An increase in the volume of freight is generally welcome in the transport industries. But there are some cargoes the industry simply does not want to haul. Unfortunately, criminal syndicates are smuggling huge volumes of methamphetamine around the globe by hiding it in the lawful flow of freight.
A string of successful methamphetamine (meth) busts have been notched up by the Australian Border Force (ABF) at seaports and airports around Australia. But their efforts are not effective in reducing the supply of meth on the street. And that's because south east Asian crime gangs have massively ramped-up the production and export of meth. Meanwhile, drug-using Australians are just gobbling, snorting and injecting as much meth as fast as they can.
Glimpses of a secret, criminal, trade
As illegal drug-making and transport is an inherently secret trade, only get glimpses of it can be seen, either indirectly by chemical analysis of waste water, or directly when it is detected and intercepted by law enforcement. But what can be inferred is that huge volumes of meth are being moved from the place of manufacture to the place of end use. And, whether by plane, ship, boat or truck, that means meth has to be freighted.
For instance, on Tuesday July 23, ABF officers discovered liquid meth worth more than A$1 million (US$700,000) hidden in an air cargo consignment of snow globes.
Earlier this month, ABF officers announced on July 5 that they had examined an imported ocean shipping container that was declared to be carrying clothing. A deconstruction of the consignment revealed 500 kilograms (kg) of meth. That's 1,102 U.S. pounds with a street value of A$375 million (US$237 million).
Even earlier in July, ABF officers at the Port of Melbourne tore apart a consignment of stereo speakers from Thailand and discovered 1.6 tonnes (3,257 U.S. pounds) of crystal meth worth just under A$1.2 billion (US$845.44 million). It was enough for 16 million drug deals, the ABF says.
Meth seizures around Australia
Seizures are not just being made in Australia, either. In March 2019, Malaysian authorities reported the confiscation of more than two metric tonnes of crystal meth at Johor. Apart from being the largest amount ever seized in the country, another notable feature is the fact it was seized in Johor – a major port city immediately adjacent to the city state of Singapore, which is itself a major port city.
Volumes of meth seized by the authorities are up by 870 percent in Myanmar; up 925 percent in Laos; up 700 percent in Cambodia; up 630 percent in Indonesia. Massive increases in meth seizures have been recorded right across south east Asia.
The list of confiscations goes on-and-on.
The authorities often emphasise how much harm has been averted because of the volume of drugs taken off the street.
For instance, the New South Wales state Minister for Police, David Elliott, said about the ABF's 500 kg meth-bust on July 5 that "the community benefits every time we take drugs out of the hands of criminals."
But do drug busts even reduce the supply of meth?
It is really questionable whether that claim stands up and whether drug seizures by the authorities actually have any effect.
A 2015 street-level study by the Australian Institute of Criminology set out to find out, from the perspective of people arrested for buying meth at the street-level, how the usage of meth changed in response to reduced meth supply following big drug busts.
What they actually found that about 56 percent of people arrested for the possession of meth "had never experienced a shortage of methamphetamine".
They also found that, even though prices fluctuated from time to time, people who were arrested for possession of meth reported that the drug had not actually become any harder to obtain.
"This indicates that methamphetamine has remained readily available across Australia, despite an increased number of seizures by law enforcement," the experts concluded.
Researchers at the Australian Institute of Criminology also carried out a study in 2014 specifically to discover what effect big drug busts have on street-level arrests for possession.
What they found was that big seizures of meth-like drugs were followed a short time later by an increase in the numbers of street arrests for meth possession. They concluded that big drug seizures and dealer arrests are "signals of increased (rather than reduced) supply".
And, as indicated above, more and more smuggled meth is being seized.
Massive increase in south east Asian meth production and smuggling
At the end of last week the U.N. Office on Drugs and Crime (UN ODC) released its report "Transnational Organized Crime in Southeast Asia: Evolution, Growth and Impact."
"Methamphetamine production and trafficking … [has] reached unprecedented and dangerous levels in the past few years. Profits have grown massively as organized crime groups have synthetized the drug market, consolidated production and innovated their business model," writes the U.N. ODC's Jeremy Douglas, Regional Representative Southeast Asia and the Pacific.
