**3.1. Usage of official macro statistics**

The usage of general statistics (mainly different types of criminal statistics) can provide a hint about the general criminal threat in a country or local area [9]. This fact is well known. Sometime is the relationship between reported crimes and public fear of crime direct whiles other times more indirect. Thus, it is possible that inverts that relationship and use macro level statistics in order to hint criminal hotspots in general. Important to remember is that this only provides a general hint about criminal threats and this clearly limited the possibility to draw far-fetched conclusions unless more detailed data is added. A good indicator for criminal threats and common distrust in the society is level of corruption in a country [10]. The higher level of corruption, the higher is the distrust in the society and this may lead to a lower will to report crimes to the police. This is only a weak indicator.

A good indicator of the violence present in a society is the number of homicides per 100 000 citizens (lower number means safer). The average homicides rate 2007 in EU which is 1.4 in general but increases to 1.9 in capital cities [11]. This indicates that the country sides are safer than bigger cities, and the long term trend is a lower average homicides rate, which means a safer society (relatively). Other good indicators of criminal threats are the reported total number of crimes as well as the reported number of thefts and robberies. Risk rating (both relative and absolute) are good indicators on more transport related crimes. It is important to remember that each country may (are likely to) have different definition of crimes and guidelines for data collection [9].

The general criminal trend in EU is that crime is declining from the pike around 1995. According to [11] have their being an increase in reported crimes types violent crime (up 3%), drug trafficking and robbery (both up 1%) in the period 1998-2007. During the same period has seen a decrease in motor vehicle crimes (down 7%) and domestic burglary (down 3%). There seems to be a time difference between countries in the trend but nevertheless the declining in reported crimes and even criminal patterns are surprisingly similar between member states [12]. The reason for this decline is according [12] the "*changing demographics, among other factors, have played a causal role in the decreases in crime across the Western world. Since the bulk of common crimes are committed by young males".* There is also a suggestion that the better policing and/or more severe sentencing contributes to the declining criminal trend [12]. The different official statistics supports these conclusions.

#### **3.2. Shrinkage and theft**

158 Risk Management – Current Issues and Challenges

from consignor to consignee in a supply chain, through nodes and links. This means the transport network only physically integrates the supply chain with the fulfilment of its transport demands [5]. Therefore, several different supply chains can be present at the same time and the same place in the transport network. This indicates that the relationship between supply chains and transport activities would be better described with complexity theory, especially if the interactions between components are the object of the research [3].

Looking at transport from a system perspective, we find that logistics is made up of different levels, infrastructure, resources and material known as the three levels of logistics [6]. A logistics system consists of links and nodes, where nodes are geographically fixed points such as factories and terminals, while the links are the elements connecting the nodes, i.e., the modes of conveyance. The flow of materials is the first level of the system, because it is the reason for the system's existence. Moving material from one place to another requires a flow of movable resources such as Lorries, trains, airplanes, and ships. These movable

The complexity in logistics can be explained by displaying the four flows always involved in logistics activities. The flows of material and resources are mentioned already. These two flows represent the "physical" part of logistics, but the other two flows, monetary stream and flow of information, are just as necessary to make the system work [6]. The four flows of logistics need geographical fixed constructions and infrastructure to fulfil the scope of logistics. Some of the infrastructure is owned and used exclusively by one company while some is co-owned or owned by governments. The four flows of logistics and the necessary

The cargo thief aims to remove goods from the goods flow by attacking the movement of resources and/or the infrastructure it uses. A potential perpetrator can also utilize the information flow in order to better plan the theft of goods or commit a fraud which targets the flow of capital. This paper uses primary the three elements, flow of goods, movement of resources and infrastructure of the five needs for logistics fulfilments. The frame of reference uses the routine activity theory from criminology to explain the interaction between the transport network and potential perpetrators, where the theft opportunity is determent by each unique configuration of the five needs for logistics fulfilments and then exploited by a

The usage of general statistics (mainly different types of criminal statistics) can provide a hint about the general criminal threat in a country or local area [9]. This fact is well known. Sometime is the relationship between reported crimes and public fear of crime direct whiles other times more indirect. Thus, it is possible that inverts that relationship and use macro level statistics in order to hint criminal hotspots in general. Important to remember is that this only provides a general hint about criminal threats and this clearly limited the

resources need infrastructure like roads, harbours, airports, and terminals [7, 8].

infrastructure are the five needs for logistics fulfilment [9].

potential perpetrator.

**3. Threats to supply chains** 

**3.1. Usage of official macro statistics** 

The term inventory shrinkage is the loss of products between the point of manufacturing or purchase from supplier and the point of sale. According to [13], the average shrinkage rate is 1,8 percent of total annual sales. This means a total loss of \$33,21 billion annually in the U.S. The report points out four major sources of shrinkage: employee theft, shoplifting, administrative error, and vendor fraud. Therefore, three of four sources for shrinkage are criminal actions. The losses in the European fast moving consumer goods are for 26 percent in manufacturing, 8 percent in distribution, and 66 percent in retail [14]. Shrinkage during distribution/transport is approximately 0,14 percent of annual sales for all types of products. According [15] is the worldwide loss ratio as 0,025 percent of the total revenue (\$307 billion revenue and \$77 million in losses). Benchmark participant loss rates varied from 0,0038 percent to 0,25 percent of total revenue. The three different reports [13, 14, 15] indicate that the annual shrinkage during distribution/transport would be 0,025 percent to 0,14 percent of annual sales. This loss ratio is compared with the loss ratio for retailers (1,75 percent) and manufacturers (0,56 percent) [14].

