3. On-Site and Interview Findings
On-Site Visits
On-site visits were conducted at the Port of New York/New Jersey and the Port of Boston
in order to understand both crime-related problems and countermeasures and best practices
in place at these locations.
Port of New York/New Jersey
Description of Site
- Kennedy International Airport and Surrounding Areas
First, as part of this study, the Port Authority police led
Volpe personnel on a tour of the Port of New York/New Jersey. Activities included: a
general tour of the John F. Kennedy International Airport (JFK) cargo handling areas; a
tour of the state-of-the-art Japan Air Line cargo facility; overflight of the port of New
York; and a tour of Springfield Gardens (an area outside of JFK populated by warehouses
and cargo handling entities).
The port supports a wide diversity of business operations such as cargo storage and
cargo exchange and transfer. The cargo operation at Kennedy International Airport
encompasses 58 individual cargo carrier tenants. These carriers handle 197 million tons
($92 billion)26 of cargo annually and vary widely in infrastructure and makeup. Carriers range from large companies with dedicated air cargo fleets (such as UPS), carriers moving cargo carried in the holds of major passenger liners (combination or "combi"
aircraft), and cargo carried by major passenger and cargo carriers that is handled by
small cargo carriers that do not operate air fleets. Each carrier is independent from the
others and operates under a lease arrangement with the Port Authority. Individual
facilities span from large, automated, secure, state-of-the-art facilities such as the
Japan Air Line cargo terminal, to small operations consisting of an office and a single
bay loading dock where all cargo is hand manipulated. Each carrier is responsible for its
own security program; therefore, security at each carrier varies widely. The majority of
personnel working at the major cargo terminals are employees of stevedoring firms.
The Port Authority maintains a police force with jurisdiction over all port facilities
in the metropolitan area. Port Authority police have state police authority, deputy U.S.
Marshall authority, and joint jurisdiction in both New York and New Jersey. The Port
Authority Police recommend a twenty-four- (24-) point security program27 to be followed by the tenants at all three metropolitan airports.
- Port Newark
Second, a tour of the Port Newark container terminal was conducted. The Port Newark
facility is a marine container terminal located in the southern harbor adjacent to Newark
airport. Containers are typically staged at the terminal awaiting the trucker for pick-up
and ultimate delivery to the consignee.
Theft at Terminal
Although the Port Authority police maintain an active and aggressive program that
addresses cargo theft, they noted that they are rarely informed of cargo theft occurrences
and often information, when it is forthcoming, is not received in a timely manner. The
immediate reporting of a theft, suspected theft, or any incident to cargo security
personnel, company management, or law enforcement enables quick investigation and offers
the best possibility for apprehension and/or recovery. Among the many reasons for lack of
timely and complete information are the following:
The vast majority of air and marine cargo transiting port facilities are not physically
inspected to verify count or content. Due to the nature of cargo transportation, many
losses go unnoticed until final delivery to the consignee; by that time backtracking the
exact point where the loss occurred is difficult or impossible. An example was given of a
leased container that returned to a U.S. port from overseas. The container was supposed to
have been empty and placed in appropriate area at the facility. When the container was
later opened to be loaded, it was discovered that it contained a large wooden crate. Upon
further inspection the crate was found to hold a coffin containing the body of an adult
male.
Cargo theft and even sustained systematic pilferage can have detrimental impact upon the
reputation of involved businesses and an entire port in general. This fact contributes to
the reluctance to report any loss.
The manner in which shipments are insured plays a role in the reluctance to report
theft. Most shippers are self-insured up to certain limits; for example, one corporation
interviewed identified its self-insurance limit as $500,000. Losses that fall within the
self-insured limits are paid, factored into the "cost of doing business," and
passed on to the consumer. To report such incidents requires employee time and, therefore,
costs.
Publicly reporting theft can have an adverse impact on the reputation of a company,
facility and port, which, in turn, can affect rates charged for cargo insurance.
Another reason for hesitancy in reporting theft is the lack of substantial outcome.
Several examples were given where individuals were apprehended and prosecuted for cargo
theft at an airport shipper facility. As cargo theft is usually viewed as a
"victimless crime", these actions resulted in minimal fines, minimal
incarceration, or dismissal.
There is no requirement to provide police reports due to theft in order to claim the
loss for tax purposes. Losses are factored into any number of accounting practices, and
there is no Federal tax accounting requirement to classify cargo theft loss in such a
manner that it could be retrieved for justification or data collection purposes.
Employees, with employee cooperation or with "inside" information, perpetrate
the majority of cargo theft in the Port of New York/New Jersey.
