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Strategies to Mitigate Fraud and Cargo Theft

28 May 2024
Category: Blog
Author: David Vidri
Shape

A recent surge in the frequency and sophistication of incidents has motivated the industry to collaborate in the search for better solutions.

Arrive Logistics is committed to contributing to a safer shipping landscape by working with others in the industry to promote best practices and facilitating discussions that drive value to all stakeholders — brokers, shippers and carriers.

To that end, we recently hosted an informative webinar featuring a panel of our fraud and cargo theft subject matter experts to discuss the latest trends and solutions businesses can implement to help protect their freight and ship with greater peace of mind. Read on to get an inside look at their conversation.

The Panelists

Moderator

Eric
Dunigan

President, Arrive Logistics

Arrive Logistics is a multimodal transportation and technology company providing strategic solutions for both shippers and carriers.

Panelist

Scott
Cornell

National Segment Lead, Travelers

Travelers is a leading provider of property casualty insurance for businesses, individuals and special risk situations.

Panelist

Chad Eichelberger

President, Reliance Partners

Reliance Partners is the fastest-growing and most diverse privately-held insurance brokerage in the country with a sole focus on the transportation and logistics space.

Panelist

Michael
Caney

Chief Commercial Officer, Highway

Highway drives to the truth behind who’s really hauling your freight to reduce fraud and supercharge your digital bookings.

The Recent and Rapid Rise of Fraud and Strategic Cargo Theft

Fraud and cargo theft have spiked significantly since the COVID-19 pandemic rocked supply chains in 2020. CargoNet, a Verisk company, reported that incidents rose by 57% from 2022 to 2023, punctuated by a 68% year-over-year jump in the fourth quarter of 2023 alone. This marked a 10-year high of $130 million worth of reported stolen goods in 2023. And because businesses aren’t required to report all incidents of theft, those numbers are just a sample size and likely fall far short of the actual total. 

These trends have continued into 2024. First quarter data is staggering, with CargoNet reporting 925 incidents, a 46% year-over-year increase from 2023 and a 10% rise from the fourth quarter of 2023. With the average stolen shipment value reaching $281,757 and the declared total value at $76 million, CargoNet estimates $154.6 million in lost goods during this period.

The Why Behind the Rise

Behind the surge are fundamental changes in how strategic cargo theft rings operate. A few years ago, most theft groups were U.S.-based. They were small, usually made up of 7 to 12 people who knew each other well and had simple methods for stealing cargo. They typically targeted known businesses and sold stolen goods locally at flea markets, small stores or online.

Today, strategic cargo theft rings are highly sophisticated global operations often based overseas. They operate like big businesses, with call centers, supply chains and online stores to sell stolen goods. Because they operate internationally, they serve larger markets and must steal more to meet demand, meaning freight theft will likely continue increasing in the coming years.

Where and What Thieves Are Targeting

Though fraud and strategic cargo theft occur across the U.S., several hot spots have emerged recently. CargoNet reported that from a year-over-year increase perspective, the hardest-hit states are California (+72%), Illinois (+126%) and Texas (+22%). 

It’s also helpful to understand where thieves gain access to freight, as shown in the graphic below. Note that the Warehouse/DC category does not include break-in and burglary-related theft incidents. It simply means that is where thieves take possession of freight when committing strategic cargo theft.

Events per Type of Location in 2024

Warehouse/DC

38%

Parking Lot

6%

Truck Stop

5%

Secured Yard

3%

Side of Road

4%

Unsecured Yard

3%

Airport, Port, Rail Yard

1%

Other

40%

Source: 2024 Verisk Analytics

Food and beverage is the most targeted category, followed by commodities like household products, small appliances and copper. Food and beverage theft tops the list because these products are easy to move, and the stolen products’ consumable and perishable nature makes for a very small recovery window. Thus, the ease with which criminals can steal this freight while working entirely remotely has caused the trend to spread. In turn, losses are adding up for shippers as they are unlikely to return stolen food and beverage products to the supply chain even if they are recovered due to contamination risks. 

Strategic Cargo Theft & Fraud: Critical Definitions and Distinctions

As criminals get more creative, theft has evolved from mere pilferage into complex fraud schemes involving digitally altered paperwork and non-delivery thefts. The persistence of these crimes and the strategic targeting of goods reflect how today’s criminals’ sophisticated understanding of the supply chain is making the landscape increasingly challenging for shippers. 

