Grand Theft Cargo in Mexico

welcome back everyone to the stock out i am grace sharkey and is this mike bowden let me rub my eyes a little bit this morning we have with us of course Thomas Watson from Loaded and Rolling and Truck Tech of course we'll dive into a lot of the work that he's doing today but I want to say you know thank you to everyone for watching the show remember that we have a wonderful community that of course goes with the show too where we send out a newsletter every week so at the end of the show if you aren't a part of that community make sure you head to freightwaves.

com at the top of the page you'll see newsletters and make sure, of course, that you join the stock out there under Market Insights. And then while you're at it, maybe even throw in some Fraud Watch. And I guess since Thomas is here, we'll give a shout out to his loaded enrolling in truck tech newsletters as well, Thomas. And, you know, Thomas, it's interesting.

You know, of course, this show, we like to talk about CPG and retail, of course, in particular. But an interesting study came up during my Fraud Watch newsletter workings that I thought would be interesting for this show. And it's their wonderful quarterly report on cargo theft within Mexico in particular. Thomas, I'll give you a guess.

Do you think it went up or down this quarter? I'm going to go with an up. I mean, you know, there's a lot more stuff. There's a lot more stuff to steal.

The weather is great. The business has got to be booming. Yeah, you know, the economy is, I wouldn't say it's doing bad per se. It's just maybe like we're at this like flat line right now of what's to come around the corner.

And whenever that uncertainty comes around to we always see an uptick. But it is interesting as we dive into this report, we'll go over some of the statistics that came along with this. And before we get into this, though, Thomas, I'd love if you could maybe give a, for those watching in particular who don't really understand the threat of moving freight within Mexico, could you maybe give a little background of the dangers that the carriers see driving through those countries, this country as well?

I'm going to put on my political science hat. The common issue with Mexico right now revolves around control, which the country is basically parceled up into various cartel related areas. The cartels really operate in those border regions as a quasi form of government. You know, this is very inhospitable regions.

If you look at your geography map, if you think about with most of Mexico, it's very mountainous. It's very rough and difficult terrain. And so what we're looking at in terms of cargo theft is the lack of central government's ability to actually police these areas extended to the roads. And so if you don't have a very functioning government in those areas, it's going to be rife for disruption.

And so that's one of the funny, I guess the real irony is that we have nearshoring. We're having a lot of movement into Mexico with supply chains. But the very unfortunate thing is, is that, you know, you can't really bring it up without mentioning Qatar cartel related activity. Sorry, Qatar or Qatar.

I'm not making fun of you guys. But with cartels, just for instance, right now we're live. If I named a specific one, I bet you one of them through their PR campaign would send me a nasty gram asking how my family's doing. And so for commentators and stuff, the safest thing is to say that it is an ongoing challenge to make sure that these areas are safe for your cargo.

And if it's the federal police is usually in better shape, but the state police and other entities within those border states are definitely, let's say they're facing some headwinds. Yeah, and the statistics actually are there to showcase that too. So overall, it looks like about 86% of all cargo thefts within Mexico did happen in that central region that you spoke of, but also the western regions as well. But 61% of that 81% was central.

So yes, heavy in that central area where I think it lacks the infrastructure, probably just resources in particular to really stop these crimes as well. And unfortunately, as Thomas put on there for a second, they are showcasing even more violence. About 81% of cargo thefts in the region have some type of violent act along with it. And 84% of the total cargo thefts that happened within the 10 Mexico states as well had some type of violence.

So it's not surprised to see that. I think that's the biggest fear, right, is not only is there cargo thefts like we see here in the United States, but the violent aspect is much more prevalent there as well. So it's interesting, too, to go into a little bit more for all those planning freight, especially we'll get into this weekend, right, and what to prepare for that. 82% of thefts occurred Monday to Friday, between Monday and Friday.

So we're looking at more between that Tuesday, Thursday range. So interesting enough, it wasn't over the weekend, right? It's during the week where people might be a little bit more, of course, moving more, right? Happening, of course, if we're seeing those thefts in those central areas, it's likely they're passing through multiple states as well.

So it's not really happening too much on the weekends. It's actually happening more during the week. And specifically, Tuesday and Friday showed about 69%, which makes sense. Tuesday, you're probably on the road.

