be looked at, that it happened there. The rail, they're alongside, obviously you saw the optics from last year with all the trains being broken into in the Southern California, Los Angeles area. The optics has helped on that. Some good news is the Los Angeles Police Department has started up another cargo theft task force. I'm meeting with them tomorrow in LA. So that's one of the reasons I'm in California today. So we can go to the next slide. So who do you think has the most cargo thefts? What state? That's our poll question. That's a layup. That should be a very easy one. Just like playing. Good job, everybody. Good job. So California. Where do we want to slide there? There we go. California, 417. And the next closest state, almost, I wouldn't say almost double, but pretty close, Texas. So that's how much is being stolen in California right now. California is the heartbeat of the nation, the produce. The produce industry, $38 billion a year in produce. Oil, a lot of oil products come out of California. Plus the products coming in from Asia, all the imports, furniture, everything, you name it, comes in from overseas there. And it's just trailers stacked up on the side of the road, containers, trucks everywhere, ports, rail yards. And this is definitely driving the country as far as commerce for transportation. Keith, not to rush you, just a time check. And I do want to see, you know, Ohio is kind of interesting to me. I don't recall seeing Ohio in the top eight. Do you guys have any thoughts on that? We've seen, over the years, we've seen Ohio come in and out of that. It's not completely obscure to see it. But I would say, in general, the only consistent in that chart, really, if you've been doing it long enough, is California, right? I mean, Florida used to be right there with California. Now it's Texas. Georgia used to be up there in the number two spot at one point. So I'd say everything outside of that California number is subject to change, right? New Jersey used to be on this list for the longest time. And, you know, it hasn't been on for a while. So I think we're always going to see some change in all of the states after California, to be honest with you. And you look, in 2020, Texas came right there with California. That was highly unusual. But we do see some of these changes. So good point, Scott. So Kentucky's off the map. It's not on the map now. And so is New Jersey. They're off. So that's going to move up the other states on the packing order there. But the numbers in Ohio have been consistent over the last three years. It's just we've got a couple other states that have fallen off. Go to the next slide. Okay, real quick here. Theft is straight-up cargo theft. It's a theft of a tractor trailer, you know, or a trailer. Straight-up cargo theft. Burglary and theft, which is what we consider pilferage. Somebody broke in the back of the trailer and stole some items. Fraudulent pickups, fictitious pickups, strategic cargo theft, however you want to say it. If you look at the increase there, most of that is in California. Broken seals is a big problem. Obviously, if it's a load of food products and the seal's broken, and even if nothing's even stolen, what doesn't get reported, and a lot of times isn't covered by insurance, is if the load is ordered by the USDA or FDA to go to the dump would be destroyed. Other could include final mile or any other type of theft. So go to the next slide, Ralph. I know we're getting pushed on time a little. We should be on the next slide. Beverage. Yeah, so here we go, food and beverage. Ralph, you want to take this one because you're kind of more granular into the weeds if you want to take this one. Sure, yeah. So food and beverage thefts, I would say the major story here is they really came off in 2021, and what we saw in 2021 was extensive targeting of electronic shipments, particularly computer electronics graphics cards, and what it boils down to is just consumer demand. Were an item that were extremely hard to get or valuable. Again, echoing some of the comments that Scott made and Keith made about work from home. Everyone was working from home or in their house and doing home improvement projects. One of them was everyone needed computer parts because they couldn't go anywhere. So we saw food and beverage thefts decline in favor of electronic thefts in 2021. That trend reversed in 2022, and we saw some of the more normal levels of theft in this category in 2022. Certainly some of the fictitious pickups that we saw later in 2022 in California affected these numbers as well, and you can see that in Q4 2022 there. So building materials, always a major commodity target in Texas, particularly Houston, but we also saw major theft of building materials in and around Florida as a side effect of some of the major hurricanes that affected the area. I forget the name of it, but the one that affected the Fort Myers area last year. So a lot of targeting of roofing shingles and lumber as those products again became in high demand. In the South