NTERNATEONAL AER CARGG THEFTg AND LC’SSES: AN EDEN‘FEFECATIGR Q? VAWABLES “mat: for flu Dagny o? M. S. MECHEGAN STHE UKWERSITY Harvey T. Harris. Jr. 1966 mesxs ——-—---~- “I. GIL- ..-.' LIBRAR Y 1"- Michigan State University —- :1 _ a :fl-J f?! t .\ 3 r; T g '5 -; 9.1! 1- 9’: ‘3 1.. ' g :I "t I}.— .~ p: o _ . d I _' ~. C ‘1 \r; ‘J El: I k ‘4 m INTERNATIONAL AIR CARGO THEFTS AND LOSSES: AN IDENTIFICATION OF VARIABLES By Harvey T. Harris, Jr. AN ABSTRACT OF A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE School of Police Administration and Public Safety WW Dr. Leon H. Weaver (Chairman) 1966 APPROVED Lzmpfih T. Galvin (Member) 74. KM Louis A. Radelet (Member) ABSTRACT INTERNATIONAL AIR CARGO THEFTS AND LOSSES: AN IDENTIFICATION OF VARIABLES by Harvey T. Harris, Jr. Due to the increase in volume and value of air cargo and the in- crease in size and speed of the aircraft carrying it, many security problems have arisen that threaten the airline industry, air cargo shippers, air freight forwarders, air cargo insurers, law enforcement agencies, and the economy in general. Satisfactory solutions to these problems, in many cases, have not been offered; as a consequence, there is a cer- tain amount of apprehension surrounding the domestic as well as the international air cargo industry. The main purpose of the thesis was to identify variables in air cargo thefts and losses. Seventy-nine air cargo theft and loss variables were identified. For the purpose of laying a broad foundation, the history of air cargo and several pertinent international regulations of air tranSportation are presented. A review of all available, pertinent literature revealed that little has been written on air cargo thefts and losses. The results of airline and air freight forwarder questionnaires are presented, and many air cargo theft and loss case histories are analyzed. As a result, many air cargo security problem areas were determined. Recommendations are advanced in an effort to aid in controlling potential air cargo thefts and losses. Harvey T. Harris, Jr. In the past when air cargo volume was small, air cargo manage- ment officials could afford to overlook some thefts and losses; however, with the tremendous increase in air cargo volume, such a traditional attitude towards thefts and losses could prove financially disastrous. Air cargo management officials must become more security conscious and must also realize that scientific research can aid in controlling air cargo thefts and losses. INTERNATIONAL AIR CARGO THEFTS AND LOSSES: AN IDENTIFICATION OF VARIABLES By Harvey T. Harris, Jr. A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE School of Police Administration and Public Safety 1966 ‘ *(O‘ COpyright by HARVEY THOMAS HARRIS, JR. 1966 ACKNOWLEDGMENTS Grateful recognition is given to the following individuals who have aided the writer in numerous ways, at various intervals in his pursuit of knowledge: To Dr. Leon H. Weaver, for his honest advice and long patience during the writer's graduate studies, for making the arduous task of writing this thesis a rewarding learning experience, and for guiding the actual writing of this thesis. To Mr. Raymond T. Galvin and Mr. Louis A. Radelet, for the advice and insights, which they imparted to the writer throughout the writer's graduate studies, and for serving on the writer's thesis committee. To Dr. George G. Ritchie, Jr., a personal friend, for the patience, guidance, and early training that he gave the writer, which formed a foundation for later experiences. To the participants of this study, who are located all over the world, for without them, there would be no evidence for this thesis. To the writer's parents, Mr. and Mrs. Harvey T° Harris, for their continued support in all of the writer's endeavors, especially urging the writer to continue his higher education. To the writer's wife, Judy, for contributing her support and many talents, above and beyond the call of duty, to the writer while he was obtaining a higher education, this thesis is dedicated. SELECTED TABLE OF CONTENTS CHAPTER I. INTRODUCTION. . . . . . . . II. HISTORY, DEVELOPMENT, PRESENT STATUS AND FUTURE OF AIR CARGO . . . III. INTERNATIONAL REGULATION OF AIR TRANSPORTATION. IV. REVIEW OF THE LITERATURE. . V. METHODOLOGY 0 O O O O O C 0 VI. RESULTS OF THE QUESTIONNAIRES . . . . . . . VII. ANALYSIS OF CASE HISTORIES. VIII. SELECTED AIR CARGO SECURITY IX. ADMINISTRATIVE ROLES OF THE X. RECOMMENDATIONS . . . . . . XI. SUMMARY AND CONCLUSIONS . . BIBLIOGRAPHY. . . . . . . . . . . APPENDICES. . . . . . . . . . . . PROBLEM AREAS . SECURITY DIRECTOR PAGE 11 27 38 55 7O 91 165 190 200 217 225 230 TABLE OF CONTENTS CHAPTER I. INTRODUCTION. . . . . . . . . . . . . . . . . The Problem . . . . . . . . . . . . . . . Statement of the problem. . . . . . . . . Importance of the thesis. . . . . . . . . Definitions of Terms Used . . . . . . . . . Air mail. . . . . . . . . . . . . . . . . Air express . . . . . . . . . . . . . . . Air freight . . . . . . . . . . . . . . . Air cargo . . . . . . . . . . . . . . . . Air cargo handling companies. . . . . . . Passenger mile or revenue passenger mile. Ton mile or revenue ton mile. . . . . . Carrier . . . . . . . . . . . . . . . . Consignor or shipper. . . . . . . . . . . Consignee . . . . . . . . . . . . . . . . Air