It's a better chance of getting pulled over by a cartel. And then Friday as well, getting to your end deliveries, especially if those deliveries are being delivered in incorrect places or there's some type of fraud involved, right? BOL mix-ups, et cetera. It's likely to see those too.

Often too, a big thing to note, most important, especially I think for when we're looking at parking and drivers getting up and ready in the morning as well. 6 p.m. to midnight was about 31% of those cargo theft incidents.

There were quite a few though, 28% between 6 a.m. and noon. So Thomas, would you say I think, especially that 6 a to noon I would assume that probably has a lot to do just with with carriers probably over the road and then getting pulled over by cartel members and being taken over while in transit correct You've got to get highly motivated.

I'm assuming it's kind of - you've got to look at this like a business for these guys. You know, 6 a.m. to noon, those are your try-hard folks, you know, early to bed, early to rise kind of fraudsters.

And we're looking at that 6 p.m. to midnight. You know, those are the night owls.

you're looking at, it's kind of a secondary economy that, like a black market of these goods that are being stolen. That's why when you look at some of the data, they really like food and beverage of all the things, like of all the things you would sell, like low margin food and beverage. And so, I mean, you know, the other thing it ties into the reasoning is vehicles are in movement. A lot of times from 12 to six, those are kind of your prime hours.

You know, preferably you get unloaded in the morning, you get reloaded, you keep rolling, you try to deliver the next day if it's a shorter haul, like a lot of these, you know, theft by day and week. One of the things I think is fascinating with these charts, and this is just a statistical blurb. When you ever see just percentages, you also want to see the total number. Because like I'm looking at this right now and I'm thinking, man, I got that 31% from like 6 p.

m. to midnight. I need to tell my drivers X or Y. But we also want to see how many instances of occurrence happened during that time.

Is this like 50 cargo thefts? Is this 500? Is this 5,000? How punkered should I be?

That's one of my fun little things to point out. If you ever see a study in a statistic that just shows you percentages, you also need to know the context of the amount out of the total. As in half of my fish in the Tennessee River are not edible for food. But how many of those fish theoretically are in the river?

And how many would it take for me to eat to get sick? And so I love cargo theft data. I just have a bone to pick. This is a spicy live take.

If you're just only using percentages without context, give me some more context. Because I need to know, like, what level is my terrorist DEF CON threat level? Remember the early 2000s? We had, like, magenta and orange and red.

Like, what's my cargo theft threat level color for the day? Well, I will say on that note, too, we are talking about fraud, right? So I think a big problem with all of this, right, in particular, too, is like what's even being reported. I mean, that I think is a big reason why we're seeing a huge uptick in numbers just in regular domestic fraud incidents as well, right, is because the community is finally realizing, oh, in order for us to fix this problem, we should probably communicate this problem even exists to people when it happens.

instead of, I would say probably here more in the United States, that's probably a little bit more fueled by just embarrassment and not wanting to tell your shippers and those involved what happened. It's just like, well, what do we owe you? Let's write a check and pretend this never happened. Where I think in Mexico, it's likely that there is maybe a little bit more political arrangements involved with who you're reporting it to.

Especially, I mean, a lot of this stuff is happening out in the middle of nowhere. We talked about that central region as well. Some level, it's like, who am I even calling to get this fixed? So definitely something to point out and something I always kind of think about too, when I see huge numbers of increases in reports because I think just, again, we're finally starting to report these as a country as well.

So on top of that, let's get into, we got some more percentages for you, Thomas, your favorite things. I want to talk about the type of goods that we're seeing most often. And I think this makes sense. We see a lot of these same type of trends as well within the United States too.

There was a five percent or five point increase uh about 34 percent total of food and drinks uh which is common here in the united states a big uptick of course uh in avocados uh not surprised by that either uh a big increase in auto parts uh four point increase i i wouldn't be surprised if that's because we're seeing more of those type of goods moving through the country as well uh we also saw points increase in chemicals and home and garden type of appliances uh and uh i'd say probably right lawnmowers things like that as well um and uh the same uh when it goes to it comes to trucks it looks like tractor trailers right the bigger guys the one that hey if we take this over if we stop this truck we're gonna get more out of it uh with box trucks of course behind at 11 but i say I love saying it behind Thomas, like, um, the, the box tricks need to get stolen more often, but it makes sense.

