Ship it Safe: How to Prevent Cargo Theft, Fraud, and Supply Chain Crime

Crime is one of the biggest challenges facing shippers today. And it’s getting worse.

“The scale of cargo theft and fraud is formidable and growing, impacting countless businesses and disrupting supply chains worldwide,” says Steve Healy, CEO of COREX Logistics. Recent data from supply chain and law enforcement agencies indicate that this issue costs industries billions annually.

The numbers bear him out. Cargo theft—the traditional practice of stealing products off trucks and trailers—jumped 33% in the second quarter of 2024 compared to the previous year, after skyrocketing more than 600% between November 2022 and March 2023, according to a recent Transportation Intermediaries Association (TIA) survey.

The average cost of gross fraud—modern methods of cybercrime, including computer hacking, identity theft, and other digital crimes—totals more than $400,000 per survey respondent, with an average cost per load of nearly $41,000, reports TIA.

The bottom line is staggering. “U.S.-based annual losses are $15 billion to $35 billion,” says Ann Marie Jonkman, vice president, global industry strategies, Blue Yonder. Recent estimates are that 2,500 truckloads are stolen every year, which is an average of more than 200 truckloads every month.

These numbers reflect only a partial picture, “as a significant number of cargo theft events go unreported,” says Scott Sandager, chief administrative officer with Arrive Logistics. “Every major shipper and transportation provider has been impacted by the rise in theft and fraud in some way.”

“What drives theft are products that are easiest to resell,” says Tony Pelli, practice director, security and resilience with BSI, a global supply chain consulting firm. “It’s across the spectrum of goods.”

Criminals now go after a wider range of products than in the past. “Bad actors target commodities that can be easily laundered and sold,” says Jessica Renner, cargo claims and risk manager for Jarrett Logistics. The top commodities targeted in 2024 include automobile accessories, alcohol, household goods, electronics, apparel and cosmetics, food, energy drinks/beverages, and metals, specifically copper, according to TIA.

“Thieves supply the global markets with online stores and organized sale methods for these stolen goods,” Renner says. “They have even been known to rebrand the merchandise.”

Pharmaceuticals, particularly specialty drugs such as immunotherapy products and controlled substances, “are valuable and easy to monetize on the black market, often commanding exorbitant resale values far above their original costs while maintaining a steady demand,” Healy says. “Pharmaceuticals are also small, portable, and relatively easy to resell without immediate detection.”

So are everyday goods such as toilet paper, wet wipes, and diapers.

“I have seen videos where thieves pull up in a white utility van parked in front of a trailer with the van’s door facing the trailer doors,” Renner says. “They get out, break open the trailer doors, and pilfer some of the shipments by loading them in the van.

“The camera on an adjacent truck shows only the van parked in front of the trailer,” she adds. “The thieves are never seen in the video. They are smart and their operations are well thought-out.”

The hot spots for theft are, not surprisingly, the large shipping hubs near popular transportation corridors: South Florida, Chicago, Memphis, Atlanta, Houston/Dallas, and the Los Angeles/San Diego corridor. Columbus, Ohio, is a relative newcomer to that list.

The number of “danger zones” for theft are increasing. “We tell truckers not to stop for the first 250 miles after picking up a load, and sometimes that’s not far enough,” Pelli says. “Thieves follow loads 400 to 500 miles, all the way from Los Angeles to the California-Arizona border.

“There is one truck stop between California and Arizona; thieves go there and wait,” he adds.

A Growing Problem

Theft and fraud are on the rise for many reasons, with financial concerns at the top of the list.

“Number one is economic pressure,” Jonkman says, first caused by the pandemic and subsequent economic downturns, and since followed by supply chain disruptions and the recent rise in inflation. That has led to a jump in food and beverage theft because these products are quickly and easily resold on secondary markets at far cheaper prices.

An increase in organized and advanced crime techniques is also to blame for both fraud and theft.

“Historically, most incidents involved criminals breaking into or stealing parked trailers,” Sandager says. “Today, however, organized crime rings engage in tactics such as pilfering pallets, holding entire loads for ransom, and infiltrating digital networks.”

Digitalization is a double-edged sword. On the plus side, 86% of cargo owners see digitalization as a remarkably helpful tool for operational efficiency, finds the Digital Container Shipping Association’s State of the Industry Report 2024.

However, increased reliance on computer networks and vulnerable software also “has introduced new entryways for fraudulent actors to intercept and falsify data, making cyber and social engineering attacks common,” Healy says.

Cyber-crime techniques “were ported over to the real world during the pandemic,” Pelli adds. “Everyone was sitting around, including criminals, and cyber crime migrated to the trucking industry, which was particularly unprepared for this type of threat.”

Technologically adept criminals employ digital trickery to engage in phishing and identity theft schemes. For example, they impersonate real brokers or trucking companies through email or unsecured online platforms, hack computer systems to gain access to freight, or divert shipments through crossdocks and create false documentation to intercept loads.

“These thieves have call centers or routing centers across the world. They are organized and sophisticated,” Renner says. “Unsophisticated thieves are a thing of the past.”

Today’s bad actors, she says, buy thousands of motor carrier (MC) numbers at a time, along with carrier phone numbers, email addresses, customer lists, and more.

“They use several MC numbers legitimately for a year or two before setting up strategic thefts, stealing tons of loads before abandoning those MC numbers and moving on to the next ones. We call them sleeper cells,” Renner says.

Supply Chain Weak Spot

Another weak spot is “the global nature of today’s supply chains,” Sandager says. “Goods often pass through multiple checkpoints, each with potential risk.”

The more high-danger spots a load crosses, the more opportunity for criminals to strike.