freight forwarder . . . . . . . . . . Domestic trunk lines. . . . . . . . . . . Domestic local service lines. . . . . . . International and overseas lines. . . . All-cargo lines . . . . . . . . . . . . . Modus operandi. . . . . . . . . . . . . . Interpol. . . . . . . . . . . . . . . . . Organization of the Remainder of the Thesis PAGE CHAPTER II. HISTORY, DEVELOPMENT, PRESENT STATUS, OF AIR CARGO. . . . . . . . . History of Air Cargo. . . . . Introduction. . . . . . . . Air mail. . . . . . . . . . Air express . . . . . . . . Air freight . . . . . . . . DevelOpment of Air Cargo. Industry's changing role towards air cargo. Harvard research study. . . Stanford research study . . Present Status of Air Cargo . Air cargo facilities. . . . Air cargo aircraft. . . . . Air cargo sales and service Future of Air Cargo . . . . . Predictions . . . . . . . . Air cargo aircraft. . . . . Air cargo facilities. . . . Air cargo sales and service Summary . . . . . . . . . . . III. INTERNATIONAL REGULATION OF AIR Paris Convention of 1919. . . Air Commerce Act of 1926. . . Havana Convention of 1928 . . TRANSPORTATION. PAGE 11 11 ll l3 l4 14 15 15 15 l6 l7 18 20 20 21 21 22 24 24 25 27 27 28 29 CHAPTER Warsaw Convention of 1929. . . . . . . . . . . . Carriage of goods. . . . . . . . . . . . . . . . Liability of the carrier . . . . . . . . . . . . Chicago Conference of 1944 . . . . . . . . . . . . (Provisional) International Civil Aviation Organization. International Air Transport Agreement. . . . . International Air Services Agreement . . . . . . Bermuda Agreement of 1946. . . . . . . . . . . . . Summary. . . . . . . . . . . . . . . . . . . . . . IV. REVIEW OF THE LITERATURE . . . . . . . . . . . . . . Literature on Air Cargo Security ... . ... . . .-.. Journal articles . . . . . . . . . . . . . . . . Literature on Airline Security Which Mentions Air Cargo Security . . . . . . . . . . . . . . . . . Book . . . . . . . . . . . . . . . . . . . . . . Journal articles . . . . . . . . . . . . . . . . Literature on Security Administration and Related Topics Applicable to Air Cargo Security. . . . . Books. . . . . . . . . . . . . . . . . . . . . . Booklet. . . . . . . . . . . . . . . . . . . . . V. METHODOLOGY. . . . . . . . . . . . . . . . . . . . . Sources of Information . . . . . . . . . . . . . . Exploratory study. . . . . . . . . . . . . . . . Survey of the literature . . . . . . . . . . . . Questionnaire sent to airlines . . . . . . . . . vi PAGE 29 3O 32 34 34 35 36 36 37 38 38 38 43 43 44 46 46 53 55 55 55 56 56 CHAPTER VI. Questionnaire sent to air freight Letters sent to newspapers. Other letters sent. Personal interviews Personal observation. Collection of case histories. Limitations of the Study. Exploratory Study . Formulation of the Questionnaires Pretest of the Questionnaires . forwarders. Distribution and Return of the Questionnaires . RESULTS OF THE QUESTIONNAIRES Airline Questionnaires. General . Question Question Question Question Question Question Question Number and number number number number number number number 7 value of thefts. Items taken . . . Time of thefts. . Location of thefts. vii PAGE 57 58 58 59 59 6O 61 64 66 67 69 70 70 7O 7O 7O 7O 71 71 71 71 72 73 74 74 CHAPTER Persons who commit thefts. Circumstances accompanying losses. Investigation of thefts and losses Question number 1. Question Question Question Question Question Question Question Question Question Question Question Question General. . Question Question Question Question Question Number and number 2. number 3. number number number number number number number number number 4. 10 ll 12 number 13 number 1. number number number number value of thefts Items taken. . . Air Freight Forwarder Questionnaires viii PAGE 75 75 76 76 76 77 77 78 78 78 78 78 79 79 79 79 8O 8O 8O 80 80 8O 80 8O 81 CHAPTER Time of thefts. . . . . . . . . . . . Location of thefts. . . . . . . . . . Persons who commit thefts . . . . . . Circumstances accompanying thefts and Investigation of thefts and losses. . Question number 1. . . . . . . . . Question number 2 . . . . . . . . . Question number 3 . . . . . . . . . Question number 4 . . . . . . . Question number 5 . . . . . . . . . Question number 6 . . . . . . . . Question number 7 . . . . . . . . . Question number 8 . . . . . . . . . Question number 9 . . . . . . . . . Question number 10. . . . . . . . . Question number 11. . . . . . . . Summary . . . . . . . . . . . . . . . . General . . . . . . . . . . . . . . . Number and value of thefts. . . . . . Items taken . . . . . . . . . . . . . Time of thefts. . . . . . . . . . . Location of thefts. . . . . . . . . . Persons who commit thefts . . . . . . Circumstances accompanying thefts and Investigation of thefts and losses. . ix PAGE 81 81 82 82 82 82 82 82 82 83 83 83 83 83 83 83 84 84 85 86 86 87 87 87 88 CHAPTER Conclusion. VII. ANALYSIS OF CASE HISTORIES. Case MEthod . Selection of the Cases. Criteria of selection Sources ... Money Conversion Rates. Cases Derived Cases Derived Cases Derived Cases Derived Cases Derived Cases Derived sumary O O 0 Air cargo thieves Items stolen or lost. From a Book From From From From From Journal Articles . . . . . . . . . . . Newspapers Official Reports . . . . . . . . . . . Questionnaires a Letter . Locations of thefts and losses. Time of