ASIA PACIFIC CARGO CRIME & SUPPLY CHAIN DISRUPTION. Q1&Q2 Report POWERED BY

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1 ASIA PACIFIC CARGO CRIME & SUPPLY CHAIN DISRUPTION TAPA-APAC Incident Information Services (IIS) Q&Q Report 05 POWERED BY

2 Q & Q 05 TAPA-APAC Incident Information Services (IIS) program will now include an analysis of Cargo Crime Loss and Supply Chain Disruption A total of 4 theft incidents were recorded in the TAPA-APAC IIS database during the first two quarters of 05. The relatively low number is an indication of poor reporting processes for cargo theft. While cargo theft is more openly shared in the Americas and EMEA, that process has not been embraced by government and Asian law enforcement agencies. TAPA-APAC s Incident Information Services (IIS) provides our Members with an analysis of the cargo crime information collected and recorded by our Members and Partnerships across the region. TAPA-APAC is looking to bridge the gaps in cargo theft reporting in Asia through relationships with the agencies that cargo theft is reported. Through the influence of organizations like TAPA, we can help law enforcement and businesses to work closely together in the sharing of information that allows for the recovery and identification of stolen cargo. Type of Incident Burglary The analysis of the data provides our Members with a breakdown of the value, location, and commodity of the cargo that was reported stolen. Additionally, we look at the modus operandi (MO), frequency, and type of the thefts along with market value correlation to identify trends that we can use to mitigate risks through awareness and training. In a continuous effort to bring value to the IIS reports, this report will have added features that previous reports did not include, such as; maritime cargo incidents and supply chain disruptions. Robbery 5 Hijacking 5 Theft

3 Q & Q 05 Cargo theft in Asia that is not committed by internal sources often include acts of violence Of the 4 total theft incidents that were recorded in the TAPA-APAC IIS database during the first two quarters of 05, electronics were the hot items accounting for 3% of the recorded stolen items. The majority of these items were taken during delivery or through the assistance of internal sources. Even the hijacking of over US$4 million in mobile phone components was facilitated through the help of internal resources. Cargo theft is a crime of opportunity, usually occurring without violence. In Asia however, of the incidents reported to TAPA APAC, 37% of the cargo thefts involved violence or the threat of violence. Looking at cargo theft data, it is easy to note where the vulnerabilities are in the supply chain process. 58% of the cargo thefts reported show the theft occurring while product is in transit. In Q & Q, that could be broken down further and shown that the majority of the thefts occurring in transit, happened at or near the delivery location. The theft location type also show 9% of reported cargo thefts occurring at a Secure location. Unfortunately, the term Secure Location is very relative. However, since the facilities in these thefts were considered Secure, we see how cargo theft can happen in any environment when personnel working inside the location help to facilitate the theft. Theft by Product Total Values Electronic Parts 7 Unknown Cash 3 $,0,987 Precious Metals $443,305 Construction Materials Unknown Consumer Health $303,909 Electronics $5,033,594 Hardware $99,6 Modus Operandi Intrusion Violent/Threat Internal Pilferage Delivery Theft Location Type Unsecured Enroute Secure Location Food & Beverage $74,9 Alcohol & Tobacco $,99,70 Unspecified Unknown Miscellaneous $44,534 The largest recorded theft was US $4,03,594

4 8 5 6 Hong Kong Malaysia Australia India Philippines Pakistan Thailand $9,,50 Known Value of Reported Crimes $4,03,594 Largest Single Loss Reported Incidents With Loss Value Over $00,000

5 India Malaysia Hong Kong Commodity Commodity Commodity Alcohol/Tobbaco Hardware Food & Beverage Electronics Precious Metal Unspecified Modus Operandi Hardware Precious Metal Cash Electronics Misc Modus Operandi 7 Electronic Parts Cash Modus Operandi Internal Violence Intrusion Internal Violence Intrusion Delivery theft Internal Pilferage

6 Q & Q 05 Maritime thefts in Southeast Asia could reach record levels in 05 The first half (Jan-June) of 05 has seen an increase of % in reported incidents across Southeast Asia, compared to the first half of instances of piracy and maritime crime were reported to Dryad. There have been vessels hijacked in the first half of 05, compared with only 9 vessel hijackings in the first six months of 04. Cargo theft in Asia cannot be fully realized without stressing the importance of tracking maritime thefts. The Strait of Malacca alone, stretching from the Northern tip of Indonesia s Bintan Island to the South China Sea is a global shipping Superhighway. More than 0,000 ships transit the waterways, accounting for /3 of the worlds marine commerce. Of the hijackings, 0 were for the purpose of cargo theft and 8 of the hijackings were successful. vessels were recovered with their cargo in tact. Vessels in the Singapore Strait reported 48 boarding and thefts, up from only 8 in 04 (an increase of 8%) Bangladesh and Vietnam had the most cases of robbery from vessels while anchored. Southeast Asia was the location of 4% of the world s pirate attacks since 995. Piracy accounts for US $7 - $ billion from the international economy annually. Theft is usually a crime of opportunity and this is also true with Maritime thefts. While some of the maritime thefts are large-scale sophisticated strikes on vessels at sea, which require military coordination and meticulous planning, 80% of total incidents wordwide occur against anchored ships.

