Loss Prevention & Security
Security and loss prevention is a three-legged stool. One is the use of technology and physical barriers. Another is hiring practices and the third is business processes.
Deborah Lockridge
Senior Editor
In the wake of 9/11, much attention has been devoted to thwarting efforts by terrorists to steal trucks or dangerous cargo to use as weapons of mass destruction.
But in the day-to-day, bread-and-butter world of loss prevention, the more immediate impact is the bottom line. And these threats aren't nearly as exciting: washing machines dented in transit, a temperature-controlled load ruined by a malfunctioning reefer unit, a load that comes up a few boxes short or a trailer full of cigarettes gone missing.
"We're in the business of hauling freight from Point A to Point B undamaged, un-lost and un-stolen," says Susan Chandler, executive director of the American Trucking Assns.' Safety & Loss Prevention Management Council. "Our industry's always been charged with protecting trucks and cargo, and that hasn't changed since 9/11."
Loss prevention is an across-the-board effort to reduce costs and claims from all types of sources, including accidents, improper loading/securement, leaky trailers and theft.
"A lot of the things we deal with are the more everyday claims," says Brian Orr, director of claims at U.S. Xpress. "Units that show up that are damaged in shipment, whether it be box damage or units that might get wet during transportation; units that show up with a shortage. Those are the majority of the day-to-day claims. We do occasionally have trailers stolen, but those are very much the exception."
A good loss-prevention program is not contained within a single department. It involves functions all across the company, including equipment spec'ing and maintenance, employee hiring and screening, driver training, safety efforts and more. Claims should be scrutinized for trends and ways to prevent them from happening in the future.
"You can prevent the shortage claim by making sure the product is properly counted before it goes on the trailer, or if it's a shipper load and count, you make sure that's on the bill of lading," Orr says. "If there was a wet damage claim filed, get any repairs made to prevent future loss."
When it comes to preventing theft, a multi-pronged approach is required, including working closely with law enforcement authorities.
"You really have to layer the security," says Norm Ellis, general manager of transportation and logistics at Qualcomm. In working closely with security-minded customers, he says, they have learned that security and loss prevention is a three-legged stool. One is the use of technology and physical barriers. Another is hiring practices. And the third is business processes - who has access to information such as manifests and driver's schedules, who has access to the yard. In many cases, inside information gets out, whether it's intentional or unintentional, and that's how thieves get tipped off.
"Loss prevention and security are pretty closely [related]," says Randy Price, head of security at Prime Inc. "If we're playing followup, then we're way behind the game. We try to be proactive in terms of loss prevention."
PHYSICAL SECURITY
Any security expert will tell you that the more physical barriers and deterrents you can put in front of a thief, the more likely they will give up or be caught before they can break in, whether it's your home, a bank or a trailer full of cargo. When it comes to protecting cargo from theft, these deterrents can include such things as yard fences, terminal lighting, seals and locks.
Prime, for instance, has trained its drivers about the importance of keeping a "chain of custody" record of the cargo through the use of seals.
"Before 9/11, if a seal was broken in transit, we were concerned about what was taken off," says Price. "Since 9/11, we also became concerned about what was put on" - perhaps poisoning the foodstuffs Prime's refrigerated trucks carry. So Prime emphasized continuous seal records, to make sure the seal was intact at the shipper and the same seal number was the one that arrived at the receiver. "That was really the only way to have full integrity of that load," he says.
There is a wide variety of locks available, with new ones being introduced all the time. There are air brake locks, trailer glad-hand locks, kingpin locks, door locks, padlocks, steering locks and high-tech electronic locks.
For instance, the Magtec vehicle anti-theft systems is a sophisticated electromechanical system that engages automatically when the engine is turned off. Once the engine is shut down, the system automatically interrupts vital circuits, guarding against unauthorized use. There's even an option to prevent unauthorized movement when the engine is running.
Kaba Mas last year started marketing to the transportation market after 15 years of designing safe locks - primarily electronic locks, for safes, vaults and automatic teller machines.
