Stopping the export of stolen vehicles —
By Hanna Beydoun, Insurance Bureau of Canada —
Canada is in the midst of an auto theft crisis that is costing Canadians billions of dollars. Auto theft losses skyrocketed more than 254% between 2018 and 2023, surpassing $1.5 billion in direct claims costs for private passenger vehicles in the last year. And that figure doesn’t include all the economic and emotional costs associated with the fallout of auto theft, such as policing and judicial costs, as well as the impact on Canadians feeling safe and secure in their homes and communities.
Auto theft is a complex issue, and combatting it requires a whole-of-society approach that includes law enforcement, insurers, auto manufacturers and all orders of government. It also includes everyone involved in shipping and exporting, such as exporters, freight forwarders, ocean carriers and trucking companies.
Governments and law enforcement have taken action to help address the auto theft crisis, which will help reduce the incidence of auto theft over time. However, there’s more to do. Carjackings in Canada are on the rise, particularly in major cities, driven largely by organized crime targeting luxury vehicles for export or resale.
Criminals will exploit any loophole to ship stolen vehicles out of Canada and into more lucrative markets, making it imperative to ensure all gaps in the auto theft transportation export network are closed. The auto theft transportation export network refers to an organized export shipping system or network used in the illegal theft and export of vehicles. By taking advantage of weaknesses in this system, criminals transport stolen vehicles to other countries where they can be sold at a significant mark-up, driving higher profits. These networks are often sophisticated, using advanced methods to evade detection, such as altering Vehicle Identification Numbers (VINs), forging documents and employing fraudulent shipping practices. The ultimate goal of the criminal network is to move stolen vehicles across international borders, making it difficult for authorities to trace and recover them.
It has been widely documented in media that many stolen vehicles are shipped overseas. But how do these vehicles leave the country undetected? There are several methods. In many cases, vehicles are concealed in cargo containers, which are then placed on ocean liners and depart before they can be intercepted.
Here’s what the typical auto-theft export transportation network looks like:
- Shipper or exporter: This is the entity responsible for initiating the shipment of goods. In Canada, the lack of stringent regulatory requirements means that almost anyone can become a shipper, making it easier for criminal elements to enter the export process.
- Freight forwarder or customs service provider: This is where the comprehensive logistics of the export process are handled, including booking cargo space on ocean carriers. They act as the intermediary between the shipper and the carrier, managing the necessary documentation and compliance checks. However, in cases involving stolen vehicles, these checks can be bypassed or inadequately performed.
- Drayage/trucking companies: Drayage is the transportation of shipping containers by truck to their final destination. This is typically shorter-distance travel between modes, like trucking to rail, or rail to ocean carrier. These trucking companies are often hired by ocean carriers to move containers to the next stage of transportation, playing a crucial role in moving stolen vehicles closer to their international destinations.
- Rail companies: Rail companies transport containers over longer distances within the country, moving them from inland locations to major ports for export. Stolen vehicles may be concealed in containers and moved undetected across provincial borders to ports where they can be shipped overseas.
- Ports: Major ports, such as the Port of Montreal, serve as critical hubs in the export process. IBC estimates that the majority of stolen vehicles from Ontario and Quebec are funneled through this port, where they are loaded onto ships for international export. The sheer volume of traffic and the complexity of port operations make it difficult to identify and intercept containers carrying stolen vehicles.
- Ocean carriers: These are the ships that carry cargo, including stolen vehicles, across international waters. In Canada, 85% of shipping trade is handled by just 10 foreign-owned companies. By law, once a container is loaded onto a ship, it cannot be opened during the journey, which effectively seals its contents until it reaches its destination. The transactional nature of these carriers means they often lack the incentive to thoroughly verify the legitimacy of the cargo they transport.
A lack of oversight and regulation within the auto theft transportation export network allows bad actors within the freight forwarding community to easily facilitate the illegal shipment of stolen vehicles out of the country. Rogue, “fly-by-night” operators established with the intent of subverting the system present fake or counterfeit documents to ocean carriers, misrepresenting the contents of cargo shipments. These fly-by-night operators are often set up quickly and operate only for a short time, to avoid getting caught. Their operators exploit the system, listing stolen vehicles as innocuous items like furniture to evade detection.
Even well-intentioned freight forwarders can sometimes unknowingly transport stolen vehicles due to the absence of legislative accountability for the goods they ship. Without clear regulations and mandatory checks, legitimate freight forwarders might inadvertently become complicit in the export of stolen property, highlighting the need for stricter oversight in the industry.
Before the stolen vehicles make it to the ocean carriers, they are often put on a truck or rail car. Drayage truck companies and railways collect little information about what’s in the containers they transport, and are not always under an obligation to inspect the contents of the containers. There are few regulations that require trucking or rail companies to inspect what they are shipping.
Once the stolen vehicles are taken to a port to be loaded on an ocean carrier, there simply aren’t enough Canada Border Services Agency inspectors to inspect all of the containers. This is where better information and intelligence sharing are paramount, as this would allow for targeted searches of container ships, regardless of resourcing levels.
Closing the gaps: Continue reading the article for Insurance Bureau of Canada’s recommendations to ensure accountability.
About Insurance Bureau of Canada
Established in 1964, Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up the vast majority of Canada’s highly competitive property and casualty (P&C) insurance market. As the leading advocate for Canada’s private P&C insurers, IBC collaborates with governments, regulators and stakeholders to support a competitive environment for the P&C insurance industry to continue to help protect Canadians from the risks of today and tomorrow. IBC believes that Canadians value and deserve a responsive and resilient private P&C insurance industry that provides insurance solutions to both individuals and businesses.
For more information, visit www.ibc.ca. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.
Source: Insurance Bureau of Canada (IBC)
