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Cargo crime can be distinguished into 3 elements namely as lack of guardian, motivated perpetrator and transported goods (Sherman, Gartin & Buerger, 1989) and all these elements have being known to be present in all types of cargo crime.  The relationship among the 3 elements is very complex and changes in one of the element may prevent or defer crime from happening.  There are few different ideas, views or explanation related to the driving force and motivation that cause the crime to occur.  Crime can be linked to social process, human behaviour and other traits or factors where the pattern of crime can be of temporary and ecological factors (Parker, 1995).  The pattern of crime was expressed in a series of papers published by Felson and Clark (1998).  The volume and distribution of predatory crime against a person or a crime in which a criminal attempted to steal an object are closely related to the interaction of the 3 variables that is typical of a crime element found in America as illustrated in Figure 2.1.  The availability of suitable target for the criminal; the absence of guardian and the presence of motivated criminals are most likely causing the crime to take place (Teresa, 1999).

 

Figure 2.1 Routine Activities Theory: The Interaction of Three Factors

Source: Teresa, LaGrange (1999).  The Impact of Neighbourhoods, Schools, and Malls on the Spatial Distribution of Property Damage, Journal of Research in Crime and Delinquency, 36, 393 – 422.

The decision whether to commit crime is defined by analyzing type of crime, timing, location and the target.  Criminals will move away from committing the crime if they perceive it as difficult task or potentially too risky for them to commit it (Garry & Don, 2001).  There are proof or evidence showing jurisdiction with comparatively low incarceration rates will also experienced the highest crime rate (Rengert, 1989).  Crime can be avoided if potential targets are guarded securely, means or opportunities to commit crime are well controlled and potential targets are monitored closely.  This will convince potential criminals to abstain from committing the crime, delay their action or even avoid committing the crime.

2.2 The role of transportation with the supply chain

Chopra and Meindl (2010) explained that supply chain is the combination of all parties whether they involved, directly or indirectly meeting the customer requirement.  The supply chain consists of manufacturer, suppliers, transporters, warehouses, retailers and the customers themselves.  Within the organization itself like the manufacturer, supply chain needs to include different functions involved in accepting and meeting the request of customers.  These functions may include new product development, marketing, operations, distributions, finances and customer services (Chopra & Meindl, 2010).  The supply chain activities are vigorous process that needs the continuous flow of information, products and money in different stages.  At each stage, the supply chain is connected through the flow of products, information and money.  Very often these flows occur in both directions and may be managed by one of the stages or an intermediary.  The objective of every supply chain is to maximize the entire monetary worth generated.  The value a supply chain generates is the difference between what the final product is worth to the customer and the costs of the supply chain incurs in fulfilling the customer's request.

Logistics or transportation is one of the activities within the supply chain and it refers to the movement of product or cargo from one location to another as it makes its way from the beginning of a supply chain to the customer.  Logistics is an important supply chain initiator and drivers because nowadays products are rarely manufactured and consumed in the same location or country and the industry is very dependent on the transportation to transfer the products.  Logistics is a significant component of the costs incurred by most supply chains.  In fact, logistics activities represented more than 10 percent of the Malaysia GDP (Kamal, 2012). The role of logistics is even more significant in global supply chains.  Transportation allows products to move across global network of a company.  Similarly, global logistics allows retailers to sell products manufactured all over the world to be sold in different countries.  International trade is becoming a bigger part of the world's economic activity today.  The Malaysian logistics industry grew 10.3 per cent to RM129.93 billion in 2012, a marked increase from an estimated RM117.8 billion in 2011(Kamal, 2012).  External trade for Malaysia increases by 5.9 per cent to RM1.42 trillion in 2012, compared with RM1.24 trillion in 2011 (Kamal, 2012).  The growth of Malaysia external trade signifies the growth of the transportation and logistics industries.  Gopal (2012) revealed that Malaysia's strategic advantage and can be successful due to its geographical location and its focus on improving supply chain efficiency which also drives growth in the local logistics industry.  The Malaysian logistics industry is forecast to grow at a compound annual growth rate of 11.6 per cent and it will reach RM203.71 billion in 2016 (Gopal, 2012).