thefts. Method of Operation . Conclusion. VIII. SELECTED AIR CARGO SECURITY PROBLEM AREAS . . . . . . . . . Theft of Air Cargo From Vehicles, From vehicles , From buildings. From aircraft . Buildings, and Aircraft PAGE 90 91 91 93 93 93 95 95 122 128 143 154 158 158 158 159 161 161 162 163 165 165 165 166 170 CHAPTER IX. Loss of Air Cargo. . . . . . Fire damage. . . . . . . . Water damage . . . . . . . Inadequate facilities. . . Improper handling procedures Inadequate packaging . . . Documentation and government clearance Misdirected cargo. . . . . Special handling . . . . . Sabotage . . . . . . . . . Electrical power failure . Human cargo. . . . . . . . Labor-management disputes. requirements. Investigation of Air Cargo Thefts and Losses Reporting air cargo thefts. Law enforcement participation. Records of air cargo thefts and losses Company security division. Investigation problems . . Insurance Aspects. . . . . . Management Attitudes Towards Air Cargo Summary. . . . . . . . . . . Security. ADMINISTRATIVE ROLES OF THE SECURITY DIRECTOR. Introduction . . . . . . . . Administrative Roles . . . . xi PAGE 170 171 172 172 174 175 176 177 178 179 180 180 181 182 182 182 183 184 185 186 187 189 190 190 194 xii CHAPTER PAGE Summary. . . . . . . . . . . . . . . . . . . . . . . . . 199 X. RECOMMENDATIONS. . . . . . . . . . . . . . . . . . . . . . 200 Security Division. . . . . . . . . . . . . . . . . . . . 200 Functions. . . . . . . . . . . . . . . . . . . . . . . 200 Organization . . . . . . . . . . . . . . . . . . . . . 202 Cost and number of personnel . . . . . . . . . . . . . 204 Selection of personnel . . . . . . . . . . . . . . . . 205 Physical Security. . . . . . . . . . . . . . . . . . . . 207 Badge and identification system. . . . . . . . . . . . 207 Security guards. . . . . . . . . . . . . . . . . . . . 207 Visitor and vehicular control. . . . . . . . . . . . . 208 Dogs in security work. . . . . . . . . . . . . . . . . 208 Fences and lighting. . . . . . . . . . . . . . . . . . 209 Electronic protection devices. . . . . . . . . . . . . 209 Fire protection. . . . . . . . . . . . . . . . . . . . 210 Lock and key administration. . . . . . . . . . . . . . 211 Personnel Security . . . . . . . . . . . . . . . . . . . 212 Background investigation . . . . . . . . . . . . . . . 212 Other investigations . . . . . . . . . . . . . . . . . 213 Civil Defense and Emergency Planning . . . . . . . . . . 213 Security Education Programs. . . . . . . . . . . . . . . 213 Theft and Loss Investigations. . . . . . . . . . . . . . 214 Recommendations to Shippers and Consignees . . . . . . . 215 Advicetoshippers 215 Advice to consignees . . . . . . . . . . . . . . . . . 216 Summary 216 CHAPTER XI. SUMMARY AND CONCLUSIONS. . . . . . . . . . . . . . . . . Summary. . . . . . . . . . . . . . . . . . . . . . . . Air Cargo Theft and Loss Variables . . . . . . . . . . Air Cargo Theft Variables. . . . . . . . . . . . Air Cargo Loss Variables . . . . . . . . . . . . . . . BIBLIOGRAPHY APPENDIX APPENDIX APPENDIX APPENDIX APPENDIX APPENDIX APPENDIX APPENDIX A. E. F. conclusions 0 O O O O 0 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O 0 Form Letter Mailed to Newspapers. . . . . . . . . List of 34 Newspapers to Whom Form Letters Were Mailed List of 89 Letters Sent to Writer Regarding Air Cargo Security. 0 O O I O O O O O O O O O O O O O O O 0 List of 35 Persons Interviewed by the Writer Regarding Air Cargo Security. . . . . . . . . . . Field Observation Data Form . . . . . . . . . . . List of 16 Airlines and 2 Air Freight Forwarders Contacted During Visits to Airport Cargo Areas. Airline Letter and Questionnaire. . . . . . . . . Air Freight Forwarder Letter and Questionnaire. . xiii PAGE 217 217 219 220 222 223 225 230 232 235 242 245 247 249 257 LIST OF TABLES TABLE PAGE I. Number and Value of Thefts for Two Airlines. . . . . . . . . 72 CHAPTER I INTRODUCTION Acceleration and diversification characterize air cargo's growth since 1945. In the past only a few emergency, perishable, valuable, or fragile products were shipped by air; today almost any and every product is shipped by air, from monkeys to elephants, from tiny transistors to enormous data processing equipment, from a child's doll to gold bullion worth several thousand dollars. Air cargo has steadily increased in volume and value, many times what it was in 1945. Air freight increased from 15 million ton miles carried in 1946 to 595 million ton miles carried in 1959, a growth factor 39.7 times what it had been in 1946; air mail increased from 39 million ton miles in 1946 to 198 million in 1959, a growth factor 5 times what it had been in 1946; and air express increased from 39 million ton miles in 1946 to 59 million in 1959, a growth factor 1.5 times what it had been in 1946.1 United States air cargo carriers from 1946 to 1959 had an impressive growth record of 960 percent, while passenger traffic in- creased only 430 percent over the same period. Due to the increase in volume and value of air cargo and the in- crease in the size and speed of the aircraft carrying it, many security 1 Norair Systems Analysis Group, Air Freight Trends 1946-1970 (Hawthorne: NorthrOp Corporation, 1960), p. 3. 