Shippers looking to crack down on cargo theft are enlisting the aid of high-tech devices. But there's more to it than simply tucking a covert wireless tracker into a shipment.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
As beta tests go, it wasn't much of a sampling. The three-month trial involved only 10 trucks used by FedEx Corp.'s Custom Critical "White Glove" unit, which transports time-sensitive, high-value goods requiring some form of special handling. But what emerged could tilt the playing field, albeit modestly, in favor of those tasked with securing their supply chains from villains, thieves, and scoundrels.
The White Glove unit was testing cellphone technology that would enable an employee to remotely disable a stolen or hijacked vehicle once it got back on the road. With the truck immobilized, the goods inside could be quickly recovered and the thieves apprehended because they couldn't stray far enough to elude law enforcement.
Carl Kiser, operations manager for the White Glove service, was impressed with the performance. "The technology worked," he says.
It is unclear how the new tool would be incorporated into Custom Critical's 1,400-truck fleet. The division already outfits about 20 percent of its trucks with devices affixed to dashboards and embedded in driver key fobs to automatically disable the truck unless the driver enters a special code to start up the engine. All of Custom Critical's fleet is equipped with global positioning system (GPS) technology that has become a mainstream tool to combat theft on the roads.
The ability to stop a stolen conveyance from a distance could become the latest weapon in the cargo theft wars, which cost American industry an estimated $6 billion to $20 billion annually in the value of goods pilfered while in transit. (Those estimates exclude the value of goods stolen from warehouses and distribution centers.) Firm figures aren't expected to be available until early next decade when the FBI rolls out a long-planned database dedicated to tracking cargo theft. Currently, the bureau consolidates cargo theft data with statistics covering other types of crime.
"Harden" the target
The effectiveness of anti-theft technology is in the eye of the beholder. IT vendors believe their tools can make great strides in combating theft and pilferage. Others are not so sure. Barry Brandman, president of Danbee Investigations, a consulting firm in Midland Park, N.J., that has worked in the supply chain security field since the mid-1970s, says technology, in and of itself, has limited value. Much of it doesn't work as promised or is quickly figured out by today's sophisticated criminal element, he says.
"These are businesspeople who are often part of organized crime groups that have their own supply chains," he says. Cargo thieves are so adept at swiftly spiriting their booty away from crime scenes that most property stolen out of supply chains is never recovered. Often, the goods end up in foreign countries.
"It generally takes less than four hours for stolen cargo to leave the state where the theft occurred, and everything from scheduling the hit and negotiating the sale price of the goods to the choice of export conveyance has already been arranged," says Brandman.
Arthur Arway, security director of the Americas for DHL Global Forwarding, the world's biggest airfreight forwarder, says anti-theft technology is most effective when it "hardens the target" by blanketing all channels through which thieves might try to infiltrate the supply chain. The idea, says Arway, is to create enough uncertainty in the minds of thieves so "they will avoid you and go after someone else."
Several vendors in the cargo security market have already begun offering some type of multilayered security program. For example, Safefreight Technology, an Edmonton, Alberta-based IT provider, uses its "SmartFleet" application to attack in-transit theft at multiple levels. Safefreight first asks clients to define "security zones" where trailer doors are scheduled to be opened. It then affixes sensors to the equipment that alert the user in real time if a door has been opened outside any pre-established zone, whether it be a small area such as a trailer yard or a large territory such as a multi-state region. Earl Bourque, Safefreight's chief technology officer, says most in-transit cargo theft occurs in confined spaces like loading docks.
The company's technology also tracks trailer schedules based on electronic interfaces provided to its customers. After the customer enters and submits the scheduling information, Safefreight uses its automated tracking system to monitor the driver, rig, and equipment in transit.
The SmartFleet system gives Safefreight customers a complete and accurate picture of their assets' location at all times, says Bourque. This helps reduce the potential for in-transit theft because the fleet is being constantly monitored and customers are notified in real time of any variances from preset conditions for routes, geographic zones, schedules, or door sensors. In addition, regular reports enable fleet managers to have a deeper and more accurate read of how effectively their equipment is being utilized, Bourque says.
"The goal of our systems is to take the technology beyond simple GPS tracking. We want to relieve fleet managers of the burden of continuously monitoring their fleets and enable them to optimize the security, safety, and efficiency of their assets," Bourque says.
Inside jobs?
