Cover Story
‘ Organized ’ cargo crime
Union Pacific steps up security as container thefts spread from LA – LB port
By Michael Angell
A rash of container thefts and breakins that began during the COVID-19 pandemic along the railroad tracks out of the ports of Los Angeles and Long Beach has spread to the US hinterlands , railroad and shipper executives say . While both groups are responding with higher security , the incidents are pointing to increasingly sophisticated criminal networks operating within the supply chain .
Rachel DeRosier , export manager for Wisconsin-based sausage company Johnsonville , said during the Agricultural Transportation Coalition ’ s ( AgTC ) annual meeting in Tacoma , Wash ., in May that six of its approximately 300 refrigerated containers shipped during 2023 experienced a break-in .
While it didn ’ t appear much product was stolen , the container breaches , some of which lasted 10 days before the container could be resealed , caused Johnsonville to destroy products and submit a claim to its insurer . DeRosier said that insurance claims as a percentage of export spending reached 20 % because of the break-ins .
“ They ’ re opening the doors and — maybe they don ’ t want the sausage — so they ’ re leaving it for another container ,” DeRosier said .
Johnsonville is looking at using “ goliath locks ,” which wrap around the top of the containers in addition to regular container seals , she added . But it
“ Seals are ripped , doors are hit . It ’ s products that they can fence quickly .”
requires workers in the consolidation center to get on top of the container , an added step and cost .
DeRosier detected the break-ins through remote temperature monitoring via sensors placed on the containers . She said that most of break-ins happened near their Midwest origin rather than near the Southern California ports .
“ My assumption was that they were happening in Los Angeles – Long Beach ,” DeRosier said . “ But the temperature checkers indicated they were actually happening near Chicago .”
No national statistics exist on cargo thefts as they are not prosecuted at the federal level , something many of the AgTC attendees said needs to change as one way to address the problem .
DeRosier said the Johnsonville thefts happened across both West Coast Class I railroads .
A shipper who asked not to be identified said during the AgTC meeting that a shipment of soybeans from Fargo , ND , was loaded on a Union Pacific ( UP ) train and routed through Minneapolis for the ports in the Pacific Northwest .
When the container reached Asia , the consignee found only one-fourth of the original shipment was intact .
‘ Fascinating and scary ’
Gene Seroka , executive director of the Port of Los Angeles , said container thefts are “ organized crime at its finest ” due to their planning and coordination . He said the port has stepped up cooperation with local law enforcement to investigate the cases and expects more theft prosecutions .
“ Seals are ripped , doors are hit ,” Seroka said . “ It ’ s products that [ criminals ] can fence quickly .”
Hassan Hyder , UP ’ s director of international intermodal , said at AgTC targeting a widening range of goods in trucks and trailers . Increasingly , theft and fraud are being carried out by organized criminal gangs that are using advanced technology to target goods .
The crime wave has gotten the attention of US Class I railroads , especially in regions where organized thefts are happening , including Arizona – California – New Mexico , Dallas – Fort Worth and Memphis .
Retailer Nike has been victimized several times because there is a huge demand for its popular shoes on the black market . The Los Angeles Police Department took down a cargo theft ring this February that was responsible for more than $ 5 million in stolen Nike merchandise in domestic and international containers between Los Angeles and Memphis , according to the Los Angeles Times .
CSX Transportation has seen the problem near Memphis . “ There will be a train with 100 containers , and [ organized crime rings ] know which box has the Nike shoes in it and go after that one to sell in the aftermarket . It ’ s a big deal ,” CSX CEO Joe Hinrichs said in February at the Georgia International Trade Conference .
“ We ’ re working very closely with local police in places like Memphis , but also with the FBI , and we ’ ve invested millions of dollars just in Memphis alone on fencing , new gates , new cameras [ and ] more lighting ,” he added .
BNSF Railway , meanwhile , is using planes and drones to catch thieves . “ Our police force is using several tactics ,” CEO Katie Farmer said at the North American Rail Shippers Conference in early May . “ I don ’ t want to get into specifics on our tactics , but it ’ s a major problem we ’ re working hard to address .”
12 Journal of Commerce | June 17 , 2024 www . joc . com