2Ibid., p. 12. problems have arisen that threaten the airline industry, air cargo shippers, air freight forwarders, air cargo insurers, law enforcement agencies, and the economy in general. Satisfactory solutions to these problems, in many cases, have not been offered; as a consequence, there is a certain amount of apprehension surrounding the domestic as well as the interna- tional air cargo industry. To establish a general frame of reference, it is necessary to dis- tinguish between security administration, airline security, and air cargo security. Security administration may be defined as the direction, management and/or execution of those functions or services performed to protect the personnel, information, equipment, property, and other tangible and intangible assets of an organization.3 Security administration also includes the protection of an individual's assets. Airline security con- sists of the protection of an airline's personnel, passengers, cargo, and other assets. Air cargo security is the protection of air cargo. In the past 20 years, air cargo thefts and losses have increased as air cargo volume has increased. No person or organization has ever made a success- ful documented research study into the problem of air cargo thefts and losses, and as a consequence, such a study is badly needed. Hays C. Larkins, ”A Survey of Experiences, Activities and Views of the Industrial Security Administration Graduates of Michigan State University" (unpublished Master's thesis, Michigan State University, East Lansing, Michigan, 1966), p. 56. 4Two "studies” have dealt with air cargo thefts and losses on a limited basis: In 1962, Mr. Donald Fish related his air cargo investi- gative experiences in his book Airline Detective. Also, the International Association of Airline Security Officers distributed a questionnaire on the subject in 1962, to 28 airlines; only eight responded. I. THE PROBLEM Statement of the problem. The main purpose of this thesis is to identify variables in air cargo thefts and losses. To this end the experiences of airlines and air freight forwarders, from 1945 to the present, have been studied intensively. Because of today's door-to-door service, air cargo can be picked up at the shipper's door, by the airline or air freight forwarder, and delivered to the consignee's door; the scope of this study will cover this period. Eventhough some airlines and air freight forwarders believe they have had few air cargo thefts and losses to date, there is nevertheless a need for such a study because of the high volume and high value of air cargo and the complicated methods of operation (M.O.) used by some air cargo thieves. Some companies handling air cargo do not take preventive security measures until after a theft occurs and puts them on notice, instead of before it occurs. Other companies do not take official notice of petty thefts, until a number of them occur or until a large amount of money is involved. When the volume of air cargo was small, some companies could afford to overlook occasional thefts of low value; however, with the in- crease in value and volume of air cargo, such repeated shortcomings might prove disastrous to those same companies. The international criminal is ”moving in” on the cargo industry 5 more and more. Large criminal syndicates operating on a national and international basis are realizing that an unprotected air cargo storage area is very lucrative and a safer ”job” than an armored car or bank Donald Fish, Airline Detective (London: William Collins Sons and Company, Ltd., 1962), pp. 23-24. holdup. Tighter security measures must be taken regarding air cargo, or a carefully planned burglary or series of simultaneous burglaries could bring disaster to any air cargo handling company which happened to be involved. It is not too uncommon today for gold bullion, diamonds, banknotes, and other valuable air cargo shipments to be valued at over $600,000, which is a very conservative estimate. Importance of the thesis. This thesis is important for several reasons. Since this particular type of research study has never been made before, one is needed in order to understand the problem of providing adequate security for air cargo shipments. Air cargo is increasing daily in volume and value, and as an obvious result, thefts and losses of air cargo are also increasing. It is important to document and evaluate in a scientific manner facts regarding air cargo thefts and losses, so that current ideas and suspicions circulating among the various air cargo handling companies can be resolved. This study, hopefully, will be a step towards a better understanding of the air cargo security problem that eventually leads to its control. Also, this study, hopefully, will be a step in the development of a body of knowledge about air cargo security, because it attempts to lay the groundwork for more sophisticated analyses of air cargo thefts and losses. If important variables involved in air cargo thefts and losses are scientifically analyzed and presented logically, airlines, air freight forwarders, air cargo insurers, law enforcement agencies, etc., which are plagued by thefts and losses of air cargo, may be able to benefit from the research findings. The research findings of this study may also benefit other cargo handling companies and companies charged with the protection of cargo, such as railroads, motor freight