Cargo theft and trucking

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We spend millions on research and development, scientist salaries, manufacturing, background checks, and the latest in high-tech facility security. Then what do we do? We turn it all over to a guy making $25 an hour driving a truck who probably doesn’t know what he’s hauling. It’s amazing – absolutely amazing.” –Chuck Forsaith, corporate director of supply chain security for pharmaceutical drug maker Purdue Pharma Technologies Inc.

I listened to great presentation yesterday from Chuck Forsaith (quoted above) yesterday at the 2009 National Cargo Theft Summit about why transportation – and trucking in particular – is so vulnerable to cargo theft these days and what shippers and carriers alike can do about it.

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For starters, I’ve been pondering his quote at the start of this post for a while and determined that it really crystallizes a lot of things that are going wrong with trucking today – neither solely in terms of cargo theft, mind you, nor solely the fault of carriers and drivers, either.

Now, for some perspective, Forsaith – a 21 year veteran of the New Hampshire State police department – deals probably with some seriously high value freight. His company, Purdue Pharma Technologies, makes OxyContin – a powerful opiate-based pain killer that’s been in the news steadily over the years due to the illegal street sale and abuse of this narcotic. (You can read all about it on the Department of Justice's website)

On the street, one milligram of OxyContin is worth between 50 cents to $1, with single pill containing 80 milligrams. That means the street value of just ONE OxyContin tablet is between $40 and $80 – and Purdue Pharma typically ships 50 to 100 DRUMS worth in a single tractor-trailer load. Now you know why cargo thieves stalk the pharmaceutical industry like so many hungry wolves circling a herd of fat deer.

While pharmaceuticals remain a relatively small part of the goods stolen by cargo thieves – making up just 6% of the total cargo theft “pie” as it were – the average value of a pharmaceutical cargo theft is very high, Forsaith explained; roughly $1.4 million per shipment. Overall pharmaceutical truckload shipments themselves can rnage anywhere from $10,000 per load (for over the counter or "OTC" products) to several million dollars (for the expsnive bio-tech drugs).

And that’s not the total picture, either, he stressed, for cargo thieves have exactly zero overhead – meaning the entire shipment is 100% profit to them, no matter what they sell if for. And when it comes to potentially addictive medicines such as OxyContin, the sky’s the limit.

Now here’s the thing about trucking in all of this. Forsaith talked about all the safety and security measures most pharmaceutical take to protect their products. They operate super clean, temperature controlled facilities surrounded by perimeter fencing, and closed-circuit cable television systems. Sometimes guards are used, along with barbed wire, but that's a rarity -- largely because they have a tendancy to draw unusual and undesirable attention, he explained.

On the inside, the latest in biometric technology is used to verify employee identification – employees that undergo extensive background checks and that are monitored around the clock to make sure they don’t pilfer anything.

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Yet all of those measures – everything, from the guards to the biometric scanners and TV cameras – disappear when such medicinal products are loaded for shipment from the plant to a distribution center, and then over that “last mile” from the D.C. to the local pharmacy.

For starters, most shippers – and that includeds pharamceutical firms -- map out their logistics scheme on a “just in time” basis. And as a result many commodities -- not just medicines -- get shipped over the weekend, being sent out on a Friday afternoon so they are outside the doors on distribution centers Monday morning. But guess what? That means a shipment – no matter how valuable – is going to sit somewhere, parked in a truckstop or alongside a highway on/off ramp, completely exposed. Why? Because most DCs – like most of the manufacturing world – are shut down on weekends; there’s no one to accept delivery.

"After looking at the pharma supply chain more closely, our group identified that as an issue and have taken recent steps to modify those practices," said Forsaith. "Shipping over weekends is really an issue that affects those selling all commodities – not just pharmaceutical ones."

Think about this, too, he stressed: if a trucker gets in trouble along the way on a weekend haul – if his or her vehicle breaks down or is stolen – who do they call? Trying to get roadside assistance on a weekend, as all truckers know, can be something of a nightmare. If their load is stolen on top of that, who do they call? Other than their dispatcher – usually at home, maybe with a pager or cell phone or maybe not – do they have the numbers of local police or even cargo task forces? Most likely, they don’t.

On top of this, pharmaceutical firms – like many companies these days – still seem to treat trucking like a commodity, as if trucks and truckers are a dime a dozen. Forsaith recalled talking to one of his peers about how they transported drugs and found their loads we’re being subcontracted out – that the shipper didn’t even know WHO was hauling their products; all for the sake of wringing a few dollars more out of the freight bill.

[You can view some of Forsaith's presentation in the second half of the video below.]

Carriers, however, don’t get off scot free either to Forsaith’s mind. Many times the lawyers at a pharmaceutical company and carrier hammer out a long, detailed contract regarding transport security policies. Yet nothing is communicated to the driver – not the importance of the load, the requirement not to stop during the first 200 to 300 miles of the run (the prime target time for cargo thieves), nothing. All the legal mumbo jumbo in the world won’t protect a load if the driver doesn’t know the load needs protecting in the first place.

In the end, however, it all comes back to a very simple mantra: you get what you pay for. Forsaith talked in detail about the kinds of carriers he hires – going so far as to hire armored tractors staffed with two drivers carrying firearms. “That right there stops cargo thieves in their tracks,” he explained. “They don’t want confrontation, because they don’t need it. They’ll just move on to another load.”

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Reading between the lines, you can tell Forsaith doesn’t skimp when it comes to transportation his company’s goods (you think an armored tractor-trailer and pistol-toting drivers come cheap?) He makes sure his carriers run well-maintained equipment, that offer tracking/tracing capability, that are willing to go the extra mile to secure a load start to finish – and I am sure he pays very well for that service.

That’s what I think it’s going to boil down to when it comes to helping the trucking industry defeat cargo thieves – making sure they are profitable enough to afford the necessary investments. You simply can’t expect companies barely surviving on 3% and 4% profit margins to invest in new equipment, maintenance, driver training, etc., when the rates they get barely afford them money to buy fuel.

Now, if carriers are paid well yet still fail to provide proper security, that’s one thing – expecting the gold standard of protection while bidding freight rates down to rock bottom basement pricing is something else entirely. That’s one of the lessons that’s got to be absorbed as the battle against cargo theft goes forward.

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