ASIA PACIFIC CARGO CRIME & SUPPLY CHAIN DISRUPTION

TAPA-APAC Incident Information Services (IIS)

Q1&Q2 Report 2015

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TAPA-APAC Incident Information Services (IIS) program will now include an analysis of Cargo Crime Loss and Supply Chain Disruption

A total of 24 theft incidents were recorded in theTAPA-APAC IIS database during the first twoquarters of 2015. The relatively low number is anindication of poor reporting processes for cargotheft. While cargo theft is more openly shared inthe Americas and EMEA, that process has notbeen embraced by government and Asian lawenforcement agencies.

TAPA-APAC is looking to bridge the gaps in cargotheft reporting in Asia through relationships withthe agencies that cargo theft is reported. Throughthe influence of organizations like TAPA, we canhelp law enforcement and businesses to workclosely together in the sharing of information thatallows for the recovery and identification of stolencargo.

TAPA-APAC’s Incident Information Services (IIS)provides our Members with an analysis of thecargo crime information collected and recordedby our Members and Partnerships across theregion.

The analysis of the data provides our Members with abreakdown of the value, location, and commodity ofthe cargo that was reported stolen. Additionally, welook at the modus operandi (MO), frequency, and typeof the thefts along with market value correlation toidentify trends that we can use to mitigate risksthrough awareness and training.

In a continuous effort to bring value to the IIS reports,this report will have added features that previousreports did not include, such as; maritime cargoincidents and supply chain disruptions.

Q1 & Q2 2015

Theft12

Burglary2

Robbery5

Hijacking5

Type of Incident

Cargo theft in Asia that is not committed by internal sources often include acts of violence Theft by Product Total Values

Of the 24 total theft incidents that were recorded in theTAPA-APAC IIS database during the first two quarters of2015, electronics were the hot items accounting for 31%of the recorded stolen items.

The majority of these items were taken during delivery orthrough the assistance of internal sources. Even thehijacking of over US$4 million in mobile phonecomponents was facilitated through the help of internalresources.

Cargo theft is a crime of opportunity, usually occurringwithout violence. In Asia however, of the incidentsreported to TAPA APAC, 37% of the cargo thefts involvedviolence or the threat of violence.

Looking at cargo theft data, it is easy to note where thevulnerabilities are in the supply chain process. 58% ofthe cargo thefts reported show the theft occurring whileproduct is in transit. In Q1 & Q2, that could be brokendown further and shown that the majority of the theftsoccurring in transit, happened at or near the deliverylocation.

The theft location type also show 29% of reported cargothefts occurring at a “Secure” location. Unfortunately, theterm “Secure Location” is very relative. However, sincethe facilities in these thefts were considered “Secure”, wesee how cargo theft can happen in any environmentwhen personnel working inside the location help tofacilitate the theft.

Electronic Parts 7 Unknown

Cash 3 $1,120,987

Precious Metals 2 $443,305

Construction Materials 1 Unknown

Consumer Health 2 $303,909

Electronics 2 $5,033,594

Hardware 2 $99,162

Food & Beverage 1 $174,291

Alcohol & Tobacco 2 $1,992,720

Unspecified 1 Unknown

Miscellaneous 1 $44,534

The largest recorded theft was US $4,203,594

Q1 & Q2 2015

5

9

7

12

Modus Operandi

Intrusion Violent/Threat

Internal Pilferage

Delivery Theft

3

14

7

Location Type

Unsecured Enroute Secure Location

Hong Kong

Malaysia

Australia

India

Philippines

Pakistan

8

1

6

2

1

5

Thailand1

$9,212,502Known Value of Reported Crimes

11Incidents With Loss Value Over $100,000

$4,203,594Largest Single Loss Reported

3

4

1

Modus Operandi

Delivery theft Internal Pilferage

7

1

Commodity

Electronic Parts Cash

Hong Kong

1

1

1

1

1

Commodity

Hardware Precious Metal Cash

Electronics Misc

1

2

2

Modus Operandi

Internal Violence Intrusion

MalaysiaIndia

1

1

11

1

1

Commodity

Alcohol/Tobbaco Hardware

Food & Beverage Electronics

Precious Metal Unspecified

2

3

1

Modus Operandi

Internal Violence Intrusion

Maritime thefts in Southeast Asia could reach record levels in 2015

Q1 & Q2 2015

Cargo theft in Asia cannot be fully realized withoutstressing the importance of tracking maritime thefts.The Strait of Malacca alone, stretching from theNorthern tip of Indonesia’s Bintan Island to the SouthChina Sea is a global shipping “Superhighway”.More than 120,000 ships transit the waterways,accounting for 1/3 of the worlds marine commerce.

Southeast Asia was the location of 41% of theworld’s pirate attacks since 1995. Piracy accountsfor US $7 - $12 billion from the international economyannually.

Theft is usually a crime of opportunity and this is alsotrue with Maritime thefts. While some of the maritimethefts are large-scale sophisticated strikes on vesselsat sea, which require military coordination andmeticulous planning, 80% of total incidents wordwideoccur against anchored ships.

The first half (Jan-June) of 2015 has seen anincrease of 22% in reported incidents acrossSoutheast Asia, compared to the first half of 2014.120 instances of piracy and maritime crime werereported to Dryad. There have been 12 vesselshijacked in the first half of 2015, compared with only9 vessel hijackings in the first six months of 2014.