Florida area. I think this is what Sal was alluding to earlier when he brought it up, but I think that's a great slide that shows that, and I think that the heat map reflects exactly what we're talking about with that. Types of supply chain crime and criminal methods of operation. I can take this one because I was around back then. Back in my day, it was hijacking was the common term used in the old days. It meant by force or intimidation. We all remember those old movies where the driver gets pulled out of the truck and they beat him up and take his load. That's very far and few between. It does happen, but it's very far and few between. Load boards were rarely used to steal loads because of requirements. The industry was regulated. Every transaction was face to face, hand to hand. You had to meet with the person you were going to haul the load for, and the load boards were not on line. So driver's license were copied. Pictures were taken. It was a whole different world. Typically, the loads were targeted. We didn't have those type of commodities back then. We didn't have computers. We didn't have solar panels and energy drinks and those type of things. It was alcohol, tobacco, firearms, alcoholic beverages, and high-end clothing, mink coats. Remember, you know, the old movies, it was always, I got a load of mink coats or whatever. Nobody even wants to even talk about that anymore. Nobody wears mink coats, I don't think. Bolt cutters, slim jims, flea key sets were the tools used, tools of the crime, or some insider knowledge of this is what's being shipped and this is where it's going to be. The theft areas haven't changed. Fencing operations were commonplace for stealing loads. I bought it off the back of the truck was the old term. Cargo net crews, close knit, a lot of them were family members. When I first started working cargo theft and I would do, I would arrest somebody. I would look through case files and see that their grandfather was arrested 10 years ago for the same thing. And then before I retired, I was arresting their sons. Late deliveries were due to equipment breakdowns, bad driver issues, weather, and those type of things, and that's changed. A late delivery now, people automatically right now go into a panic mode. When I was working in transportation, a late delivery was a late delivery. Now the first thing we think of, and this takes up a lot of our time for my analysts, the driver's a day late, and right away we go into an emergency management mode of the load stolen. The load's overdue. We don't know where the driver is if it's stolen, but we're automatically leapfrogging over all the kind of innocent things that could happen going right to, it's either going to be a theft or a hostage load. Go ahead, Ralph. Ralph, you can have this one since this is more your generation. Thank you, Keith. Yeah, so post-Internet era of supply chain, certainly we're hearing a lot about supply chain disruptions ever since 2020. Load boards, online load boards have taken the place of insider information. You don't really need someone at a warehouse informing you what shipments are coming. You can see it clearly online on one of the many load boards that are available. The Internet has taken the place of rudimentary burglary tools. You really need to break into a trailer when someone will give it to you, right? Targeted shipments have gotten a little bit more high tech. And what I mean by that is particularly computers, computer electronics, solid state hard drives, RAM modules, very small items that are worth a lot of money. You could fit a lot of them into a truck. So if you lose a whole truckload of solid state drives, that's a multi-million dollar theft right there. Those things didn't exist in the 70s, that's for sure. So you have e-tailers, things like, not to name names, but third party marketplace stores. A lot of retailers now, you know, they sell their own products and they also have a third party marketplace. Some of them will do fulfillment for their third party sellers. And once it goes into a fulfillment by one of these e-tailers, it gets commingled with everything that has the same SKU number. So it becomes impossible to tell stolen goods from legitimate goods. Diverters. So a lot of gray market things. A lot of what we'll see here are people that buy, say, salvage pallets from a retailer or things that the retailer can't sell anymore. So they'll just sell it to someone in salvage. And there's certainly a lot of commingling of stolen products with these gray market diverters. So cargo theft crews, loose net focus, mostly on pilferages. You can break into a lot of trailers, steal a little bit of goods and create a lot less attention on yourself. And also spinoff crimes. Another major category there, comm check scams. So people that are scamming logistics brokers for fuel advances or quick pay and they're collecting a thousand, two thousand, three thousand dollars at a time. You make a lot of money doing that. And again, it's a low priority property crime. It's