carriers, contract security agencies, etc., because cargo thefts and losses occur in all of these various areas. The methods of Operation (M. O.) of air cargo thieves, which are presented in this thesis, may enable interested air cargo manage- ment personnel to spot the hazardous areas in their air cargo operations. At the present time there is a considerable variance in the type of security used to protect air cargo. A partial reason for this is the difference in the individual circumstances of the airlines, air freight forwarders, and other air cargo handlers. For example, one type of sea curity operation may be adequate for an airline that has a separate cargo area from the passenger area, but it may be inadequate for an airline that has the cargo and passenger areas together. This thesis will present guidelines to be considered by air cargo management officials and other interested parties, so that they can apply them or adapt modifications of them to fit their particular circumstances. By putting such measures into practice, air cargo handling companies can save money and also insure a larger and more permanent group of air cargo shippers. No shipper wants to ship his products with an airline or air freight forwarder that has a reputation for consistantly losing air cargo. Good security measures reduce the temptation and Opportunity to steal, but they cannot prevent theft and loss 100 percent. A good air cargo security program will "pay its own way” over a period of time, be~ cause it will assist in getting lower insurance premiums, more permanent air cargo shippers, and a good reputation for the airline or air freight forwarder. Relative control, not the complete prevention, of air cargo thefts and losses should be the immediate goal of any air cargo security program, because it is a much more practical one. There is very little space given to the subject of air cargo theft and loss prevention in the literature. This thesis will be a starting point for future research studies on the subject, and also a starting point for future research studies into the various aspects of air cargo security, such as physical security of air cargo, personnel security measures for air cargo personnel, etc. The thesis, hopefully, will create interest in the subject of air cargo security by making the top management of air cargo operations more sensitive to the problem. Usually top management only hears of the relatively large thefts and losses: They seldom hear of the repeated minor thefts that occur much more frequently than the larger ones. As a result tOp management often says, "Air cargo thefts? Oh, we don't have many of those.” II. DEFINITIONS OF TERMS USED Definitions of general terms are offered at this point to provide a better understanding of the contents of the thesis. Specific terms will be defined in the paragraph in which they are first used. Air mail. Letters and packages carried by aircraft and includes air parcel post; the load can run up to 70 pounds and is shipped through the United States Post Office. It_has top priority over air express and air freight. Air express. A service provided by a partnership between 39 air- lines and REA Express (new name for the complete domestic and international surface and air services of Railway Express Agency). It covers a load of 5-50 pounds that is shipped as air express, and it takes priority over air freight, but not air mail. Air freight. A revenue cargo service operated by each airline and does not include passengers' baggage. It has lowest priority. Air cargo. Includes air mail, air express, and air freight, but does not include passengers or passengers' baggage. Air cargo handling companies. Airlines and air freight forwarders. Passenger mile or revenue passenger mile. One paying passenger carried one mile and does not include airline personnel. Ton mile or revenue ton mile. One ton of cargo carried one mile. Carrier. The airline. Consignor pp shipper. Person or organization that initially starts the goods on their journey. Consignee. Person or organization to whom the cargo is shipped. Air freight forwarder. Person or organization that picks up the goods from the shipper, delivers them to the airline, and after the air- craft reaches its destination, delivers the goods to the consignee. Air freight forwarders consolidate small shipments, thereby reducing shippers' rates, and they can also use any airline for shipping. Domestic trunk lines. Air carriers that have permanent Operating rights within the continental United States. Domestic local service lines. Air carriers that operate routes of lesser traffic density between the smaller traffic centers and between these centers and principal centers. International and overseas lines. United States flag air carriers operating between the United States and foreign countries other than Canada, and over international waters. All-cargo lines. Air carriers that operate under certificates authorizing scheduled cargo flights between designated areas in the United States and in one case to the Caribbean and in another to EurOpe. Modus operandi. Method of Operation (M. 0.). Interpol. International Criminal Police Organization, an infor- mation gathering agency and criminal records clearing house for almost all free world countries, not including