Cargo crime research conducted in Sweden revealed that many transportation companies do not invest in security to secure their trucks (Urciuoli, 2010). In Sweden, criminals often have time to attack cargo when the driver leaves the trucks for lunch, or when driver is sleeping in the cab or delivering the goods to the customer (Urciuoli, 2010). Urciuoli (2010) adds on that cargo crime is a growing problem in Europe. His explanation on why Swedish transportation companies are doing too little to enhance security is that they often do not find it worthwhile to tackle such a problem. Consequently, relevant stakeholders such as Police, Customs, Courts of Justice, Insurance companies, Certification Bodies, Security companies, Transportation companies, Shippers and Cargo owners put less effort into fighting cargo crime than they should but Urciuoli (2010) survey revealed that it pays to address this issue. Only a few Swedish transportation companies who invested in security, establishing closer collaboration with the authority face less security incidents.
2.5.2 Cargo crime research in Europe
The majority of freight transport in the European Union (EU) happened on the road and it is very significant to the economy of European Union (Europol, 2009). A report on cargo crime was published in 2008 by the International Road Union (IRU) and International Transport Forum (ITF) analyzing crime from year 2000 to 2005. Issues highlighted such as drivers being attacked, assaulted at the parking area, load being taken from trucks and cases of crime are not reported to Police. Transportation cargo crime is an on-going threat caused by syndicated criminal targeting road freight where cargoes obtained can be easily sold in the black market. The majority of cargo crime in European Union happened on the road during transportation of the cargo and it is estimated worth Euro8.2 billion annually, an average value of Euro 6.72 per trip (Europol, 2007). Those figures are only estimated figures and gathering accurate numbers of cargo crime losses is very difficult or almost impossible in many instances. This is due to limited reporting by the transportation operators or industry and also lack of law enforcement department requiring such reporting. However, where specialist units have evolved, such as in Belgium, France and the United Kingdom, there has been a noticeable shift in attitude, enabling the Police to direct more (even though still small), numbers of resources to the problem. Despite that, criminals are showing an increase in the usage of firearms and violence in pursuit of their goals and in many cases have demonstrated little regard for human lives.
2.5.3 Cargo crime research in United State of America
The National Cargo Security Council; a coalition of public and private transportation organizations has retained FIA International Research Ltd (FIA) to examine how the transportation and supply chain function is impacted by cargo crime specifically on contraband. Whenever there is enough demand for contraband product and if it is sufficiently lucrative to supply it, then organized crime groups will enter that market. Eventually they dominate it because of their capability, well-resourced in infrastructure and expertise to supply contraband products on a commercial scale. The massive size, complex transportation and supply chain function provides organized crime groups with an almost infinite number of ways to conceal smuggling of counterfeit or pirated goods (FIA, 2001). Research indicated that cargo crime in USA is a nationwide problem and mostly concentrated in southern California; south Florida and New York City or New Jersey metropolitan areas. However, there are no precise figures quantifying the extent of cargo crime in the United States because the cargo crime data is not specifically collected under the Uniform Crime Reporting Program administered by the Federal Bureau of Investigation (Journal of Commerce, 2001). The industry estimated and indicated the severity of the problem that worldwide cargo crime account for direct merchandise losses to be as much as $50 billion a year (Journal of Commerce, 2000). If all associated losses such as the cost of product re-ordering are included, the estimated cost may hit $60 billion (Best Review, 2000). Rand Corporation research reported in Inter-agency Commission on Crime and Security (2000) that an estimated theft from U.S. manufacturers and their customer could exceed $5 billion a year due to the advancement of technology and components.
2.5.4 Cargo crime research in Australia
In Australia, there are about 80 to 99% of cargo crime happened in large-scale theft at freight forwarding yards due to collusion between truck drivers and warehouse employees (Hume, 1996; Ackerman, 1997; Atkinson, 2001). While one employee has been historically responsible for most cargo crime, crime syndicates pose an increasing threat (Atkinson, 2001). Cargo is at its highest risk during loading and unloading and it can be carried off when a driverâ€™s attention is being diverted. Vehicles such as cars and trucks are the common targets as they can be shipped overseas, broken down for parts, or counterfeit identity created and sold cheaply as discussed by DeGeneste and Sullivan (1994). Access to loading areas in freight yards must be restricted and controlled. If many organizations share the same freight-forwarding facility then security must be carefully coordinated (Hume, 1996). It is also very important for security guards who manage the gates to ensure that trucks are not let out of freight-forwarding yards without full documentation verification and identification of the drivers as revealed by Boyer and Cole (1995). Normally the cargo will be at high risk if security procedures break down, rules are not followed and non-conformance (Tyska & Fennelly, 1983). Long time ago faxed invoices may contribute to cargo crime as they may be leaked, copied or sold to criminals (Huska, 1998) but the trends has changes. In Australia there are 218,816 truck fleets used in the movement of most cargo (MAA, 2000). Trucks carrying cargo are most vulnerable to crime because they are highly visible, easily identified and may be parked unattended at unsecured location for relatively long periods of time (Gooley, 1999). Comprehensive prevention requires target-hardening, procedural and inventory controls to prevent cargo crime.
