Six in 10 SMEs experience 'devastating' cargo theft

11 July 2022

Six in 10 (60%) SMEs in the US have reported stolen shipments over the past year, with 75% of thefts resulting in losses of up to $20k.

Among those impacted by cargo theft, 33% said theft was enabled by employees and 30% said it was enabled by vendors. Around two-thirds (63%) reported performing background checks on logistics/inventory management employees.

Almost all (96%) reported losing money because of the theft, despite 80% filing at least one insurance claim. Only 2% said they didn’t lose any money because the theft was covered by insurance, according to Capterra’s survey of 320 SME (1-1,000 employees) supply chain managers based in the US.

Olivia Montgomery, principal supply chain analyst at Capterra, told Supply Management: "The crimes don’t happen often but the cost of even one theft can be tens of thousands of dollars lost. And, relying on insurance to cover the loss is unrealistic.

"Another, and possibly the most consequential, impact to a business’s bottom line is the loss of opportunity for sales during the time the item would’ve been available for purchase. Empty shelves mean you lose out to a competitor who does have product available as customers typically aren’t willing to wait once they’ve decided to make a purchase."

Montgomery added thefts can place more stress on upstream partners, as the need to find replacement inventory while supplers are straining to meet demand is difficult. 

"Supply chains are really more like webs or networks, which means strain in one area can cause strain in multiple other ways that aren’t apparent or immediately felt," she explained. "For example, if an SMB’s suppliers are forecasting production demand based on orders placed, an unplanned event such as cargo theft subsequently doubles the demand unexpectedly. The supplier can struggle to fill the new order as the buyer, understandably, wants replacement items as soon as possible.

"This may require the supplier to bring in more workers to try to fit the new order into their existing schedule, which can create additional challenges as many companies are still playing catch up due to closed factories and offices during the pandemic."

Despite more than half of cargo thefts occurring at warehouses (55%) and in trucks/trailers (52%), only 39% of SMEs impacted by cargo theft invested in securing these types of large assets. 

A quarter of cargo thefts (27%) occurred due to a cybersecurity breach.

“One incident can leave SMBs [small to medium-sized businesses] in a financial lurch,” Capterra stated. “Whereas shoplifting losses are akin to death by a thousand cuts, one case of cargo theft can leave SMBs financially devastated.”

Capterra found six effective strategies for reducing risk areas and investing in prevention and recovery:

1. Hiring

Include vigilance as an aspect of the hiring process and provide cargo safety training. Ensure employees know how to, and are encouraged to, report suspicious activity.

A third of SMEs who were victims of theft stated their own employees enabled the process, so ensure background checks are performed for all employees handling cargo and inventory.

If you’re using third-party logistics (3PLs) and other partners, be sure the security measures they have in place, such as background checks, align with your expectations and goals.

2. Tech

Install security cameras wherever possible. Trucks and warehouses are key risk areas, and less than half of SMEs had invested in securing these assets. These will serve as deterrent and provide evidence for filing police reports and insurance claims.

3. Risk Assessment 

Areas of weakness in both physical and cybersecurity require regular attention. Keep software systems up to date and maintain password best practices, offering cybersecurity training where possible.

Perform at least an annual risk assessment on your supply chain processes, partnering with HR, IT, and operations to get a holistic view of risks and ways to mitigate them.

4. Warehouse

More than half of cargo theft (55%) occurs at the warehouse. SMEs should work with their IT leaders to strategise security protocols using technology, focusing on the warehouse.

5. Investigate thefts

Use the information gathered from police reports to allocate your resources effectively, improving security processes and taking measures to prevent future thefts.

6. Insurance

Reassess your coverage according to your risk profile by focusing on the type of cargo you transport, and where it travels to.

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