As freight transportation moves into the 21st century, margins are tighter than at any time in the history of the industry, insurance premiums are sky high, competition is fierce, and clients are demanding better service. And, it�s sad to say, some things never change: Lost cargo due to theft is the biggest problem facing the industry. All of these factors are at play during a time when new government regulations on securing cargo in the wake of September 11 seem imminent.
Today the industry must not only prevent stealing, but it has also been given the charge of preventing smuggling. Companies must find new, more effective ways to protect freight, yet existing margins make this a daunting task.
Shippers who are preparing themselves for the new government regulations for securing freight can use this situation as a springboard to gain a competitive edge in customer satisfaction. This is the type of action that will distinguish top-tier shippers from the rest of the pack. Those shippers willing to sacrifice long-term effectiveness for short-term savings will be left behind.
Available Options
The easiest option is to wait until Congress passes regulation before acting at all. This is not practical for two reasons: The longer companies wait to implement more secure methods of shipping, the harder the task becomes when mandated, and even when mandated, Congressional measures will probably do nothing to address the issue of theft.
Another option presented to the industry has been implementing X-ray equipment at points of embarkation. The equipment will analyze contents and report the presence of contraband, be it weapons, narcotics, humans, etc. But while X-ray equipment can serve as an effective means of discovering inconsistencies in cargo loads, there are several impediments to establishing such a system.
First, in most cases, it is cost-prohibitive. In order for an X-ray machine to perform at a level consistent with the industry�s needs, each machine would cost in excess of $2 million. Further, only one machine per location would be unworkable because each load needs to be scanned individually. Obviously, having to funnel all freight through one X-ray machine would dramatically slow the speed of transport at a time when the global economy is demanding even faster delivery times. Finally, even if X-ray technology were 100% effective and inexpensive, once inspected, cargo loads would still remain in a warehouse at an air or seaport, sometimes for more than 24 hours, where they would once again be vulnerable to tampering.
Another option some shippers have instituted is the use of black, garbage bag-type plastic in addition to shrink wrapping. The rationale behind use of black plastic is that it will prevent theft of valuable merchandise by covering up brand names stamped on boxes. Unfortunately, this has proven to be a completely ineffective in preventing tampering, since plastic is too easily ripped, and rips in plastic are too easily hidden.
Preventing Theft
Protective measures don�t have to be as expensive and extreme as X-ray machines. And while shrink wrap and black plastic bags are within our budgets � and comfort zones � they just don�t get the job done; however, there are basic solutions that can be implemented today that provide the necessary protection without annihilating your bottom line.
The most effective solution for shippers is to utilize freight coverings that fully encapsulate freight and are sealed with tamper-evident locks that, once broken, cannot be resealed. This method of protection prevents the removal and/or addition of contents to palletized freight loads. If the transporter seals freight effectively, other entities are prevented from accessing the contents, which is the goal of freight protection. Further, because locks utilized for this purpose are assigned unique serial numbers or codes, they cannot be replaced once they have been removed. Only U.S. Customs can replace a lock after inspecting the contents.
Insurance Costs
The use of fully encapsulating freight coverings with uniquely serialized locks has helped many shippers substantially reduce freight tampering and theft. And they are enjoying an additional long-term benefit: reduced insurance premiums.
High insurance costs are directly related to not just actual loss alone but to expected loss as well. All parties involved in the trans-portation of freight are forced to absorb the immediate financial hit of high insurance premiums. This includes the manufacturer as well as the shipper and the final recipient of the goods.
If the shipper or manufacturer � or both � assume the responsibility of protecting freight more effectively, they will reap the benefits. Simply being certain that your freight is going to arrive intact has huge psychological as well as significant financial advantages. And both parties will benefit from lower insurance costs. Furthermore, they will be the ones best positioned to comply with the new government security regulations. Short-term costs are an investment that generates savings, and in the end, ensures long-term survival for a business. Those shippers will become the industry leaders in the 21st century.
Jeff Garfinkle is the director of Freight Glove, a line of packaging innovations that help protect cargo from water damage, theft and tampering. He can be reached by email at jgarfinkle@freightglove.com. For more information, please call 212-946-6455 or visitwww.freightglove.com.
