Drugmakers have stepped up their game in recent years in protecting their supply chains against cargo theft. But thieves can be resourceful, and a big jump in losses in the third quarter indicates ways in which they have evolved their own techniques.
In its Q3 report on U.S. cargo theft, FreightWatch International reported that while cargo thefts across all categories were down 18% and pharma thefts accounted for only 6% of total incidents, the numbers of cargo thefts in the drug industry increased a whopping 125% over the previous quarter and 350% over the same quarter a year ago. It didn't list the exact numbers.
Not only that, but the size of the average loss from truckers carrying drugs was significant at $558,000, a 151% jump from the previous quarter and second only to electronics, where average losses were $797,454. The pharma average loss was nearly twice that of the next category, personal care products, which logged in at an average of $255,000 per loss, the report said.
The security firm also noted some trends that pharma needs to consider to protect its supply chain. Pilferage, small thefts, it says, are not generally seen as a big concern. While perhaps the most underreported category of cargo theft, they typically account for less than 6% of the total, FreightWatch says. These losses are often dismissed as loading or inventory errors, and the losses are seen as easier to absorb than an insurance premium hike.
Pilferage is the modus operandi of most street-level players, but FreightWatch says some incidents may be tied to organized crime syndicates. They "use this as a method of intelligence gathering, breaking into loads to verify the cargo and then pulling back to judge response time and determine what security measures may be in place on the load," the FreightWatch report says.
It pointed to a series of three small thefts in three weeks in Memphis, TN, of trucks that were waiting to deliver their pharma loads to a final destination. Each theft was of the same amount of product, from the same location on a trailer that was breached in the same way, it said. These kinds of incidents can be an indicator of what a gang is planning: "Instances such as these will make it unsurprising to see a theft or attempted theft of full truckload of pharmaceuticals either in or on its way to Memphis in the coming months."
The industry continues to work with law enforcement to detect trends, and it has paid off with some arrests and convictions. This summer, three members of a gang that for years made South Florida one of the most dangerous spots for cargo theft in the country were sentenced to federal prison. They were convicted for their part in a scheme to steal and resell $2.2 million worth of the cold medicine Mucinex and $500,000 worth of baby formula off tractor-trailers. Authorities have also gotten convictions in recent years of a number of defendants tied to the burglary of an Eli Lilly ($LLY) warehouse in Connecticut in 2010 in which thieves left with about $50 million worth of drugs.
- access the report here (reg. req.)