An inherent deterrent
Since the fall of the Soviet Union, we have become used to widespread reports of highway robberies, vehicle and cargo theft, but is it really that bad? Not any more, says Semyon Fokin, General Manager of Cesar Satellite’s Automotive Division, but there is still a lot of work to do, as he told Julia Nelepa.
Russia has become a high-volume destination for imported goods, much of which comes in by road from Western Europe. Yet, fears are that crime is rampant and police is inefficient. How bad is it in reality?
As you know, Russia is a country with a European outlook, but an Asian mentality. There are, obviously, some unique factors: huge distances between cities, rather low density of population, fast market growth and, at the same time, relatively high volatility. There is a significant income inequality, as well, and living standards differ a lot from region to region. Overall, this unstable economic and social environment, unfortunately, provokes crime. Meanwhile, emergency response outside of major cities can be quite problematic – the structure of the police forces is rather complex and decentralized, and its efficiency and resources vary greatly from region to region. Interaction between different regional police forces is sometimes quite complicated. For a driver in distress, it is often very difficult to determine which number to call for help, and how to reach the nearest police station using their mobile phone. As a result of all this, it is, unfortunately, quite easy to commit a crime on the road somewhere, and no one will be able to come to the victim’s rescue in time. Therefore, the issue of cargo theft is a huge topic in Russia.
Is it primarily theft or are we talking about violent road crime that has been widely reported in the global press t since the early post-Soviet years in Russia?
It is much more often theft, than robbery or any type of violent crime. Contrary to perception, violent crime on the roads in Russia is very rare – which, I think, has a lot to do with our laws. Penalties for any crime involving violence, such as robbery or hijacking, are much higher than for pure property crime. Theft, at the same time, is quite easy to commit and get away with. Cargo theft, specifically, is a low priority for law enforcement. It is not a politically viable issue that concerns the public too much, and it tends to affect mostly medium-sized and large businesses, which aren’t particularly in favour in Russia nowadays.
So, what are the major weak points for cargo theft? Breakdowns, rest stops?
Lunch breaks and overnight stops, for sure – the cargo could be offloaded, or the entire vehicle can be stolen while the driver is away. Surprisingly though, this isn’t all – theft from a moving vehicle is quite widespread as well. There was even a movie about this recently on the Russian TV: a car attaches itself to a moving truck, at the same time as another overtakes it, distracting the driver. The doors are opened, and several packages of goods are offloaded into the car through a windshield that is dismantled. It then detaches and leaves, and the driver often does not realize what has happened, until he arrives at destination. This often happens with cigarette shipments for example and in factcigarettes are most often stolen this way – and direct loss from a single incident may be up to €100,000. There is also a compound indirect loss that is a result of stolen cigarettes of certain brand flooding some regional markets at highly discounted prices. Local consumers are subsequently less willing to pay the full price for legally imported and taxed cigarettes of the same brand. Competition from trade in stolen tobacco drives overall prices, and profits, down.
In a scenario like this, as you say, the driver doesn’t even notice that anything is happening, so a panic button, which is a standard feature in fleet management systems, will not be of any use. How can we address this?
Currently, there are several theft prevention methods available on the market and we are providing all of them. First, and the most expensive one, is a security escort. It’s very simple – you hire a vehicle with armed guards, who are escorting your truck, or a convoy of several trucks. It is then very unlikely that something would happen, and is also effective against any hypothetical fraud scenario involving the driver. Second and a bit less expensive is to hire an armed guard who will travel in-cabin with the driver – this can be a private guard or an agent from local police security force. It is also quite efficient but may not, for instance, help against theft from a moving vehicle as described earlier – the guard’s view will be just as obstructed as the driver’s. Additionally, there is a potential for human error – for instance, the driver and the guard going to lunch together, leaving the vehicle or cargo open to theft.
The third method is a telematics fleet management system with a panic button. The driver can detect that something is happening with the vehicle and react. The major disadvantage though, is that basic service offered by almost all fleet management providers does not include guaranteed response time. In most areas of Russia, emergency signals from panic buttons and sensors that are set off on a basic fleet monitoring system, will be referred to local police forces, where timing or efficiency of response varies by region, and depends greatly on the location of the incident. There is a risk that, by the time the help comes, everything could be stolen already.
And to what extent can we rely on the Russian police force? We hear a lot in the news about allegations of corruption, and local forces that are sometimes less equipped than the criminals they are trying to apprehend.
Firstly, of course, this situation is changing – and not only in Moscow and St. Petersburg, but also all over Russia. Secondly, we are not talking about very sophisticated types of crime, nor the sort of criminals that ride around in Porsche Cayennes. These are regular criminals in average unremarkable vehicles, committing relatively low-risk, from their perspective, crimes.