The report adds that there has been a massive surge in the amount of methamphetamine being seized by authorities in Southeast Asia. "Seizures of [crystalline and tablet] forms of the drug are being made in quantities unimaginable a decade ago," the report says.
In southeast Asia itself, meth (both tablets and crystal meth) is moved both overland and via "substantial maritime flows," the UN report says. A major centre for meth production is northern Myanmar. From there it is trafficked overland into Thailand and Malaysia. It is also transported around the region by sea via Myanmar's port at Yangon
Southeast Asia-origin meth is also increasingly being trafficked out of the immediate region and around wider Asia, the UN report says. Cambodia, Indonesia, Malaysia, Thailand and Vietnam are now "major embarkation" points for the regional distribution of meth. Australian, Japanese and Korean customs authorities are now finding more and more meth from Southeast Asia, the UN report adds.
Methods of drug transport vary. Increasing numbers of air couriers are being arrested for trying to smuggle meth, the UN report says. There is also a steady meth-flow westward from Myanmar into Bangladesh. Transport methods include shipping by fishing vessels and via coastal vessels. Myanmar-origin meth is increasingly transported via Vietnam to the Philippines, the UN report adds.
Smuggling meth by hiding it in the massive volumes of lawful cargo
The physical flow of lawful trade is huge.
And criminal gangs like to smuggle their meth in the flow of commercial cargo. For instance, in Australia alone, the ABF processed more than 50 million air cargo consignments and three million sea cargo consignment in the 2017-18 financial year. It also made 43,000 detections of various kinds of illicit drugs that, in total, weighed more than 11.8 metric tonnes (26,015 U.S. pounds).
And that's just Australia. Internationally, more than 750 million shipping containers move by sea each year, according to the global Container Control Programme, a joint effort by the U.N. Office on Drugs and Crime and the World Customs Organization.
Lawful trade flows therefore represent a massive opportunity for criminal syndicates to move illegal drugs, like meth, around the world.
It's not just south east Asia that experiences huge volumes of meth-smuggling. This picture shows 615 U.S. pounds of meth seized from a commercial trailer by U.S. Customs and Border Protection officers at the Pharr International Bridge cargo facility on the U.S. / Mexico border. Photo: U.S. Customs & Border Protection.
How many lumps of meth do you take with your tea?
One tactic that southeast Asian drug syndicates have deployed in the last few years is an attempt to smuggle meth in cargoes of tea.
"During the first seven months of 2018 alone, Thai authorities seized more than 12,000 packages of crystalline methamphetamine concealed with this method, and they have also reported many cases of mixed loads of methamphetamine in combination with ketamine," the UN report notes.
It suggests that, because of the consistency of packaging, methods of shipping and distances shipped, that "a major transnational organized crime syndicate and/or a network of organized crime groups are coordinating."
The rationale for using tea packaging is unclear. There is some speculation that the crime syndicates are trying to create a brand that reassures dealers about the quality of the product.
"This method is a strategy to signal continuity and quality to traffickers, dealers and users," the UN report says.
South east Asia: the world's new meth lab and cargo hub
The causes of the upsurge in crystal meth production and distribution from southeast Asia are relatively simple to explain. Increased law enforcement in China has caused Asian crime gangs to relocate. Southeast Asia has favorable geography – dense jungles, extensive maritime routes, vast archipelagos, "unofficial seaports," hills and mountains. There's poverty co-existing alongside centers of excellence for the production and use of chemicals, wealthy nearby countries, numerous free trade zones to boost trade, casinos to launder money, and slack (or corrupt) officialdom and law enforcement.
It is a near-perfect region to locate and organize global drug production and smuggling.
"While ASEAN [Association of Southeast Asian Nations] governments have invested heavily in infrastructure and ambitious cross-border trade pacts, they have not made parallel investments in public security and social protection, and a fully operational framework for tackling cross-border crime does not yet exist," the UN report states.