Communist countries or their satellites, which enables member law enforcement agencies to Obtain criminal activity information without going through regular diplomatic channels. III. ORGANIZATION OF THE REMAINDER OF THE THESIS The remainder of the thesis is divided into ten chapters as dis- cussed below. Chapter II, History, Development, Present Status, and Future 2f Al; Cargo, is a discussion of all phases of air cargo (air mail, air ex- press, and air freight) in an effort to Show how rapidly and drastically the industry has changed. The chapter attempts to show that present facilities are inadequate to accommodate this relatively sudden increase in air cargo volume, and future predictions call for an even greater in- crease in volume. The main problem that has emerged is the protection of air cargo. Chapter III, International Regulation 2f Air Transportation, is a discussion of selected regulations governing the international carriage of goods by air. These regulations demonstrate a need for an agreement be- tween various nations, regarding the international investigation of air cargo thefts and losses. At present no such agreement exists. The chapter also shows that international air cargo regulations are very complex. Chapter IV, Review pf the Literature, is a discussion of the lit- erature on air cargo security, on airline security which mentions air cargo security, and on security administration and related tOpics which are applicable to air cargo thefts and losses. Since little had been written on air cargo security or airline security, it was necessary to survey the field of security administration for material applicable to air cargo thefts and losses. In a remote sense, almost everything written on thefts and losses in industry is somewhat applicable to air cargo thefts and losses; however, no attempt was made to survey all the hundreds of writings on the subject of industrial thefts and losses, because the remote connection with air cargo thefts and losses is not significant. Also, since hundreds of articles have been written on industrial thefts and losses, it would be impractical to discuss them in this thesis be- cause of space limitations alone. Chapter V, Methodology, is a discussion of the many sources of information that were used in gathering the raw data for the thesis and also its limitations. Other aspects covered in this chapter are the exploratory study, formulation of the questionnaires, pretest of the questionnaires, and distribution and return of the questionnaires. Chapter VI, Results pf the Questionnaires, is a discussion of the information obtained from the airline and air freight forwarder question- naires. The responses for each question are given, and a summary of the findings is presented. 10 Chapter VII, Analysis 2f Case Histories, contains a discussion of the case method, the criteria used in the selection of the cases, and the sources of the cases. Conversion rates of foreign currency mentioned in the cases are given, so the reader can more easily understand the value of the stolen items. The facts of the 70 cases are presented, and a number of the cases have an analysis following the facts. A summary of the cases discusses who perpetrated air cargo thefts, what items were stolen and their value, where and when air cargo thefts and losses occurred, and the methods of Operation (M. O.) of the thieves. Chapter VIII, Selected Air Cargo Securiperroblem Areas, discusses some of the more important problem areas involved in air cargo security: theft and loss of air cargo, investigation of air cargo thefts and losses, insurance aspects, and management attitudes towards air cargo security. Chapter IX, Administrative Roles pf the Security Director, discusses the administrative roles each airline and air freight forwarder security director must play, if air cargo is to be most effectively protected from theft and loss. Chapter X, Recommendations, discusses various recommendations made by the writer on the following topics: security division, physical and personnel security, civil defense and emergency planning, security education programs, theft and loss investigations, and shippers and con- signees. Chapter XI, Summary and Conclusions, discusses the more important findings of the study and of the variables identified in air cargo thefts and losses. Conclusions of the writer are given, along with suggestions for further research. CHAPTER II HISTORY, DEVELOPMENT, PRESENT STATUS, AND FUTURE OF AIR CARGO In order to appreciate how drastically and rapidly the air cargo industry has changed and to better understand its security problems, it is necessary to briefly discuss several selected historical events that directly relate to air cargo (air mail, air express, and air freight). Seeing where the air cargo industry has been in the past and how it devel- oped to its present status may indicate where it will go in the future. I. HISTORY OF AIR CARGO Introduction. On December 8, 1903, Samuel Langley made an unsuc- cessful attempt to fly in a steammdriven double biplane. The first successful motorized flight was made by a Dayton, Ohio, bicycle manu- facturer named Orville Wright on December 17, 1903, at Kitty Hawk, North Carolina. It was not until Charles Lindberg‘s 1927 flight across the Atlantic Ocean that commercial aviation really got started.6 In 1936, the DC-3 (cargo capacity 8,500 pounds) was introduced, and it soon became the workhorse of the airlines. During World War II, the C-47 (cargo capacity 8,500 pounds) was used extensively to carry troops and supplies, along with the C-54 (cargo capacity 16,500 pounds). To facilitate moving people and materials on a priority basis in time of national emergency, 6Truman C. Bigham, and Merrill J. Roberts, Tran5portation (New York: McGraw-Hill Book Co., Inc., 1952), pp. 109-111. 