Cargo Fraud, Theft Surging In ‘Wild West’ US Truck Market

A surge in cargo theft and fraud across the US is costing shippers, brokers and trucking companies millions of dollars and forcing them to reassess supply chains and basic business procedures.

Many businesses are being forced to tighten controls over how goods are shipped and who they ship them with, but the technology that helps them may also be used against them, according to industry sources and speakers at a recent logistics conference.

The number of cargo crimes and the value of stolen goods increased by double-digit percentages in 2022, according to theft prevention and recovery service CargoNet. And both metrics are still climbing in 2023.

“Incidents” from crimes of opportunity to the premeditated theft and laundering of cargo by organized crime rose 15% year over year in 2022, while the value of stolen goods rose 16.3% to $107 million, CargoNet said.

Those figures are the tip of a much bigger iceberg, as hard data on the scope and cost of cargo crime are difficult to find, partly because there’s no one agency tasked with fighting freight theft. CargoNet, a subsidiary of Verisk, maintains a national database that draws from multiple sources.

Almost five months into 2023, “we’ve already exceeded all the fraud incidents reported to us last year,” Keith Lewis, vice president of operations at CargoNet, said at the Transportation & Logistics Council (T&LC) conference in San Diego in early May. CargoNet tracked 142 incidents of pre-meditated “strategic” theft in the US, the type involving significant planning and organization, in all of 2022. So far this year, it has recorded 143.

“The beginning of this year has been nuts — I call it the wild, wild west,” said Nadia Martin, loss prevention and carrier compliance manager at Blakeman Transportation, a third-party logistics provider based in Fort Worth, Texas. Scammers, she said, “will call the same broker 20 to 30 times using different numbers until they get the one person who’s too busy and books them on a load.”

Complaints about fraud of all types from carriers and brokers were about 400% higher than normal in early 2023, Brent Hutto, chief relationship officer of truck freight marketplace Truckstop, said in an interview. “We started seeing this super-surge of complaints in October 2022,” Hutto said. “It reached a really big peak in January and February, and started coming down some, but it’s still high.”

Hutto measures those complaints against a baseline established in 2003. His index rose 100% in the 2008-09 economic recession, but the recent surge is unlike anything he’s ever seen.

Stealing opportunities

A complex web of factors is driving the surge in cargo theft and fraud, including supply chain disruptions, a highly competitive marketplace, the globalization of freight crime and the ability of thieves to hack into digitized supply chain systems that share data in real time. A significant increase in the number of new carriers since the start of the COVID-19 pandemic also creates opportunities for fraud.

The number of US freight haulers with operating authority and insurance on file with the Federal Motor Carrier Safety Administration (FMCSA) increased 50% from December 2019 through this April, rising to 361,686, according to the DOT agency.

“The FMCSA is getting 10,000 newbies registering a month, and they can’t possibly tell which of these are genuine owner-operators and which are scamsters,” transportation attorney Henry E. “Hank” Seaton told the T&LC conference. By the time the FMCSA begins a safety audit of a new carrier, that carrier may be long gone, Seaton said.

Cargo thieves are highly organized, and they thrive in a highly competitive market.

“Shippers are under immense pressure to reduce costs, and that’s where the criminal element inserts itself,” Jim Blaeser, chief procurement officer of global logistics company Omni Logistics, said in an interview. Omni Logistics said it encounters 10 to 20 double-brokering attempts a day.

Hijacking technology, not trucks

Cargo crime of all types is on the rise, said Lewis, who has had a long career in law enforcement alongside his work at CargoNet. Trailer break-ins at locations such as truck stops, parking lots and yards are up 18% year over year. Fraudulent pickups reported to CargoNet were up 600% in 2022, rising from low numbers but rapidly increasing. “In December alone we had 52 fraudulent pickups,” he said.

In those cases, the fraudulent pickup equaled a stolen load. Most of those loads were energy drinks worth $75,000 to $200,000 a load and solar panels worth about $225,000 a load, Lewis said.

The evolution of supply chain technology and rapid spread of information in real time are also factors in the surge in cargo theft. “The criminal element has become much more sophisticated,” Blaeser said.  “They’re able to ‘spoof’ credible brokers, like a phishing scam.”

By the time a broker or shipper realizes the driver that picked up its freight was not legitimate, the goods are long gone — especially if they’re easily consumable or resalable.

The remedies available to shippers, brokers and carriers are much the same as those used for any scams: constant vigilance and due diligence. That includes practices such as double checking carrier inspection records and identification numbers, driver’s licenses and bill of lading information.

“You have to put the work in. The thieves are out there,” said Blaeser. “If you’re asleep you will get stung.”

By: William B Cassidy / JOC