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  • Published on: 14th September 2019
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In today's economy, every organization is working hard on reducing its bottom line to get its profits up, as top line growth is almost non-existent.  In logistics and supply chain business, one area that can add to organizations profitability but often overlooked is the prevention of cargo crime.  The need for cargo security is critical to assist the transportation industry in combating the increases in cargo crime.  Supply chain security is not an isolated event.  Security has to be applied across the supply chain, across borders (countries, departments, competitors, customers and transportation modes) and integrate an ongoing awareness in every single point of interaction with the cargo.  Hence security will only be secured after of all the steps have been implemented and applied across the supply chain.

a. The role of Transportation in Supply Chain

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request (Chopra, Sunil & Meindl, Peter, 2010).  The supply chain includes not only the manufacturers and suppliers, but also transporters, warehouses, retailers and even customers themselves.  The functions of the supply chain include new products development, marketing, operations, distributions, finances and customer services.  A supply chain activity is a dynamic process and involves the constant flow of information, product and funds between different stages.  At each stage, the supply chain is connected through the flow of products, information and funds.  These flows often occur in both directions and may be managed at one of the stages or an intermediary.  The objective of every supply chain is to maximize the overall value generated.  The value of supply chain generated is the difference between what the final product is worth to the customer and the costs of the supply chain incur in filling the customer's request.

Transportation is one of the activities within the supply chain and it refers to the movement of product from one location to another as it makes its way from the beginning of a supply chain to the customer.  Transportation is an important aspect of supply chain because products are rarely produced and consumed in the same location and industry is very dependent on the transportation to transfer their products.  Transportation is a significant component of the costs incurred by most supply chains and the role of transportation is even more significant in global supply chains.

b. The Impact of Cargo Crime

Attached below are some of the impacts or consequences of cargo crime which may affect the transportation industries:

- For a business operating on “just-in-time” concept, the loss of goods may threaten viability; particularly if insurance cover is inadequate or compensation payments are contested.

- Companies can be exposed to litigation, liability suits or other attacks on their brand name through theft related circumstances. Stolen goods can be out of date or ineffective due to bad storage which exposes the company to unhappy customers who bought these goods in good faith.

- Stolen goods reduce profits exponentially by losses in sales opportunities caused by the distributor where the competitor is selling the goods without these “extra theft cost” causing the distributors goods never be able to compete.

- Further, the illegal sale of stolen cargo undercuts prices in legitimate businesses.

The source of risk for cargo crime within the transportation network comes from crime opportunities.  The criminal has flexibility relative to time, place, method and the type of crime committed.  In reality, criminals are normally limited in their mobility, adaptability and flexibility, relative to a particular crime, place, time and method (Hesseling, 1994).  The crime opportunities are highly specific and concentrated in time and place.  This is the result of required scheduling and fixed assets of the normal activities within the supply chain which gives the criminals the opportunity to really attack at the weakest point in the transportation network and that is certain area of the Malaysia highway.  The risk of cargo crime can be reduced by initiating resilient countermeasures focusing on reducing crime opportunities.   The theory of crime displacement states that within the potential criminals' capability, the criminals will change their crime pattern in response to countermeasures implemented by the authorities or security professional.  

Crime information can be obtained from Police or incident records and, where available, the records of other agencies.  Information on different aspects of crime problems can be shared between agencies to provide a clearer picture.  Obviously, this pooling of information must be subject to safeguards.  However, since crime analysis is concerned with patterns and trends, for which information on personal identity is not required, the sharing of information should not pose a problem.  Although the task of data collection and analysis should be able to draw on information collected; existing records may sometimes provide an inadequate basis.  This can be the case with Police crime records, where many victims may have chosen not to report the offence they suffered (Hough and Mayhew, 1983 & 1985).  Where the official database is inadequate it may be necessary to supplement it by setting up special recording exercises, surveys or direct observation.  

c. Data Collection

A ‘snapshot' of cargo crimes committed in any given area in Malaysia will inevitably show some kind of clustering.  As far as evaluation is concerned the stronger the element of random fluctuation; the greater the difficulty of making a conclusive judgment (Ekblom, 1988).