Understanding the nuances and distinguishing between fraud and strategic cargo theft incidents is a critical first step in protecting your business. Incorrectly reporting the type of crime reduces the likelihood of catching perpetrators and recovering freight. Below are some key definitions and distinctions for the most common crimes to help ensure you’re using the right vocabulary.

Fraud

Fraud comes in many forms, but identity theft is one of the most common. In the transportation industry, it typically involves scammers stealing a carrier’s identity to fraudulently access accounts, load details or financial data. For example, thieves may slightly alter a legitimate broker or carrier’s email address to access loads via online load boards and then impersonate the account holder to conduct fictitious cargo pickups for resale or disposal.

Double Brokering without Consent

Double brokering involves the carrier hired to transport a load transferring that task to another carrier. This is often done without the shipper’s knowledge or consent or in violation of the carrier’s contract with the shipper or broker. Double-brokered loads are difficult to trace, given that the paperwork will not align with the actual carrier hauling the cargo. The crime often involves a contracted carrier in collusion with another carrier, but also common in cargo theft scenarios is where a fraudulent carrier deceives both the shipper and the actual carrier. For instance, fraudsters often impersonate carriers to secure a fuel advance or payment from a freight broker on a double-brokered load but never pay the actual carrier.

Strategic Cargo Theft

Strategic cargo theft involves thieves tricking companies into handing over their freight after a fraudulent act has occurred. Examples include:

  • Fictitious Pickups: These incidents occur when unauthorized individuals impersonate legitimate carriers to pick up cargo shipments. By the time the crime is discovered, the cargo has often disappeared.
  • Cluster Thefts: Cluster thefts occur when scammers purchase MC numbers and account login information, often from carriers going out of business, to pose as legitimate trucking companies. They then infiltrate approved carrier pools to steal multiple loads at once.
  • Strategic Pilferage: This occurs when thieves systematically remove portions of cargo by altering documents to reflect smaller shipments, effectively concealing theft while keeping a significant portion of the goods. Usually, the stolen goods aren’t discovered until the shipper audits the inventories, which can be months later.

The Direct and Indirect Impact of Fraud and Strategic Cargo Theft on Shippers

Beyond the immediate financial impact of stolen freight, fraud and strategic cargo theft can cause shippers several direct and indirect losses.

Direct

  • Covering the cost of replacing stolen goods or fulfilling existing orders. 
  • Covering the cost of criminal investigation and recovery efforts.
  • Potential damage to brand reputation with vendors and consumers.

Indirect

  • Higher insurance premiums. 
  • Product launch and manufacturing delays due to missing components. 
  • Products may need to be recalled, leading to additional costs.

Best Practices for Risk Mitigation and Loss Prevention

Stopping fraud and strategic cargo theft requires intentionality. Our panel shared insights and responded to audience questions with actionable recommendations your business can implement to start shipping more safely today. 

Actionable Strategies for Shippers

Given the sophisticated nature of today’s criminals, shippers must take an active role in stopping crime. Below are several actions shippers can take to get started:

  • Practice Open Communication and Verify Shipments: Strong communication between shippers, brokers and carriers is necessary to verify exact load details and track shipments from start to finish. When a load leaves its origin, ensure the same number of pallets arrive at the destination. Both the shipper and receiver should confirm that everything matches.

  • Use Tracking Technology and Regular Checks: Enabling tracking connectivity is important to effectively monitor goods and identify issues early. Additionally, consistently check the freight volumes and address discrepancies immediately to prevent larger losses over time.

  • Understand Your Broker Network’s Insurance: As the landscape evolves, insurance agencies will be less likely to insure brokerages that are not implementing best practices. Talk to your broker about their policies and insurance regularly to ensure they are the right fit for your business.

  • Choose Strong Partners: Partner with brokerages that focus on doing business with carriers that provide real-time transparency and protect shippers at the load level.

Navigating Trailer Seal Issues

Weak or outdated trailer seals are one of the easiest ways for criminals to commit theft that a shipper’s warehouse team can detect on their premises. Shippers must be vigilant in ensuring carriers’ equipment meets modern standards and be willing to turn away those that are not. Below are several solutions shippers are using to effectively navigate trailers with bad seals:

  • High-Security Seals: Many shippers use high-security seals that are harder to break. These seals, especially digital options that keep a footprint, provide extra protection for cargo.

