Cargo theft, a growing problem in Mexico for the past decade, spiked 40 percent in 2009.
BY SILVIA CHAVEZ
AND GUILLERMO TELLO
MEXICO CITY -- More than a century after he came to life in Los Bandidos de Rio Frio, the classic Mexican novel by Manuel Payno, Relumbron (Flash), the novel’s leading character, whose epic tales of thievery enshrined him in the Mexican imagination, has spawned a host of modern-day imitators. Just as Relumbron and his sidekick Juan Robreno sewed fear along the roadways and in the towns of central Mexico in the late 1800s, today’s bandidos are terrorizing transport companies across the country.
Cargo theft is a thriving business in Mexico. Just about any cargo is at risk. Electric appliances, food, clothing, shoes, car parts, medicines -- whatever the product, there’s a bustling underground market ready to receive it and sell it to consumers, who are eager to buy name-brand items at rock-bottom prices.
In 2009, cargo theft in Mexico cost businesses between $650 million and $750 million, according to a recent estimate by the National Multimodal Transport Alliance (ANTM), a 40% spike over the average of the past three years. Needless to say, the risk of theft on the open road has led to increased stress for truckers and trucking companies, not to mention rising transport costs.
Criminal gangs are tightening their grip on the country’s supply-chain. Throughout most of Mexico, the gangs are directly linked to organized crime and are strategically located at major intersections of internal, as well as international, commerce. Their operations are coordinated and often perfectly timed, triggered by inside information about cargo shipments that is obtained from a variety of sources: truckers, warehouse workers, shipping agents and, even more worrisome, from government Customs agents or inspectors.
A study of press reports on gang activities throughout the country indicates that the most aggressive gangs are operating in the center of the country, in the states of Mexico, Puebla, Veracruz and Michoacan. Federal highways in these states are often only lightly policed and the majority of truckers employ few, if any, security procedures or technologies, such as GPS devices, emergency panic buttons or armed-guard escorts.
Given the ripe pickings in this region, some local gangs, which are often “subcontracted” by organized crime syndicates, have committed up to 200 attacks per month, according to press reports and data compiled by the Office of the Attorney General. Merchandise stolen in the state of Guanajuato can end up being sold in the states of Veracruz, Chiapas or Nuevo Leon. The extensive and highly organized criminal supply chain not only pays off for the thieves themselves, but also generates income for thousands of people who have lost their jobs in the economic recession and are now part of this illegal underground economy.
The sharp rise in cargo theft in 2009 is directly related to the economic crisis that pummeled Mexico in late 2008 and early last year. The country’s official unemployment rate (which doesn’t account for Mexico’s legions of underemployed) averaged a record-high 5.5 percent throughout 2009, matching the spike in cargo theft.
Crime statistics compiled and analyzed by Kroll indicate that cargo theft in Mexico has been on a steady rise for the past 10 years. And, like any growth industry, it attracts talent. Statistics produced by the national statistics bureau, INEGI, indicate that there are some 30 times more criminals active in cargo theft than there are in the kidnapping business.
The most targeted products by cargo thieves are goods that are easily resold, such as clothes, food, cigarettes, footwear, liquor, home appliances and medicines. Almost 80% of the stolen goods are sold on the black market, whose activities are concentrated in the Federal District – notably, the Tepito area in the center of Mexico City – and elsewhere in the state of Mexico.
While Mexican trucking companies are the primary victims, attacks on cargo trains are also on the rise. Transporting goods by train used to be considered a relatively safe option; not any more. Last year, there was an average of 4.5 train robberies per day, according to the National Association of Private Transportation (ANTP). Among the most sought-after goods: clothing, car parts, corn, wheat and sugar. In 2009, some 1,400 tons of corn were stolen, three times more than in previous years.
Emboldened by their successes, Mexican train robbers are becoming as audacious as los bandidos of yore, sometimes stopping trains en route to make off with the goods. In 2008, a train carrying Nike products to the company’s distribution center in the state of Michoacan was robbed. “The impressive thing is that they stopped a train traveling at full speed,” notes Nike Brand Protection Manager Roberto Castaneda. “The theft was not significant; the alarming thing was the message they sent. Organized crime is capable of doing more than just stopping a train.”
Besides terrorizing countless truckers and other transport company employees, who can easily be intimated by crime gangs, the principal impact of rising incidents of cargo theft is on cargo insurance rates, which have increased by as much as 60 percent. According to AMESIS, the Mexican Association of Insurance Companies, placing a GPS device in trucks can reduce the cost of insurance by up to 30%. Even so, trucking companies that do employ GPS devices continue to lose cargo to the gangs. And sometimes, the trucks themselves are stolen and held for ransom.
Silvia Chavez is a Senior Analyst and Guillermo Tello is a Director in Kroll’s Mexico headquarters in Mexico City. This article is republished with permission from Kroll Tendencias, the company’s monthly newsletter.