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Transportation Holdups Are on the Rise
New York – As high-tech companies beef up security in their warehouses, thieves are hitting the most vulnerable link in the supply chain: transport.

Just last December, a tractor-trailer retrieving cargo from a Southern California airport was held up at gunpoint for about $5 million worth of hard drives. Eleven days earlier, the same trucking company carrying cargo for the same supplier was robbed of nearly $3 million worth of components, also at gunpoint.

On Jan. 1, Western Digital Corp., Irvine, Calif., suffered an armed robbery of one of its trucks, the most recent of a string of such assaults within six months, a spokesman said. The company lost about $6 million in hard drives, according to an unnamed source. Since mid-1995, “takeover robberies,” in which thieves confront truck drivers with weapons and commandeer their rigs or their high-tech loads, have been on the rise in Southern California, Miami, and New York/New Jersey area.

Law enforcement officials attribute the rise in transport crime to heavy security measures being taken at high-tech campuses. Those security efforts were prompted by reports of dozens of holdups at high-tech headquarters and warehouses.

The rise in transport crime has prompted OEMs, industry groups, and law enforcement organizations to share information and come up with preventative measures. Some of that shared information is often embarrassing to high-profile companies.

Ten high-tech firms sponsored a one-day “Cargo Theft Investigators: Meet and Greet: seminar in late February in Milpitas, Calif. At the seminar, security managers from 27 firms and 47 police agencies, including the New York and New Jersey Port Authority Police and the F.B.I., compared notes.

One of the speakers was Norm Claus, vice president of worldwide corporate real estate and services at Quantum Corp., Milpitas. In 1996, Quantum lost about $7.5 million in hard drives from an armed hijacking of a truck leaving Ireland’s Dublin Airport.

Where, once corporations were closemouthed about such thefts; they are beginning to share war stories, at least with each other. “We got tired of seeing the same crooks in so many different municipalities and by so many different agencies,’ said Kevin Fairchild, president of Cyte-M Investigations/Security Consulting, Santa Clara, Calif., who organized the conference. “They’re beginning to realize that your crook is my crook.”

Claus and other industry executives shared tips to prevent transport theft:
• Carefully investigate trucking companies you’re planning to use. Some OEMs are now hiring private investigators to handle that task.
• Keep company logos, names, and other identifying marks off boxes, cartons, and even packing tape.
• Since many thefts can be linked to employees working along different points of the supply chain, it is imperative that all new hires be thoroughly investigated.

Word of mouth among recent immigrants that an ounce of chips is worth $800 to $1,000 on the open market (an ounce of gold is worth about $360), along with press accounts of successful and lucrative heists, is encouraging to thieves and has contributed to the recent upswing in takeover robberies, Fairchild said.

Whereas other hoisted goods fetch only about 50% of their value on the “street,” components can fetch anywhere from 80% to 90% of their wholesale value on the “gray market,” according to Lt. Ed Petow, who is in charge of the Tactical Operations Multi-Agency Cargo Ant-Theft Squad of the Metro-Dade County Police in Florida.

Stolen components move quickly. “We are finding that some of the chips stolen one day appear 24 hours later in San Diego, 125 miles south of us, and then go on to Singapore, Hong Kong, Germany, Switzerland, Tokyo, England, and Holland. Some returned to the U.S. back in the Southern California area in less than a month,” said Lt. Jack Jordan, head of the Cargo Criminal Apprehension Team, Rancho Dominguez, Calif.

Fairchild, a former Santa Clara police officer, calls it the “electronic food chain,” whereby components stolen from the United States make their way back into the country in the gut of another manufacturer’s product. He said that chips have also ended up being sold back to the same company from which they were stolen.

In 1994, there were 33 grand thefts of electronics/computer cargo in Jordan’s jurisdiction, valued at $7,645,213 wholesale. That same year, there were 31 robberies valued at $7,651,873 wholesale. In 1996, there were 44 grand thefts reported, valued at $11,218,869, and 25 robberies valued at $9,794,345. This January alone, there were four grand thefts of electronics valued at $710,000 and a robbery valued at $58,500.

So far, the ability to recover stolen merchandise has been slight. Since January 1990, Los Angeles police have recovered less than $27 million wholesale in high-tech takeover robberies – including collusion thefts of trucks – and made less than 75 arrests, leading to only about three state or federal convictions, according to Jordan.

Petow attributes the upswing in high-tech crimes to an increased demand in Colombia, Venezuela, and Brazil for components. “The demand is higher. Yet the South and Central American market is several years behind us in computer technology. So there’s a high demand on the export market,” he said.

The fact that legitimate high-tech exports do flow to South America makes it that much easier for thieves to move stolen components there unimpeded. “That those countries are trading partners with the United States makes u particularly attractive, because the infrastructure is already there,” Petow said.

Other hot spots are beginning to appear on the map. One is Mexico, where the National Cargo Security Council estimates that about 15 truck hijacks occur a week. Many manufacturers now hire armed guards to ride shotgun alongside the trucks.

Crime Numbers Elusive
It is almost as hard to collect statistics on the exact extent of high-tech crime as it is to recover the stolen property itself.

The Technology Theft Prevention Foundation puts the crime figure at $30 billion a year, but that includes pilferage, fraud, and theft of intellectual property. The Chubb Group of insurance Companies has paid out $44 million between 1991 and 1995 in theft claims to U.S. high-tech firms, but that represents just one-third of the actual losses, Chub estimates.

The National Cargo Security Council puts cargo theft in the United States at about $10 billion a year, but that includes all products. “That $10 billion figure is just based on a scientific guesstimate,” said Wallace Appelson, vice president and general manager of TM Claims Services, New York. “Not everyone reports thefts. There’s very little in the way of hard data for specific figures given.”

“Some people inflate the statistics if they want to sell you security. Some deflate it if they don’t want your insurance company to know there’s been another theft,” said Lt. Jack Jordon of the Cargo Criminal Apprehension Team, Rancho Dominguez, Calif. “There’s a need for separate reporting for armed robbery and theft,” he added. “Until there’s mandatory uniform reporting and a cargo crime central database, it will be impossible to quantify the dollar amount stolen every year in the U.S.”