2.5.5 Crime research in Malaysia
Tang (2009) conducted a research on the linkages among inflation, unemployment and crimes rates in Malaysia examining the linkages between inflation, unemployment and crime rates in Malaysia. The research extends the unemployment-crime model specification by introducing the variable of inflation that has not been considered by previous studies. The introduction of inflation into the determinants of unemployment and crime specification may avoid the misspecification problem. This may also draw some attention on the implication of using inflation and unemployment rate as a policy instrument to reduce crime rate in Malaysia. Modified Wald test was used to ascertain the causal links between crime rate and its determinants (Toda &Yamamoto, 1995; Dolado & Lutkepohl, 1996). This research used annual data of crime rate, consumer price index and unemployment rate from 1970 to 2006 in Malaysia. The data were extracted from International Financial Statistics (IFS), Malaysian Economic Report, United Nations Crime and Justice Information Network (UNCJIN), Euro-monitor International, and the Royal Malaysian Police reports. In his research, Tang (2009) found the normalized coefficients for inflation and unemployment rate are positively related to crime rate in Malaysia for period of 1970 to 2006. This implied that inflation and unemployment are two importance criminal motivation factors in Malaysia. In another research on crime by Baharom and Habibullah (2008) tried to correlate crime with inequality in Malaysia.
2.5.6 Research on Supply Chain Security in Malaysia (Ching-EL, 2014a)
Most or all organization is putting lots of effort in reducing its bottom line to improve the profits as top line growth is almost non-existent in todayâ€™s economy. In logistics and supply chain business, one area that can add to organizations profitability but often overlooked is the prevention or reduction of cargo crime. The need for cargo security is critical to assist the transportation industry in combating the increases in cargo crime. Security is not an isolated event and has to be applied across the supply chain, across boundaries such as countries, departments, competitors, customers and transportation modes. It also needs to 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 entire supply chain.
a. The role of Transportation in Supply Chain
Normally supply chain consists of many parties to be involved whether directly or indirectly to meet customer demands (Chopra, Sunil & Meindl, Peter, 2010). The functions of the supply chain must not exclude new products development, marketing, operations, distributions, finances and customer services as well. Supply chain activities are very dynamic and it involves the constant flow of data, information, product and funds in different stages. At every stage, the supply chain is connected through the flow of products, information and funds as it often flows 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 customerâ€™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
The consequences and impacts due to cargo crime which may affect the transportation industries seriously are append as below:
- Business operating on â€œjust-in-timeâ€ concept and 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;
- Lost cargoes reduce company profits exponentially by losses in sales opportunities caused by the criminal in selling the stolen goods;
- Illegal sale of stolen cargo will impact the sales 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. Hesseling (1994) discussed that criminals are normally limited in their mobility, adaptability and flexibility in relative to a particular crime, place, time and method. The crime opportunities are highly specific and concentrated in time and place. This is the impact 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. 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 criminalsâ€™ capability, the criminals will change their crime pattern in response to countermeasures implemented by the authorities or security professional.
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 in Malaysia, a new law was drafted to deal with hardcore criminals where built-in mechanism need to be introduce to stop abuses by the authorities (Wong-CW, 2013). A new law is required 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 revealed that 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).
2.5.7 Insider Job - The Culprit to Cargo Crime in Malaysia (Ching-EL, 2015)
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. Everyone knows that cargo crime has been around since the olden days where robbers attacked merchants on trading roads to pirates seizing ships at sea and bandits on horseback robbing 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. In this new era cargo criminals are becoming very professional and work with highly organized groups, targeting specific cargoes and employ people with the required skill. Some are specialists who can bring a different set of criminal skills to the group. These professional cargo criminal will setup their operations base at trucking 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.
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 conducted through structured interviews with security managers, transportation and logistics manager in Malaysia. Reliable source provide cargo crime statistics as Malaysia Police is unable to provide due to the confidentiality of the information. The volume and trend of cargo movement in Malaysia is being scrutinized and statistics are retrieved from statistics department. Local newspaper reports on cargo crime are also 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. The 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 â€˜Insiders Jobâ€™
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 insiderâ€™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 â€“ Police believe the pirates who attacked the Singapore owned oil tanker in the Straits of Malacca near Pulau Ketam may have had an insiderâ€™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. The Police believed the heist was pulled off possibly with an â€˜inside helpâ€™ from certain crew members. 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 â€“ This hijack on the road where thieves took away microchips RM800, 000 worth by driving off the truck in Bayan Lepas Penang, Malaysia. The truck was later recovered not far away with 12 out of 22 boxes reported missing. Police detained the driver to find out if it could have been an insider job (The Star, Dec, 2013). Eventually Police arrested two men believed to be involved in this case.
iii. October 9th, 2013 - Five men were charged at the Sessions Court in Shah Alam due to hijacking a trailer loaded with shampoo worth RM49, 000. Unemployed man; lorry drivers; security guard and lorry attendant pleaded not guilty to the armed gang robbery.
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. About 70 devices had been recovered.
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.
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). About two hours later, the truck was spotted and 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. 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.
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. When the driver passed the toll plaza, his vehicle was blocked by another lorry. Several men armed with â€˜parangâ€™ (long knife) confronted the driver and threatened to harm him if he resisted. Police have recorded statements from the driver and co-driver and believe the hijackers had inside help.
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. By the time the ship docked in the port of Yokohama at the end of January, the condoms had vanished.
x. September 29th, 2010 - Police suspected it was an inside job where RM4 million hard disk heist at KLIA cargo terminal where many of the employees at cargo complexes are old hands and they work with syndicate members, tipping them of valuable cargo in the premises. These thefts are the work of organized crime syndicates which form partnerships with cargo officials. 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.
Respondents were interviewed based on the structured questionnaire as shown in Figure 2.14. Many questions were raised and the questions that are related to insiderâ€™s job are questions No. 30, No. 31 and No. 32 as attached.
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