On June 25th 2013 it was reported in The Sun daily in Malaysia that the research team on crime and policing from Universiti Sains Malaysia knew that Malaysia is going to see a significant surge in violent crime especially those involved gangs and recidivist (repeated offenders) (Sundramoorthy, 2013).  Associate Professor Dr. P. Sundramoorthy, a well known criminologist attached to Universiti Sains Malaysia urged the authority to relook at preventive laws to rein in criminals (Sundramoorthy, 2013).  In replacement of the Emergency Ordinance, a new law to deal with hardcore criminals, with a built-in mechanism to stop abuses by the authorities should be drawn up (Wong-CW, 2013).  A new law to replace the Emergency Ordinance (EO) is being finalized to book ex-detainees who have found to be partly responsible for the rising crime rate (Fazaniza, 2013).  On July 5th 2013, Home Affair Minister of Malaysia, Datuk Seri Zahid Hamidi, said the move was necessary in the wake of rising crime attributed to ex-EO detainees who did not fear arrest after the repealing of the Emergency Ordinance (Fazaniza & Goh, 2013).

Cargo thieves have learned to become sophisticated and more tactical about striking a crime.  A lucrative black market keeps cargo thieves going and impacting the global economy.  Cargo crime has been around for centuries, from robbers attacking merchants on trading roads to pirates seizing ships at sea to bandits on horseback robbing stage coaches.  Unfortunately, cargo crime has been evolving along with cargo transportation modes.  Trucks have replaced horse-drawn carriages, and today's criminal are organized into international crime syndicates.  Cargo crime is an international problem affecting consumers and manufacturers alike.  In today's global economy, raw materials manufacturing and sourcing often occur in one part of the world, while the finished product is produced and stored or consumed in another part of the globe.  Cargo can be easily stolen or hijacked at any point in between.  Cargo criminals are becoming very productive and work in highly organized groups, targeting specific cargoes and employ people with the skill set they require.  Some are specialists who can bring a different set of criminal skills to the group.  The professional cargo thieves will setup their operations base at truck yards, hubs for commercial freight cargoes, airports and sea ports.  Meanwhile, criminals who are targeting cash and valuable items will setup their operations in different locations.  Cargo thieves used sophisticated systems and equipments with well organized hierarchies of leadership.  They are willing to employ specialists who can carry out different tasks and responsibilities including professional thieves, brokers and warehouse operators as well as fences.  The fences also work with drivers in transferring the stolen goods and deliver them to the black market.  Recently in Malaysia, many foreign labourers were used to move the goods and work with drivers in transporting the stolen merchandize from the premises in order to avoid exposure of the identity of the syndicate.  In fencing, goods are brought from another party who is in illegal possession of those goods.  

The cargoes stolen in Malaysia are usually disposed through fences for local market.  Most of the case, high value and high technology cargoes are taken out of the country in a very short time to avoid being detected by the Police.  Cargo thieves heist truck load of merchandize can be valued up to few million dollars depending on the type of cargoes they are carrying.  There are many cases especially cargo of electronics and high technology products hijacked in Malaysia and found in the black market overseas the next day.  This is how efficient and sophisticated network the professional cargo criminals are having.  There is no such specific research on insider job related to cargo crime in Malaysia and this research is being taken to look into cases of cargo crime related to insider job.  Research has been carried out through structured interviews with security managers, transport manager, logistics manager in Malaysia by analyzing the literature review.  Cargo crime statistics is being retrieved from reliable sources since Malaysia Police is unable to provide cargo crime statistics due to the confidentiality of the information.  The volume and trend of cargo movement in Malaysia is being scrutinized and statistics are retrieved from Malaysia statistics department.  Reports from local newspaper on cargo crime are included in this research.  Police investigation reports on insider job related to cargo crime are not available as such report is confidential.  Only security managers and logistics personnel who have conducted internal investigation related to cargo crime have been interviewed.  Their information sharing is very valuable in this research as the researcher is able to get first hand information related to insider job during the internal investigation.