12 the airlines and the U. S. Government formed the Civil Reserve Air Fleet (CRAF) and the War Air Service Pattern (WASP).7 Two U. S. Government agencies control the airways: Civil Aero- nautics Board (CAB) and Federal Aviation Agency (FAA). The CAB performs three main functions: It regulates several economic aspects of domestic and international United States air carrier operations and of foreign air carriers who come to the United States in the normal course of their business; it aids other organizations in establishing and developing international air transportation; and it promotes safety in the field of civil aviation. The CAB also investigates accidents involving civil air- craft and recommends preventive measures to the FAA. Violation of CAB orders carries a civil penalty of not more than $1,000 for each offense, and its orders are subject to judicial review by the Court of Appeals of the United States or the United States Court of Appeals of the District of Columbia. The following are only a few of the FAA'S functions: It regulates the certification of aircraft flight crews; it administers air traffic control of civil and military air Operations within the United States airspace; it develops, tests, modifies, and evaluates systems and devices needed for safe and efficient air navigation; it registers aircraft; it leads and directs business and the federal government in developing a supersonic transport aircraft, which would operate safely and economically; Air Transportation Association of America, A Half Century 2f Progress £2 Scheduled Air Transportation (Washington: Air Transportation of America, 1963), p. 8. 8 United States Office of the Federal Register, United States Government Organizational Manual (Washington: Government Printing Office, 1965-1966), pp. 383-385. 13 and it constructs and maintains any federal navigational aids necessary for the safety of aircraft. .Aip‘mgil. In 1911, the first experimental air mail flights were made between two cities on Long Island, New York. Between May and August, 1918, the first regular air mail service began between the cities of Washington, Philadelphia, and New York. The War Department carried the mail at first, using the opportunity to train U. S. Army pilots. In August, 1918, the Post Office took over full responsibility for the mail from the War Department, since by that time, it had its own planes and pilots. When the Kelly Act of 1925 authorized the Post Office to award mail routes to private contractors, this proved to be a significant boost to commercial aviation. Postmaster General Walter Brown shaped the air industry further, when he used the authority granted him in the McNary- Watres Act of 1930 to build a system of trunk and feeder lines, by con- solidating and extending the existing air mail routes.10 In 1934, after a Senate investigation, the U. S. Army Air Corps took over all air mail flights, but due to the high cost and a rash of accidents, the air mail flights were given back to private contractors three months later. In 1935, the first air mail flight crossed the Pacific, and in 1939, the first crossed the Atlantic. Statistics of air mail carried on regularly scheduled aircraft Show that volume has increased greatly: 1938 (12,750 ton miles); 1950 (73,968 ton miles); 1963 (356,601 11 ton miles). 91bid., pp. 396-399. 10Bigham and Roberts, 2p. cit., pp. 110-112. 11Air Transport Association of America, 2p. cit., p. 4. 14 Air express. In 1919, there were two express systems: American Express Company and Southeastern Express Company. In 1929, the Railway Express Agency (REA) was taken over by the Class 1 rail carriers, and Southeastern Express Co. was absorbed into REA. In 1929, REA and a number of airlines formed an air express service, which provided an extensive door-to-door pick up and delivery service.12 If an aircraft is to remain at: an airport more than two hours, the air express is unloaded and put on another leaving sooner. Shipments are also consolidated for efficiency and economy. Statistics of the amount of air express carried on regularly SChecluled aircraft, show a tremendous growth: 1938 (2,173 ton miles); 13 19 50 (37,864 ton miles); 1963 (70,834 ton miles). Air freight. In 1914, the first scheduled air cargo and passenger flight was from St. Petersburg to Tampa, Florida, by the St. Petersburg- Ta-Inpa Airboat Line, which had as its motto, "safety first." Prior to Wor 1d War 11, almost all property shipped by air (except air mail) was cal led air express and was shipped through the Air Express Division of REA. Air freight volume increased greatly, due to the supplies needed duting World War II. Lower rates, redesigned aircraft, more frequent Scheduling, and more dependable service increased air freight volume after World War II, with air freight being carried in the cargo bins of , , 14 passenger aircraft and in the allucargo carrying DC-3 and C-46 aircraft. \ P 12Frank M. Cushman, Transportation for Management (New York: rentice-Hall, Inc., 1953), pp. 27-28, 37. 