"Border control mechanisms in Southeast Asia have improved significantly in some locations; however, capacity remains lacking in many places known for trafficking. Meanwhile, opportunistic networks of criminals continue to identify and take advantage of inconsistencies in border management and deficits in legal systems and regional cooperation, asserting themselves to expand operations."
The report continues, "As ASEAN standardizes and simplifies its trade and customs procedures, shifting the emphasis of border management from control to facilitation, transnational organized criminal groups are likely to expand their illicit enterprises alongside growing legitimate commercial flows, embedding illegal commodities into the legal movements of people and goods across the region."
Southeast Asia is now also an important origin and transit region for the flow of meth to Australia, Japan, New Zealand and South Korea because these markets are worth between US$30.3 billion to US$61.4 billion a year, says the UN Office on Drugs and Crime.
Supply calls forth demand
Meth-supply is called forth by an insatiable meth-demand. Australians demonstrably do like to chow-down, snort-in and shoot-up meth. As any substance that goes into the body eventually comes out of the body and into the sewer system, an examination of wastewater can yield interesting results.
Researchers engaged by the Australian Criminal Intelligence Commission analyze wastewater at water treatment plants throughout the year to get an idea of how much of which illegal drugs are being consumed by the population as a whole. The analysis covers about 12.4 million Australians, which is about 54 percent of the population.
The chemical analysis showed that, far and away, Australia's favorite illegal drug is none other than meth.
Australians yearly get through about 9,847 kg (21,709 U.S. pounds) of meth. That's 41.5 doses a day per 1,000 people. On a population-weighted average consumption basis, there's only one country in the world that consumes more meth than Australia and that's the U.S. with 52 doses per day per 1,000 people.
Meth is an attractive product for criminals
From a criminal gang perspective, meth is a particularly attractive product. It's made from low-cost man-made precursor chemicals, which liberates the criminal gang from the need to grow natural ingredients (such as opium poppies) in areas that are suitable for growing the crop.
Low-cost and easily obtained chemicals used in the production of meth include, among other things, acetone, remedies for the common cold, ammonium nitrate (plant fertilizer), drain cleaner, high purity alcohol and water. It can be manufactured in low-cost and easily assembled laboratories. In the U.S., meth labs have been built in houses, outbuildings, motels and even cars.The final product is low-volume and can be easily transported. Meth can be sold in tablet, paste/oily powder, power, liquid and crystal forms, which creates a variety of options for concealment when smuggling.
Money makes the meth go round
And, of course, selling meth potentially generates absolutely huge sums of money. Meth prices will vary by volume, place, location in the supply chain (e.g. mass importer, bulk wholesaler, local wholesaler and so on), drug purity status, time, supply constraints, demand levels and the form of meth being sold.
Meth prices in Australia are much higher than elsewhere around the globe, a parliamentary inquiry in the state of Victoria found. For instance, the wholesale price of crystal meth supplied to the market in China was US$1,800 per kg in 2018, the UN's report stated. In comparison, in early July this year, the Australian Border Force claimed that its seizure of 500 kg (1,102 U.S. pounds) of meth had a street value of A$375 million. That would suggest a street price of about A$750,000 a kilo (US$530,000 for 2.2 U.S. pounds).
The ABF's valuation for its 500kg meth bust seems to be too high when compared to figures reported in the Australian courts and figures given by the Australian Institute of Criminology.
Case-by-case: wholesale meth production costs, prices… and profits
In the criminal case of HL v DPP, the offender, HL (a pseudonym) was sentenced to 18 years' jail for two counts of importing meth hidden in ocean shipping containers. HL was part of a three- or four-man criminal conspiracy. One charge related to importing 50.1 kg (110.45 U.S. pounds) of high purity meth into Australia from Hong Kong. HL paid A$20,000 (US$14,082) to rent a warehouse for the shipping container and roughly A$225,000 per kg (US$158,422 per 2.2 U.S. pounds) for the meth. He also paid $4,000 (US$2,816) to an associate.