The consequences of fraud and theft are broad and far-reaching for shippers.

“Financially, the direct cost of stolen goods can be staggering, especially when high-value goods are involved,” Healy says. “Beyond this, replacement costs, claims processing, and increased insurance premiums add to the burden.”

Indirect costs to implement or boost security measures, investigate theft events, and recover stolen goods also add heavily to a company’s bottom line and impact profit margins.

A brand’s reputation can also suffer severely if victimized by crime. “Customers expect reliability and a single incident can strain relationships, reduce trust, and ultimately harm future business opportunities,” Healy notes.

A brand whose products end up on the black market can be tainted by adverse events and publicity. Stolen food, for instance, may spoil before it’s sold on the secondary market. Consumers may become sick and the resulting bad press could cause long-term damage to the brand.

The legal stakes are also high because any failure to comply with regulatory standards or security standards, or a breach of contract can result in fines and sanctions.

Small companies are at increased risk because losing one shipment to fraud or theft can have a greater impact than it would for a larger corporation. For all companies, “other indirect costs can include product recalls and manufacturing or product launch delays, which can far exceed the cost of stolen shipments,” Sandager adds.

Ultimately, consumers pay more as businesses raises prices to cover the losses. “This doesn’t help anyone, full circle,” Jonkman says.

Fight Back with Best Practices

“Mitigating cargo theft is a game of offense and defense,” Sandager says. “Organizations across industries must continuously audit their existing operations to identify any vulnerabilities while also working proactively by staying informed on the latest theft and prevention methods.”

Experts agree on the following best practices for playing offense and defense against theft and fraud.

Raise Awareness. The first step to mitigating theft is simply understanding the landscape. Investing in dedicated expert personnel responsible for staying informed about emerging tactics, commonly targeted goods, and high-risk regions is essential.

“Those subject matter experts should be accessible for employees to lean on for questions, as educating employees about the increasing threat of theft can empower them to recognize and report suspicious activity,” Sandager notes.

“An informed team that is part of a culture that recognizes and rewards loss prevention is a basic strategy any transportation company can take,” he adds. “Once you have a strong knowledge base, pay it forward to others outside your organization.”

Enhance Verification Protocols. Verifying carrier credentials, real-time tracking, and rigorous validation processes are essential.

“Perform background checks to verify your carriers’ credentials,” Jonkman says. For example, take photos of every driver’s license, the logos on their trailer, MC/DOT number, and license plates.

Audit and Update Processes. General awareness goes a long way, but it’s also critical to thoroughly and regularly audit your operations to identify and address vulnerabilities.

Every organization responsible for transporting goods should consistently review internal processes surrounding carrier vetting, onboarding, transit safety, and information security.

“As fraudsters update their methods, we need to update ours,” Renner says. “Red flags include changes in FMCSA information or MCS-150 within the past six months.”

Leverage Data. Use data to pinpoint weaknesses and take proactive measures to help fortify your defenses. Track your progress; if you have success, help strengthen the industry by sharing your best practices with your partners and even your competitors.

“The fewer entry points for malicious behavior across transportation, the higher the likelihood of combating strategic cargo theft as a sector,” Sandager says.

Boost Cybersecurity Measures. Cybersecurity is indispensable. Regular audits, phishing training, and secure communication channels are essential to minimize digital risk.

Control Chain of Custody. From origin to destination, strict chain of custody and access controls are paramount. By utilizing tamper-evident seals, GPS tracking, and secure storage locations, shippers can reduce the risk of theft.

Build Strong Strategic Partnerships. Partnering with service providers is essential for fraud prevention. “Creating a safer shipping landscape requires a joint effort among brokers, shippers, and carriers,” Sandager says. “In a somewhat fragmented industry, fostering communication and knowledge sharing among stakeholders is crucial.”

The first steps toward building these relationships include collaborating on prevention and mitigation strategies, ensuring insurance and compliance measures are current, and maintaining open communication about potential threats as they arise.

“Providers such as CargoNet, Overhaul, Highway, MyCarrier Portal, and Carrier 411 are there to help shippers with their vetting processes and are instrumental in detecting bad actors,” Renner says.

Use Risk Assessment and Data Analytics. Risk assessment tools and analytics play a key role in identifying vulnerabilities. “We use data-driven decisionmaking to preemptively mitigate risks and adjust protocols based on the latest threat intelligence,” Healy says.

Conduct Staff Training. Train every team member in security protocols and potential fraud signals. “Even one misstep can create an entry point for fraud,” Healy says.

Additionally, “shippers and transportation partners can support each other by training employees using the latest resources and best practices, and asking challenging questions to stay informed,” Sandager says.

Communicate Early and Often. “If unusual activity is detected, it’s important to promptly escalate the issue, internally or with external partners,” Sandager says. “Fast response times can enhance the outcomes and help prevent potential losses.”

Connect to Law Enforcement. “Whether you are a large or small business, tap into local law enforcement,” Jonkman says. “You might have a theft ring in your area.”

Collaborative Efforts

Mitigating cargo theft and fraud demands proactive, collaborative endeavors across the entire supply chain. “No single entity can tackle cargo theft alone; it requires ongoing partnership with law enforcement, regulatory bodies, and supply chain stakeholders to foster an organizational culture of vigilance,” Healy says.

It also means evolving security practices based on current industry trends. “Our strategy starts by staying informed about modern theft methods, targeted goods, and high-risk areas,” Sandager says. “We regularly optimize our prevention processes, technology, and insurance to mitigate risk.

“Organizations must stay active against bad actors who consistently innovate their methods of identifying and exploiting businesses’ vulnerabilities to commit crimes,” he adds.