7 Q & Q 05 Supply Chain Disruptions Have Global Impact Earthquakes can have a dramatic impact to a business and supply chain lane. In Q & Q Asia experienced 58 earthquakes. The majority of this earthquakes occurred in the Southeast region of Asia-Pacific however, the three deadliest earthquakes of the first half of 05 occurred in Nepal (), and Malaysia. Nepal experienced a 7.8 magnitude earthquake on April 5 th which flattened entire villages in many districts. As a result of the earthquake, over 9,000 died, there were over 3,000 people injured and 450,000 people were displaced in Nepal, India, China, and Bangladesh. Earthquakes Nepal was already struggling with the costs of infrastructure improvements to attract foreign investment. With a GDP of approximately US$0 billion Nepal cannot fund its recovery on its own. It will take many years for Nepal to restore the infrastructure necessary for economic growth. 05 has been a disastrous year for flooding in Asia. While the death toll for floods may not be as high as other natural disasters, the impact to businesses and communities is enormous. In Q & Q, Malaysia, Indonesia, Thailand and Sri Lanka evacuated over 400,000 people due to flooding. Economic impacts of the flooding included surging palm oil and rubber prices with Thailand and Malaysia dropping production of rubber by 30%. When you see a rise in commodity prices and with the increased need for building materials, theft of these commodities is predictable. In addition, consumer health care product thefts are like to increase also. Floods Flood reporting in Q3 & Q4 is likely to have a much larger impact and will displace many more people as the rainy season in many regions reaches it s peak. In 04, typhoons accounted for two of the top five worst global supply chain disruptions. Typhoon Halong and Rammasun ravaged Southeast Asia having a combined revenue impact of US$.5 billion and requiring an average of 39.5 weeks of recovery time. The majority of annual typhoons usually occur in Q3, however, Q &Q have already seen three tropical storms, one severe tropical storm and four typhoons. The supply chain effects of a typhoon are felt on land and at sea. Ships must be rerouted to avoid typhoons. The term Safe Harbor does not pertain to super typhoons which cause major damage to a ship at dock or turn it into a massive wrecking ball should it break free. Typhoons Typhoon Noul had the greatest impact, in terms of economic costs, on the region in May 05. The Caroline Islands, Philippines, Taiwan, and Japan were all effected by the typhoon with caused US$3.5 million in damages.

8 Q & Q 05 78% of all Terrorist Attacks Happen in 0 Countries, Four of Which are in Asia; Pakistan, Afghanistan, India, & Thailand Terrorism Disease Outbreaks Strikes and Labor Disputes Terrorist attacks most often have an indirect effect on supply chain lanes. Asia Pacific has a rising terrorist threat and can expect to see supply chain lanes and their businesses impacted by acts of terrorism. Pakistan and Afghanistan have the most severe risk of terrorism, while Bangladesh, Bhutan, India, Thailand, Myanmar, Philippines, Indonesia, North Korea, and Malaysia have a high risk ofterrorism. Q & Q saw terrorist attacks in Pakistan, China, Philippines, Afghanistan, South Korea, India, and Thailand. The majority of the terrorist targets have been political/government and religious targets, however, the top five terrorist attacks on businesses industries include: retail, oil & gas, tourism, electricity infrastructure, and aviation. Disease outbreaks effect an organizations ability to operate. Q & Q saw the impact that a disease outbreak can have on a country with the Middle East Respiratory Syndrome Coronavirus (MERS-CoV) outbreak in South Korea. By the end of June, the S. Korean government estimated that exports fell 0.9% in the month of May. The MERS-CoV outbreak also reached Thailand, Honk Kong, China, and the Philippines. However the outbreak was contained and had little impact on thebusiness communities. Besides MERS-CoV, China had 0 confirmed cases of Avian Influenza (Bird Flu), which was contained oneach incident. In Q & Q of 05, Asian Ports were spared of any major labor disputes or strikes that would impact global supply chain lanes. The impact of a labor dispute was felt by Hong Kong in 03 when during a 40 day labor strike. The port was able to operate at 80% capacity and still claimed losses of HK$.4 HK$5 million dollars per day. Container congestion reached as high as 0,000 containers and businesses faced delays of up to three days getting product through the port. However, Q saw the US West Coast Ports continue a labor dispute that started in Q4 04. The labor dispute caused major cargo congestion as 70% of all imports from Asia are processed at thewest Coast Ports. Manufacturing plants in the US had to slow production due to parts delays imported from Asia. Fuji Heavy Industries claimed they had to fly parts into the US, costing an additional US$59 million per month.

9 Contact: TAPA APAC IIS Copyright TAPA APAC 05. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise, without prior written approval of TAPA APAC or its authorized representative. We acknowledge all third party rights for the software and data used in the generation of this document. Confidentiality: This document contains information that is confidential to TAPA APAC, its authorized suppliers or third parties, and cannot be disclosed in whole or in part without the prior written authority of the Board of TAPA APAC or its authorized representative. Disclaimer: All information, products and services are provided as is without warranty of any kind. TAPA APAC and its IIS Service Provider hereby disclaim all warranties with respect to this information, products and services, whether express or implied, Including the implied warranties of merchantability and fitness for a particular purpose. In no event shall TAPA APAC or its IIS Service Provider be liable for any direct, indirect, incidental, special or consequential damages or damages for loss of profits, revenue data or use, incurred by you or any third party, whether in an action in contract or tort, arising from your access to, or use of information, products or services obtained from TAPA APAC IIS.