Many shippers and anti-theft experts consider the driver to be the weak link in the security chain. For that reason, some anti-theft specialists have chosen to combat the problem with services and technology aimed at ensuring that carriers and their drivers follow pre-set procedures that minimize risk to their trailers and their loads.
As for how they monitor compliance, one method is to plant high-tech tracking devices inside loads. For example, FreightWatch International (USA), a global company that provides security services, makes use of a covert mobile wireless device manufactured by a Canadian company called Sendum Corp. The device, about the size of a folded-over cellphone, is used mostly to track truckload shipments of high-value goods such as pharmaceuticals and electronics. A vehicle with 24 pallets, for example, might be monitored by two or three of the embedded devices. The devices are inserted covertly, work off a satellite network, and will emit tracking signals at intervals that are pre-set by the user but which can be changed at any time. Generally, shippers or intermediaries embed the devices before the goods are packed. For the most part, trucking companies and their drivers are oblivious to their presence.
The devices will notify the user if the driver is not following pre-determined routes or established practices. The user then contacts the trucker who, in turn, relays the information to the driver. The reusable devices sell for $300 to $500 apiece, which doesn't include an ongoing subscription fee.
The process strengthens trucker and driver compliance, thus reducing the potential for an incident, says Ed Petow, director of quality control for Freightwatch (USA). "If you get compliance, there's less of a chance for theft," he says. Plus the prospect of surveillance tends to keep people honest. "I had one customer tell me that 'the trucking companies can't lie to me anymore,'" says Petow.
A role for RFID?
Even RFID is getting into the act. Mikoh Corp. of McLean, Va., has built and patented technology designed not to protect the asset while in motion, but the RFID chip tracking it. The chip automatically self destructs if removed from its original location, making it impossible for thieves to detach it and affix it to another item.
Mikoh officials acknowledge their company's technology will not directly prevent the theft or pilferage of an intransit shipment. They say, however, that once the RFID reader detects a security breach, users can take remedial action that may prevent future incidents. The company has also developed an advanced tag that leaves a smoke-like trace to indicate possible tampering, while the tag itself continues to function normally.
Mikoh's technology hit the market in September 2005 and today is used mostly by government agencies and onboard courier firms whose couriers carry time-sensitive and high-value material in briefcases. Perhaps the product's most widespread use is in Bermuda, where it's used to discourage tampering with the RFID chips used to ensure that commercial and personal vehicles are properly registered.
The RFID protection technology has gained little traction among large commercial users since its introduction. The lack of commercial customer uptake reinforces the perception that the cost of RFID tags and the expense and difficulty of implementation make it of doubtful value when it comes to fighting cargo crime.
Andrew Strauch, vice president, product management and marketing, says Mikoh is currently in the "educational" phase with commercial prospects. He reports that Mikoh is aggressively courting the pharmaceutical and healthcare industries, which he calls ideal candidates for technology to protect RFID tags because they make and ship high-value, perishable goods that are vulnerable to theft and tampering.
Strauch acknowledged his company's efforts have been hindered by the marketplace's lack of focus on protecting the RFID tags themselves. "RFID security has not been ignored," he says. "But users have been too busy figuring out the technology's economics and its effect on business processes to concentrate on the security of the tag itself." Mikoh's mantra, as expressed by Strauch, is "protect the tag, and you protect the asset."
Not the be-all, end-all
As with virtually all business applications, anti-theft technology cannot work effectively in a vacuum. Few dispute that the tools are less expensive, more user-friendly, and more robust than ever. However, experts warn against buying into the notion that IT offers the "silver bullet" premise that can solve what is a nagging and growing problem.
Brandman, a 36-year industry veteran, says anti-theft technology can only be effective when integrated into an organization's best practices. The growth in supply chain scope and complexity, the rise in the number of human touch points, and the fact that employees are involved, knowingly or not, in most thefts of mobile cargo combine to make the integration of technology and processes a requirement for a successful anti-theft program, he says.
"Technology must always be supported by appropriate policies, procedures, and trained personnel," Brandman says. Absent this holistic effort, "most end users will not know what they are buying," he adds.
Or as Jeanne Dumas, director of the Security Council for the American Trucking Associations, says, "Technology definitely has its place. But the best theft deterrent is common sense."
it's the intelligence, stupid!
