Stick ?Em Up! Give Me All of Your Pallets!

As if the competitive nature of the pallet industry is not enough, recyclers over the last couple of years have had to deal with a whole new threat to their business –   cargo theft. Across the country, recyclers have reported having trailer loads of pallets stolen off their property and from customers’ lots. The trailers usually are retrieved, but the pallets are gone.

                      Theft has become much more commonplace as core supplies have tightened. White wood pallets are easy to fence because there is no way to trace the owner. And in markets where recyclers will buy anything with a “don’t ask, don’t tell” mindset, would-be thieves can make thousands of dollars for only a few hours worth of work. Pallets can be found everywhere, and it is nearly impossible to tell whether or not someone has the right to be in possession of them. Pallets are also low profile enough that they do not grab much police or bystander attention.

                      Cargo theft costs companies $10 billion a year in the U.S. According to the FBI, cargo theft is one of the biggest non-violent crimes in the country.

The Chicago Scene

The hotbed for pallet theft appears to be Chicago, where many major recyclers report they have lost at least one trailer load of pallets to theft and most claim they have lost much more.

“It’s aggravating every time it happens. But it has happened so much, you just get numb to it,” said Brian Constantino, president of Skid Recycling Inc. in Naperville, Il.

The stories that some recyclers told are pretty outlandish. Some thieves went to great lengths to acquire pallets without being caught. Jim Riff, sales manager at N.W. Pallet Supply in Chicago, Il., said his company had a customer who caught thieves on camera. Jim said, “The thieves were blatant, knowing that they were being taped, but they didn’t care.” They stole both the tractor and the trailer, tearing off a dock lock that attached the trailer to a wall. Then they rammed through the gate with the tractor and stolen trailer, went down the road, attached the trailer to another tractor, and made off with the stolen pallets.  

                      The video surveillance did not provide enough detail to catch the thieves, which tends to be a problem with video cameras. Poor lighting, being too far away to make out much detail and disguises render video surveillance ineffective in many cases.

                      Jim said, “The police haven’t produced any results. These guys are going to keep on stealing pallets because there are no negative ramifications until they get caught.” John Swenby, president and owner of PalTech Enterprises in Chicago, Il., said that he had caught a person on tape stealing a load of pallets. But the driver had gone to the effort to put a fake name and logo on the tractor. And there was no way to really identify the culprit.

                      Talking about video surveillance, Inspector Hank Lipinski of the Northern Illinois Auto Theft Task Force said, “Outside video footage is usually not good because you can’t get close enough to see their face.”

                      Many of the thefts happen at night, which makes it even more difficult to get good video footage. Normally, trailers are lifted on weekends when lots are left unattended.         When it comes to law enforcement, it can be hard for cops to spot a stolen trailer because there are so many of them on the road. What makes a stolen one stand out from one going about the normal course of business?

Local police, even task forces, can only put limited resources on the problem. Cargo theft used to be a high priority crime for the FBI. However, in recent years, the FBI has switched its focus to more terrorist-related crimes. This shift has put the burden for cargo theft back onto state and local authorities.

Pallet theft is not a big enough crime for many jurisdictions to focus on it. Local police have bigger crime problems to tackle, and many cases involve multiple jurisdictions, especially when the pallets are stolen in one place, the owner resides in another location, and the trailer is eventually found in still another locality. In Chicago, a number of jurisdictions have established task forces to crack down on cargo theft, including pallets.

Wayne Clements, a sergeant with the Illinois Tri-County Auto Theft Task Force, said, “A typical street officer doesn’t give much concern to a trailer of stolen pallets. But we look at it as cargo theft. We view it as a major problem.”

Unfortunately, none of the Chicago task forces has been able to catch the thieves. Even after sting operations, the pallet thieves remain at large. Jim said, “It’s hard to get into trouble. That is why thieves are getting into it.”   A pallet thief can clear a couple thousand dollars for a few hours work with little to no risk of getting caught or doing significant jail time.

And the thieves seem to be pretty smart. “It is a well organized operation, whoever is doing it,” said Brian.

                      John added that there doesn’t seem to be any real pattern. Thefts in the Chicago area have been diversified by customer, location and pallet recycler.  

Security Measures Deter

                      Recyclers have tried a number of security measures with varied success. PalTech has added pin locks and put stickers on all of its trailers. These measures have helped according to John. But they won’t stop a determined thief.

                      Brian reported that thieves are starting to use torches to cut off locks, particularly at customer locations. Thieves can disable tracking devices if detected. Tracking technology is expensive, and it can be difficult to identify stolen loads even with satellites.

“These guys do it so fast. It always seems to happen over the weekend,” said  

Les Hagan, president of Commercial Pallet in Chicago, Il.

Commercial Pallet paints its name, logo and phone number on its trailers now. This is a good, cheap way to help police spot stolen trailers. But it is not a solution for recyclers that lease trailers instead of owning them outright.

One way of eliminating pallet theft is to try to clamp down on recyclers that buy stolen pallets. However, this can be even more difficult than catching thieves in the act. Two years ago, the Rockford task force busted crooks stealing trailers of pallets.   They prosecuted all involved except for the pallet recycler because they couldn’t prove the recycler was acting with criminal intent.

“If pallet companies were to mark pallets, it would be easier for police to catch thieves and the government to prosecute them, especially if the pallets in question are only distributed to certain companies,” said Hank of the Rockford task force.

The police claim it is primarily the small pallet companies that are buying the stolen pallets. These guys come and go very quickly, which makes it hard to stop them.

“It’s the smaller guys who are buying stolen pallets,” said Wayne of the Tri-County task force. “For the most part, the larger, reputable companies are the ones being victimized.”

Thefts Cost Money

                      Beyond the lost revenue from the stolen pallets, theft ties up management resources, causes emotional stress and helps your competitor stay in business.

At least in the Chicago area, most of the trailers are usually returned. Sometimes recyclers have to pay towing and impound fees to get back their trailers.

                      “You are fortunate if your trailer hasn’t been dropped in a place where it gets ticketed and towed,” said Brian. The largest expense that he ever paid to get back a trailer was $1,000.    

Thefts have even caused tension between recyclers and their clients. John said that he had a customer who accused him of stealing his own trailer to sell pallets back to the client. John said that the accusations ended their business relationship because he wasn’t going to stand for being called a thief. Some other recyclers reported similar interactions with some overly suspicious clients.

                      Who pays for the cost of the pallets if the trailer is stolen off a customer’s lot? Well, that depends on the situation. Some recyclers report sharing costs with customers. Other recyclers take the entire financial hit of the stolen pallets themselves.  

Industry Impact

                      Pallet recyclers have reported theft being a problem in a variety of areas across the country. It is easier to get away with it in a big city because there are a lot of recyclers, more police jurisdictions, and bigger crimes competing for police attention.   Market dynamics have a lot to do with it. Do pallet thieves have a place to fence the pallets? How tight is the core market in your area?

Working with other reputable companies in your area can do a lot to keep pallet theft from ever being a problem. Your customers can take measures to secure trailers and prevent unauthorized people from driving away with them. It pays to discuss this issue with them and to analyze the security vulnerabilities for your assets. A few proactive steps now can cut down on your losses later.