However to guarantee efficient police response you need to have relevant experience and established cooperation with them. We as Cesar Satellite have a very good track record cooperating with police forces all over the country, since we have been doing it for over 15 years in relation to our vehicle theft services. Currently we have more that 150 cooperation agreements with various police and state emergency response bodies all over Russia. From the police standpoint, working with us is very efficient, because we use our tracking systems to help them catch the thieves. Thanks to us, they can close more cases, improve their crime solving statistics and receive promotions and commendations. So when we call and say that there is an emergency ongoing and we need help, they will send their best people immediately, because they know that in the end, it is likely to be beneficial for them. And by the way we are not calling them any more – a couple of years ago we have completed M2M integration with the Police and Ambulance vehicle dispatching systems so now we send incident cards to them automatically from our monitoring software.
However, in order to guarantee an efficient and timely response we still need to have a network of our own vehicles and our local partners’ crews, so that when something happens we always have a security crew nearby that will respond to the incident. Therefore we run our own
security agency, which currently employs about 200 people in more than 60 response crews, mostly in Moscow, St.Petersburg and along the major transport routs. Also we cooperate with more than 600 security agencies in all regions of Russia that provide their vehicles upon our request.
All methods that you mentioned so far are quite traditional. Are there any new technologies for cargo security?
Absolutely. Last year we started rolling out a service that we call a “secure transport corridor”. For this service, we developed an infrastructure of emergency response crews alongside the particular roads, so that we can guarantee response time of no more than 15-20 minutes, no matter whether an emergency happens 50km or 500km from Moscow. This setup provides the same efficiency as security escort but provides significant economy to the truck owner.
But it must surelyrequire a lot of people and resources…
Our experience shows that for that you need to have a crew every 30-50km. We use our own crews, as well as our existing partners in the home alarm service that are included in the network. That allows us to provide total coverage for several major routes. The first route where we started offering this service was the road between Moscow and St.Petersburg, and further North to the Finnish border, starting at any of the three major crossings between Russia and Finland. The secure transport corridor is like an improved telematics service, where there is system installed in the vehicle, but there are also battery-powered trackers than can be embedded directly in the goods, to control not only where the vehicle is, but where the goods are. That way, even if the vehicle is on track and the driver hasn’t noticed anything, we can see if the goods are getting off course, and this will also trigger the guaranteed emergency response.
This would only make financial sense for you, if there was a certain amount of subscribers, thought, wouldn’t it?
It’s more a case of a certain amount of deliveries per month actually. Of course, in order to guarantee the advertised response time, we have to maintain all of this integrated structure, including our own crews, our partner crews, cooperation with police in certain regions and so on. We need to invest in this service on a monthly basis in order to continuously maintain it on developed routes.
However, in a major transport corridor such as this, there is a sufficient demand to provide this service, and it turns out very cost effective. Security on a shipment along this secure transport corridor can cost the shipper 30-50 per cent less compared to other methods currently used on high-value shipments, e.g. security convoys and armed guards. We have just rolled out the same service on another major route from Western Europe: from Poland via Belorussia to Moscow.
But Belarus is a different country with its own specific circumstances.
Indeed it is. For instance, operation of private security services is not allowed in Belarus under local law, so on their territory, we have to rely on local police forces. It must be noted though, that Belarus today is much more like the old Soviet Union – the police have much better control over their territory. In Belarus, however, the only types of service available for cargo shipments from the local police will be security guards and armed escorts. The other types of service will start at the border with Russia.
You have so far targeted two main corridors into Western Europe, which is understandable – yet, cargo security and emergency response time is surely as big a problem elsewhere in Russia as well?
Most imported goods come into Russia along one of those two routes, and most go directly to Moscow, where the majority of large companies have their main distribution centers. So, at first this service targeted mostly large importers, who already used to similar services being offered elsewhere in Europe. The problem most certainly does not end there, though. The goods are sold to local distributors or re-distributed for further transportation to smaller carriers that take them in all directions and in a variety of ways and vehicles, and they remain just as susceptible to theft. We are developing two other major destinations for the same service, roads from Moscow to Rostov-on-Don, and from Moscow to Ekaterinburg.
Finally, a lot of vehicles on which goods come into Russia from Europe will already have some telematics equipment installed so subsequently there may be a lot of people coming in with devices by different manufacturers, is this a problem?
We do provide our own equipment as needed, but pre-installed systems are not an issue, either. Our monitoring system can integrate any sort of data exchange protocol, and we can monitor all kinds of pre-installed devices.