Transporting High Value/High Risk Loads

Transporting High Value/High Risk Loads
Kick the Tires First: What every shipper needs to ask a logistics
provider before committing to a single High Value/High Risk load
The facts regarding freight theft are eye-popping and budget-busting:
• A total of 1,197 cargo thefts were reported in the U.S. in 2012
• Even though cargo theft decreased by 1.5% from 2011 to 2012, it’s estimated to cost about $30 billion per year
• The total value of losses due to theft results in an estimated 20% markup in retail prices
(Sources: CargoNet, and the FBI)
Both high value goods, as well as high risk goods in great demand on the black market, are especially attractive targets for
thieves. Proper loss prevention ensures that these shipments aren’t also vulnerable targets. Smart crooks, armed with the
latest in high tech gear, are experts at finding and penetrating any weak links in the supply chain. To outwit them, shippers
increasingly count on their logistics providers to be their best ally and first line of defense in thwarting theft, particularly of high
value and high risk goods.
However, shippers all too frequently rely on intermediaries whose qualifications don’t include the entire spectrum of requirements to safely and securely transport these types of goods. A logistics company may have an excellent reputation moving
“regular” commodities, but that doesn’t necessarily mean it has the experience, specialization, insurance or network of qualified
motor carriers needed to move high end goods such as electronics or upscale apparel. While many claim to have this caliber
of security, few actually do. Unfortunately, the rubber meets the road when a load is stolen, can’t be recovered and the shipper
comes to the realization that the carrier’s and intermediary’s insurance won’t cover the loss.
To keep our clients’ freight safe and secure, AFN utilizes unique proprietary procedures when transporting all loads that meet
our, and our clients’, definitions of high value or high risk. We recognize that not every load is the same and customize our
procedures accordingly. Our innovative multi-layered approach to handling high value or high risk shipments is focused on:
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Theft Prevention
Asset Monitoring
Asset Recovery
Remuneration
These anti-theft procedures, developed over the past decade, have served
our clients well and have earned us industry recognition. While we obviously can’t reveal the specifics of our best practices, our intent in this white
paper is to list the most critical questions that any client needs to ask of an
intermediary prior to moving a single high value, high risk load. We also
offer our perspectives on the answers you need to listen for - and confirm in
writing - to ensure that your goods will arrive at their destination and, in the
unfortunate event that a load is stolen, enable you to recover the goods or
be reimbursed.
Ask: “What criteria do you use to classify freight as either high value
or high risk?”
The best practice is to have a common, crystal clear definition of what constitutes (1) high-value, (2) high risk and (3) high-value, non-high risk freight
so all parties - the shipper, the intermediary and the carrier selected by that
intermediary - involved in the transportation of your cargo are in agreement.
Iron out any ambiguities upfront so that there is no question later of the
nature or the value of the shipment or the way in which it is to be handled
throughout the entire transportation chain.
How Does AFN Define High Value Freight and
High Risk Freight?
“High Value Freight” is any load valued at
greater than $100,000. “High Risk Freight” is
any load:
• Consisting of electronics, pharmaceuticals,
liquor, or any commodity containing any
precious metal, regardless of value
• Valued at greater than $100,000 consisting
of clothing/apparel, cosmetics/perfume, appliances, beer, or wine
• Containing a commodity, or traveling a
specific route, or traveling over a specific
period of time for which AFN has received
credible intelligence of an increased potential for theft
• For which AFN has agreed to pay damages for late deliveries (overtime, plant
shutdowns, e.g.) and is designated as High
Risk by our Director of Security
• That AFN and AFN’s customer have agreed
to treat as High Risk
Ask: “Who’s in charge of security? How are your staff trained and
how will they work together to ensure that my high value and high risk
cargo is properly secured?”
