Air Cargo and Airport Security: Data-Based Systems Can Address These Issues Proactively

CargoNet announced 900 reports of theft, fraud, and other kinds of criminal activity in supply chains during the first 20 weeks of 2023. This level represented an estimated 41% rise compared with 2022. The types of criminal activity included shipment misdirection and fictious pickups. In 2022, 1,778 events resulted in an estimated loss of $223 million of cargo in Canada and the United States.

In the United Kingdom, in April 2023, the British Standards Institution (BSI), TT Club (a mutual logistics transport insurer), and the Transported Asset Protection Association (TAPA) issued its annual report on cargo theft. They reported that while hijacking of trucks declined between 2021 and 2022, over a quarter of all thefts were from cargo facilities. In 2022, ‘carrier fraud,’ where criminals imitate carriers and drivers, accounted for 84% of all claims handled by TT Club. The report noted that freight crime costs in the UK reduced the economy by UKL 420 million (USD $525M) annually.

The broad categories of loss event included:

• Theft from a vehicle: 7.2%

• Theft of a vehicle: 11%

• Theft from container/trailer: 12.8%

• Hijacking: 17%

• Theft from facility: 26

• All other: 26.1%

Continuous monitoring of vehicles and facilities, which account for about 84% of the locations of thefts, must be implemented. Preserving a clean chain of custody is extremely important, particularly for high-value products. As I note later, there are technologies that can provide a foundation for this approach.

That TT Club report identified six imperatives for businesses to pursue:

• Top-level leadership to fight cargo theft.

• Monitor rapidly changing regulatory agendas.

• Increase the understanding of supply chain susceptibility to criminal activities.

• Address digital risk.

• Invest in tools and technology including data analysis, internet of things, cloud computing, information security, and predictive analysis.

• Use data analysis and cybersecurity to differentiate the business from others.

While most of the statistics reflect thefts at a vehicle level, the rapid e-commerce-led expansion of consignment volume is adding complexity to the overall situation. With hundreds of individual shipments replacing consolidations as well as the ever-changing supply chain organizations, there is a tsunami of consignment data and information from more partners. This raises the risk of cyber criminals penetrating supply chains and re-directing shipments.

These numbers are worrying. But there are common-sense solutions which can reduce the level of activity.

Stopping theft

The use of data is repeated among the recommendations. So, let’s look at how using shipment data and information can be used to stem the rising tide of cargo thefts.

At the core, criminals use information and data to identify targets of opportunity. They are increasingly employing sophisticated technology and tools such as “sniffers” which can detect and jam covert GPS technology buried in shipments. Once the cargo is stolen, it can not be tracked. Malware, introduced into computer systems by innocuous phishing emails, allow the criminals to access sensitive data and information about shipments. Using that information, they then create paperwork used for fictitious pickups. Protecting the data and information within each step of a supply chain is a challenge. Protecting that same consignment data and information across a supply chain is impossible if just one partner is not actively protecting the data.

One tool and technology which can stall this activity is the airport/port cargo community system (A/PCCS) about which I have written previously. The A/PCCS provides an encrypted digital platform that limits shipment data entry to only approved members, and strictly controls the release of the same data. When these platforms are tied together by digital data corridors, the entire chain and all the active partners can operate in a secure data and information environment. At the same time, this environment generates significant volumes of data which can be used to identify areas and points which require higher levels of security. These pain points can be geographical (California and the northeast region of the United States or the “Golden Logistics Triangle” in the United Kingdom’s West Midlands), as well as at specific steps within a supply chain such as points where consignments are handed over from one partner to the next.

Artificial Intelligence and predictive tools are dependent on volumes of data and information. The data and information generated by the A/PCCS and the Digital Data Corridors are the valuable fodder to feed these tools. The result will be a unique and fast-acting perspective of the various supply chain links and nodes and the emergence of anomalies which require special attention. Risk matrices which categorize and prioritize issues and outcomes need to be revised to reflect the changing landscape of supply chains and incorporate the output of AI and other tools.

Aligned with this is the need to educate and train all staff about the problem and how to combat theft. There are many online and face-to-face courses which inform staff to the many ways that vital information can be collected by criminals. As the complexity of supply lines morph from sequential chains to webs, the need for this education and training is even more important. The education and training programs need to be updated to accommodate the use of AI and other tools that identify issues which staff will investigate and apply the appropriate remedies.

From a financial perspective, theft reduction is clearly reflected on a company’s profit and loss statement and balance sheet. What is also needed is a recognition of the value of continuous education and training of managers and staff to combat criminal efforts to disrupt supply chains. Trained, committed full-time employees instead of ‘gig’ temporary workers are more likely to be vested in securing supply chains. While laying off employees under standard accounting rules save costs, at the same time, the same rules do not recognize the long-term value of education and training of staff as an investment and addition to the value of a company’s balance sheet. The pure accounting/financial perspective must be tempered by a realization that losing experienced employees can set a company back from the perspective of competition and security.

It is unlikely that the U.S. Financial Standards Board will amend this accounting issue. It is incumbent on each company to recognize the value of education and training of its most valuable asset, it’s managers and staff. Combined with the traditionally recognized investments in tools and technology, leading companies can take a proactive approach to reduce theft of shipments.

The worldwide air cargo industry has always been changing. Embrace the changes and prepare for it now!

About the author:

Charles H.W. Edwards, B.A., M.Sc., MBA, has over 50 years in the transportation, distribution, and logistics industry. Edwards is a vice president of SASI World and a professor of the practice at the University of North Carolina at Chapel Hill in the Department of City and Regional Planning. He is a Scholar Fellow of Sigma Chi Mu Tau (Supply Chain) honor society. He began his career as a truck driver in Toronto. Since then, Edwards has worked in international freight forwarding in Canada and the UAE, numerous sectors of the airline industry, aviation design and manufacturing in Germany and the United States, ocean freight, rail management, economic development, and logistics education. Edwards can be contacted at [email protected].

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