Vehicle crime in the Netherlands
A research into freight exchange fraud
E.V.A. Eijkelenboom
Erasmus University Rotterdam
Erasmus School of Economics
Date: August 2012
Supervisor: Mr. Dr. P.A. van Reeven
Student number: 304873
Master program: Urban, Port and Transport Economics
Abstract
Road transport is a vital part of the Dutch economy. Unfortunately road transport crime occurs frequently in various forms, disturbing the market and creating losses. This thesis aims to start academic research into freight exchange fraud, an upcoming form of crime, and to enhance understanding of vehicle crime in the Netherlands. Vehicle crime originally consists of three components, namely cargo theft, vehicle theft and combination theft. Is freight exchange fraud a new component of vehicle crime or is it an innovation and did vehicle crime increase in total? Or did vehicle crime undergo a change resulting in innovation of vehicle crime and do the same actors behave differently?
Our research investigates if freight exchange fraud is an addition to vehicle crime in the Netherlands. We perform a correlation analysis and a vector autoregression to retrieve information about relationships and dependencies between the different components of vehicle crime. Results of our research are mixed. Our research indicates that criminals stealing cargo or vehicles can be seen as experts, who are operating in a homogeneous group of actors. If circumstances remain unchanged, criminals are expected to remain stealing. Cargo theft criminals are found to be different than vehicle theft criminals. We did not find statistical significant evidence for an additional component of vehicle crime. Based on a descriptive analysis freight exchange fraud does seem to be a more advanced way of stealing cargo, vehicles or combinations and can therefore not be seen as an individual component of vehicle crime.
Keywords: Vehicle crime, freight exchange, fraud, vector autoregression
© E.V.A. Eijkelenboom 2012
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission, in writing, from the author.
Table of Contents
List of figures iii
List of tables iii
Acknowledgements v
Chapter 1: Introduction 1
1.1 Vehicle crime 1
1.2 Aim of the research 2
1.3 Structure 3
Chapter 2: Freight exchange fraud 4
2.1 Liberalisation of EU freight transport 4
2.2 Freight exchange 7
2.2.1 Definition 8
2.2.2 Membership procedure 9
2.3 Freight exchange fraud 11
2.3.1 False document companies 12
2.3.2 Company take-over 13
2.3.3 The mole 13
2.3.4 Consequences 14
Chapter 3: Data and methods 15
3.1 Data description 15
3.1.1 Data transformation 16
3.2 Correlation 17
3.2.1 Model I 17
3.2.2 Model II 22
3.3.3 Summary and concluding remarks 27
3.3 Model set up 29
3.3.1 Model I 31
3.3.2 Model II 34
Chapter 4: Results and analysis 37
4.1 Model I 37
4.2 Model II 41
4.3 Freight exchange fraud – descriptive 42
Chapter 5: Conclusion and recommendations 46
5.1 Conclusions 46
5.2 Policy recommendations 48
5.3 Recommendations for further research 51
List of references 53
Appendix 55
A. Legal Framework 55
B. Data description 59
B.1 Data characteristics 59
B.2 Chow test 60
C. Vector error correction model 60
D. Model I 61
D.1 Stationary tests for model I 61
D.1.1 Cargo theft 61
D.1.2 Combination theft 63
D.1.3 Vehicle theft 66
D.2 Lag selection for model I 68
D.3 Impulse response function Model I 69
D.4 VAR analysis and impulse response function for Model I including first difference of cargo theft 70
D.4.1 Lag selection 70
D.4.2 VAR analysis 71
D.4.3 Impulse response function 75
E. Model II 75
E.1 Stationary tests for model II 75
E.1.1 Members 75
E.1.2 Posted advertisements 78
E.1.3 Viewed advertisements 80
E.2 Lag selection for model II 83
E.3 Johansen cointegration test 84
E.4 Impulse response function Model II 85
F. Freight exchange fraud 86
F.1 2008 86
F.2 2009 86
F.3 2010 87
F.4 2011 88
List of figures
Figure 1 / Orbis 2008 / 6Figure 2 / EVO, 2003 / 6
Figure 3 / Three components of vehicle crime graphed from January 1996 – December 2012 / 32
Figure 4 / Impulse response function VAR(2) model I vehicle to vehicle / 38
Figure 5 / Impulse response function VAR(2) model I cargo to cargo / 38
Figure 6 / Impulse response function VAR(2) model I combination to combination / 38