"A trailer or a container is really nothing more than a safe, other than the fact that it's moving," says Steve Pollack, marketing manager.
The company's first introduction was a mechanical lock that is permanently mounted on the back of the trailer. "This pretty much replaces the padlock that often is not used. It's very simple for the driver to open and lock, and to ensure that the trailer door was locked when it was closed," Pollack says.
Kaba Mas just introduced an electromechanical model that controls and audits entry into the trailer. Because many thefts are an inside job, you not only have to protect against the bad guy getting in, you also have to keep your employees accountable. The new G150 works in conjunction with an RFID seal. When a driver presents the proper credential to the seal, it fires the lock open, and the seal records the time and date.
"If you know your driver's making five deliveries, you can program his card to only open that door five times," Pollack says, "so there's no sixth time when he drives to his house and unloads something. You control it, then you audit it. Just the knowledge that you can be audited, it's like Big Brother's watching, and it's been proven to eliminate the temptation."
HOW TECHNOLOGY HELPS
High-tech locks are hardly the only technology that helps in loss prevention efforts. For instance, collision avoidance and rollover warning systems can help reduce costly crashes. Curb detection technology can help protect loads from damage caused by a trailer wheel running up on a curb and shifting the load.
Roadway is among fleets using a device that blows a foam into the crevices of a loaded trailer to keep the load from shifting. Trailer makers offer more and more options for load securement. RFID tags for tracking individual boxes and pallets within a load are being explored by shippers.
The industrywide popularity of vehicle communications and tracking systems has made it easier to locate a stolen vehicle. Some fleets even use them to monitor sensitive or high-value loads from origin to destination in real time. Many systems now offer "geofencing" options, which send an alert when the vehicle leaves a predetermined area.
Networkcar, a company that recently entered the heavy-duty market after working with tracking systems for automobile fleet owners, offers some features that especially address the theft issue.
"Typically people are purchasing the system for asset management, but one of the features is the ability to quickly recover the asset," says Ryan Glancy, director of marketing. For instance, he says, Networkcar updates the vehicle location every two minutes, a more frequent rate than many competitors.
In addition, Networkcar has a 24/7 call center. "Other solutions require the customer to find the location via their interface and work with the authorities," Glancy says. "A driver can call a 24/7 call center manned by our representatives, and they can work with the authorities to recover the vehicle." Glancy says the Networkcar solution is also priced lower than many other tracking systems. It has traditionally used terrestrial communications to track vehicles, but now offers a new satellite option as well.
Qualcomm, the pioneer of satellite tracking and communications systems, last year introduced a couple of new features aimed at reducing loss from theft.
One is a Vehicle Immobilization Device. This lets the driver place his truck in a "restricted mobility" mode. When used with the Wireless Panic Button - a wireless transmitter for use outside the vehicle - the VID feature increases the security of a truck's load and its driver. In addition to working with the VID, the Wireless Panic Button allows drivers to send emergency notifications with their current locations. Panic message alerts are simultaneously sent to the customer's dispatch and Qualcomm's Network Operations Center.
The other new option is called a Security Integration Package. This allows companies to customize the frequency of vehicle position reports based on commodity codes, high-risk areas or out-of-route violations.
Companies can receive an exception alert if a vehicle has made an unauthorized stop or trailer drop, turns off the truck's ignition prior to delivery or fails to report in to dispatch in keeping with the customer's set parameters. In addition, customized route alerts can be dispatched via pager or e-mail according to the severity of the exception.
"This software package was something we created as a result of direct customer inquiry to help them enhance monitoring of sensitive cargo, both high value and hazardous materials," says Norm Ellis, vice president and general manager of transportation and logistics. "Many of our customers are large and can't watch every single load as it moves through the supply chain. That's why it's exception-based."
Qualcomm is also working on the ability for fleets to send commands over the air to put the vehicle in a restricted mode remotely. "There is a very strong desire by our customers to be able to control the vehicle," Ellis says. "They do the best to hire the best people they can, but at the end of the day they want to have control of that asset."
Also down the road are devices that require a driver to enter an authorization code via a keypad before starting the vehicle.