not worth a lot of money on each individual event. So it doesn't attract a lot of law enforcement attention. And late delivery. A late delivery can be something simple as Keith alluded to. Now, it could just be someone broke down or they have bad operating procedures and dealing with a bad carrier. Or it could be a theft. It's hard to know. Next slide, Rob. Trying, it won't advance for me. I don't know if someone took control. I'll touch on just this real quick. Pilferages, someone breaks in the back of the trailer and steals some commodities. Simple. We travel down the road and we see a lock on the right-hand door of the trailer. We see a seal on the right-hand door of the trailer. Does anybody ever stop and think about the left-hand door of the trailer? Because the right-hand door of the trailer does not keep the left door closed. It doesn't overlap. The only thing that keeps the left-hand trailer door closed is the latch on the door and a rubber seal to keep the bad weather out. There are ways to get the lock off and manipulate those. I don't want to get into too detail on this call on it because we're tight on time. But it's so easy to manipulate the right-hand door, even if there's a seal on it, to get the door open. A lot of times the bolts can be compromised, taken out, put back in. The rivet can be turned out. It's loose. It's not really tightened up. You can get it off with a pair of pliers, whatever. There's so many different ways. One thing I always focus on is we always forget to put a seal or a lock on the left-hand door, or secure the doors together, lock them together so they can't open. The only thing that I would add around pilferage is from a potential underwriting perspective, things to think about is how are you preventing pilferage? What are you doing to protect seal integrity? Those types of things are things you're going to want to consider. If you have a perishable load, somebody takes a few boxes off the back, quite often it's not just those couple of boxes. If it's a perishable load or there's concerns around the rest of the load or anything like that, meaning temperature-wise they open the doors and the temperature drops out of range or things like that. Those are things you have to consider. What are you seeing around the protection of, to Keith's point, keeping those two rear doors married together and protecting the seal integrity on loads of that nature? That's important. The difficulties with pilferage is really where did it happen? If the driver leaves California and they're headed to Texas and they stop five or six times along the way and they don't do a walk around on their tractor and trailer before they take off every time, you may not realize until you get to Texas that the load has been pilfered, and now you really don't know where it happened. That makes it a very difficult thing to look into. Good point, Scott. Think about getting a police report made and saying to the officer, it happened between Los Angeles and Albuquerque. I don't know where it happened. The police officer is not taking a report for you. It's not going to happen. Ralph, you want this one? Sure. Quickly, another method of theft that we see in the supply chain, very popular now, supply chain fraud. This could be anything from a money order to a fictitious pickup. We're even seeing some just good old-fashioned confidence schemes. For example, in Marino Valley, suspects will wear high visibility vests and stand outside a distribution center. They approach truck drivers with a fake device that looks like a check-in scanner, and they just act with authority and say, hey, you're here to check in, go to that dirt lot, get out, walk to the DC. And while they're doing that, they break into the trailer and steal entire pallets of goods. Trying to advance, and it's not always responsive. Sorry about that. Let me just interject here. I apologize. I am in a law enforcement training class here, and I am teaching, and I'm going to have to turn this over to, I believe, Ralph and Sal and Scott are going to take over. My apologies, but y'all are in good hands, and you're going to be so much more happier that I'm off the call now. Thank you, Keith. Appreciate that. So this is my two minutes of fame here. Thank you for the opportunity. They've given me about four slides. We'll make them brief. Their limited exposure to me is always very good. But I assure you, although this slide may have looked like it's a commercial for CargoNet, certainly not the intent. It's always a challenge when we're asked to talk about resources for cargo theft recovery and prevention and other tools for the industries without talking about some of the things that we are doing. But really, the whole idea is to talk about how the data looks, whether it's on a route or on a specific location. So on the screen now, what you're seeing is just a 30-mile radius of Edison, New Jersey, which is just a few miles from the port. And this here is a two-year snapshot, and it's showing 66 thefts in that area. Doesn't look