Of the 12 hijackings, 10 were for the purpose ofcargo theft and 8 of the hijackings were successful.2 vessels were recovered with their cargo in tact.Vessels in the Singapore Strait reported 48 boardingand thefts, up from only 18 in 2014 (an increase of118%)

Bangladesh and Vietnam had the most cases ofrobbery from vessels while anchored.

Supply Chain Disruptions Have Global Impact

Q1 & Q2 2015

Earthquakes can have a dramatic impact to a business and supply chain lane. In Q1 & Q2 Asia experienced 58 earthquakes. The majority of thisearthquakes occurred in the Southeast region of Asia-Pacific however, the three deadliest earthquakes of the first half of 2015 occurred in Nepal(2), and Malaysia.

Nepal experienced a 7.8 magnitude earthquake on April 25th which flattened entire villages in many districts. As a result of the earthquake, over9,000 died, there were over 23,000 people injured and 450,000 people were displaced in Nepal, India, China, and Bangladesh.

Nepal was already struggling with the costs of infrastructure improvements to attract foreign investment. With a GDP of approximately US$20billion Nepal cannot fund its recovery on its own. It will take many years for Nepal to restore the infrastructure necessary for economic growth.

Typhoons

Floods

Earthquakes

2015 has been a disastrous year for flooding in Asia. While the death toll for floods may not be as high as other natural disasters, the impact tobusinesses and communities is enormous. In Q1 & Q2, Malaysia, Indonesia, Thailand and Sri Lanka evacuated over 400,000 people due to flooding.

Economic impacts of the flooding included surging palm oil and rubber prices with Thailand and Malaysia dropping production of rubber by 30%.When you see a rise in commodity prices and with the increased need for building materials, theft of these commodities is predictable. In addition,consumer health care product thefts are like to increase also.

Flood reporting in Q3 & Q4 is likely to have a much larger impact and will displace many more people as the rainy season in many regions reachesit’s peak.

In 2014, typhoons accounted for two of the top five worst global supply chain disruptions. Typhoon Halong and Rammasun ravaged Southeast Asiahaving a combined revenue impact of US$11.5 billion and requiring an average of 39.5 weeks of recovery time.

The majority of annual typhoons usually occur in Q3, however, Q1 &Q2 have already seen three tropical storms, one severe tropical storm and fourtyphoons. The supply chain effects of a typhoon are felt on land and at sea. Ships must be rerouted to avoid typhoons. The term “Safe Harbor”does not pertain to super typhoons which cause major damage to a ship at dock or turn it into a massive wrecking ball should it break free.

Typhoon Noul had the greatest impact, in terms of economic costs, on the region in May 2015. The Caroline Islands, Philippines, Taiwan, and Japanwere all effected by the typhoon with caused US$23.5 million in damages.

78% of all Terrorist Attacks Happen in 10 Countries, Four of Which are in Asia; Pakistan, Afghanistan, India, & Thailand

Q1 & Q2 2015

Disease Outbreaks

Terrorist attacks most often have an indirect effecton supply chain lanes. Asia Pacific has a risingterrorist threat and can expect to see supply chainlanes and their businesses impacted by acts ofterrorism. Pakistan and Afghanistan have themost severe risk of terrorism, while Bangladesh,Bhutan, India, Thailand, Myanmar, Philippines,Indonesia, North Korea, and Malaysia have a highrisk of terrorism.

Q1 & Q2 saw terrorist attacks in Pakistan, China,Philippines, Afghanistan, South Korea, India, andThailand. The majority of the terrorist targetshave been political/government and religioustargets, however, the top five terrorist attacks onbusinesses industries include: retail, oil & gas,tourism, electricity infrastructure, and aviation.

Strikes and Labor Disputes

In Q1 & Q2 of 2015, Asian Ports were spared ofany major labor disputes or strikes that wouldimpact global supply chain lanes. The impact ofa labor dispute was felt by Hong Kong in 2013when during a 40 day labor strike. The port wasable to operate at 80% capacity and still claimedlosses of HK$2.4 – HK$5 million dollars per day.Container congestion reached as high as 120,000containers and businesses faced delays of up tothree days getting product through the port.

However, Q1 saw the US West Coast Portscontinue a labor dispute that started in Q4 2014.The labor dispute caused major cargocongestion as 70% of all imports from Asia areprocessed at the West Coast Ports.

Manufacturing plants in the US had to slowproduction due to parts delays imported fromAsia. Fuji Heavy Industries claimed they had tofly parts into the US, costing an additional US$59million per month.

Disease outbreaks effect an organizations abilityto operate. Q1 & Q2 saw the impact that adisease outbreak can have on a country with theMiddle East Respiratory Syndrome Coronavirus(MERS-CoV) outbreak in South Korea. By the endof June, the S. Korean government estimated thatexports fell 10.9% in the month of May.

The MERS-CoV outbreak also reached Thailand,Honk Kong, China, and the Philippines. Howeverthe outbreak was contained and had little impacton the business communities.

Besides MERS-CoV, China had 10 confirmed casesof Avian Influenza (Bird Flu), which was containedon each incident.

Terrorism

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