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Policy & Compliance
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Containers and trailers are subject to theft globally, as well as their cargoes. TT Club explains that being aware of the threat landscape is critical Supply chain security
A recent article by the TT Club reminded the writer of this article of an incident, that they had been involved in when working for a previous employer. A 40 ft container full of books destined for Soweto was hijacked en-route to the final delivery point. The books were found neatly stacked by the roadside – the container was never found. According to the police it was stolen to be converted into a new residential home. Supply chain security usually focuses on cargo but, as the above incident demonstrates, that is not the only target for thieves. While the circumstances are typically more complex, containers and trailers are also subject to theft globally. This type of theft reveals methods that are quite distinct from cargo theft incidents, so being aware of the threat landscape is critical. Freight crime is a concern often highlighted by TT Club, focusing much on the cargo side. However, there are other aspects that impact the industry. Container traffic in 2021 has been estimated to be around 240 million movements, of which about 142 million are laden. There have been widespread problems relating to availability through the pandemic and arising from congestion in various parts of the world, but indisputably demand for available containers continues to be high. It is increasingly widely accepted that all actors in the freight supply chain – including operators of containers – need to exercise diligence in relation to their counterparties, particularly when contracting with those who are new or there is an apparent change in expected behaviour. Misappropriation of containers has proved to be a particular problem when units are seized (often in respect of the contents), subject to commercial disputes or implicated where cargo has been abandoned. Many containers are leased, and shipping lines are usually vigilant in ensuring that their containers are returned – failure to do so often incurs heavy demurrage charges to compensate the line for losing the use of its equipment. BIFA is aware that Members, during the pandemic, extended their operations to include operating their own containers and in some
cases their own vessels. It is important that adequate measures are in place to ensure that containers are returned on completion of the job. Also, it is common practice for importers to arrange their own cartage of cleared containers from terminals, which can expose the Member to increased risk if the container is not returned as per the shipping lines instructions. In order to minimise the risk of problems, it is prudent to establish documented processes to monitor completion of carriage and return of equipment. Early identification of an issue assists as it provides the possibility to investigate and take timely action. Where appropriate, legal advice should be obtained to facilitate the recovery of containers. It can of course be challenging to predict which transactions present risk in this context. There are, however, a number of steps that operators may build into ‘know your counterpart/customer’ (KYC) processes to mitigate risk exposure. Isolated instances of containers not being returned may be more difficult to counter. However, many notable instances of container misappropriation involve multiple containers. Being mindful of these risks when securing contracts relating to batches of containers is essential, building in additional due diligence steps to protect your interests. While not exhaustive, additional steps could include: Enhanced due diligence Robust ‘know your customer processes’ are essential in mitigating this area of risk. Do you know the customer? Does the current request for equipment fall within expected parameters of former behaviour? Is the customer a reputable company? Are there any financial concerns, commercial or operational circumstances that raise suspicion? Insurance Can the customer demonstrate that it has adequate liability insurance in place to cover the value of the equipment while in its care, custody and control? Beware of fraudulent documentation, applying appropriate verification
checks (such as contacting the insurer) – allowing sufficient time to complete such checks.
Cargo What type of cargo is being booked for
shipment? This allows simple checks to ensure that the cargo is consistent with the customer’s activities, as well as acting as an indicator of additional risk. For example, waste, recycling or low value cargoes might be considered red flags when coupled with other factors described in this article. Route/destination Consider the cargo routing; ask yourself does it make sense and what is known about the consignee? And address concerns, if any are raised. For example, if the cargo being packed is waste, ensure that it is not being transported through or to a forbidden country. Equally, does this customer frequently ship containers to this destination? Deployment of technology One practical challenge in all instances where units go missing can be actually locating the containers and/or verifying the last known location. The advent of ‘smart’ containers with the ability to track location (amongst other things) might provide an opportunity to mitigate this particular risk. However, some form of active monitoring may be required to overcome the risk that jamming equipment may block GPS signals. Unusual activity This ‘catch all’ links to each of the former items. Consideration should be given to the number of
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December 2022
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