13Air Transport Association of America, loc. cit. 14R. Dixon Speas, Technical Aspects of Air Transport Management (New York: McGraw-Hill Book Co., Inc., 19537, p. 243. 15 Air freight, handled on an individual basis by each airline, has door- to-door service, but is not as extensive as REA's service. Air freight is landoubtedly the fastest growing segment of air cargo today. Statistics of 1:he amount of air freight carried on regularly scheduled aircraft Show a tzrremendous increase in volume: 1938 (no air freight carried on a r3811 larly scheduled aircraft); 1950 (248,899 ton miles); and 1963 1 (1,023,007 ton miles). 5 II. DEVELOPMENT OF AIR CARGO Industry's changing role towards air cargo. Today, a wide variety (Diff i_tems are shipped by air, such as aircraft engines, household goods, nLElcztiine parts, etc. The largest single category that is shipped by air, n1€i1:t:y Four (CL-44), cargo capacity 66,000 pounds, is unique, because t5t1£3 complete tail end of the fuselage swings Open through an arc of 105 degrees for straight-in loading. For speed, the "Swingtail 44" can h>¢3, loaded in the tail portion and in the main fuselage area simulta- I'1e‘—dely and seemingly taken the international participants by surprise, aSpe cts regarding the investigation of air cargo thefts and losses will 1161\763 to be agreed upon in a conference in the near future, or a con- ‘tfiitllJuation of the problem will add to the already complex nature of air (léilfggo Operations. CHAPTER IV REVIEW OF THE LITERATURE The specific problem of air cargo thefts and losses has, unfor- ttiriately, been the subject of little literature. There have been no lacacaks published on the specific subject of air cargo thefts and losses; licyurever, there have been three journal articles published that deal with tI1e3 subject. One book on airline security and four journal articles nnear:t:ion air cargo thefts and losses. Seven books and one booklet dealing V'thiki security administration and related tOpics have sections applicable ‘t<3 éazir cargo thefts and losses. 1. LITERATURE ON AIR CARGO SECURITY Journal articles. Mr. R. C. J. Gordon, an underwriting member of I"10)7d's of London Insurers, wrote an article on the "Problems of Air Cargo Security," in which he vigorously attacked air cargo security. 1&11: - Gordon stated that the problem of air cargo security had been dis- cussed several times in recent years, but there were few signs that iali~1?line or airport management personnel were serious enough about it to éal<21t2ually do something to prevent air cargo thefts. In making numerous recommendations based on observations made at £31 . . . ifew airports, Mr. Gordon stated that it should be pOSSible to use air \ 45R. C. J. Gordon, "Problems of Air Cargo Security," Security “‘<§Ej§ig£££) 6. 47- 48, February, 1964. 39 cargo vehicles only within the boundaries of the apron (runway adjacent to terminal), to limit access of trucks and personnel to the cargo area, to have the right to search all personnel and vehicles entering the air cargo area, and to patrol the fences around the cargo area. In Stuart, the security of an airport should be run like a dock security program at a well-run port. To insure good air cargo security, several other points were made 1337 .Mr. Gordon: The airline should not hire any cargo handling personnel M7i.tfli a previous criminal record. Every airline should have its own scn11"fOr the storage of valuable goods. All airlines should have the ITiJgII t to search all personnel who leave the air cargo area after working hOur S. Because Mr. Gordon's article was based on little, if any, documented Scientific research, and because he made such broad, sweeping statements c:‘:3“1<.‘.erning air cargo security, he left himself "wide open" for criticism. :Ilt: Vvas not long in coming. In the very next issue of the same journal, at the editor's request, ITeply to Mr. Gordon's article was written by Mr. Gordon Fraser, at that time, Chairman of the Airline Security Officers' Association and IleE=£id of Quantas' (Australia's national airline) security division for (:ITU’GEr 16 years. After stating that Mr. Gordon had discussed some very £§;<:’<>d points in his article and that the Airline Security Officers' Ié§I§SHESOCiation was pleased to know that an underwriter from Lloyd's was jL t1tierested in air cargo security, Mr. Fraser began his dissection of 40 Mr. Gordon's article. Mr. Fraser pointed out that it was not always possible or practical to model air cargo areas after well-run dock security programs at a port. The passengers and cargo are often transported on the same aircraft, making it impractical for the aircraft to make two stOps at an airport, one at the passenger terminal and one at the cargo terminal. Some airports do not have a separate cargo terminal, and it is necessary to st:c>re the cargo in a room just off the ticket counter. Passengers must 1161\7E! access to the terminal and their baggage. Airline schedules would 1161\762 to be changed to allow an aircraft to unload cargo at a separate 1