The carriers most interested in these type of technologies, Ellis says, are those hauling especially dangerous materials, such as chlorine gas or munitions, as well as those hauling high-value commodities, whether it's pharmaceuticals, tobacco or electronics.
Today, vehicle tracking has gone beyond power units. Tracking of untethered trailers is a development that fleets may adopt primarily for operational reasons, but they can help in loss prevention, too.
U.S. Xpress has "seen some great successes," with its untethered trailer tracking system," Orr says. Recently, a driver was given permission to drop his trailer in a truckstop lot while his tractor was getting repairs. When the repairs were complete, the driver discovered the trailer was gone.
"Through the trailer tracking system we were able to locate the trailer - it was about 30 miles away," he says. "The police were there within about an hour of the driver reporting the incident, the product was still intact, and we were able to make an on-time delivery."
One of the big bugaboos that has so far prevented wide adoption of untethered trailer tracking has been how to keep the unit powered. Companies have been working on longer-life batteries and other solutions to this problem.
GeoLogic Solutions, formerly part of Aether Systems and the company that sells the MobileMax in-cab communications product, has turned to solar panels. Its new exterior-mounted version of TrailerMax uses a solar panel to provide essentially unlimited power. (The company also offers an interior-mounted "stealth" version of TrailerMax that is not solar-powered.)
"When a trailer is untethered, after 30 to 45 days, typical systems may lose power," says GeoLogic CEO John Lewis. "Oftentimes you don't know something's missing until quite a while after it's gone missing."
SkyBitz, which began selling its technology commercially in late 2002, has a different approach. It uses a patented "global location system" as opposed to the common global positioning system. GLS does not have a GPS chipset built into the communications system. Instead, SkyBitz' GLS wakes up and takes a snapshot of where it is in relation to the GPS satellite, and sends that information to the SkyBitz operations center. The location calculations are done there, rather than on board the truck communications system.
"That allows our device to go back to sleep after just 10 seconds," says Roni Taylor, executive vice president of marketing. "In comparison, if we used a GPS chipset, our radio would need to be on for 45 seconds up to maybe several minutes, and that would use up quite a bit of the battery life."
The SkyBitz unit uses eight double-A lithium batteries, which last two to three years and are relatively inexpensive and easy to replace.
SkyBitz also allows a customer to change reporting parameters over the air. If a trailer is believed to be stolen, the system can be put in panic mode, reporting every three minutes so law enforcement officials can track the stolen trailer. Or, a customer might want to specify reporting every hour rather than once a day for a particular high-value load. Another useful feature allows the trailer to be put in lockdown mode, with an alert sent if it starts moving.
The other big stumbling block to untethered trailer tracking has been the cost. "The cost of the units has to be such that it makes economic sense for carriers to install," says GeoLogic's Lewis. "You can't spend multiple thousands of dollars per trailer."
Today, however, both equipment costs and wireless communication costs have come down. Lewis estimates the average cost to install an untethered trailer tracking system is $500 or less, plus no more than $15 a month for communication costs.
"From both an asset utilization standpoint and from a safety, security and theft standpoint, trailer tracking is going to provide a lot of value to carriers," Lewis says, "particularly those with high value cargo or hazardous materials cargo."
Also expected to spur the adoption of untethered trailer tracking is demand from shippers and receivers. "We've seen several studies conducted that said shippers and consignees will give people more business if they have trailer tracking on their trailers," says Qualcomm's Lewis.
Qualcomm has offered tethered trailer tracking since 1989, but now offers T2 Untethered TrailerTracs. T2 automatically reports the location and status - unloaded or loaded, tethered or untethered - of trailers. It automatically issues alerts when trailers move inside or outside user-defined boundaries, or geofences.
Already, forward-looking companies such as Schneider and U.S. Xpress have gone with untethered trailer tracking systems.
"Schneider is putting it on 48,000 pieces of equipment," Lewis says. "They'll create a competitive advantage for themselves; they did it when they were our very first customer, and they changed the industry. The same thing will happen with untethered trailer tracking. Productivity and efficiency is improved, and you add security on top of that."
