Supply Chain Security in South America

Over the past few months, BSI Intelligence recorded historic incidents in supply chain security relevant to South America. Two separate cocaine seizures, one of an estimated nearly 18 tonnes and another of 4.5 tonnes, originating from the region and a bold armed robbery at an air cargo terminal in Brazil exemplify the range of supply chain risks rampant throughout South America. Cargo theft and smuggling continue to lead as the top security incidents that BSI has collected for South America this year. Colombia, Peru, and Bolivia reign as some of the world’s primary producers of cocaine and Brazil continues to lead as the for world’s top country for cargo theft. As a whole, South America suffers a higher rate of cargo truck hijackings than any other region in the world.

In June, U.S. Customs and Border Protection officers discovered nearly 18 tonnes of cocaine packed into seven shipping containers on a Liberian-flagged container ship. The seizure is the single largest in the history of U.S. Customs and Border Protection. The vessel had previously been in the Bahamas, Panama, Peru, and Colombia, and investigators report that smugglers loaded the shipment onto the vessel using six other boats in the middle of the night after the ship left Peru.

In July, authorities at the Port of Hamburg intercepted a separate load of 4.5 tonnes of cocaine in a shipment labeled as “soybeans.” In this instance, the cocaine arrived in Germany from Montevideo, Uruguay, a lesser utilized transshipment point for drugs exported from South America. This is also the largest single seizure on record for German authorities, which followed this operation up less than two weeks later with another seizure in Hamburg of 1.5 tonnes of cocaine arriving from Brazil. These major drug seizures stand out among much more frequent smaller seizures of drugs introduced into legitimate shipments traveling from or through parts of South America into Europe or the United States, typically arriving in shipments of agricultural products and consumer goods.

Nearly half of the incidents of illegal drug smuggling that BSI has recorded globally occurred in food and beverage shipments and another twenty percent of global incidents involved drug smugglers using shipments of consumer products. The demand for fresh tropical fruits and vegetables necessitates the frequent and large-scale import of such products, making these shipments a major target of opportunity for cartels and other organized criminal groups to attempt to smuggle illegal drugs into these larger western markets. Agricultural shipments and shipments of consumer products are voluminous, providing ample opportunity for traffickers to conceal smuggled drugs. Further, generally speaking, there is also a perceived lower level of scrutiny on “just another” shipment of fruits or vegetables as opposed to a smaller shipment of high-value goods such as electronics or pharmaceuticals. Much of these products are imported on a large-scale from South America. For example, Ecuador is one of the world’s largest exporters of bananas, and BSI continually records incidents of illegal drugs discovered in banana shipments originating in Ecuador. Based on historical data, in drug smuggling incidents involving Colombia, over half (53%) target agricultural and prepared products. Similarly, based on historical data, in Brazil, over half (55%) of smuggling incidents involving Brazil target agricultural and prepared products.

Not only is South America a region of high risk of illegal drug introduction, but it is also a region in which cargo is extremely susceptible to theft, often taking the form of violent hijackings. In July, BSI recorded an incident in which eight heavily armed assailants assaulted an air cargo terminal at São Paulo International Airport, stealing nearly $30 million in gold. The criminals reportedly worked with a corrupt facility guard and arrived disguised as police officers in unmarked police vehicles. Authorities investigating the incident noticed patterns in the thieves’ tactics and are attempting to determine whether the group conducted another airport robbery at Quero-Quero Regional Airport back in March.

This incident in Brazil underscores the fact that no other region in the world suffers from as high of rate of cargo truck hijackings than South America. BSI recorded cargo truck hijackings in almost every country in the region during 2018, with thefts in Brazil accounting for the clear majority of recorded incidents. While attacking a cargo terminal at an airport is not the regional norm, thieves in South America do frequently steal goods from freight facilities and warehouses. The top commodities stolen in the region include food and beverage, electronics, automotive, and tobacco products. 

Due to these major risks, companies with supply chains in South America continually need to exercise vigilance and often employ additional security precautions to thwart not only illegal drug introduction into shipments, but also violent hijackings of in-transit cargo. Any logistics firm or company doing business in the region should conduct comprehensive lane analysis of shipping routes throughout the region to take the proper precautions for the safety and security of the drivers and the cargo.