a. Cargo Crime in Malaysia related to ‘Insiders Job'

Cargo crimes have been reported quite frequently in Malaysia for many years.  After investigation, most of the cases revealed that the crimes are committed with the assistance of an inside person.  An insider's job is very important for criminal to commit the crime.  A snapshot view of some of the reported cargo crime cases related to insider job in Malaysia as follows:

i. April 24th 2014 – Police believe the pirates who attacked the Singapore owned oil tanker Naninwa Maru No. 1 in the Straits of Malacca near Pulau Ketam on Tuesday April 22nd 2014 may have had an “insider's help”.  This is based on several events when pirates boarded the oil tanker carrying five million litres of diesel, siphoning off part of the cargo and kidnapping three Indonesia crew members.  “We believe the heist was pulled off possibly with an ‘inside help' from certain crew members,” said Federal Marine Police Deputy Commandant (Operations and Intelligence) ACP Abdul Rahim Abdullah.  Senior crew members of the ship did not raise the alarm or send out a distress signal when the incident occurred at 1.00 a.m. or when the captain, first officer and chief engineer were taken away, reported in The Sun.

ii. December 22nd, 2013 - Another case of “hijack on the road” saw thieves escaping with RM800, 000 worth of microchips after driving off a lorry in the Free Industrial Zone in Bayan Lepas Penang, Malaysia.  The lorry was later recovered 1.5km away with 12 out of 22 boxes reportedly missing.  Police detained the driver to find out if it could have been an insider job said Deputy OCPD Balik Pulau Deputy Superintent Lai Fah Hin (The Star, Dec, 2013). Two days later, Police arrested two men believed to be involved.  

iii. October 9th, 2013 - Five men were charged at the Sessions Court in Shah Alam for hijacking a trailer loaded with shampoo worth RM49, 000 armed with machetes during the hijack.  Unemployed man; lorry drivers; security guard and lorry attendant pleaded not guilty to the armed gang robbery of the trailer belonging to transportation company.

iv. October 20th, 2012 - Malaysian police arrested 12 people for theft of 1,400 Samsung Galaxy Note 2 devices worth a total of 3.23 million ringgit (US$1.05 million).  The incident took place just a day after the product became available in the country.  The smart phones were stolen on Oct. 20, 2012 from the cargo area of Kuala Lumpur International airport where the shipments arrived.  The device was launched in Malaysia on Oct. 19, 2012. Syed Ismail Syed Azizan, Federal Commercial Crimes Investigation Chief, said 12 people were arrested in raids conducted around the Malaysian capital Kuala Lumpur, most of who were believed to have planned the theft together.  About 70 devices had been recovered.  Among the 12 arrested, three forwarding agents were charged at the Sessions Court for the crime and they pleaded not guilty.

v. October 2nd, 2012 - Nine individual pleaded not guilty at Session Court Butterworth after being charged for stealing 268 cartons computer microprocessor (CPU) worth RM22 million.  The criminals were armed with samurai swords when they held up a supervisor and six guards by entering the premises through the back entrance.  The criminals tied up the employees, loaded their getaway truck with three pallets of microchips and flee the premises.  The truck was eventually found by the Police but they failed to recover the missing products.  They since detained seven male suspects connected to the case.

vi. July 7th, 2012 - A trailer carrying soft drinks that was reported stolen in Penang were stopped in Bidor (more than 70km south of Penang).  Penang Police had sent a nationwide alert to keep a lookout for the trailer after it was reported stolen at Taman Limau Manis in Bukit Mertajam at about 1.30am 6th July, 2012.  About two hours later, the truck was spotted at a school located along Jalan Sungkai in Bidor, about 50 meters from the town's police station.  Tapah Police chief Supt Somsak Din Keliau said a 32-year-old suspect had been detained in connection with the stolen vehicle and shipment of drinks.

