What are the true Financial Costs of Cargo Loss

Published on
May 17, 2023 at 2:28:00 PM PDT May 17, 2023 at 2:28:00 PM PDTth, May 17, 2023 at 2:28:00 PM PDT

If a trailer is stolen or tampered with, the cost of missing goods can be very high. To calculate the full cost of cargo loss, supply chain managers have to consider more than just the loss of the missing goods. Cost of stolen or damaged equipment, insurance claims and premiums, expedited freight costs and reputation risk must also be included. 

Cost of equipment: If a truck or trailer is damaged or stolen during a theft, companies will need to pay for repairs or replacement. Sourcing new equipment or parts can be arduous. Supply chain interruptions during this down time can also be very costly. Future loads that were slated for the out-of-service tractor or trailer cannot be fulfilled, resulting in less income for the trucking company. 

Insurance claims and premiums: The cost of an insurance claim after cargo theft should be considered by supply chain managers in addition to a likely insurance premium hike. 

Expedited freight costs: Once a delivery is delayed due to theft, replacement goods need to be sourced and delivered. To stay as close to an on-time delivery as possible, often the replacement goods need to be shipped quickly at an additional cost to the company that incurred the theft. 

Reputation risk: Whether you are a manufacturer or shipper, dependable deliveries are extremely important to you and your clients. Companies are less likely to look favorably upon those fleets who have experienced theft. They have to replace the stolen items to keep up with demand and have to manage the delivery disruptions. Delayed shipments can mean the end user seeks out a different product resulting in lost sales. Additionally the thieves can tamper with the stolen goods which can negatively effect the brand's reputation. Businesses may decide to cancel other deliveries or forgo the relationship entirely and seek out a more security minded fleet. 

Avoid cargo loss 

Many fleets view security as a cost without realizing the investment can have a positive impact on the overall financial picture. Fleets should take a layered approach to cargo security to protect their bottom line. Layers can include GPS tracking devices installed on trucks, full perimeter fencing at distribution and warehouses, driver education on where theft is occurring, safe parking options for drivers and high security locks. Heavy duty locks can be installed to secure trailers and prevent pilferaging. For dropped trailers, a device such as a king pin lock or landing gear lock can prevent theft of the entire trailer.

Retailers and manufacturers are encouraged to evaluate security standards for shipping companies and consider requiring heavy duty locks to secure products. This will help mitigate theft and disruptions to your supply chain.