Figure 7 / Impulse response function VAR(2) model I combination to vehicle / 39
Figure 8 / Impulse response function VAR(1) model II d.cargo to d.cargo / 42
Figure 9 / Freight exchange fraud monthly percentage allocation / 44
Figure 10 / Freight exchange fraud daily percentage allocation / 44
Figure 11 / Freight exchange fraud percentage allocation per region / 44
Figure 12 / European Union within CMR / 55
Figure 13 / Liability / 58
Figure 14 / Impulse response function VAR(4) model I vehicle to vehicle / 73
Figure 15 / Impulse response function VAR(4) model I, combination to combination / 73
Figure 16 / Impulse response function VAR(4) d.cargo to d.cargo / 73
Figure 17 / Impulse response function VAR(4) d.cargo to combination / 74
Figure 18 / Impulse response function VAR(4) combination to vehicle / 74
List of tables
Table 1 / Correlation table model I, 1 / 18Table 2 / Correlation table model I, 2 / 20
Table 3 / Correlation table model II, 1 / 22
Table 4 / Correlation table model II,2 / 25
Table 5 / VAR(2) analysis model I / 37
Table 6 / VAR(1) analysis model II / 41
Table 7 / VAR(4) analysis model I (cargo theft in first difference) / 72
Acknowledgements
This thesis and underlying research would not have been possible without the help and support of the following people.
First of all I would like to thank Chris Selhorst, my supervisor at the Korps landelijke politiediensten (KLPD). It is because of his help that I was able to conduct an internship at the KLPD, where his enthusiasm, interest in the subject matter, work experience and his large amount of contacts helped me to get a grip on the subject. I appreciate the great amount of time he made available for me and my research, which has not only been a great stimulus for my thesis but made my internship a very valuable and unique experience.
Secondly I would like to thank my colleagues at the KLPD, especially Enny Magendans, Frans Dekker and Hans van ‘t Hart of the Landelijk Team Transportcriminaliteit (LTT), who gave me such a warm welcome and made a very pleasant work environment.
Furthermore I am grateful to thepersons who were willing to answer my questions and provide me with in depth information about the subject so that I was able to form my opinion. These people were Remco Segerink (KLPD), Roger Busch (Bovenregionale Recherche Zuid-Nederland), Alexander Oebel and Smahan Dahmani (Timocom), Henk Schenk (Teleroute), Wim DeKeyser, Frederik DeKeyser and Dimitri DeKeyser (B.V.B.A. Wim DeKeyser International Loss Adjusters) and last but not least Artur Romanowski, Hilde Sabbe, Cristina Checchinato and Rowan Timmermans (Europol).
Fourthly I would like to thank my supervisor Peran van Reeven for supervising me during this process of thesis writing. I am grateful for the fact that he allowed me to write about a subject which is not common in the field of Urban, Port and Transport Economics and supported me from the first research proposal onwards. His reachability, approachability and critical remarks have been of significant positive influence on this final product.
Last but not least I would like to thank my friends and family, especially for helping me: by drinking endless amounts of coffee whenever that felt needed (Job Jan, Suzanne); by serving late night drinks (Hilleke, Kimberley); with the statistics (Yvonne, Gert-Jan); sharing happiness or cheering me up (David, Irene, Linda); by constantly supporting me and showing an unceasing amount of interest (mum, dad).
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Chapter 1: Introduction
1.1 Vehicle crime
In March 2008 a new criminal phenomenon in the transport world grabs media attention[1] causing a great fuss in the Dutch transport world. An intelligent, well thought through criminal act made it possible to let whole truckloads disappear. No one had seen something like this before. Everyone was aware of dangers like curtain slashing, holdups and corrupted drivers, which caused damages which were costly, but bearable. No one was prepared though for a new type of criminal activity, which made it possible to let a company go into insolvency with only one single criminal act. This new type of criminality is called ‘freight exchange fraud’.
