The Rise of Freight Crime and Its Risk to Supply Chains

By Logan Wamsley

For all of the risks associated with critical inventory such as geopolitical tensions and raw material shortages, one factor not to be underestimated is the risks associated with shipment.

There are, of course, shipment risks worth considering regarding packaging processes — especially in regard to sensitive electronic inventory — and there are risks that, once shipments leave facilities of the supplier or distributor, are largely out of their control.

One example can be found with the recent trend of inventory loss through freight crime, as can be seen in the data recorded by the Transport Asset Protection Association, which found that almost €500,000 ($604K) of goods were stolen daily from regions in Europe, the Middle East, and Africa between 2019 and 2020.

“Even though we know the big picture of cargo crime is far greater than the level of intelligence we receive, in the last two years alone, TAPA has recorded over 15,000 losses from supply chains in our region, with a combined loss value of more than €310M ($373M) – which is the equivalent of €424,000 ($513K) of goods being stolen from supply chains every single day of 2019 and 2020,” said Marcel Saarloos, chair of TAPA EMEA. “This should act as a big wake-up call for everyone involved in the movement of goods, because almost every type of cargo is a target for criminals.”

Even more concerning is that COVID-19 has done little to disrupt these trends. Despite the pandemic and the subsequent social lockdowns, it appears freight crime grew last year, with TAPA’s Incident Information Service recording a 6,463 crimes, amounting to a loss of €172m ($208M). However, TAPA is quick to point out that this was “a fraction of the losses TAPA EMEA believes are being suffered by manufacturers, shippers and logistics service providers.”

Such trends reinforce the value of minimizing reliance on just-in-time inventory models in favor of long-term storage solutions. An Inventory Ownership Solution through Partstat, for example, gives customers the ability to purchase large quantities of inventory early in the production process without any loss of capital. This has a variety of benefits including potential bulk purchase discounts, mitigation of price inflation, and an elimination of virtually any risk associated with just-in-time inventory such as obsolescence and extended lead times. Additionally, Partstat will store all of the inventory on the customer’s behalf in their secure, climate-controlled facilities located right outside of Orlando, FL. This gives customers, especially those located in the U.S., significant peace of mind that over the course of five, 10, or more years their inventory can be safe kept in-region without any issues associated with global shipping.

All manufacturers should be in the business of risk mitigation, and taking a long look at the risks associated with the shipping process is something that should not fall under the radar. The less reliance on shipping to ensure production schedules are met, the better.