Technology's most meaningful contribution to the science of supply chain security may lie not in its ability to stop today's thefts but in its capacity to prevent tomorrow's. By mining data from previous incidents, company executives, security consultants, and law enforcement authorities can spot behavioral patterns that are more than coincidental. With the past as prologue, networks, processes, and technologies can then be tweaked to deter tomorrow's thieves.
The Florida Highway Patrol, which in 2005 launched a Web-based system to notify law enforcement and multiple state agencies of every cargo theft within two minutes after the incident was reported, added in 2007 an online mapping program that tracks theft histories by county.
A recent query into activity in Osceola County, south of Orlando, found that 11 cargo thefts had occurred during a six-month period, which, based on historical data, was determined to be a high incident rate. Armed with the data, the Highway Patrol's Cargo Theft Task Force planted decoy tractor-trailers at a specific location in the county to lure and trap suspected criminals. The bait worked: Within days, thieves hit the site, stealing one decoy trailer and five decoy tractors. The stolen decoy trailer was followed to the Miami area, where the thieves were captured and arrested.
The IT tools are having a beneficial effect, says Lt. William Jackson, who coordinates the Task Force and administers the theft notification application, known as the "Electronic Freight Theft Management System." From 2002 to 2007, the number of annual reported cargo thefts in Florida dropped by 31 percent, according to Highway Patrol data.
Furthermore, as word gets out about the agency's technological prowess, criminals are shifting their focus to other states, according to Jackson. As a result, the state, long a prime destination for stolen goods because of its proximity to Central and South America and the Caribbean, could see a long-lasting reduction in cargo theft, he says. "Thieves are leaving Florida," he claims.
Jeremy Van Puffelen grew up in a family-owned contract warehousing business and is now president of that firm, Prism Logistics. As a third-party logistics service provider (3PL), Prism operates a network of more than 2 million square feet of warehouse space in Northern California, serving clients in the consumer packaged goods (CPG), food and beverage, retail, and manufacturing sectors.
During his 21 years working at the family firm, Van Puffelen has taken on many of the jobs that are part of running a warehousing business, including custodial functions, operations, facilities management, business development, customer service, executive leadership, and team building. Since 2021, he has also served on the board of directors of the International Warehouse Logistics Association (IWLA), a trade organization for contract warehousing and logistics service providers.
Q: How would you describe the current state of the contract warehouse industry?
A: I think the current state of the industry is strong. For those that have been focused on building good client relationships over the years, I think it’s a really exciting time. Coming out of all the challenges of the past few years, I think there’s a lot of opportunity for growth and deeper partnerships. It’s fun to see the automation and AI (artificial intelligence) integration starting to evolve [in a way that’s] similar to what we saw with WMS (warehouse management systems) in the early 2000s.
Q: You are now president of your family firm. Is it an advantage having grown up in the business as opposed to working elsewhere?
A: I definitely believe it was an advantage growing up in the business. Whether it’s working with family or someone else in the industry, there’s always an advantage when you have mentors[to guide] you. I’ve been blessed to have several mentors, some in the industry, others just in life, and I’m thankful that they were willing to mentor me and that I was willing to listen to them.
Q: What are the biggest challenges currently facing 3PLs, and how are you addressing them?
A: Labor and legislation are both tough right now. The two seem to have a lot to do with each other, and it can make it tough to find and retain people. So I think we’ll see more and more automation of processes industrywide.
Q: Third-party service providers often must handle a wide variety of products for a lot of different clients. Does this variety make it difficult to invest in automation and other new technologies?
A: It can make things more difficult when looking at certain automation, but it’s in the “difficult” that a lot of opportunities lie. It would be tough to find a single solution that fits every client’s needs, but there are always opportunities to improve in certain areas. It just takes a bit of vision and commitment, and a willingness to invest in your own long-term success.
Q: As a 3PL, what do you look for when selecting the clients you work with?
A: Quality relationships that will last a long time. When both parties are happy and working together in the same direction, everyone wins.
Q: You’ve been a board member of the International Warehouse Logistics Association since 2021. Why is your involvement with this organization important to you?
A: I think it’s important to understand what’s happening in the industry. IWLA is a great resource for staying up to date and getting a solid education when it comes to the latest logistics trends. I also think it’s important to give back and pass along what we’ve learned to those just getting started in the business. As important as it is to have a mentor, it’s just as important to mentor and help others.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”