Any supply chain's success is closely linked to the appropriate use of a secured and safe transportation mode.  Supply chains also use responsive transportation for centralize inventories and operate with fewer facilities and this has created more activities within the logistics industries.  To understand logistics within the supply chain, it is important to consider the perspective of four mode of transportation namely locomotives/rail, trucks, airplane and ship.  Supply chain network is just like a combination of nodes and links where transportation starts and ends at nodes travelling on links.  Many modes of transportation and infrastructure such as seaports, roads, waterway and airports are very important and required both at the nodes and links.  Most transportation infrastructure is being managed as a good and effective facility throughout the world.  It is very important that infrastructure being managed in such a way that goods can be transported for one location to another location safely.   

Many companies have not invested to improve security beyond the minimum security standards due to challenges in justifying security investments (Pelleg, Gillai & Sept, 2006).  Many companies who are unable to see the benefits and advantages of enhanced security may not be able to justify an adequate business case or needs for security implementation.  That is because penalties for non-compliance with new security standards are minimal or non-existent and the benefits are difficult to measure (Unisys, 2005).  However, supply chain security management is not the culprit and it is believed that secured supply chains will definitely provide a good return on investment for companies investing in the initiatives.  There are researches being conducted that can quantify the tangible business benefits of investing in supply chain security.  The areas that are positively influenced by security efforts includes supply chain visibility (50% increase in access to supply chain data, 30% increase in timeliness of shipping information), improvement in inventory management (14% reduction in excess inventory, 12% increase in reported on-time delivery), more efficient customs clearance processes (49% reduction in cargo delays, 48% reduction in cargo inspection or examination) and in the long-term benefitting the customer relationship (20% increase in new customers and 26% reduction in customer attrition (Blanchard, 2006).  Global trade is no longer just about moving cargoes quickly and efficiently, it is also about moving cargoes safely.  As many as 25 different parties are involved in the global movement of just one container of cargo (Russell & Saldanha, 2003).  The supply chain encompasses different representatives of buyers, sellers, inland freighters, shipping companies, intermediaries, financiers, governments and the list goes on.  With so many different supply chain operators involved, the risk of supply chain disruption and vulnerability to external intervention would increase.  One supply chain partner may have excellent internal security efforts but if others within the supply chain are lacking adequate security efforts, or if there isn't sufficient coordination between supply chain partners, those efforts may not be beneficial at all (Sheffi, 2001).  Supply chain security management needs to be encompassing and supported by all players within the supply chain.  Long term cooperation with supply chain partners is a very important first step, but securing the supply chain will require an even greater commitment.  It is believed that supply chain security strategy which is cross-institutional and international, including all players of the supply chain is absolutely necessary and critical.

2.3 Logistics Landscape in Malaysia

Cargo transportation is a vital element in the economic prosperity of any country.  A large variety of products and cargo need to be efficiently transported within and among the consumer markets, industry sectors and international trade networks; while addressing as much adverse impacts as possible on congestion, environment and cargo security.  Bryan et al. (2007) argued that those involve in the planning of transportation must consider the different costs of road cargoes transportation which includes environmental, maintenance, security and congestion costs in order to formulate or offer practical solutions.  As the businesses increasingly adopt sophisticated supply chain management strategies, cargoes shipment decision-making process is becoming ever more complicated.  

Logistics forms the backbone of international trade and foundation of a competitive advantage in Malaysia. Detailed information is required related to existing strengths of logistics clusters that are available in Malaysia.  The map on critical logistics spot do provides an actual insight of Malaysia's key logistics areas based on survey conducted by shippers and users of these logistics areas (Chang, 2012).  In the survey, the current perception is measured based on:-

a) Sufficient and available land for logistics and warehouse space;

b) Presence of good transportation infrastructure (the main infrastructures like highway, sea ports, airports and rail);

c) Presence of good computer networking infrastructure (internet access and high speed internet connections);

d) Accessibility and connectivity of logistics locations (public transport, no traffic congestion, multi-modal access);

e) Support from local government and other government agencies;

f) Skilled and unskilled labour availability;

g) Availability of education in logistics (vocational training, universities courses and collaboration with universities and education institutes);

h) Presence of good transport security;

i) Presence of good warehouse security

With Asean Free Trade Area (AFTA) coming fully into effect soon, Malaysia is a preferred location for warehouse facilities and regional distribution centres, leveraging on its additional strength in connectivity and education system.  AFTA is a trade bloc agreement by the Association of Southeast Asian Nations (ASEAN) supporting local manufacturing in all ASEAN countries.  Companies dealing with transportation, warehousing and logistics have forecasted a double digit Compounded Annual Growth Rate (CAGR) in 4 years as illustrated in Table 2.1  Thus the logistics network will become very important element to support the business.  

