Here are some tips on cargo theft that might save you $75M

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As I was reading the FDA's new SOP on cargo theft this week, I was reminded  of a conversation with Charles Forsaith, director of supply chain security for Purdue Pharma Technologies. He also coordinates the Pharmaceutical Cargo Security Coalition, which is dedicated to combating theft of pharmaceuticals in transit.

Our talk centered on how U.S. manufacturers in the last couple of years have made a giant leap forward in protecting against cargo theft. He pointed out that last year there were only 5 stolen shipments valued over $500,000 and only three over $1 million, compared to 15 and 11 in 2009. That calculates to 33% and 25% decreases in just two years. Forsaith explained those results have been hard-won.

Just a few years ago, the industry was losing loads that had values rivaling the numbers normally associated with the salaries of professional athletes.

There was the dramatic burglary of and Eli Lilly warehouse where rope-rappelling thieves stole cancer, cardiovascular and depression medications. Loss: $75 million.

There was a similar burglary at a GlaxoSmithKline warehouse. Loss: $6 million.

And there was a 2009 heist of a rig from North Carolina, containing Novo Nordisk ($NVO) drugs, some of which later were tied to adverse reactions from patients who got them from a pharmacy chain. Loss: $10.9 million. 

It hasn't been that many years, Forsaith said, since drivers would arrive at a shipping dock and the only thing anyone was concerned about was whether they made it to where they were going by a particular point in time. "You didn't necessarily collect the name of the driver, get his cell number, make or a description of the truck, put a high-security cargo seal on the back door, tell the driver that he was not supposed to stop for so many miles. There were so many things that we took for granted."

But with losses, and attendant publicity, growing changes were made. The coalition was formed, information was shared and companies were educated. The pharma industry learned from the practices, and the mistakes, of others such as manufacturers of high-end electronics and jewelry.

Now companies vet their shippers to make sure they use two drivers and never leave a rig unoccupied. They paint trailers with large letters to make them easy for law enforcement to spot if they are taken. They use technology, like planting GPS devices in a load, or even use trailers with doors that close with a magnetic lock initiated by a cell phone and not even accessible by drivers. They constantly share information so danger spots for truck heists are quickly identified and can be avoided. This has all made loads harder to steal and easier to recover if they are taken.

At the warehouse level, guards, lights and fencing can all make a difference, but Forsaith says he also urges warehouse operators to get to know their business neighbors and share contact numbers in case someone sees something unusual on a weekend, holiday or after hours. "It is just like a neighborhood watch, but just on a much grander scale."

The world remains a dangerous place, Forsaith acknowledges. In other countries gangs often use weapons and violence to steal pharmaceuticals. But at least in the U.S., the situation is so much better.

In fact, FreightWatch International reported last year was the first time on record in which the "pharmaceutical industry did not have the highest value per theft incident." That honor went to the electronics industry. -- Eric Palmer (Email | Twitter)