In our experience, there needs to be a distinct and well-defined chain of
command in which cooperation and teamwork rule the day, but the buck
Finally, “High Value, Non-High Risk Freight”
ultimately stops with one individual. That’s why our Risk Management Team
is any load valued at greater than $100,000
is led by our General Counsel and Director of Security who reports directly to
that does not meet the definition of High Risk
our CEO. All of AFN’s high value and high risk shipping is overseen by the
Freight above.
dedicated Compliance Group while theft prevention is a responsibility shared
by everyone on our team. For instance, when we take on any new load,
Customer Sales and Customer Solutions representatives are responsible for
knowing the value and commodity being hauled for each and every shipment accepted, as well as ensuring that this information
is accurately entered into our system. When a load is determined to be high value and/or high risk, our risk management team
oversees the rest of the transportation process.
Our training is intense. Before booking a single load, all of AFN’s new hires undergo a ten week long training program in which
theft prevention is a major focus. Training continues on the floor, in the classroom and on the job. A certification program
requires that anyone who touches a high value or high risk load, including security team members, must pass an exam. We also constantly monitor alerts
from our carriers, from law enforcement authorities and other industry crime
prevention entities such as NICB and CargoNet. Our operating procedures
are reviewed and updated on an ongoing basis to stay ahead of the latest
scams and/or threats. Furthermore, the training doesn’t stop within our four
walls. AFN also invests considerable resources sharing knowledge about
theft prevention with our carriers.
Ask: “How exactly do you evaluate and select carriers?”
Before you select an intermediary to transport your high value and high risk
goods, make sure that you know precisely how they conduct due diligence
on the motor carriers used to transport your freight. Given the industry-wide
driver shortage, it’s particularly essential that drivers are screened thoroughly.
Driver screening, however, is only one layer of security. Our carrier selection
checklist literally fills several pages and covers a range of criteria from safety
and security gear installed on trucks to storage yard procedures. The level of
due diligence conducted by our Compliance Department on the carriers we
utilize for high value and high risk shipments is even more detailed. The motor carriers are tiered into different categories based on the checklists. Once
a carrier is ranked within our system, it is utilized based on the requirements
of a particular load. This entire process goes well beyond verbal assurances
and examination of a carriers’ service levels and includes, but is not limited to
verifying:
AFN is a member of CargoNet, a recovery
network that revolves around a sophisticated and secure database, secondarymarket monitoring, and a theft alert
system that allows effective and secure
data sharing from theft victims to law
enforcement. AFN won CargoNet’s “Best
in Security” Award for 2012.
• Actual insurance policy exclusions and endorsements (not just certificates of insurance) and that the insurance covers the
commodity being hauled
• The financial stability of both the motor carrier and their insurance provider, as well as overall service levels
• That the carrier owns or leases a minimum number of tractors (at least 50 trucks for our Tier 1 carriers that have been in
business for at least 10 years)
• That the carrier has been in business for at least three years without any significant gaps in trucking authority (90 days or
more) within the past three years
While some shippers may not recognize that rail shipments involving certain commodities/values can be problematic, we have
a special set of criteria in place in the event we utilize intermodal/rail transportation service providers for high value, high risk
loads.
AFN Uses Covert Tracking Devices That
Ask: “How is my high value, high risk shipment monitored enroute?”
Feature:
At AFN, we practice vigilance at every mile. Once a high value, high risk shipment
or non-high risk load has been accepted by AFN, that shipment is placed on a spe• Vibration sensors for fragile shipcial internal load board that is managed by our Security team. All these loads are
ments or to indicate when a shiptracked at least twice per day (including weekends), or however often our customer
ment is in motion
requests it. We also require that the carriers we work with on these loads have
a live person to contact 24 hours, 7 days a week to perform yard checks, provide
• Geo-fence technology to determine
updates and provide additional information (such as vehicle identification numbers)
if a shipment goes out of route as
pertaining to any AFN shipment.
well as when it leaves the shipper
and enters the consignee’s location
Based on our proprietary Standard Operating Procedures, or through prior mutual
• Tamper alarm to detect if the device
agreement with our client, the Security Team also determines which shipments will
has been compromised, damaged
be monitored through the AFN Covert Tracking Device Program. These state-ofor removed
the-art devices are monitored 24 hours per day, 7 days per week.