I mean, if you're going to go and, uh, take over a load or cartel a load, you're going to go for the biggest bang for your buck, which is going to be the bigger trailers as well. And, you know, Thomas, I'm interested from your perspective, uh, as we see more freight, right. Moving through Mexico. Uh, do you think, have you seen any signs of Mexico, Mexico government looking to try to tackle this problem more and more from your perspective, or do you think they're still behind, especially in that central region?

It's really hard for the Mexican government to tackle it. If you haven't noticed in the past 10, 15, 20 years, people who try to get voted in and tackle the cartels also mysteriously end up with things like lots of bullet holes in them. And so there's a very real and clear and present danger for anyone wishing to take on the cartels. That's why you've noticed I haven't mentioned a specific cartel.

I can talk generally about it, but unfortunately, there is a safety hazard in terms of tackling cartel-related activity and the failings of the Mexican government, which some commentators have said that basically the borders are a failed state. Others have said that, well, it's not a failed state. It's the lack of the central government. That chart that you showed showing the majority of the fraud being in that centralized region.

What's fascinating is for the state of Mexico, as in the state with the big S, not a small state, is that they are most active and most in control in the central area. So I'm going to give a counterfactual here. Is it the fact that the reason this centralized area is so large, is that because there's actually enforcement capabilities? Because you got to imagine that the cartels really operate in, you know, Chihuahua, that Nuevo Laredo, those little areas, depending upon the location of it.

Could this also be the fact that they not reporting it Because if the fraud does happen in those northern regions there not really much of a centralized government to really complain to And they find out real quick who complained if you took their specific load So that's one of those things where if you look at a study, is it like the water is wet study if it rains? You know, streets are streets are wet by the increase by 15 percent. But then we also take into account that maybe it rained the day before.

So that's one of those things where, yeah, you can't, looking at stuff being taken over by cartels, food and beverage is fascinating. It's stuff you've got to be able to flip quickly. If you're a criminal, you know, car parts have things like stamps. I can find the product code.

Lawnmowers, you know, those are well-established supply chains where I can figure out what shipment got taken, and it's easier to kind of figure out who stole it. But if you're looking at like a bag of potato chips, for instance, nobody really cares about the potato chips. So it's like low-hanging fruit for fraud. Because you've got to imagine when these things are happening, you have like 60-something percent happening in transit.

They're scoping out the distribution center. They know what's coming out of the facility. They've got a guy on the inside who probably told you when the shipment comes out. And so I love the fact that a lot of the fraudsters are just targeting food and beverage.

It's almost like they're trying to have their own form of grocery stores. Quite literally. every once in a while you know i'll go to like a local liquor store and there's just like a big old uh pallet of something just sitting in the middle of the shop and i'm like interesting order we've got going on here but i'm not gonna throw my buddies under the bridge you know we'll just uh i'll i'll hope that they're being as ethical as possible running that liquor store right we can all hope um getting let's move on to some some tariff talk because i'm sure our audience is like, wow, we are at least 10 minutes in this episode.

And Grace hasn't mentioned tariff tariff once, you know, and that's usually how we start off this show. So I figured, you know, bring it in with a little bit of danger, start off a little bit of spice, and we'll get into the tariffs here as well. And of course, I want everyone to go to freightways.com because Stuart did, of course, put up another article on the page for American Shipper that talks about scene record TUs, of course, coming in to the United States.

Now, Thomas, I know you spent a lot of time in sonar as well. What are your thoughts on the current freight market and what we should expect over the next couple of months or more so, should I say, over the next, what, 90 days or so with tariffs as well? It's a tough situation. The crystal ball is really hard because so we have theoretically on one side we should see uh this is what the common thought process is is that now with the tariff pause where everyone's going to ship in over this 90 now 80 something day period probably they're going to ship all their stuff they're going to front load it they're going to get it staged for christmas which typically happens right now and then uh consumers are somehow magically going to buy more stuff and then that stuff is going to say another demand spike because consumers in this model are so price sensitive and they're so educated enough that they're going to say, I need to save 10, 15, or double for my crappy Walmart goods.

It's going to be one of those things where, so from a freight market standpoint, we've seen everything from a small blip and a sugar high to a sugar crash in Q3, and then maybe something that's normally Q4 to, oh my gosh, it's going to be like COVID. We really don't know the answer. And the reason we don't know is it's all about the consumer. These are replenishments.

