FreightWaves shares the story of a trade operator that demonstrates what’s happening to many businesses. The operator sent a truck to pick up a load of avocados. But that load disappeared. Apparently, a truck arrived at the warehouse facility, showed them the load pick-up number, and drove away. No one knows where the load went.
This is an example of a strategic cargo theft. The most common strategic cargo thefts are fictitious pickups, identity theft, and double brokering scams. In other words, the thieves use methods to trick companies into giving them the load.
It’s the second time it has happened to this person’s logistics brokerage firm, and it cost them $200,000. The person said they knew of another business that had six loads stolen. They can’t afford to pay for replacements for the lost loads and may have to shut down the business.
In the FreightWaves story, Scott Cornell, transportation lead and crime and theft specialist at Travelers, says data reveals cargo theft has reached a 10-year high. Cornell believes 2024 will have higher theft numbers than 2023.
Don’t let this happen to your business. Not convinced this is a widespread problem? Read on.
Why Businesses Need to Act to Prevent Cargo Theft
If the previous story of someone about to go out of business isn’t enough, the latest data from CargoNet, a Verisk company, shows almost 700 reports of cargo theft incidents occurred during the third quarter of 2023. This is an increase of 59% over the third quarter in 2022. California, Texas, and Illinois comprise almost half of the thefts. The top location for cargo thefts are warehouses and distribution centers followed by truck stops.
Cargo theft data
The top targeted commodities are food and beverages with household goods right behind. In the third quarter of 2023 alone, thieves swiped more than $31 million worth of shipments. Note these refer to only documented events. Many go unreported out of fear that insurance premiums will go up or bad publicity.
The fourth quarter of 2023 didn’t fare much better. A Forbes story lists CargoNet’s Q4 2023 data in which there were 766 thefts in the quarter, higher than the third quarter. Almost one-third of the cargo thefts took place in warehouses. The rest fell in the “Other” category that included parking lots, truck stops, and secured yards.
In the report, CargoNet warns of the following:
- Be aware cargo thieves continue to find new methods of cargo theft.
- Cargo theft groups commit fraud against smaller carriers or operators.
- Thieves work to hijack accounts or convince operators to get shipments from brokers on their behalf.
- Crooks aim to work around identity theft checks.
The Overhaul Risk Advisory Services LLC report confirms cargo theft remains a severe problem. Last year had 1,183 reports of cargo thefts with each having an average of $546,045 in losses. Their data corresponds with CargoNet’s data in that California and Texas are hotspots. They also indicate electronics were the most frequently stolen product type.
Canada has not escaped cargo theft. Most of them took place in Ontario. The Overhaul report indicates new risks will appear in 2024 and that it will increase by 35%. This goes hand-in-hand with CargoNet’s warning that thieves continue to come up with new methods of committing theft.
“It’s unprecedented,” said Overhaul Founder and CEO Barry Conlon. “I’ve been in this industry now for nearly 30 years. What’s really changed in the last number of years since Covid is the buying community’s willingness to accept product through anonymous sites that they don’t really know a lot about, but they’re getting promises like it’s still in factory packing. That’s what’s really changed here. Supply and demand.”
Conlon goes on to say that organized crime rings target anything of value that can be moved. It’s easy for these rings to track a truck to a stop and drive off with the load while the driver is away from the truck left running to prevent the vehicle from getting hot.
What Federal Motor Carrier Safety Administration (FMCSA) Reports
FreightWaves verifies that crime rings don’t quit once they’ve been arrested. Apparently, some of the crime ring members who escaped created splinter cells and started working in other places across the country.
The operator who had their avocado load stolen thought the Federal Motor Carrier Safety Administration (FMCSA) had rules that required warehouses and logistics employees to request multiple forms of identification from truckers picking up the loads. FMCSA officials confirm this is not the case.
They also affirm this isn’t a requirement for a carrier who must be certified for the Customs Trade Partnership Against Terrorism (CTPAT) inspections program. The purpose of the program is to mitigate risks to the supply chain.