Freight exchange fraud is added by the National Police Services Agency (KLPD) to the other already familiar forms of vehicle crime, namely the theft of cargo, the theft of vehicles and the combination of both. This new type of vehicle crime makes one wonder if transport related criminal activities in the Netherlands increases or if the amount of criminal activity stays the same but changes towards a new equilibrium. Since road transport is a vital part of the Dutch economy, being responsible for almost 3% of the GDP[2], it is important to investigate activities that threaten this sector. A secure and safe transport environment is beneficial for many parties.
Road transport is not only of main importance in the Netherlands, in the European Union it takes 46.6% of the total goods transported for its account.[3] Every day more than 1.5 million tonnage of raw materials, food and other cargo is transported by road. Criminals are aware of this continuous cargo flow and they try to interfere in order to find a source of income or use the haul to fund other, more complex criminal activities, such as trafficking in human beings. Criminals perceive cargo theft as a low risk/high reward crime and therefore it is seen as a lucrative business.[4] This perception is not only caused by the size of road transport but also by the characteristics of the sector. The goods that are transported are often not secured. This is partially due to the high costs of protection, which are not bearable for the transport companies, who are suffering from low margins. The fact that the goods are not secured properly makes it an easy target for criminals.
Pressure exerted by (inter)national policymakers in combination with the low margins force transport companies to drive as efficient as possible.[5] Inefficiency in the market creates opportunities for businesses to implement ideas that enhance efficiency. The freight exchange is one of these plans meant to increase efficiency which was successful. The internet platform made it possible for supply and demand to meet in the digital world, exchanging orders and decreasing the empty drives and cargo surplus. The previous years have made it clear that freight exchanges do not only bring positive but also come along with negative externalities. Criminals are currently infiltrating in the freight exchange, using the provided information to make it possible to let whole truckloads disappear, which causes enormous losses for the transport company.
Every day, efforts are made to decrease vehicle crime. On a daily base the Landelijk Team Transport[6] (LTT) is trying to solve road transport crime including freight exchange fraud, which is reported in the Netherlands. Current agreements[7] of interest parties such as insurance companies, the Dutch Transport Operators Association (TLN) and the KLPD deal with a wide variety of criminal aspects in road transport. The attention for road transport crime is necessary since the direct and indirect losses caused by road transport crime are estimated at € 8.2 billion per year for the European Union and € 330 million per year for the Netherlands in specific.[8] Diminishing transport criminality, especially freight exchange fraud, will enhance the life of many trucking companies.
1.2 Aim of the research
This thesis aims to start academic research into freight exchange fraud and enhance understanding of vehicle crime in the Netherlands. Specifically we test for relationships and dependencies between different components of vehicle crime to be able to answer the following research question:
Is freight exchange fraud an addition to vehicle crime?
Although the problem of freight exchange fraud only covers a small part of vehicle crime, it causes relatively high losses. The European police is aware of this problem, as is shown by the Europol Report of 2009[9], but is unable to react due to a lack of information. This thesis tries to provide both information and analysis on freight exchange fraud, in order to provide the transport sector with policy recommendations that are aimed at recognizing criminal behaviour in advance and preventing freight exchange fraud from causing enormous economic damage.
For this research we make use of Dutch vehicle crime reports gathered between January 1996 and December 2011 and freight exchange data from between January 2007 and December 2011. We will perform a correlation analysis and vector autoregression to come to our conclusion.
1.3 Structure
This thesis is structured as follows. Chapter 2 starts with the history of the European Union to provide the reader with an inside in how the freight exchange could. Furthermore the rise of the freight exchange, working of the freight exchange and freight exchange fraud with its different working methods will be addressed. Chapter 3 will give a description of the available data, a correlation analysis and the model set up to investigate the relations between the different variables. In chapter 4 the results of the vector autoregression analysis complemented with an impulse response analysis are presented. These analyses will verify and complement the correlation analyses. Furthermore freight exchange fraud is described based on the available data. Chapter 5 will conclude this thesis with the main conclusions of this research, it provides policy recommendations and recommendations for further research.
Chapter 2: Freight exchange fraud
This chapter will elaborate on the problem of freight exchange fraud. In the first paragraph the emergence of the freight exchange is discussed following the evolution of the European Union, the second paragraph gives a detailed explanation of the working of the freight exchange which will lead towards the third paragraph in which the problem of freight exchange fraud is examined.