Supply Chain Security: Mexico
ProTecht Risk Solutions works very closely with several industry organizations that track cargo theft trends and statistics. One such organization is the British Standards Institute (BSI), who report that cargo theft was on the rise in 2019 and in recent years. That came to a dramatic halt at the beginning of 2020 with the coronavirus pandemic and all of its impacts on the global supply chain, but with a recovering market, industry experts warn of a resurgence in cargo theft and a possible targeting of COVID-19 vaccines and treatments.
The Transported Asset Protection Association (TAPA), another organization very familiar to Falvey, has warned that transportation related crimes have already begun to rebound, and we will likely see a spike in numbers as the industry returns to more normal operations.
The fallout from the coronavirus uncovered many significant issues and a lack of preparedness in the supply chain across countries and industries. This has left organized crime, industry insiders, and opportunists looking for ways to take advantage.
Organized and highly specialized groups of sophisticated cargo criminals pose a huge threat throughout many parts of the world. Criminal cargo theft gangs in Mexico for example take advantage of the current situation. The goods that they can obtain through illegal means are lucrative and fairly low risk targets. The threat of violent crimes, hijackings, theft from unsecured lots, and supply chain corruption are all major areas of concern for operations in the country.
There have been two recent high-profile incidents involving theft of pharmaceuticals from hospitals and pharmacies that are not necessarily indicative of increased frequency of theft but do illustrate the scale and nature of the threat.
Mexico has seen widespread theft of pharmaceuticals from a range of sources, including hospitals, pharmacies, and even supply chains to some extent. The trend is perhaps most prominently highlighted by two recent theft incidents. One involves thieves breaking into a warehouse and stealing about 38,000 doses of medications used to treat cancer. The other involves theft of over 10,000 flu vaccines from a truck in transit. These and other high-profile thefts have led to public concerns over shortages of medications and specifically COVID-19 vaccine distribution, despite the government’s reiterations that this is not an issue.
Pharmaceutical theft in Mexico has on average represented about 4% of all thefts in the country according to the research from the BSI, but with a highly anticipated and valuable commodity such as the COVID-19 vaccine being distributed, we could see an increase in targeted and aggressive attacks on the supply chain.
In the large 38,000 dose theft specifically, 10-15 armed men arrived at a warehouse in a district of Mexico City, forcibly restrained and locked up warehouse workers, and stole the cancer treatments designed specifically for children. These treatments were specifically targeted because Mexico is currently in a widespread shortage of expensive high-end drugs to treat chronic diseases, and the cartels and criminal organizations see this as an opportunity to steal the drugs and resell them on the black market netting millions in profits and further strengthening their criminal organizations.
As a result of this current environment, we recommend the highest levels of security planning and risk mitigation procedures when operating in Mexico, particularly in high-risk areas, and with targeted commodities. The ProTecht Loss Prevention department offers consultative services to guide our assureds through industry recognized best practices and customized transportation solutions. Some recommended standard security countermeasures are route planning risk assessments, recommended toll roads, daylight hours travel, caravan transport, vetting of logistic service providers, C-TPAT certified carriers, Free and Secure Trade (FAST) certified drivers, and multi-tiered security protocols including GPS active monitoring among other recommended actions.
As a practical example, we recently worked with two of our assureds that manufacture and distribute theft-attractive goods in and out of Mexico to review their supply chain programs and assist with implementing appropriate security countermeasures to mitigate risk to their products during transit. These engagements included conducting shipping lane risk assessments using the most up-to-date industry trends and statistics related to cargo theft within Mexico. As a result of the risk assessments conducted, we were able to assist each assured to implement varying layers of security appropriate for the assessed threat level for their respective shipping programs.
One assured was moving their goods into Mexico City via both road and rail from the port of Lazaro Cardenas while the other assured was transporting goods, via road, from Guadalajara to the U.S. through the Laredo, TX border crossing. While the risk level along each of these shipping lanes is rated as “severe”, each required different countermeasures to effectively mitigate risk of theft (particularly hijacking) during transit. In each case, we were able to connect the assured with supply chain security service providers that offer specialized services appropriate for the assessed threat level along each route, including control tower GPS monitoring, truck telematic integration, specially-trained security escorts (armed and unarmed) and armored vehicles. In addition, we worked with our assureds to implement appropriate escalation procedures, data security programs, security awareness training and in-transit contingency action plans. Not only should assureds strictly adhere to the list of best practices, but a tailored approach from a knowledgeable and experienced source must be taken for proper precautions.
Reporting from the BSI and TAPA