Table 2.1 Compounded annual growth rate of major logistic company listed in Bursa Malaysia

Company Market Capital

(RM mil) Current P/E Forward P/E Dividend yield *Net margin 4-year CAGR Businesses

GDex 2,175 87.59 90 0.46% 7.5 – 15% 18% Courier services, logistics

Tiong Nam 543 8.02 - 1.94% 8.8- 12.1% 18.3% Warehousing, transportation, property

Tasco 388 12.8 - 2.32% 5.6 – 7.4% 6% Supply warehousing, haulage

Century Logistics 329.7 9.87 14.52 6.11% 11 – 14% 0.42% 3PL, oil & gas logistics, procurement logistics

Freight Management 266.6 11.63 12.20 3.23% 5 – 6% 11% Air, sea and rail freight; warehousing and distribution

Integrated Logistics 134.8 - - 4.58% Loss making in FY14 -30% Public bonded warehouse, freight forwarding, shipping, bonded trucking

Complete Logistics 111.5 9.85 - 3.26% 9 – 11.8% 2.45% Shipping, transportation, warehousing

*The spread in net margin is over a few years.

Note: Compounded annual growth rate (CAGR) is based on the companies' revenue from FY10 to FY14

Source: Bloomberg annual reports

The logistics industry is crucial for cost effective and efficient international trade and is therefore important for the competitive advantage of a country.  Due to Malaysia being situated at strategic regions, along one of the busiest shipping routes (the Straits of Malacca); Malaysia has successfully developed the sea ports and became an important transhipment hub for Asia which is facilitated through Port Klang and the Port of Tanjung Pelepas (PTP).  As for air freight, Kuala Lumpur International Airport (KLIA) caters the central region, Penang International Airport supporting the northern region, where major electronic manufacturing are based, and Senai Airport to cater the southern region.  These are key cargo airports, which are expected to be further developed into regional air cargo hubs over the coming years; supported by further development of the five economic growth corridors namely; Iskandar Malaysia in Southern Johor (IRDA), NCER - Northern Corridor Economic Region, ECER - East Coast Economic Region, SDC - Sabah Development Corridor and SCORE - Sarawak Corridor of Renewable Energy.

2.3.1 Cargo movement within the supply chain in Malaysia

The flowchart below Figure 2.3 & 2.4 illustrates the steps involved in the import and export of cargo in and out of Malaysia.  The procedure may vary slightly depending on whether the cargoes is cleared from the port or airport and sent to the customers' premises or from the port to a bonded area such as a bonded warehouse.

Figure 2.3: Cargo movement out of Malaysia

Figure 2.4: Cargo movement into Malaysia

2.3.2 Sea, road and air transportation in Malaysia

Sea and road transportation are being identified as the major mode of transportation for cargoes in Malaysia.  The following are the locations identified:

 5 major ports (Port Klang, Tanjung Pelepas, Penang, Kuantan and Bintulu) and 24 main ports;

 By 2020, sea ports are expected to handle 36 million TEUs;

 772 kilometres of North-South Expressway (NSE) which is the longest expressway staqrting from Bukit Kayu Hitam in Kedah near the Malaysian-Thai border to Johor Bahru at the southern tip of Peninsular Malaysia;

 East Coast Expressway (ECE) is an extension of Kuala Lumpur-Karak Expressway, which starts from Kuala Lumpur to Karak linking the West Coast and the East Coast of Peninsular Malaysia and this highway passes through 3 states namely Selangor, Pahang and Terengganu;

 ECE III is an extension of East Coast Expressway (ECE) II which is under construction. ECE III will connect Kg. Gemuroh (Kuala Terengganu) to Kota Bharu, Kelantan; ending at Pengkalan Kubor, with an approximate length of 171 km;

 Phase IV of the ECE runs to the south, connecting Kuantan, all the way, to Johor Bahru;

 Road transport: 187 haulier companies; 819 general cargo, 7,256 registered prime movers and 36,413 trailers.

Air transportation comprises of:

 Air cargo carriers and integrators;

 Airport and cargo terminal operators;

 Airport ground handlers;

 Freight forwarders and air cargo agents

 Airport regulators;

 International airports (KLIA, Bayan Lepas, Senai, Kuching and Kota Kinabalu) and domestic airports.

