Fraudulent Pick-up on the Rise - Who’s Got Your Product?



Andrea Charles
12/30/2012

Fraudulent pick-up is on the rise in the Pharma industry, due to thieves employing more sophisticated techniques and methods to compromise the supply chain. The Pharma industry must respond to ensure the security and safety of their products during distribution and help avoid theft or diversion.

In a recent interview with Cold Chain IQ, Alan Spear, Director of Cargo Security Loss Control for the USA and Canada at AIG, described the increase in fraudulent-pick up as the most dramatic change he had witnessed in supply chain security. "It’s a very rapidly growing trend all over the world," he said to www.coldchainiq.com.

Sophisticated security breaches

Spear noted that the problem has evolved over the last few years, as thieves have adapted to security measures implemented by the pharmaceutical industry and their distributors.

He said: "I think I saw my case of fraudulent pick-up probably ten years ago, where a driver pretended to be the correct driver and picked up a load of cargo and disappeared with it, and two hours later the proper driver showed up. But thieves have become far more sophisticated in their methodology for those kinds of diversions of cargo. And they are creating false documentation; they are creating corporations out of thin air; they are stealing corporate identities from trucking companies and forwarders to make it appear that they are the proper company to pick up the cargo; and then they pick up the cargo and of course they steal it and it’s never seen again."
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He also said part of the issue was that the supply chain has become much more electronic: "The more electronic we become, and the more we don’t actually touch things, we do everything virtually, it becomes almost easier for thieves to create virtual companies, virtual identities, and to use those to be able to cause these thefts."

The Cold Chain and fraudulent pick-up

Fraudulent pick up can apply to all sorts of shipments within the pharmaceutical industry not just large ones. Spear explained in the cold chain distribution of biopharmaceuticals fraudulent pick-up can be a slightly different. This is because the supply chain tends to be a small package environment, shipping highly valuable cargo as opposed to full truckloads. From this standpoint, Spear said cargo may be re-directed by various means:

"It may be re-directed as stolen because the delivery address is changed on the package, or the delivery address when the driver arrives to deliver is told to go some place else to deliver the package, and he does that, and of course then delivers it inadvertently to the thieves… but all of this has to do with the stealing of identity or the misrepresentation of addresses or identity in order to be able to steal cargo."

Supply chain visibility

So how can we improve supply chain visibility?

Cargo theft often happens due to miscommunication in the supply chain. Almost every cargo theft that Spear has seen in his role has been the result of some failure in communication between parties in the supply chain. This needs to be worked at all the time and there is no quick fix.

"I think the critical issue is in the communications between the shipper and the carrier. The shipper and the carrier must maintain communications about what their protocols are; what their priorities are; what security processes in place, and they must monitor and audit those," said Spear.

"Almost every cargo theft I have ever seen was a result of some sort of failure in communication between somebody and somebody, and so that’s really the issue that needs to be addressed most clearly in all the time. It’s not something you can fix once and then forget it: you’ve got to fix it and work on it continually," he continued.

All stakeholders in the supply chain must be vigilant to fraudulent pick-up. To protect high-value and high-risk cargo in the supply chain there are a number of simple practices that can be employed, such as checking the spelling and the accuracy of information on documentation before releasing cargo. "So much of this has to do with training people who are releasing the cargo to look carefully at what kind of information is presented to them before the cargo is released," said Spear.

"In the full truckload world, much of this has to do with how you appoint your carriers, and making sure that you appoint carriers that are known to you and that you never ever release loads when there are any questions," he said.

There is no single solution to preventing fraudulent-pick up in the pharmaceutical supply chain, but through adequate training, improving communication and selecting the right carrier we can start to reverse this alarming trend.

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