These are shipments. Right now, truckload capacity is plentiful. It is at the kind of equilibrium. So last year, it was really crappy, 3% rejection rates.

That's hungry, hungry hippos level on the hunger scale. Now, we're really kind of in this equilibrium on the contract space. Now, the spot market space is still a lot lower. It finally got back to where it was last year in terms of the first year of seasonality being last year.

So But the biggest question is going to be, are people going to buy stuff? Because at the end of the day, a lot of these goods, especially with De Minimis Exemption coming out, they're going to become more expensive and this apparel and stuff like that. It's just like, how many TVs are you planning on buying? How many fridges do you have?

A lot of the commentators and talking heads are splurging out because they're somehow worried that we're just not going to get access to TVs. And I think the American consumer has been in such a tough spot. Literally the upper incomes, right? Like the top 20% of incomes in the U.

S. has been driving like half of consumption. And so it's really up to rich people. And so if rich people stop buying, then we're in for a world of hurt.

Because the poor is in the middle classes. They're already sitting out there. It's already halftime for them. So we got two more quarters.

We'll see if upper income Americans keep this party alive. But for the most part, it's also you see a rise in cargo thefts for things like food and beverage. It's increasingly difficult to predict. And, you know, let's say with sentiment as well.

Right now, sentiment is bifurcated along party lines. You ask a Republican, they say things are going to be great. You ask a Democrat, they say, oh, we're in a recession. Now, prior to the election in 2020, the most recent one, 2024, you know, it was the exact opposite.

that Republicans were claiming that, oh my gosh, the economy's in the pooper, while Democrats saying, hey, things are doing pretty well. So our data sources are really struggling. The last thing I want to say, especially with tariffs, is the people who complain the loudest right now are usually the ones whose hands are in the honeypot. Yes, you are exploiting cheap labor to make your toys.

Congratulations. You can complain that they're not making in the U.S., but it's also one of those things where is our labor set up to make it, or have you not found a machine shop?

I know plenty. I've had a lot of plastic stuff, tons of resin in Ohio and Midwest. You can find some plastic fabricators. So it's very fascinating looking at discussions on LinkedIn and the X platform because, you know, while being an expert in full truckload, I also know that right now we are at the stage of hurry up and wait.

So step one is let's see import bookings, right? This is how we'll know. Tons of bookings come in. So we know that that should be more truckload.

Doesn't take a rocket scientist to figure that out. But step two, which is intermodal players. they are hungry as well. Intermodal has been having issues in terms of they need more things to haul.

And when you think of the port of LA and Long Beach and the West Coast, those are the perfect things to put on rail if you're not in a hurry. So when we're talking about this bullish booming trucking, we need two things to happen. One, we need a crap ton of stuff coming across from China specifically hitting these West Coast ports And two we need intermodal to drop the ball which right now they been trying really hard like trying to get into shape after a breakup They going to Orange Theory They getting in shape Their service level is improving So will they take that away from truckload Because truckload does a great job on the West Coast when you need speed or you just need it to go a certain way that it doesn't fit a rail network.

So, you know, when we're making these broad blanket statements, the real answer is give me 30 more days. Because right now it's we're seeing an uptick in rates. We're seeing an uptick and rejection rates and spot rates. But at the same time, is that because it's produce season, which typically constrains capacity?

Is that somehow front-loading inventory causing up and downstream ripples based on survey data? And survey data is notoriously difficult because I will say one thing, but I will do another. Or is it an actual structural movement? It's really hard to tell.

But I know for sure right now, I guess summarizing it, putting a little bow tie on all of this tariff talk is, you know, we really have to see a situation where if the ports start getting backed up and the rail starts crapping the bed after this all comes in, which will take another few weeks, then we'll know for sure there's hope. Thomas said, I'm going to show him today and I'm going to burn this podcast down to the ground. I got a few pet peeves. The channel again is doing it.

and I love the coffee mug too. That's the perfect touch to it all. No, I, I love those points and you're right. It's, it's tough because, uh, yeah, it is a fun job right now because that is the exact answer.

It's like, give me 30 days and I'll give you my answer. Here's what you shouldn't trust, which is the engagement bait farming, which is, oh my gosh, this is apocalyptic. There's going to be a bullwhip effect. We're going to see the highest, the highest life's going to be great.