Here’s what FMCSA says it’s doing according to FreightWaves:
- Implementing measures to address fraud.
- Developing a new registration system with security and fraud prevention.
- Adding identify verification services.
- Performing manual intervention checks on paper requests.
- Requiring multi-factor authentication on IT systems.
- Employing strict requirements for new motor carrier registrants.
Cornell advises operators to look for red flags such as a recent change to a motor carrier’s information, watch for a carrier’s operating authority that has been inactive for a long time, and connect with the cargo security community.
Top Ways to Mitigate Cargo Theft Risks
Organized crime rings keep evolving their tactics. So, how can warehouses, logistics, distribution centers, and others affected by cargo theft fight back? The key to a strong cargo theft risk mitigation strategy is layered security. Here are the top ways to mitigate cargo theft risks.
Implement processes and procedures
Security is only as strong as its weakest link. That weak link is typically people. For example, truck drivers who keep the truck running while at a stop put their load at a high risk of theft. Therefore, it’s important to address the people part of the equation because they can make mistakes that lead to theft or they are an internal threat.
This is where processes and procedures enter the picture. While the FMCSA may not require checking identification, a carrier can make it an internal requirement. Putting in steps like verifying identities and information can add barriers to cargo theft.
Processes and procedures should also explain what to do in the case of theft. Everyone who has a role in reacting to a theft needs to know what their job is as soon as there’s a report of theft. The faster they execute the response team, the better the chance of recovery. Once 24 to 48 hours pass, the chances of recovery drop by half.
Training for employees and truck drivers
The big question remains. How do you ensure people follow processes, procedures, and protocols? This is why consistent security training is mandatory. It’s not a one-time training. It’s regular training to prevent lapses.
Truck drivers also need training and checklists. Training and checklists will remind them not to leave the engine running at a stop. Another common recommendation is to ensure they drive far enough to get out of the hot zone. Criminals have the means and motivation to follow a truck 20, 50, and even 100 miles.
Educate truck drivers to go at least 200 miles before stopping and to prepare for this by meeting all their needs before departing. They would get provisions and use the restroom.
Use tools, data, and technology
Mitigating cargo theft risks requires investing in robust security measures. One such measure that comes with multiple layers of security is remote video monitoring. This system can track all comings and goings as well as follow trucks as they enter the perimeter. Integrating an access control system with the video surveillance system boosts security. Then, it can help you manage the check-in and check-out processes.
Another technology to add to your toolbox is software for managing logistics and transportation routes. The software can optimize transportation routes and cut risk in theft-prone areas. Use GPS tracking systems to monitor shipments in real time to watch for and respond to potential threats quickly. Unfortunately, some organized crime rings have the technology to deactivate the GPS. Nonetheless, add GPS trackers to your technology arsenal.
Use tamper-evident seals and locking systems on cargo containers. However, be aware that some crime rings have the technology to make copies of seals. Fight back by randomizing the seals.
Considering professional criminals have sophisticated technology, it’s important to boost your cybersecurity endeavors. Cybersecurity today isn’t always working as many companies continue to get hacked.
Protecting cargo and sensitive information requires firewalls, software updates, and secure communication channels. A better approach would be to change the culture to one where physical and cyber security converge. This is an all-inclusive method of securing the physical perimeter and information technology assets.
Cargo theft affects many industries and persists. If it’s not addressed, it could lead to significant financial losses and disruptions to the business. Cargo theft affects many industries. To help protect their assets and maintain the integrity of their supply chains, businesses must implement processes and procedures while regularly checking for adherence. No one will follow the process if they don’t know about them, therefore training is a must.
This addresses the people and processes part of the equation for mitigating cargo theft risk. Technology is a crucial piece. The convergence of physical and cyber security is a strong tactic when you incorporate video surveillance, remote monitoring, and access control systems.
To learn more about cutting cargo theft risk, check out the guide to Remote Video Surveillance: More Than Just Catching Criminals. For a customized security plan that protects your cargo and maximizes your ROI, contact us.
