Cargo Insurance, Industry Insights, Shipper's Interest Cargo Insurance, Trade, Transportation | Jason Palumbo

Reduce the Increasing Rate of Rail Thefts

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Situation

  •  In Q4, BSI recorded a significant uptick in rail thefts in North America, especially in the United States, in the Los Angeles area along trail lines, and near the port.
  •  In Q4, the rail modality accounted for 6.7 percent of recorded cargo theft incidents in the United States. While this is a significant jump from previous years, predominantly composed of either the facility or trucking modality, the majority of the thefts are limited to California, generally, and the East Los Angeles area, more specifically. However, Memphis, Tennessee is increasingly seeing an uptick in rail thefts as well, highlighting the shared risk factors that are conducive to higher rail thefts
  •  In California, multiple incidents in 2022 indicate that thieves are targeting electronic products, along with apparel, and other high-value consumer goods
    • On February 2, authorities reported that thieves are targeting firearms as well. Reports indicate that at least 80 firearms have been stolen by organized criminal gangs. At least one of the guns has been connected to an August 2021 murder
  • According to the rail operator for Union Pacific, during the busiest shipping period of the holiday season, on average thieves were breaking into 90 containers a day, with damages exceeding 5 million USD in 12 months.
    • In another report, Union Pacific stated that theft, assaults, and armed robberies of Union Pacific employees have risen 160 percent in the past year
    • On January 30th, 2022, authorities arrested 5 suspects for breaking into a train car and stealing packages from it while it was in transit on tracks near 190th Street and Hawthorne Boulevard.
    • On January 15th, 2022, 17 Union Pacific trains were derailed in the same area where most thefts have occurred. The incident is still under investigation; however, Union Pacific is now considering diverting freight traffic away from LA County reducing the risk of theft.
    • To combat these threats, Union Pacific announced it has begun a drone surveillance system and would begin using “specialized fencing and trespass-detection systems” in Los Angeles, California. With these surveillance systems, Union Pacific has been able to make hundreds of arrests
    • Intermodal freight trains in East LA, Lincoln Heights neighborhood, are at the highest risk of cargo theft.

Analysis

  •  Increases in rail thefts, around Los Angeles, are contributing to massive losses for companies relying on an already strained supply chain
    • Criminals have exploited the supply chain crisis to their advantage by preying on freight trains in East Los Angeles. Union Pacific reported thieves are breaking into an average of 90 containers a day in Los Angeles, with damage exceeding 5 million USD in 12 months
  • Such cargo theft potentially results in transportation disruption. For example, 17 train cars derailed as they were traveling through Lincoln Heights, one of the areas with the most significant amount of vandalism and cargo theft in Los Angeles. Authorities are still investigating the exact cause of the crash
  • Although the top products targeted by the thieves are electronics, apparel, and other high-value consumer goods, other industries are being affected by the robberies
  • Companies and analysts are attributing the crime to local laws, including Special Directive 20-07 which allows the dismissal of misdemeanor cases before arraignments

Recommendations

Tony Pelli, BSI’s Practice Director of Security and & Resilience, shares recommendations for companies to counter the risk of rail thefts of containers:

  • Seal rail containers with ISO 17712-compliant bolt or cable seals
  • Consider the use of t-bar door locking devices to enhance container security
  • Conduct checks on seals and door locking devices at all stops and document these checks
  • Load freight as close as possible to the engine, locomotive or front of the train
  • Where possible, ensure that containers are loaded door to door on wagons or in the bottom of well cars to prevent tampering with container doors
  • Use GPS tracking on rail containers
  • Consider using devices that can alert when container doors are opened
  • Develop response protocols for security incidents and other irregularities
  • Ensure that rail personnel are trained to inspect rail containers for irregularities
  • Check that all rail yards used along the route are fenced, well-lit, patrolled by guards, and monitored by CCTV, with controlled access to the yard

The Value of Cargo Insurance

The sharp increase in rail losses serves as a reminder of the importance of investing in Cargo insurance. Roanoke Insurance Group, an experienced specialist who understands the intricacies of cargo insurance, can assist you in obtaining the right coverage and protecting the financial interest of your clients. Please contact your Roanoke Trade professional at 1.800.ROANOKE (800-762-6653) for more information.

Copyright Roanoke Insurance Group/NMU/BSI 2021

This information is presented as a specialty service offerings through a strategic partnership with BSI Supply Chain Services and Solutions. BSI is a leading global provider of supply chain intelligence, auditing services, audit compliance, risk management software solutions, and loss prevention advisory services. Through this partnership, our clients will have preferred access to risk intelligence and best practice insights to improve overall supply chain security and reduce theft and cargo loss risk.

 

Disclaimer: This information is provided as a public service and for discussion of the subject in general. It is not to be construed as legal advice. Readers are urged to seek professional guidance from appropriate parties on all matters mentioned herein.

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