like it's a big, major issue. So when you do look at it from a different perspective, you'll start to see the comparison is vast. So I think I can do the slides. Yep. All right, let's go back one more. Okay. So in comparison, we looked at Long Beach and the port of Long Beach. And Keith said it earlier, generally, we won't see thefts occurring in gate at the port. Look, there's stevedores. I'm sure it happens. However, the real main thefts that we're referring to are generally happening outside of the port, which should make sense, right? It's a target-rich environment. Cargo criminals know. Product is coming from overseas. And they'll stake out, out gate of the port, and then they'll follow the tractor trailer anywhere from, you know, 50 to 200 miles. And one thing that's kind of interesting, so I have a friend that works at the port, and he's a crane operator. And I was actually talking to him last night. And out of nowhere, he knows I collect football cards, right? So he said, well, look at this. He goes, I have a container full of Panini trading cards. And for those of you that don't know, the trading card industry has boomed since COVID. It's multi-billion dollar industry. And some of those boxes that were $35 are now $350. And the $350 boxes are $3,500. And some of those cards in those boxes are worth hundreds of thousands of dollars. Shocker. It's crazy, right? So he said to me, I've got a container full of Panini. And I said, well, how do you know that? And he said, it says it right on the container. It's wallpapered all over it. So what kind of covert operation is that, right? You're letting them know. They're very quick to identify. You probably have millions of dollars in that container. So just think about when these vehicles, yep, thank you for the next slide, when we take the cluster markers off, you can barely see some of the cities that are just coded. And I'm seeing 650 thefts in a 30-mile radius. So where do you begin to see that exposure? Scott and Keith had talked earlier how the data doesn't necessarily change over the years. But I think what we do see change is specifically the where, right? And it's one thing as an underwriter or security personnel to look at data in the media. We release our reports and portions of it. And you'll see California is a top-targeted state or household goods is a top-targeted commodity. But really, the devil's in the detail, right? And how does that correlate? Is it food and beverage in California? If it's food and beverage in California, where in California, right? What type of food? Is it nuts? What type of nuts? Is it walnuts? Is it almonds? What are the average values of those products being stolen? So that's where I think the data becomes more actionable than one might think. Look, no one's going to say, oh, California is a massive area for cargo theft. We're not going to haul in California anymore. Which is not ever going to happen. So we need to be able to manage the risk to identify it. Yes, Scott? I think it's one thing, Sal, that you can't really, if you're evaluating risk, you can't really, it's impractical to think you can look at every lane, every commodity, those types of things. But if we tie it back to some of what we talked about earlier, which, okay, we know what the top, let's say four or five commodities are, right? And we know from the heat map or from the theft by state charts, what states are the hottest. So if you're looking at somebody who's hauling household goods in Southern California, it might be a good thing to get an idea of what the lane is and what the lane risk is. And then ask, what is your plan? What kind of a plan do you have in place for prevention? Are you aware of the theft rates around this on the lane that you're running or things like that? Those are good questions to ask. I think that's something that can be a useful tool. A great point. Thank you for clarifying that for me. So we did a little route analysis just to kind of give you a visual lead. Now this is a two-year snapshot, and I know it's really kind of small, it was larger earlier, but this is the two years. This is a lane from Chicago, Illinois to Miami, Florida. And it's concerning because I look at route analysis probably all day when I'm demonstrating the tool. And it's rare that you will see a route that really has no breathing room. There's certain areas on routes where you can go, okay, we're out of the hot zone. But when you look at this, I'm not comfortable really anywhere, maybe halfway through there. I hate to say I'm comfortable stopping in Tennessee, Nashville area. So to be able to identify, and if you can see on the left, if it's not too small for you, and these slides will be made available, it's broken out by product. So you see that there's 99 of those thefts are food and beverage, and 68 are electronics. So if you've got an insured that's got a high concentration of cargo moving from Chicago to Miami, and it's food or electronics, maybe you need to dig in a little deeper, and as Scott alluded to, start