The Port Of Boston (Massport)
Description of Site
- Logan International Airport
The cargo operations at Logan are conducted through eight dedicated cargo shippers with
the remainder of cargo carried on board nearly thirty passenger aircraft lines that
service the airport. In 1997 Logan handled 23.6 million passengers and 744 million pounds
of cargo. Of the cargo handled, the majority is express small package shipments, followed
by cargo shipments and mail. Of this total, approximately 190 million pounds is
international cargo.28 As with Kennedy International Airport, the physical security of the airport and access into the airport is very well controlled, making the possibility of theft perpetrated by non-employees very remote. Each cargo carrier is responsible for its
own security forces, based upon FAA requirements,29 and overall security is provided by the Port Authority. With the exception of passenger security screening personnel, all security personnel are employees of each particular shipper and not contracted. Massport’s
security force is made up of Massachusetts State Police officers.
- Conley Marine Terminal
The Conley Terminal is a "rolling" container terminal (i.e., all containers
awaiting shipment are mounted on trailers awaiting pick for over the road transit or
delivery to the dock for loading on board a ship). As with Logan airport, access into the
Conley terminal is tightly controlled.
Theft at Terminal
The following issues were noted regarding the nature and levels of cargo-related crime
at the facility:
Similar to the findings from the New York facility, the Massport police are not advised
of all instances of theft that occur. They are usually made aware as a result of direct
observation or when a claim has been made to an underwriter by the shipper.
Employees, with employee cooperation or with "inside" information perpetrate
the majority of theft that does occur at Massport.
The majority of cargo entering Conley Terminal is pre-cleared by Customs EDI procedures.
Estimates of the percentage of containers actually inspected at by Customs (5 percent or
less) are consistent with the GAO30 report and
the estimates received in the Port of New York and New Jersey. The average layover time for
an inbound container awaiting pickup from the terminal is less than two days; however, examples were given of some cargoes being expedited (i.e., containers listed as containing "Holland tulips") so that customs processing and transport out of the terminal onto the highways can be assured
within two hours of the ship’s arrival at the dock. According to Massport officials,
similar percentages (less than 2 percent of cargo actually inspected) are estimated for
air cargo inspection. Layover time is significant in minimizing theft, which generally
occurs when cargo is sitting idle.
Domestic and international mail accounts for 143.5 million pounds of cargo shipped
through Logan International Airport.31 All mail is carried in the holds of passenger
aircraft. Inbound mail is handled by the individual airlines and transported to a central
U.S. Postal service terminal. As part of the Postal Service security32 restrictions
currently in place packages are limited to specific weight and size restrictions, however
none of the mail is subjected to scanning. Lack of scanning is significant when
considering issues such as smuggling.
Interviews
The following issues are the result of telephone and in person interviews with state
and Federal law enforcement, carrier, trade association, and terminal operations
personnel. Due to the sensitive nature of the subject matter, the following information
was discussed only on the condition that sources were to remain anonymous.
Just-in-Time
Recent improvements in transportation and communication methods combined with financial
pressures have resulted in the "just-in-time" concept which has reduced
industry’s reliance on the warehousing of stock and finished products. Today’s
warehouses are on rails, wheels, afloat, in the air, or awaiting transport by any of these
modes. Intermodal transportation can be thought of as a "warehouse on wheels"
with its own set of security needs. "Just-in-time" manufacturing increases the
need for adequate security levels for shipments. Since, when utilizing such a system,
there are no warehouses to backfill a stolen shipment, replacement may require weeks or
months, thus amplifying the effect of a loss on the consignee.
Employee Screening
A common problem cited by the majority of individuals interviewed is the lack of
adequate background investigations and standards for all personnel handling cargo and
employed in ports and terminals. Although new FAA requirements for employee screening33 do
address specific criminal activities, other agency requirements do not, are non-existent,
or are under judicial restraint. In all cases they vary by mode and are not uniform or
comprehensive. Related to this issue is the lack of a uniform identification criterion and
scheme. In many cases there are questionable individuals (known thieves, illegal aliens,
etc.) employed in cargo handling positions.
A problem common to all ports lies in the identification and qualification of personnel
employed therein and given access to port areas. There is not a standard criterion for
background examination of employees for purposes of access or even for employment as a
security official. Having a felony theft conviction in ones background might keep one out
of specific transportation modes but it may not exclude one from employment in other
facets of the transportation industry where access may be as equally critical. In many
cases, mere possession of a commercial driver’s license opens the gate to intermodal
terminals, and organized crime entities have the capability of easily forging such
credentials.
Lack of Accountability
Several entities contacted state that the root causes of the problem of cargo theft is
the lack of accountability for losses, and the minimal impact to the shipper in the event
of loss. Knowing and apprehending insiders does not necessarily yield a positive outcome.
Several instances were given where employees were apprehended and successfully prosecuted
for cargo theft, only to receive minimal or no punishment and/or be returned to their
previous positions (not all with the same shipper at a given facility but they returned to
similar positions nonetheless). The reasons for this are threefold:
Cargo theft is not in the public spotlight (regarded as a victimless crime) and
therefore it does not carry severe sentencing, nor is it high on the list of criminal
activity in the courts.