• Remote paging feature in case a
device cannot be located at the reAsk: “How do you mitigate risk during stops or when a shipment must be
ceiver or to assist law enforcement
stored in a yard?”
during an asset recovery operation
More goods are stolen from unattended yards or while the driver is on a break than
at any other time. We therefore require that trucks hauling high risk loads are fully
• Readings to ensure that sensitivefueled prior to pickup and that the driver must have enough hours to legally drive
loads are kept at the right temperathe required distance before taking the first break. Unless there is an emergency,
ture
the driver may not stop for any reason within the first 300 miles after leaving the
Our tracking devices are mandatory on
shipper.
all high risk loads.
Unfortunately, transit times or delivery parameters often mean that shipments are stored in yards or warehouses. We have
established very strict rules for our carriers to follow. For example:
• High risk freight can’t be left unattended for more than ten minutes, unless placed in a pre-screened secure yard/warehouse, with cameras, on-duty guard, and fence or secure building
• We require the carrier to do a yard check every day that any high value; high risk; or high value, non-high risk shipment is
stored in any yard/warehouse
• Any shipment containing high value; high risk; or high value, non-high risk freight left unattended must be properly secured against a wall or by using a fifth wheel lock
• Likewise, while most reliable motor carriers do this as a matter of course, we are adamant that the freight must be sealed,
and that multiple seals must be furnished by the carrier for multiple stop loads
Ask: “What happens if my shipment is stolen?”
Even with all the procedures described above in place, crime still happens. You need to be prepared by understanding, in detail, the steps that your intermediary will undertake on your behalf to recover the shipment. Since time is on thieves’ side when
recovering stolen goods, it’s important to also ask how rapidly the intermediary will respond. While we have not lost a single full
truckload while using covert tracking devices, we are always ready to take action immediately in the event of theft.
If a theft is reported, we first turn to our network of law enforcement contacts. This network is unique in our industry and consists of strong relationships with the following groups:
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The National Insurance Crime Bureau – AFN is the only logistics company to be a member of this organization
CargoNet – AFN is a charter member of this group and AFN’s General Counsel is on the Advisory Board
National Cargo Theft Task Force – AFN’s General Counsel is the Chairman of the Government Affairs Committee
Federal and local law enforcement – AFN provides financial, technical and operational support to various law enforcement
agencies around the country
• eBay – AFN works directly with their fraud department (and employs a former member of eBay’s fraud department) to
monitor the sale of stolen goods
Ask: “What does your insurance policy cover?”
Your due diligence process must also examine your logistics partner’s insurance in the event that a shipment is stolen, unable
to be monitored, or have its assets recovered. Some logistics companies, including AFN, go several important steps further on
coverage. Unlike the policies many logistics companies carry, our insurance policy is not a “contingent cargo” policy and does
not exclude any commodities. Our insurance carrier is rated A+ by AM Best and we purchase “primary” coverage policy that
pays for a loss without requiring a wait for other policies to respond. The policy is also not limited per occurrence and there is
no cap on the number of occurrences. In several instances while transporting particularly sensitive loads, we have also worked
with carriers and or our shippers to purchase additional insurance.
Summary
AFN is recognized in the industry as one of the leaders in cargo theft prevention and has achieved this status through innovative ways of thinking and a commitment to becoming the best in the industry. We pride ourselves in treating high value and
high risk loads more carefully than any other non-asset based logistics company. This takes extra effort, additional investment
and requires a long-term view of our business and the relationships we build. Our work in this area has gained us industry accolades, new customers, improved relationships with existing customers, and clearly contributed to our success. If you have
any questions about how we can help your business achieve peace of mind in transporting your goods, please contact your
representative, call us at 877-LOAD-AFN (877-562-3236) or send an email to marketing@afnww.com
To learn more about AFN’s capabilities, visit www.LoadAFN.com
or call us at 866-LOAD-AFN (866-766-8348).