asking some questions. Hey, did you know that this is really risky, and we need to get a better understanding on how you're going to harden these soft targets. Next slide. Okay. Oh, I went too quick, one more. Last slide for me. This is a route analysis from Chicago to Los Angeles, and it's kind of interesting. As I mentioned on that last route, there wasn't really any breathing room whatsoever. But here, when you get outside of the Illinois area, it opens up a little bit, and then you've hit in St. Louis. But as you go through, there's some really nice opportunities where you could feel a little bit more comfortable. But of course, as we know, when we get in that LA area, the theft spike, and you need to... If the hours of service are going to end up in Los Angeles, I hope you or your insured have a plan on where they're going to park that and how they're going to park it. So I know we're a little tight on time, so we'll just keep this moving. And I think, Scott and Ralph, you guys are back up. Sure. If you want to go to the next slide, I'll talk a little bit about law enforcement collaboration and case study. I think it's really important to work closely with law enforcement. Obviously, that should be your first call when you have a theft. Ralph, I think you're going to walk us through a case that you had here. Sure. Yeah. Just real quick. While working an investigation about takeover robberies of cell phone stores, FBI agents with the Dallas field office uncovered a large warehouse full of stolen goods. The warehouse was so large that they called in agents from other places and agents with cargo theft experience to go and help them. In addition to that, we were called in ourselves because they said, look, all this stuff is from cargo theft. Why don't you come help us? So we were there for about a little bit over a week, just separating stolen goods from not stolen goods and calling victims and getting cargo released to them. So the moral of the story is you never know where your cargo is going to be found or where your next lead is going to come from. And these warehouses, a lot of how they were selling their goods, again, third party marketplace on retailers. So very large case, a hundred indictments. That's it. Scott. I think one of the other things that this highlights really is knowing what you're missing. Right. So Ralph touched on the fact that they were brought in to help find who the cargo belonged to. Right. So having that information ready, having all the serial numbers, the transit receipts, anything associated, any paperwork or information associated with the loss, having that handy and ready so that you can identify cargo if it's recovered or found, and then also having the ability to move it once it's found. The law enforcement needs it moved, and that's one way that the insurance industry can really work hand in hand with law enforcement. When law enforcement makes a big recovery, if they find a warehouse and the warehouse is full of stolen cargo, they need that cargo picked up and moved and brought to the rightful owner, whoever that may be at the time. So those are important areas of collaboration. And I would just add to this really quickly that I think you make a great point. You know, if your customers are unprepared to capture the product details post theft, that's a challenge. Right. So they need to know at their customer level who do they go to, who's that person they're going to call, what's their cell number after hours, because I can't wait a day or two for them to give me product details or a week or two. So if they have that fast track to that back phone to that person that they can get that information quickly, it's going to bode well for everyone in the recovery effort. And that's about planning. That's about knowing ahead of time what resources you have, you know, and who's going to pick up the phone at two o'clock in the morning. Right. One of the things we always say is cargo theft isn't a nine to five or an eight to four type of loss. It's a, you know, weekends, late nights, middle of the morning. I've taken many of those calls over the years doing cargo theft. And you know, if you have to make that call at two o'clock in the morning, you know, we have our team, our investigative team that takes those calls for our clients. But if you don't have a resource like that, what resources can you have ready? You know, who can you call that, you know, is going to pick up the phone and start right away? Because and I know we didn't have that in the numbers earlier, but the reporting delay is really trending in the wrong direction. We're seeing delayed reporting, not trending positively for the industry. And after the first 24 to 48 hours, your chances of recovery really decreased dramatically. So you have to have a plan in place and you have to have all the information available right away so that people can really start working on this for you immediately. And I know that's something that you guys do, right, Sal? Ralph's going to take that call at two