As the vehicle began moving, its path was suddenly blocked by members of the South Florida Cargo Theft Task Force. The thieves--visibly dazed by the abrupt turn of events--had been caught in a sting It was now 9:50 p.m.; barely four minutes had elapsed since they walked up to the truck.

"They were slow," remarks Lieutenant Ed Petow of the Miami-Dade Police Department, who heads the Task Force, adding that more accomplished thieves would have hit the road in half the time it took these two young men.

Every day across America, thieves like these target the transportation and supply function--the vital logistical web linking manufacturers, importers, exporters, shippers, wholesalers, retailers, and end users. In the process, they're also exposing national security vulnerabilities.

The estimated losses are nothing short of staggering. Nationwide, cargo theft is estimated to account for as much as $25 billion in direct merchandise losses each year, says Lou Tyska, former chairman of the National Cargo Security Council (NCSC) and past chairman of the ASIS Transportation Council. If all associated losses are also included, the estimate rises to as much as $60 billion.

Cargo crime has an extremely appealing risk-reward ratio. Consider that a tractor-trailer frill of cigarettes may be worth $1.7 million; one full of cell phones, $1.3 million. The resulting profits are high--sometimes higher than in drug trafficking--and the risks are low because cargo crimes get less attention in the criminal justice system than other offenses.

Cargo thieves are especially on the lookout for such high-value goods as computers and computer components, consumer electronic products, fashion apparel, cigarettes, and over-the-counter pharmaceuticals. "It's basic economics--supply and demand," says Petow. The greater the contraband demand for an otherwise legal product, the more likely it'll be the target of cargo crime groups. As taxes have risen on cigarettes, for example, so have the number of incidents involving thefts and hijackings of trucks carrying cigarette cargoes.

Despite the serious nature of the threat, cargo theft task forces like Petow's and their private-sector partners face major impediments. First, cargo crime is not a statutory offense. The term covers a number of criminal acts--including larceny, burglary, or robbery, depending on the circumstances--associated with the misappropriation of otherwise legal products while they pass through the transportation and supply chain. Compounding the problem is the difficulty of tracking the issue. Since cargo theft is not a specific offense, no precise data is collected by the FBI's Uniform Crime Reporting Program.

In response to mounting concerns, last year ASIS International and the NCSC jointly published a cargo security threat assessment--commissioned by the NCSC and prepared by the author--entitled Contraband, Organized Crime and the Threat to the Transportation and Supply Chain Function. The study was based on, among other things, confidential interviews with leading experts from law enforcement and the private sector. The document provides useful details about the cargo theft problem as well as recommendations for future action.

The problem. The threat assessment found that while cargo crime is a nationwide problem, the greatest concentrations of perpetrators are found in southern California (especially the Los Angeles metropolitan area), in south Florida (in particular, the areas surrounding Miami), and in the New York City/New Jersey region.

None are more sophisticated--or far ranging--than those based in south Florida. The activities of these Florida-based groups span the country. For instance, in January 2003, three Miami residents were arrested near Cincinnati after police found about 1,125 boxes of stolen Levi jeans in a warehouse, worth an estimated $800,000. That same month, Petow's task force recovered a multimillion-dollar load of cell phones in a Miami-Dade warehouse, stolen in New Jersey in late 2002. "We've recovered stuff from all the way up into Connecticut, into Ohio and Illinois, Tennessee, and Georgia," Petow notes.

Cargo theft tends to be a cash business with a rapid product turnaround. What helps to make Miami-Dade a magnet for cargo theft is its large concentration of "brokers" able to fence stolen goods on a commercial scale, says Petow. These brokers in Miami likewise service buyers throughout the United States and in Central and South America. (More on international issues later.)

How they operate. Regardless of where they're based, cargo crime groups tend to share characteristics. The threat assessment found that cargo crimes tend to be perpetrated by organized crime groups that do not appear to exhibit the hierarchical structure of traditional organized crime rings. Rather, they tend to have a more independent, entrepreneurial structure.

Overall, the cargo crime sector appears to be composed of individuals performing three separate functions: Crews who commit the theft; intermediaries--sometimes called brokers or fences--who finance the heists, acquire the stolen goods, and act as illicit wholesalers; and buyers who operate the illicit retail end of the contraband market.

Many cargo crime groups are composed of small cell-like crews of five to eight members. When there is a major operation needing 20 or so individuals, the organized crime group brings together three or four separate crews for the job.

Individual members may be paid a portion of the proceeds from the sale of the stolen goods or they may be paid to perform a specific task. In one case, a crime group paid a man $75,000 to drive a $1 million load of stolen cell phones to Miami.

Roles and functions in individual crews appear to be interchangeable, but a higher status is given to any individual who can connect to a buyer, and sometimes cargo crime groups blend the theft and brokering functions to bypass the fences and increase their profits. For instance, in one cargo crime group, the street-level thieves were paid a flat fee to steal cargo. The operation was controlled by four individuals who oversaw the warehousing operation in which stolen cargo was received, broken down, and distributed to customers or to small self-storage garages for safe-keeping. The warehouse operators received about 20 percent of the retail value of the product.

Other groups simply focus on a major distribution center that handles a variety of lucrative products, and they target departing tractor trailers. (For a case study of such a theft operation and how the target company shut it down, see "How a Confederate Delivered the Goods," in the April 2003 issue of Security Management.) These groups are less certain of getting a big score. For example, a consumer products distribution center may ship both flat-screen TVs and blank videotape from the same site; a truck loaded with one is obviously much more lucrative than one carrying the other. More sophisticated are the Miami-based burglary groups that deliberately strike warehouses with exclusively high-end products.

