Lies, Statistics and Cargo Crime

Nothing irritates me more than the use of statistics to manipulate the truth. I guess we’ve come to expect that from some politicians and in some advertising, but industry professionals should know better, and those of us reading or listening to unsupported statistics should be smart enough to recognize baloney when we see it. 

In the world of advertising, lying is traditional. Most of the lies we see in television advertising are lies of manipulation or omission rather than flat-out untruths, but they’re lies nonetheless.

For example: “Up to 50 percent off if you buy before Tuesday.” What we see when we experience the advertisement (and what they intend for us to see) is “50 percent off,” but the reality is that 0.25 percent is within the universe of “up to 50 percent” and what you get when you respond may be nowhere near the 50 percent you expected. In fact, there likely will be many reasons why an actual 50 percent discount won’t apply. To be really particular here, we should recognize that “up to 50 percent off” does not include 50 percent. If the advertisement said “as much as 50 percent off,” it would include 50 percent.

A major consumer magazine often pokes fun at the vagaries of advertising, but we need to recognize that such lies are an insidious attack on our ethics, our beliefs and our overall sense of honesty. When we make something seem what it’s not, and then try to sell it, whether as a physical product, a concept, or an idea, we’re essentially dishonest. When we come to expect that behavior from our politicians, our advertisers and the corporations that hire advertisers, we encourage institutions and individuals to be dishonest. Blind acceptance of this sort of perfidy has led this country, and many others, to war, hatred and discrimination, and it’s no exaggeration to say statistical lies have killed people, destroyed cultures and cost trillions of dollars. Given that, even the smallest statistical lies are a disease in the body of society. 

In my own field of cargo crime prevention, statistical lying is usually the result of a company or group trying to sell something by scaring people. If we consider the statistics gathered by various groups over the past five years, we’ll find major cargo crime events (theft of entire truckloads or major thefts from warehouses) occur 1,000 to 1,200 times a year in the U.S.

Some will rush to say, “Yes, but that’s only the reportable cargo crime, and there’s much more out there that isn’t reported.” Hence, the building of a myth founded on sand: a statistical lie. 

If we study the cargo crime statistics gathered by reputable groups since 2006 (note, the federal government has collected no such data) we’ll find the average reported major cargo crime costs about $300,000 per event. While that figure fluctuates, it’s a reasonable number to use within a generally reported range of $250,000 to $350,000. So, let’s look at what these numbers give us:

Using the figures — 1,200 major cargo thefts annually in the U.S., or 100 a month; and $300,000 per event on average — we can project that major cargo crime events in the U.S. will cost $360 million a year. Now we have to guess a bit, but there are some assumptions that can legitimately firm up this number:

  • The actual costs of cargo theft to the victim companies likely are between three and five times the reported physical cost of the goods lost. This calculation adds in cost of investigation, cost of claims handling, cost of increased premiums, replacement cost, loss of market, damage to reputation and compromised brand integrity. Three to five times reported physical cost is probably a reasonable range to use. In fact, research analyst Rand issued a study in 1999 that suggests just those figures. 
  • Taking the high end of the range — five — and multiplying it with our $360 million figure gives us $1.8 billion a year.

From here, we enter the world of statistical fantasy. Some sellers of goods and services, and some supporters of programs in the cargo crime field, will tell you that 1,200 is nowhere near the actual number of major cargo thefts that occur, and that at least five times that many go unreported to law enforcement or insurers. There is no support for that statement, but it makes nice reading if you’re trying to generate funds for a program or to sell a security widget. I wouldn’t argue too hard against a figure of between $2 billion and $3 billion (not including pilferage, which isn’t included here), but the fantasy makers go far beyond that. In fact, I read an advertisement recently that quoted a figure of $100 billion in annual cargo crime as possible and went on to say it was the fastest-growing crime in the U.S., another fantasy. (Identify theft is probably the fastest-growing crime.) 

About 10 years ago, some law enforcement and security professionals were trying to decide over coffee how much cargo crime there was in the U.S. One said he’d bet there was at least $10 billion in losses each year. About two months later, that figure was used in a presentation made by the FBI at a national conference and was quoted in the national media. It immediately went from coffee table talk to “fact,” and has been hanging around ever since. 

In fact, someone decided a couple of years ago it wasn’t big enough, and said they thought cargo crime was upwards of $35 billion a year, and the FBI’s Web site still quotes that amount, although the FBI, nor anyone else, can support that figure statistically. I’ve seen that figure used in speeches, articles and advertising. Just for the sake of argument, let’s take those figures and back some statistics out of them:

  • $10 billion, at $300,000 per crime event, would represent 33,000 cargo crime events a year, or 2,777 a month. Every statistical study done for the past five years has found around 100 a month. Are we really expected to believe that only 3.6 percent of all major cargo crime is being reported to law enforcement or insurers? 
  • $35 billion would generate 9,719 cases a month, or approximately 97 times what statistics can support. That would mean less than 1 percent of all cargo theft is being reported to law enforcement, insurers and other sources of data.

It’s not my intent to denigrate the impact of cargo crime. I have, after all, spent much of my professional career trying to stamp it out. But understanding a problem like cargo crime requires just that: understanding, not exaggeration. Cargo crime can have a terrible effect on its victims, and I’ve met often with companies who have had hundreds of damage claims over a policy term but want to talk about how to avoid the two cargo crime events they experienced.  After all, when cargo is stolen, it’s often sold back against the manufacturer in its own markets, and the implications for brand integrity, warranty support and potential liability — real or perceived — are staggering. 

If you sell frozen chicken, for example, and a truckload is stolen, what’s to say the thieves will keep the refrigeration unit running properly? If they don’t and if the chicken thaws and freezes again, it could poison anyone who eats it, and your name is still on it. That could be a company-ending event. 

That type of risk is what we should look at when we look at cargo crime, not fanciful statistics made up to support some self-serving agenda.  Cargo crime is a low-incidence-high-impact event and should be considered that way. 

When you see a number being used in marketing, advertising, politics or just pushing an idea, think about it. Is 50 percent really 50 percent? Is 10 billion really 10 billion? Lying with statistics will never go away, but we can defend against it by being smarter. 

Alan F. Spear is director of cargo security loss control at AIG and a past chairman of the Transported Asset Protection Association, or TAPA, in the Americas. Contact him at alan.spear@aig.com.

For the full story: Log In, Register for Free or Subscribe