o'clock in the morning, right, Ralph? Someone's been a lot of those. Yeah, I know. Tips and best practices, data analysis, aids and understanding and writing the risk on a micro level. I think that's important. Right. That goes back to things like the lane assessment that Sal brought up earlier. But knowing, you know, I think knowing what is going on out there, knowing what the cargo theft trends are, being aware of that, that's where the data really becomes critical. You know, Sal, do you want to comment on the benchmark losses and the other stuff? I would say that the data analysis really can be informative when you're assessing risk around this cause of loss. Yeah, I mean, real quick on the benchmark losses, essentially insurance companies are generally working off their own data set, their proprietary historical claims loss data, right? How valuable is it if you're able to benchmark that against your peers and be able to look at the totality of the issue? And how does it look like for your book of business, but this is what it looks like for the nation. So that's kind of what we're talking about. We're saying benchmarking against the national aggregate. I know historically through my conversations with my insurance clients that that is a concern for them, that they want more than beyond what they have, right? Okay. We're a little bit over time, guys. We have until 3.15, Ralph. Gotcha. We do want time for questions and answers, Sal, so let's make sure. I think it's like one of the last slides, right? Yeah. Yeah. I think we're about there. Okay. So warehouse and distribution center security tips. Your insurance should make sure that their facility is in good working order. Generally we recommend security lighting, backup generators, alarm systems, more than one preferably, surveillance equipment, perimeter fencing, and any other kind of barriers. One of the most common ways that I see warehouses broken into, they just make a cut in the fence line and gain access to the property that way. So keeping an eye on the fence line is very important. You should definitely remove all keys from all facility equipment and place them in a secure location. Never treat any alarm signal as a false alarm. Another common thing that we see in warehouse burglaries is they'll trip the alarm continuously. Over the course of multiple days to make facility employees think that there's something wrong with the alarm so that they ignore the next signal. Encourage documentation and reporting of all suspicious activity and ask local police agencies to make routine checks of facilities during holiday downtime. Holidays are massive for warehouse burglaries. They know they're going to be closed for an extended period of time and that's when they look to start. So, for our prevention tips, for those of you with logistics brokers insurance, generally we recommend that logistics brokers tier their motor carrier network and create high-risk shipment categories for designated high-risk shipments. Using some of the information that we provided, we know food and beverage are targeted items. We know computer electronics are targeted items. We know shipments coming out of California, particularly Southern California right now, are problems. Logistics brokers can leverage this information to identify which shipments of theirs are highest risk and assign those shipments to approved, trusted motor carriers that are going to follow safety protocols. Compare the contact information of whoever's bidding on a shipment to the motor carrier's established contact details in the FMCSA system. It is definitely not a perfect system by any means, but it is the best that we have, and logistics brokers should leverage this information whenever possible. Consider the use of a phone number verification tool to check if an inbound call is coming from a voice over IP number. There are a lot of businesses that use VOIP numbers. However, a major clue for fraud, for fictitious pickups, fraudulent pickups that we see right now are that they're using VOIP second number apps, such as TextNow, TextFree, Hushed, and they're using these as dispatch and driver phone numbers to make calls to logistics brokers and get set up on shipments. Using a tool like this isn't necessarily a red flag, but it is a cause for concern, a yellow light, if you will, that something might be going on and you should investigate further. Partner with the shipper to educate them on supply chain fraud issues and to create satisfactory check-in procedures that record information of who's coming to pick up a shipment and verify that the person that was tendered the shipment is the person showing up for the shipment. Part of the current strategy right now is to misdirect a shipment from the origin to a public crosstalk. They usually inform the motor carrier that it is a blind shipment and to ignore the receiver address in the bill of lading. Shippers should verify with the driver of where they're delivering to and to inform them that it is not a blind shipment. And there