Globalization. Both contraband markets and the organized crime groups themselves are increasingly operating on a global scale. Goods may be stolen in the United States and smuggled to a foreign market where they compete unfairly against legitimate U.S. exports. Or products may be stolen while they are being imported into the United States; this is especially a problem for fashion apparel produced in Latin America and imported through south Florida.

Members of major cargo crime groups are very professional: They are sophisticated and knowledgeable about countersurveillance techniques and security systems, such as hidden sensors, used to track transport trucks. For the primary theft, these criminals use vehicles that can be dumped in case of a confrontation with law enforcement and whose ownership is deliberately difficult to trace. Some crews even use the latest point-to-point radios to communicate among cell members.

In their criminal efforts, intelligence gathering is of paramount importance. Some cargo theft groups obtain bills of lading and other documents from petty thieves who have stolen a small quantity of a sought-after product. The major players then use this information to discover where major warehouses are located.

Cargo theft represents a massive transfer of wealth from the legal economy to the illegal one. "Demand is pretty equal...on the legitimate side and the stolen products side," says Petow. For example, consider a cargo theft of 1,000 personal computers-each worth $1,500 at retail and thus $1.5 million total-from a manufacturer's distribution network. The crime group behind the theft may sell the 1,000 computers to an illegal broker for 25 percent of the retail value, say $375 each, for a total of $375,000. The illegal broker will then sell the computers to an illegal retailer for 50 percent of their retail value ($750), thus earning $375,000 on the transaction.

The illegal retailer will, in turn, sell the computers to consumers for 75 percent of the retail value ($1,120), again earning $375,000. So, the direct participants in the illegal economy earned about 75 percent of the $1.5 million retail value of the 1,000 personal computers stolen.

Yet these transactions actually represent a transfer of the FULL $1.5 million from the legal to the illegal sector. While the remaining 25 percent of the retail value-or $375,000-did not flow directly into the pockets of the cargo theft group or the illegal retailer, it represents the cost of enticing consumers into the illegal economy.

Solutions. What can be done to combat cargo crime? The primary issue is that it should be made a priority-especially in view of the national security implications. Experts surveyed for the threat assessment made the following recommendations.

Because cargo theft is currently not a specific statutory crime (rather, it is categorized as and charged as a larceny, burglary, or robbery depending on the circumstances, as noted earlier), consideration should be given to examining whether new statutes and forfeiture provisions are warranted to address this major organized crime problem. The threat assessment published by ASIS and the NCSC was part of an effort to push for such activity.

The report calls for an examination-ultimately by Congress-of how best to address the fact that many existing statutes, regulations, and sentencing guidelines do not provide sufficient sanctions to deter cargo crime and the illegal distribution and retailing of stolen goods. The goal is to establish a federal offense for cargo theft to make the crime a felony with significant penalties and fines.

Another recommendation is to implement a national collection and reporting system for cargo theft data. None exists at present, though the American Trucking Association does have the Cargo Theft Information Processing System (CargoTIPS). However, it deals with truck cargo thefts only and is a fee-based information service.

Meanwhile, the NCSC has been lobbying for a national collection effort for several years. Currently, ASIS and the NCSC are working cooperatively to develop a separate Uniform Crime Report for cargo theft. Progress has been made in identifying key legislators who have agreed to champion this initiative.

With the establishment of a Uniform Crime Report mechanism, data concerning cargo thefts would be reported as such by police agencies; the statistics would then automatically become available and reportable by the government, which is probably the only entity with sufficient resources to record all thefts.

NCSC is also calling for more law enforcement resources and training targeted toward cargo crime. For example, in view of the increases in global commerce, additional resources need to be allocated to U.S. Customs and other federal agencies whose jurisdiction involves imports and exports.

Another concern is the need for increased cooperation between the public and private sector. In areas with high levels of cargo crime-such as Miami and southern California-law enforcement and affected corporations have effectively done this by forming security councils.

Security councils help private industry focus their assistance to law enforcement by providing exactly the kind of support that law enforcement needs. For example, a private corporation may lend a warehouse or a tractor trailer to an investigative police unit for an undercover operation for a day.

However, the primary goals of security councils, says Petow, are information sharing and relationship building. "Law enforcement gets to know what's happening in the industry, and the industry is kept abreast of crime trends."

Security councils can also play other important roles. For instance, they can facilitate training programs for both law enforcement and private security professionals in how to conduct effective cargo crime investigations. Also, they can act as efficient information distribution outlets, ensuring that all council members are up to date on key developments-such as an important theft or indications that a cargo crime group is targeting a particular region.

Security councils take different forms. Within the Miami-area's security council, for example, there are three levels of membership. Category-one members are corporations affected by the cargo crime issue; they fund the council and have voting rights. Category-two members are law enforcement agencies; they participate in security council affairs but do not have voting rights. Category-three members are private subcontractors that provide security services to category-one members.

Other security councils vary this model. For example, law enforcement representatives may be category-one members with full voting rights. Whatever form security councils take, however, Petow says one thing is clear: "Everybody benefits" from such efforts.

Mario Possamai is president of FIA International Research in Toronto, Ontario, Canada. He is a member of the ASIS Transportation Council.