HL therefore spent at about A$11.3 million. The estimated imported value of the meth in his part of Australia at the time was A$10.5 million wholesale and A$27.6 million street. So HL would have made a loss of A$0.8 m (US$563,000) wholesale and a profit of A$16 million (US$11.3 million) street.
In the February 2019 case of DPP v Nguyen, Thai Noc Nguyen, who was born March 10, 1981 in Thailand, tried to import 22 kg of pure meth into Australia by air cargo in April 2017. Expert evidence was that his profit would have been A$2.2 million to A$3.3 million if sold wholesale or A$6.9 million to A$13.8 million if sold on the street. So that's an upper profit of A$150,000 per kilo (wholesale) and an upper profit of A$627,272 per kilo (street).
Dropping down a level in the supply chain, the judge sentencing the offender Li Wang of Unit 505B, 339 Sussex Street, Sydney, in the 2014 case of R v Wang, noted that Wang expected to profit by A$5,000 per half kilo of meth. Unlike the previous mass-importer examples, Wang appears to have been a low-level wholesaler catering to street dealers.
Meth on the streets: desperate dealers, entrepreneurial dealers
It's a completely different trade at the street-level. According to the Australian Criminal Intelligence Commission's current "Illicit Drug Data Report 2016–17" (the 2018 version is due to be published in a month or two) a street deal is 0.1 gram (0.0035274 U.S. ounces). The low end of the price range for a street deal in Australia in 2017 was A$17 (US$12) and the high end was A$150 (US$106). The price for a full gram was A$250 to A$1,000. The price for a kilogram (35 U.S. ounces) ranged from A$50,000 to $280,000.
There's a wide variability in the price of meth. Some street dealers will profit from their trade while others will just scrape by.
A good example of price variability can be found in the case of R v McIntosh (2017). Street dealer, Hayden McIntosh, 43 years old at the time of sentencing and who lived in Mount Gambier (a small town in South Australia), was sentenced to jail in March 2017. He was a prolific meth-street dealer. The highest price he received for meth was A$100 for 0.1 gram (a single hit of meth) which gives a price per gram of A$1,000. The lowest amount he charged was A$1,500 for 14 grams, which gives a price per gram of A$107. McIntosh did not generate large profits from his dealing.
In contrast, in the Northern Territory's R v Roe (2017), Chad Roe, originally from the Philippines, was 43 at the time he was given a near four-year meth-related sentence in September 2016. Although he was a meth user, he did not come from a deprived background.
"He had been in well-paid employment and, as a mature adult, he deliberately chose to engage in criminal activity to make a profit," the judge in his case noted.
He was engaged in a potentially lucrative trade.
Roe bought meth in the southern city of Melbourne in 28 gram packs (just under a U.S. ounce) for A$3,000 (US$2,112). He divided it and sold it in sizes from 0.1 gram (a few crystals) to 1.75 grams (0.06 of a U.S. ounce) on the streets of the northern city of Darwin. His retail price in Darwin was as potentially high as A$1,200 (US$844) for a gram.
He was turning that over on a monthly basis so, not taking into account the cost of transporting meth from Melbourne to Darwin, he could potentially generate revenues of A$33,360. Subtract the purchase price of A$3,000 and he was making making a profit of about A$30,000 a month.
Insatiable demand and high prices equals more smuggling
With insatiable demand, hugely valuable markets and high product prices, it seems unlikely that criminal gangs are going stop shipping meth from Southeast Asia around the globe anytime soon. Given the high profits, criminal gangs can simply afford to treat busts as a mere cost of doing business. And comparing drug busts to Australia's wastewater results, and intelligence from street-level dealers, suggests that drug seizures by the authorities across southeast Asia are not in fact seriously hindering the trade in meth.
So it seems reasonable for freight industry executives to believe that criminal gangs will make ever-more attempts to use their planes, ships, containers and trucks to smuggler ever more, and bigger, volumes of meth.
Be prepared.
Visit FreightWaves to read more articles on freight and drugs:
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Philadelphia Port sees second drug bust on container ship this year (with video)
Drug-abusing trucker jailed for 18.5 years after savagely beating his boss to death
Drugs at sea – more coke plus more ships equals more problems
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