  • Tamper-Evident Devices: Using devices that show clear signs of cargo tampering helps quickly identify and address any security breaches.

  • Employee Training: Shippers should train front-line employees to be vigilant about recognizing, turning away and reporting trailers with weak locks or modified latches

  • Driver Training: Some shippers train drivers to recognize and avoid high-risk areas where strategic cargo theft is more likely to occur and provide protocols to use if they suspect a load has been tampered with.

  • GPS Tracking Systems: Many shippers use trailers with GPS tracking systems. These monitor the location of the cargo in real time and alert shippers and brokers if there are any unauthorized stops or deviations from the route.

  • Door Sensors: Door sensors detect if the trailer doors open without authorization and send an alert to allow for fast resolution.

  • Collaborating with Law Enforcement: Shippers and brokers can work closely with law enforcement agencies to share information about theft attempts and patterns. This collaboration helps to address and reduce criminal activities effectively.

Audience Questions

Finally, our panelists also shared insights in response to audience questions. 

What are law enforcement agencies doing to stop fraud and strategic cargo theft?

Since mid-2023, the FBI has shown more interest and effort in stopping fraud and strategic cargo theft, which is a promising sign. They have been actively trying to better understand the problem and contribute to solutions by partnering with organizations like Travelers, which hosts one of the largest annual fraud and strategic cargo theft conferences in the industry today.

Homeland Security is also involved, but state and regional task forces have faced significant downsizing in recent years. For instance, the once highly effective Georgia Task Force dissolved in late 2020. Bolstering these agencies would go a long way toward stopping criminals.

Federal assistance is only becoming more crucial, and we are starting to see it materialize. The FBI’s increased involvement is a positive step, and the Federal Motor Carrier Safety Administration (FMCSA) has announced plans to set up a fraud unit to address various issues. These developments suggest that more support is on the way, and efforts to combat fraud should continue to improve.

  • Insurance Companies: The long-term effects of fraud and strategic cargo theft are driving significant change in the insurance world. Due to increasing incidents, insurance companies are seeing more claims and higher payouts. In turn, premiums could rise for shippers, and those costs could be passed to consumers.
  • 3PLs: Partnering with the right 3PL is more critical than ever as fraud and strategic cargo theft incidents increase. Some insurance companies that used to cover auto and cargo liability for freight brokers no longer want to cover cargo or are adding rules limiting theft coverage. In turn, 3PLs must pay higher deductibles, and shippers often pay the price. Protect your business by ensuring that your brokerage partners implement sound fraud and cargo theft strategies and have the scale and financial means necessary to secure excellent insurance coverage.

CargoNet, Highway, TIA Watchdog and the Federal Motor Carrier Safety Administration (FSCMA) are excellent resources for sharing this information.

Move Forward with the Right 3PL Partners

Fraud and strategic cargo theft are persistent challenges that will likely get worse before they get better. The best offense is a good defense for shippers. That starts inside the walls of your organization and continues with choosing trusted service providers that can help ensure your freight moves as safely as possible. 

Your business can also play a critical role in creating a safer landscape for all by fortifying your network and championing industry-wide collaboration through sharing learnings and best practices with other shippers, carriers, agencies and brokerages.

As a leading transportation and technology company, Arrive Logistics is committed to protecting our shipper and carrier partners while fostering a safer industry overall. We welcome your questions and opportunities for collaboration with other leaders, so reach out using the form below and let’s keep the conversation going.

Want to continue the conversation?

Join Arrive Logistics for a quarterly roundtable discussion with stakeholders in our space (3PL) about fraud and strategic cargo theft trends and best practices for 2024 and beyond. Fill out this short form to receive your exclusive invitation to the next roundtable in the coming weeks.

These statements are about general industry practices and not about specific practices of Arrive, which are implemented on a case-by-case basis and constantly evolve as industry circumstances change. This event and events like it are intended for members of our space to access relevant information from subject matter experts and third-party resources.


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Freight fraud continues to impact our industry. We encourage shippers and carriers to reach out to Arrive immediately if there is ever a shipment in question that may be subject to fraud. Arrive Logistics registered email domain is @arrivelogistics.com. Our 24/7 phone number is 888-861-0650 and our leadership team can also be reached at feedback@arrivelogistics.com

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