Labor and civil law provisions exist that can be used to challenge port authority
attempts to refuse individuals’ employment based on a cargo theft conviction.
Many organizations do not include theft as a disqualifying element of a person’s
record for employment purposes.
Major investigations have been conducted, some involving sting operations, and others
where government and or state agents established fencing operations in order to recover
merchandise and gain investigative insight. These operations recovered large quantities of
high-value items (electronics, credit cards, weapons, computer components,
pharmaceuticals, etc.). In all cases discussed, the majority of perpetrators arrested were
employees of the facility where the theft occurred and all thefts were the result of
inside operatives or information.
Pilferage
The most common form of cargo theft is pilferage, which is most often perpetrated by
employees. Figure 3 shows confiscated merchandise that reflects the ease with which large
quantities of cargo can be removed from a container.
Figure 3: Cargo Pilfered from a Container
The practice of handlers pilfering cargo has long been an institution in the shipping
industry. Manufacturers have been known to over-ship cargo to allow for the
"shrinkage" that occurs due to pilferage. In the case of containerized cargo,
access is achieved through the following methods:
After offloading from the ship while the container is idle awaiting pickup/delivery in
the terminal yard.
While the cargo is undergoing consolidation or de-consolidation either at the terminal
or an off-site freight forwarder.
Anywhere along a trucking or rail route where the shipment is idle.
Instances occur in which high-value, high-technology equipment is deliberately
"sidetracked" inside a carrier’s terminal by employees. When it fails to
arrive at the consignee, it is treated as a loss. After a period of time it legally
belongs to the carrier; and, after appropriate arrangements are made between the
perpetrators and associated liquidators, the shipment is sold at a fraction of its value.
The value of computer hardware and components makes such shipments an attractive target
of theft. Exchanges now take place where cocaine shipments bound for the United States are
traded for computer chips stolen from cargo shipments. In this scenario, both commodities
have the capacity for significant increase in value as they are passed along. Further, as
an alternate method to shipping drug profits (that are in the form of cash) out of the
United States, those profits are invested in stolen cargo purchased at a fraction of its
value (computer hardware, memory chips, etc.) and shipped overseas as legitimate cargo,
thus maximizing the capital generation of illicit activity.
One means for pilfering cargo is by removing the contents of one container and placing
all or part of the contents into an adjacent container (for example, one that is empty or
carrying low value cargo) that will not be monitored. Thieves have devised several ways of
gaining access into shipping containers, some of which involve removal and replacement of
all or part of the door hardware fasteners so that the seals and locks will not appear to
have been disturbed. Once transferred, the perpetrator can arrange for removal and
delivery of the stolen goods with minimal risk.
One example of the ability to remove cargo without detection is shown in Figure 4.
First, a container is inspected and original seals are attached to container handles and
are secured.
Figure 4: Sealed Container
Second, at some point during the shipment, a "zip" gun is used to shear the
back of the rivet that attaches the handle to the guide arm mechanism, allowing the doors
to be opened without disturbing the integrity of the original seals. See Figure 5.
Figure 5: Compromised Seal
Finally, a second rivet, which was previously threaded, is then used to secure the
handle and arm back together again without the appearance of having been compromised. See
Figure 6.
Figure 6: Rivets
In addition, employees of shipping companies with access to EDI applications have been
able to trace shipments from point of origination to delivery at the terminal in order to
arrange theft of the cargo. In some examples, current employees, using access codes that
were either fabricated or belonged to other co-workers, conducted the thefts. In other
cases former employees, using their old access numbers accessed shipment information via
the Internet.
Deliberate misdirection of high-value cargo, to an outside, non-secured, general
storage area on the tarmac or in the container yard is one method of setting up a shipment
theft. Once it is misplaced, the cargo is easily transferred into other containers for
delivery out of the terminal. In one instance, this cargo consisted of a large shipment of
commercial grade 9mm automatic pistols. Some of those pistols were recovered by local
Federal and law enforcement agencies (as shown in Figure 7). However, many of these
weapons were never recovered.
Figure 7: Recovered Weapons
- Port of New York/New Jersey statistics for 1997. [ Back ]
- Caron, Robert M., Detective Lieutenant and Molina, Michael, Detective, 24 Point Security Program, Port Authority of New York Police Department, JFK International Airport, 1997. [ Back ]
- Boston Logan International Airport Monthly Airport Traffic Summary November 1997. [ Back ]
- 14 CFR 107. [ Back ]
- Terrorism and Drug Trafficking: Responsibilities for Developing Explosives and Narcotics Detection Technologies (Briefing Report), GAO/NSIAD-97-95, April 1997. [ Back ]
- Boston Logan International Airport Monthly Airport Traffic Summary November 1997. [ Back ]
- FAA target mail. [ Back ]
- 14 CFR 108.31. [ Back ]
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