According to the New York Times, about 20 million containers move through the ports of Los Angeles and Long Beach California every year. They include 35 percent of all the imports coming into the United States from Asia.
This glut of goods presents an opportunity that is too good for one group to pass up: cargo thieves.
Supply Chain Brain reported that “Cargo thefts in the U.S. rose a troubling 9% year-over-year in 2023, with a further “significant” uptick in the latter half of the year, from around 60 in June to roughly 120 in each of July and August.” That is according to Overhaul, a supply chain risk management platform that tracks law enforcement data.
Overhaul’s data also finds that 48 percent of 2023 cargo theft nation-wide happened in California, but other top target areas include Dallas, Texas, Memphis, Tennessee, Chicago, Illinois, and Atlanta, Georgia. Reports of cargo theft have doubled since 2019.
Surging Theft Hits Union Pacific
Perhaps because they are the dominant rail operator in the Los Angeles Basin, Union Pacific has experienced a significant percentage of the cargo theft reported.
According to Union Pacific, “The thefts involve criminals trespassing on Union Pacific property, climbing aboard trains and breaking into customers’ containers loaded with cargo, packages and merchandise destined to warehouse facilities around the country.”
Rail thefts increased by 160 percent in L.A. County from 2021 to 2022, spiking in the lead up to the holiday shipping season. In October 2021, thefts from Union Pacific trains increased an unbelievable 356 percent compared to the same month one year earlier.
That increase in theft cost Union Pacific at least $5 million in one year according to the railroad company, with an average of 90 container thefts a day. Union Pacific Chairman, President, and CEO Lance Fritz said that while theft has long been a nuisance, the current situation is a draw for organized crime.
Profits v. Costs
The spike in thefts raises the question of how the containers are secured. According to many of the articles I read, the locks used to secure these containers put up little resistance.
“Anything that adds to that transportation cost, including security, is typically thought of as extraneous or unnecessary,” Tony Pelli, Practice Director, Security and Resilience at BSI, told Malia Wollan, the author of the New York Times article referenced earlier.
Most of the cargo is insured, and this creates an ironic problem.
It is cheaper for shippers and rail operators to file loss claims than it is to respond to automated signals that a lock has been broken or goods have been taken.
According to Freightwaves, some shipping companies (as opposed to shippers) are now suing the railroads over stolen goods. But the rail operations often don’t know when or where a theft has occurred. They simply find breached or empty containers once the train comes to stop.
Some point to Union Pacific’s record profitability in recent years, suggesting that the rail operator is abdicating their responsibility for securing equipment and property, but that is not a straightforward story either.
It is not a stretch to think that the 11 percent increase in 2021 was thanks to some sort of COVID-19 related irregularity, and the additional increase in 2022 was easily wiped out by 2023 and 2024.
Governor Newsom Rides the Rails
Cargo theft and the mess left behind has been a high visibility issue for the last couple of years, especially in Los Angeles. In early 2022, California Governor Gavin Newsome walked the tracks to see the mess for himself.
As reported by NBC in Los Angeles at the time, “A day after Gov. Gavin Newsom toured a stretch of Union Pacific rail tracks in Los Angeles littered with the remains of looted packages, L.A. County District Attorney George Gascón said the railroad doesn’t do enough to ensure its trains are adequately locked and protected.”
The area around the train tracks is littered with boxes, packing materials, and abandoned goods. Governor Gavin Newsom accurately described the situation by saying the tracks “look like a third-world country,” before helping a clean up crew with their work.
And he isn’t wrong. With all of the discarded packaging material and products scattered right around the tracks, it looks like the aftermath of a Christmas morning gift exchange from hell. Some even feel that all of the debris on and around the tracks are contributing to the risk of derailment.
“The break-ins provide a rare glimpse into a segment of America’s supply chain that relies on a private police system for security,” wrote Rachel Uranga, Andrew J. Campa and Richard Winton for the LA Times.
As visible as the problem of cargo theft is – especially in the Los Angeles area – it continues.
The coordination between public and private security forces need to be stronger to deal with the lure of an increased volume of consumer goods traveling via rail. It is simply too easy for individuals and groups of thieves to breach these containers – piling on added costs to what retailers and consumers must already bear.