KLIA contributed about 74.8 per cent to the total cargo volume by air in 2011 and air freight is targeted to handle 2.4 million tons by 2020 (Chang, 2012).

In line with the growth of global mobility, the aviation industry in Malaysia has been growing at more than 10 per cent a year, leading to a positive outlook on air transport as reported in Malaysia DCA Annual report 2011 (Azharuddin, 2011).  Air transport is measured via mail, cargo, passengers and all forms of aircraft movement at airports.  In 2011, more than 32,000 metric tons of mails were sent by air, compared to 26,500 metric tons in 2010.  The volume of cargo handled at airports decreased by 2.09 percent in 2011 after recording a strong growth of 14.3 percent in 2010, noting a drop from 924,964 in 2010 to 905,654 metric tons in 2011.

2.3.3 Contribution of Logistics Industry in Malaysia

Transportation, storage and communication services contributed 8.5% Malaysia's GDP  in 2005 (Chang, 2012).  In order to provide more focus on logistics sector, the Government has set up the Malaysia Logistics Council (MLC) in February 2007.  This effort is to ensure there is as a focal point for coordination of all the strategies, policies, regulations and rules of the logistics sector.  There are more than 22,000 companies involved in the logistics industry in Malaysia at the moment in multiple areas of activities to enhance this industry (Chang, 2012).  

Furthermore, it is forecast to grow at a compound annual growth rate (CAGR) of 12.6 per cent and expected to reach RM196.5 billion in 2015 (Chang, 2012).  This is the result of activities of import and export, forwarding, shipping, airfreight, high technology and capital intensives project and business planned for the 10th Malaysia Plan and Economic Transformation Program (ETP).  The intention is to acts as a catalyst in creating opportunities for Malaysia's logistics market.  Foreign direct investments are likely to flow into the electronics and electrical, oil and gas, healthcare and solar-related industries.  Gopal (2012) reported in Malaysia Logistic Directory 2012/2013 (16th Edition) reported that Malaysia's advantage is due to its strategic location and focus on improving supply-chain efficiency which will also drive growth in the logistics industry.  He added that the logistics industry is poised to enjoy double-digit growth with a projected compounded annual growth rate of 11.6% to reach a staggering RM203.71 billion in 2016 in Malaysia.  The growth of external trade would spur growth of the transportation and logistics industry, especially for import and export forwarding, air freight and ocean freight related businesses.  Total trade for the first 11 months in 2011 was valued at RM1.156 trillion, up 8.7% from the corresponding period in 2010.  Exports rose by 9% to RM633.81 billion while imports expanded by 8.4% to RM521.81 billion, resulting in a trade surplus of RM112 billion during that same period.

In terms of cargo volumes, total cargo volume is expected to increase.  In 2011, sea freight was the most popular mode of transport for cargoes in Malaysia, handling more than 90% of total freight traffic.  Port Klang and Port of Tanjong Pelepas contributed 39.2% and 22.7% of total sea throughput in 2011, respectively.  The quality and availability of trade-related infrastructure such as roads, railways and ports play important roles in the logistics performance in Malaysia.  Similarly, efficient border management and coordination of transportation agencies involved at the border clearance are critical in supporting the growth.

Table 2.5: Number of Logistics Business Establishment in Malaysia

Logistics Sub Segments Number of Business Establishments

Road Freight Transport 1,898

Sea Freight Transport 306

Air Freight Transport 8

Towing and Pushing Services (Sea Ports) 37

Support Activities for Transportation 41

Courier Services 184

Note: Number of Business Establishments supporting logistics business in Malaysia

Adapted from Malaysia Logistic Directory 2012/13 (16th Edition) by Marshall Cavendish Business Information (Member of Times Publishing Group)

Prior to the liberalization of the container haulage industry, there were only five operators which resulted in insufficient capacity that cause port congestion and delays in delivery of containers to their destinations.  This prompted Malaysia government to introduce polices to liberalize the haulage industry.  The resulting competition is expected to bring about service rationalization, reduction in delays and rate adjustments thereby benefiting containers users as well as encouraging greater containerization in the future.  Table 2.5 from statistic department reported there are 2474 business entities which are supporting the logistics business in Malaysia.

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