vii. October 19th, 2011 - Penang Police have detained three suspects in connection with the microchip robbery worth hundreds of thousands from Cargo Terminal at Bayan Lepas International Airport in Penang.  Penang Deputy CID Chief ACP Mohd Nasir Salleh said the three suspects aged between 20 and 23, and employees of a courier company were detained.  The theft was spotted by an employee in the cargo terminal at about 2am on Sunday.  The employee found a number of boxes where the microchips were stored, had already been opened.  He made a police report and Police quickly acted on the report and detained the three suspects.  Mohd Nasir said Police were carrying out investigations to identify the mastermind and where the microchips were sold by the suspects.  The microchips were meant for an export to South Korea.

viii. September 21st, 2011 - A container loaded with computers worth about RM2mil was hijacked by a group of armed men near the Putra Heights toll plaza.  It is learnt the incident happened at about 11am on Monday shortly after the lorry driver left KL Inter¬national Airport (KLIA) cargo complex and was heading towards the computer manufacturer's warehouse in Subang Jaya.  When the driver passed the toll plaza, his vehicle was blocked by another lorry.  Several men armed with ‘parang' (long knife) confronted the driver and threatened to harm him if he resisted.  They then forced him and the co-driver out before driving off with the lorry containing the computers.  The driver lodged a report shortly after. Police patrol car later found the lorry, which had been burnt, near Batu Tiga minus the cargo.  Police have recorded statements from the driver and co-driver and believe the hijackers had inside help.  Selangor CID chief Senior ACP Mohd Adnan Abdullah confirmed the incident.

ix. February 11th, 2011 - It was mid-afternoon when workers at a factory in the Malaysian state of Perak finished loading more than 700,000 condoms into a shipping container.  The container was then driven to Port Klang, the busiest port in the country, and loaded onto a ship bound for Japan.  It was a routine procedure for Sagami Rubber Industries, a Japanese company, but by the time the ship docked in the port of Yokohama at the end of January, the condoms had vanished.  “The container was empty,” said K.K. Leung, the administration manager at Sagami's Malaysian factory, whose Japanese colleagues had alerted him regarding the theft.  The case of the missing condoms made headlines in Malaysia, but it was not an isolated case, according to industry groups.

x. September 29th, 2010 - Police suspected it was an inside job where RM4 million hard disk heist at KLIA cargo terminal in 2010.  Many of the employees at cargo complexes are old hands and they work with syndicate members, tipping them of valuable cargo in the premises," said an official.  These thefts are the work of organized crime syndicates which form partnerships with cargo officials.  What was shocking was that there were no security guards on duty at the warehouse, enabling the thieves to coolly drive away an eight-tons lorry packed with 542 boxes containing about 10,800 units of hard disks worth an estimated RM4 million.  Acting Selangor Criminal Investigation Department chief Assistant Commissioner Omar Mammah confirmed that at the time of the heist, there were no security guards on duty at the warehouse.  

Findings from the interview session conducted revealed that insider job and employee involvement were found in most of the criminal cases investigated by the security manager or the management of the company.  All the respondents agreed there are elements of insider job that are related to cargo crime in Malaysia (Ching-EL, 2015).  The respondents concluded that it will be difficult for the crime to be committed without the collaboration from ‘inside'.  Studies need to be conducted in depth and investigation from the Police will be very useful to confirm that insider job is the culprit to cargo crime in Malaysia.  The Police will be able to get more reliable information from the criminals who are arrested for such cases.  Insider job is one of the main culprits of cargo crime as research evidence revealed that hijacking cases in Malaysia are mostly related to insider job (Ching-EL, 2015).  Hijacking of trucks with cargoes is a cause of great concern as well as a burden to Malaysia economy and the transportation industries.  It may also impact the Foreign Direct Investment (FDI) into Malaysia as high cargo crime rate will cause the investors to move away from Malaysia.  

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