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.
The issue
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
To address the growing concerns of the auto-theft transportation export network, it is essential to implement measures that ensure accountability and prevent the operation of “fly-by-night” freight forwarders or other unscrupulous entities. Insurance Bureau of Canada (IBC) recommends that the federal government introduce new regulations for freight forwarders, requiring them to verify that the documentation provided by the exporter accurately reflects the contents of the container. This verification process should include a physical inspection of the vehicle to confirm the VIN. If the VIN does not match the information provided by the exporter, the shipment should be halted, as the export of property obtained through criminal activity is a criminal offence in Canada.
Currently, Canadian regulations allow for export documents to be amended and submitted after a vessel has left port. In contrast, U.S. Customs and Border Protection mandates that vehicle exporters submit all export documentation and present vehicles at the port at least 72 hours prior to export. This procedure has contributed to a significant reduction in the export of stolen vehicles in the U.S. To address this discrepancy, IBC strongly recommends that Canada adopt similar customs procedures, requiring the presentation of documentation and vehicles at least 72 hours before export.
Scanning is also a critical component in stopping the export of stolen vehicles. Just as passengers and cargo undergo thorough screening at airports, increasing scanning to similar levels at rail/shipping yards and ports can enhance the ability to detect and intercept the export of stolen vehicles. Combining enhanced scanning at the ports with early intervention at rail and shipping yards can further strengthen efforts to prevent the export of stolen vehicles. To that end, IBC commends the federal government for its recent deployment of a mobile X-ray scanner to the Greater Toronto Area (GTA) to aid in the examination of shipping containers. IBC is calling for increased scanning measures to intercept and stop the export of stolen vehicles.
IBC commends the federal government on its National Action Plan for Combatting Auto Theft. However, the government should expand the plan’s scope to include more accountability for companies involved in exportation. Solving the auto theft crisis will take a whole-of-society approach, and it’s critically important that freight forwarders, rail and trucking companies, ocean carriers and others in the export chain are involved in finding solutions. We all have a role to play in ending auto theft and making Canada a safer place to live. IBC and its members stand ready to work with governments and stakeholders to end Canada’s auto theft crisis.