If someone says that the answer is no, just, No, stop. This is one of those things where the correct and responsible thing, if you're in a position where you get to see the data, which is we see things are getting better, but there's about three or four other stars that have to align before it's going to be bonanza. And we really, because of how complicated black boxes these supply chains are, we really won't know the answer until it becomes increasingly obvious that we should have known the answer.

and people will get mad. They'll say, well, why aren't you Freightstradamus? Why don't you just know? I was like, well, good luck with that.

You ever try to figure out your ETA on your Amazon package? You ever try to figure out a tracking number for UPS? You can't even figure out when my cat food comes in two days. Don't be trying to tell me that we're going to accurately predict this thing like 14 days out.

Well, and talk about the rhetoric of it all. For all those out there, it's funny. Everyone's been talking about the switch. Will the switch get here on time?

Will the switch to be here on time. Hey, here's a fun fact. Don't get the switch to, it actually sounds terrible. It's you can't modify it or it'll take, it'll literally shut down and do some deep dive into the switch as well.

And realize actually don't buy it and don't even worry when it's going to get here because it's not worth it to begin with. Uh, Thomas, we've got to call you a few minutes here as well. I I'd love to give you some time to of course let the audience know about your shows. I mean, you've had some wonderful content, especially on the truck tech side, you've been traveling to the ACT Expo and doing all the fun stuff.

What can people expect from the show for the next couple of weeks? Well, if they want to check it out, I'll give them the, here's the spiel. Loaded and rolling truck tech. Check them out.

Newsletter phrase.com slash loaded and rolling slash truck tech. Truck tech became fun. I'm going to talk about that one.

I took over from Alan Adler. He retired recently. Amazing fella. Definitely had a huge impact in terms of reporting in the space for freight waves.

And so getting to take that over has been really fun. I love the autonomy aspect. That is one of the most fun things ever because, you know, this is the stock out. We're talking about CPG and other trends.

The funnest thing is, is the very customers that are adopting these middle mile autonomous trucks and stuff and box trucks as well. You know, shout out to Gatic and those folks is going to be your Walmarts, your Tysons, your large grocers and stuff like that. So there's a lot of talk right now because remember I talked about engagement farming. well, everyone's worried about autonomous trucks and taking their jobs and yada, yada, yada.

Well, we're going to see these large private fleets start, you know, dipping their toes into it. Now, it's not going to be like a Terminator Skynet flip the switch moment and we have all these trucks. We're seeing very measured, you know, 10 trucks here, five trucks there. And that's one of those very fascinating things that it's like getting a conversation when you talk and you listen to Steve Jobs talking about like iCloud.

And he talked about it in 1997. He was like, I'm tired of carrying around computers. We didn't really get iCloud really working until like the mid-teens, the 2010s and stuff, or 2005 to 2015 range. And so imagine with autonomous trucks, it's the same thing.

You got a lot of people discounting autonomy, battery, electric, and other stuff. But you can see which way the wind is blowing because drivers are expensive and unruly. And so you can either talk about the poor quality of drivers on the road, or you just replace them with the robo truck and certain applications. And so that's probably the coolest thing, I think, with Truck Tech right now, going to Act Expo, going to Manifest.

It's all about AI, but I really like the AI in the physical space. Those things are cool. Robot arms, robot cassette tape deck things. You know, it's really fascinating because a lot of AI we think is pie in the sky software.

But I think the biggest trend over the past three or four years and why Truck Tech's cool right now is that it's becoming physical applications. And we're putting that AI to work in the real world. Yeah, and we'll be talking, of course, about a lot of these topics this week. We actually have our virtual domestic supply chain summit happening this Wednesday.

So make sure you head to live.freightwaves.com to get ready for that. And then for everyone who loves the content Thomas is talking about, in July, we have our Enterprise Fleet Summit.

But we also have another in-person event coming up in July, our supply chain AI symposium. So if you had a great time at our fraud event or didn't get a chance to go to that event, then this is one that you're going to want to check out as well. So, again, head to live.freightways.

com to check out all those events. And, of course, F3, which will be coming up in November, too. Thomas, thank you so much for joining me. For our audience, we'll be back next week.

Well, actually, no, Memorial Day weekend is coming up. So we'll be back the following week. Until then, everyone, enjoy some shopping this weekend. Thank you.