you go. That was fabulous. All the expertise here allows us a window into a world that we don't get to see very much. Hopefully, it's helpful to apply for the underwriters and people in this webinar. So we do have a few questions. We have a little bit of time. Lisa asks, is anyone tracking OSNDs on the carrier and Verisk side? Any intel? Well, I think most carriers track OSND. So that's something that's very common in the carrier world. I don't know that, I don't want to speak for CargoNet, so I'll let Sal answer that part of it. But on the carrier side of it, it's very common for them to track OSND. Yeah, I mean, from a CargoNet perspective, generally, obviously, overtures and damages aren't something that we're going to track. It's not a criminal intent. But from a shortage perspective, our members do have the capabilities to report shortages to us. We do have that as a drop down in our system. Some use it more than others. But nothing that I would really say, hey, let's use this to start benchmarking or analyzing, right? But, you know, it's a good question. Excellent. We have another question from Sandy. Thank you for that one. What percentage of thefts actually reported to authorities, insurance, and CargoNet? I'll take that one if it's okay, and then Ralph, chime in. But we only know what we know, right? So we really have no idea the totality of all the cargo theft that's happening across North America, nor does anyone. If it's not reported to us, then it's, you know, really not something that we're going to be able to record or report on. But, Ralph, or Scott, please feel free. Yeah, I think you said it just right. You know, it's voluntary reporting, and this is something that I touch on quite often. CargoNet, I think, is a prime example of a company that does a great job of gathering the data that's reported to them through various sources that they can access to get known cargo theft, but I think Sal's statement, we know what we know, is dead on, we don't know how much other cargo theft is not reported or not seen, and there is not mandatory reporting at this time. So that's something that the industry's always going to make it. The way I look at it, we've seen people swag a stick and say, oh, it's cargo theft, a $30 billion problem. We've not seen any indication of that. I wouldn't be surprised, but the way I kind of look at it is we're reporting about $260 million of losses a year, and when you look at how we did a self-insured ratio impact study a long time ago, and it showed that when you take the above the iceberg and the below the iceberg impact that it's having on the businesses, that you can look at it as a 10 to 1 ratio, meaning if you lose $250,000 in goods, it's about $2.5 million in new incremental sales you need to offset to generate that loss. So if you extrapolate that with our $251 million, you're looking at $2.5 billion, and at the end of the day, when you get to the billion, it deserves a solution. Well, here we go. That might lead into the next question, and we have four more questions in about four more minutes, so I'll try and go through them like lightning round. Okay, here we go. Is there such a knowledge, if there is, and this is from Anne, if there is such knowledge on the lanes of highway theft, why aren't law enforcement organizations creating more task force presence or working with the industries with the highest targeted commodities? Money, resources, and priority. Scott, you go. I think it's exactly that. It's money and resources, really. I think they're doing everything they can. California, as an example, is the number one state in the nation for cargo theft. They also have the most dedicated law enforcement to cargo theft. So I don't think it's an unwillingness. I think there's limited resources. And to add on to the priorities, if they're dealing with a homicide or gang violence or domestic abuse, and you're a frozen shrimp, you're going to lose every time. That makes sense. And we have another question. Thank you. We have a question from Andrea. Are you seeing a lot of issues involving illegally double-brokered loads for some of these thefts? Well, it's a double-brokering scam, right? That's part of strategic theft. So we see that quite often where the bad guys pretend to be a trucking company to get a load assigned to them. Then they turn around and pretend to be a freight broker, and they reassign that load. Quite often, they reassign that load to a legitimate trucking company. To be clear, that legitimate trucking company has no idea that they're being hired by a bad guy, just like the original broker didn't realize they were hiring a bad guy. And then they will turn around and rebroker that load and direct that load to where they want it to go so that it's easier for them to steal it. And it is the fastest emerging trend that we're seeing in our 14-year history, and it's up 700%. Good question. Excellent. Next question. It is from Danan. It seems thieves are getting more high-tech. Are drivers and trucks getting more high-tech