There is a significant problem with the theft of cargo worldwide. It is estimated that theft represents a loss of at least US\$10 billion per year in the United States and US\$30 billion worldwide [16]. The value of cargo theft for the European Union is estimated to be €8.2 billion annually, an average value of € 6.72 per trip [17]. Gathering accurate numbers for cargo theft losses is difficult or impossible in many cases, due to limited reporting by the transport industry and the lack of a national law enforcement system requiring reporting and tracking uniformity [18]. Despite these figures, cargo theft generally has a low priority status in most countries and is often perceived largely as the cost of doing business.

Supply Chain Security – Threats and Solutions 161

Fake

accident Deception

threat/risk matrix points out the most dangerous location to be *near end location* or at *insecure* 

Theft of vehicle

Fake police

*parking* depending on which modus operandi is considered most threatening.

Theft from vehicle

Load point 2 3 2 3 1 1 4 Driving 4 1 1 1 4 4 2

parking 2 4 4 4 3 1 2

parking 2 2 3 3 1 1 2

Location 4 3 3 4 3 1 3

point 2 3 2 3 1 1 4

be external to and internally involved in the supply and/or the transport chain.

The word "terror" is a Latin word meaning "to frighten." Consequently, a terrorist is a person that intends to frighten others through fear. The term terrorist/terrorism is itself controversial because its key signature is political and it has been used by states to illegitimatize political opponents. This leads to a vindication of the state's own use of terror against its opponents [27]. The lack of a universal definition of consequence of this is best explained with the cynical comment "*that one state's terrorist is another state's freedom fighter*". Regardless, terrorism is definition by [28] as, "*Terrorism is not an ideology or movement, but a tactic or a method for attaining political goals.* Terrorism is one of the major obstacles for

**Table 1.** Threat/risk matrix, road transport using Eurowatch data 2002-2009, 4 represents the highest

The greatest source of risk for businesses is trusted insiders [21]. Some authors consider insiders to be involved in approximately 60 percent of all losses [22]. According to [23] is 65 percent of all "whole load losses" related to the use of inside information. Others claim there are no reliable figures [24]. This is interesting when considering the fact that most countermeasures are implemented to reduce external theft [25]. An internal perpetrator acts not randomly or in an unstructured way, but more as a response to social and environmental factors present in the work environment [22]. According [26] is the complexity around insiders and drivers expressed: *"Some estimates indicate a high level of driver involvement, but drivers are possibly the weakest link in the security of the supply chain. They are also the first line of defence and there is a need to train and educate them on cargo crime and personal safety issues whilst on the road."* This leads to that the potential perpetrator both can

Hijack Robbery

Insecure

Secure

Near end

Unload

risk [23]

**3.3. Terrorism** 

meaningful international countermeasures.

A problem related to cargo theft is the theft of vehicles and the lorry-driver's private property. There are many reasons behind a truck theft, but they can be described basically with three main characteristics - value, cargo carrying ability, and valuable documents [3]. *The first characteristic,* value, represents the truck's value as all objects and can be sold and exchanged for money. *The second characteristic, carrying ability,* refers to the general propose of a truck. The vehicle and its load were targeted in 63 percent of the attacks [19]. The truck can be stolen with the current load where the goods are the desirable object and the truck is only the simplest method to move the goods to a warehouse or to another truck for further movement. A truck also can be stolen for other criminal activities.

*The third characteristic* of theft problems toward freight is the attack for the lorry-driver's private property or other types of valuable documents such as credit cards, mobile phones, and digital cameras stored in the truck during transport. According [19], 17 percent of all drivers suffered an attack during the past five years, 30 percent were attacked more than once. Of all drivers attacked, 21 percent reported they were physically assaulted during the attack [19]. This type of attack represents a considerable amount of the total, but nothing was stolen in 38 percent of attacks against trucks [20]. However, even if nothing was stolen it was still a crime against a part of the transport network and therefore shall be seen as an antagonistic threat. 70 percent of attacks against road transports occur between 22:00 in the evening and 06:00 in the morning [19]. Therefore, it is possible to state that time of day plays an important role in antagonistic threats. According [19], the direct cost for an attack is approximately €25000 per attack, including theft of vehicles, load and the driver's personal belongings.

Regardless of which of the three characteristics of theft problems the motivated perpetrator uses, there is a number of commonly defined modus operandi or methods to attack trucks. These different modus operandi are used differently depending on where the attack is executed. The different locations are described in terms of different steps in a road transport from consignor to consignee, which starts with loading the goods and ends when unloading them. Eurowatch has developed a threat/risk matrix based on the data on cargo theft in road transports over a seven-year period [23]. The matrix presented in Table 1 maps modus operandi and location of attacks against each other.

A quick analysis of the matrix points out some obvious relationships. The method *fake accident* is best suited to deceive a truck driver to stop during driving and then conversion to a hijack. The same course of events can be created with the use of *fake police* tactics. The


threat/risk matrix points out the most dangerous location to be *near end location* or at *insecure parking* depending on which modus operandi is considered most threatening.

**Table 1.** Threat/risk matrix, road transport using Eurowatch data 2002-2009, 4 represents the highest risk [23]

The greatest source of risk for businesses is trusted insiders [21]. Some authors consider insiders to be involved in approximately 60 percent of all losses [22]. According to [23] is 65 percent of all "whole load losses" related to the use of inside information. Others claim there are no reliable figures [24]. This is interesting when considering the fact that most countermeasures are implemented to reduce external theft [25]. An internal perpetrator acts not randomly or in an unstructured way, but more as a response to social and environmental factors present in the work environment [22]. According [26] is the complexity around insiders and drivers expressed: *"Some estimates indicate a high level of driver involvement, but drivers are possibly the weakest link in the security of the supply chain. They are also the first line of defence and there is a need to train and educate them on cargo crime and personal safety issues whilst on the road."* This leads to that the potential perpetrator both can be external to and internally involved in the supply and/or the transport chain.