THE PEOPLE FACTOR
While seals, locks, load securement devices and high-tech tracking systems are all important tools in loss prevention, they do not replace perhaps the most important factor in a loss prevention program: screening and training employees.
"Those that have been successful in reducing claims have a continuing effort to train and instill in drivers" the techniques and importance of protecting the freight, says ATA's Chandler.
U.S. Xpress starts that training when drivers go through the orientation process and first get information on the company's policies and procedures. The message is reinforced in safety meetings, in the company newsletter, and via regular news updates that drivers access through a toll-free phone number. They work to instill messages such as: only drop your trailer in secured yards or drop centers; park in well-lit areas at truckstops; and lock the truck and take the keys with you when you leave it.
Cargo CATS, the cargo theft investigative unit of the Los Angeles County Sheriff's Department, offers security tips for drivers, such as being aware of possible surveillance of the truck, not picking up hitchhikers, not discussing cargo or destination with others, never leaving extra keys in the vehicle, and carrying information on the equipment they are driving (such as license numbers, trailer numbers, description of equipment) in case it is needed by law enforcement officials.
Drivers also should be trained to report any losses of cargo or equipment promptly, using a standard loss report form, according to John Albrecht, vice president of Transport Security Inc., Waconia, Minn. Unreported small losses can add up to a lot of money at the end of the year. Set up a system where drivers can contact a company official 24 hours a day in the case of theft.
In fact, the process of having drivers handle the freight properly really starts before orientation, during the hiring process. At Prime Inc., potential drivers are put through a criminal record check, references are called, employment records are checked. Certain items, such as a narcotics conviction at any time in the applicant's life, will flag an application so it's sent to the security department to make decisions on a case-by-case basis. Everyone who is hired is fingerprinted.
One East Coast trucking company hired a driver without checking his employment history and sent him to make a delivery to a client in the Midwest, according to Albrecht. Instead of making the delivery, the driver sold the cargo and tractor. It was later learned that the same driver had committed a similar theft the year before at another trucking company. A quick background check might have prevented the loss.
If you don't have the resources to do background checks yourself, you can hire a service to do it. Some companies also use personality and integrity testing.
It's also important to make employees accountable for their actions. At Watkins Motor Lines, employees (drivers or dock workers) who are at fault for damaged freight go through a progressive disciplinary process, starting out with verbal warnings, proceeding through written warnings and finally to termination, says Mike Jones, corporate claims prevention manager. "We document everything, including photos" of the damaged freight, he says. Independent contractors are held at least partially responsible financially for claims resulting from their actions.
GETTING STARTED
Not every trucking company can afford a department devoted to loss prevention, security and claims. But there are steps you can take to get started in the right direction.
Become active in related associations. At meetings of groups such as the Safety and Loss Prevention Management Council of the ATA or SMC3's Loss Prevention Conference, you'll get to hear real-life stories of how other fleets dealt with specific situations.
Put someone in your company in charge of loss prevention, starting with hiring practices, recommends Prime's Price. "Instead of just looking at an application and saying, 'You've driven for five years, cool, I'll put you to work,' call and make sure they've been where they say they've been," he says.
Especially if you're hauling hazardous materials or high-risk goods, do a formal risk assessment at least once a year. Loss prevention and security groups can offer advice on how to do this, or you can hire trained cargo security consultants to handle the task. You should look at things such as employee hiring and training practices; pre-trip cargo loading and storage security; en-route procedures such as stops and trailer drops; vehicle tracking and communications systems; what procedures to follow in case of a theft or other emergency.
"People who aren't really progressive and active in securing their fleets are going to become targets," says Qualcomm's Lewis. "The thieves know who's adopting untethered trailer tracking and they're saying, 'there's low hanging fruit out there, I'll go somewhere else.' "
But don't confuse the latest technology with a comprehensive loss prevention program.
"A lot of companies are out there looking for the big thing that will solve everything," says U.S. Xpress's Orr. "But a lot of it is basic fundamentals."
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