regarding security? Couldn't they hide air tags in their load? So if it's stolen, it could be found, or alarms on the rear doors to sound if they are open during the route. There's a lot of tools out there to prevent cargo theft. It depends on how you're using them, who's using them, are you using them all the time, are you using them the right way? Covert tracking is widely used at this point. I see the use of covert tracking, huge change in that method of prevention over the years. If I go back and date myself to way back when I first started this, it wasn't even available. Then when it became available, it was very expensive. Now it's very affordable. A tracking device can be anywhere from $100 to $250, depending on what capabilities and bells and whistles and usage and all those things you want in there. So we do see the application of a lot of that. Cargo thieves spend their day figuring out how to defeat those things. You put a tracker on, they come out with a device that will block the signal. A jammer. The jammers. Thank you. I couldn't get the name out for some reason. They come out with a jammer. You put locks on, they will bring tools to defeat the locks, things like that. So it's a constant back and forth with that. It's a bit of a chess match, really. I'll quickly add, put yourself in your insured's shoes. If they're a small to mid-sized broker, and they've had one theft in the last 10 years, and you're thinking that they're going to invest $200,000 a year to apply new types of technology, it doesn't make sense mathematically for them. Excellent. We have two more questions. I'll try and get them both in, because I like the last one that just popped in from Fabian. Which parties involved in cargo shipping are most likely to give insider info to thefts? I don't think there's really any clear-cut answer to that. I don't think you know. I think quite often there's some confusion around that, meaning someone might point to insider information, but quite often we see the organized rings actually plant members of their organization in places to gain an advantage. That person is there with nefarious intent in the first place. I don't think there's any real easy answer to that question. Yeah. I mean, certainly warehouse workers, right, could be suspect, and drivers, very difficult to prove. Look at my friend. He's a crane operator. He could easily tip somebody off that that was a panini load moving out, right? Good point. And final questions from Andrea. Is law enforcement typically looking at the original carrier on these? I ask because I'm working on one now that they caught an Ecuadorian prime ring stealing the load as it was happening, but I'm not sure that they're looking at the broker. I don't really. You broke up in the beginning of that question. I'm sorry. Okay. The question is, is law enforcement typically looking at the original carrier on these? I ask because I'm working on one now. Yeah. So I would say law enforcement is going to look at every, you know, it's cargo theft investigation 101. You talk to everybody who's touched the cargo. That doesn't mean you're looking at them. It doesn't mean that they're implicated or anything like that. I think it's just a thorough, you know, a cargo investigation involves a thorough investigation that includes, you know, talking to everybody who's been involved in the movement of that trade. And Andrea clarified a double brokered load. So I don't know if that changes anything. Yeah. No, I would say the answer is the same. It's a very long winded, convoluted response to if anyone wants to spend some time, I think we're going to share our contact details and just, I know Scott's always makes himself available and we do as well. So feel free to reach out on the side if we need to elaborate. Excellent. Excellent. Well, we're certainly at, we are at time. You guys did a fantastic job of moving it along at a very good pace and so full of good content. So we appreciate that. Your contact information's here. I have the pleasure of selecting the best slash most engaged winner for a $25 Amazon e-gift card. And I'll give that for the last question, Andrea, I thought that was a great question. It was actually your second question. So thank you. And thank you to our presenters. It was absolutely wonderful. Kelly just popped a survey link into the chat box on your control panel. So please do share feedback. You'll also get an email, but we always want to hear what's worked well, what you'd like to see more of and any suggestions you may have for IMUA's education on all formats. So please do share. Again, thank you everyone. Thank you to our attendees and our presenters. That ends today's webinar. Thanks everyone. Thank you, IMUA. Well, thank you.

Inland Marine Underwriters Association

cargo theft trends

fraudulent pickups

household goods theft

building materials theft

California theft rates

Texas theft rates

sophisticated theft methods

data analysis importance

collaboration with law enforcement

security measures at warehouses