Cargo Shipping Snarls Are Wreaking Havoc in the Supply Chain. One Group That’s Not Complaining? Thieves

An alarming spike in cargo thefts has cargo owners and their insurers on edge. Thieves are also growing more sophisticated in their maneuvers.
By: | March 31, 2023
Topics: Claims | Fraud/Theft

There were 1,778 “supply-chain risk events” across the United States and Canada in 2022, an increase of 15% from 2021, according to CargoNet, a commercial theft-prevention and recovery service.

“Scarcity and cost drove illicit market demand for goods that were most affected such as technology and food — notably computer graphics cards, and raw beef, poultry, and pork,” according to the service. “Available capacity eased in the later months of 2022, but theft remained a prominent threat.”

That said, the trends identified by CargoNet are supported by data from underwriters. “We have our own cargo-theft investigation team,” said Scott Cornell, transportation lead, and crime and theft specialist for Travelers.

“I use our internal numbers to validate the CargoNet figures, and yes, we are seeing the same things at street level, and hearing from law enforcement and transportation companies. The increases are surprising. I can’t recall numbers like this, and I’ve been at this a long time. Among my peer group, people are reaching out to each other.”

From Semi-Trucks to Tools and Toys, Thieves’ Favorite Steals

CargoNet’s 2022 data indicates that events involving theft of at least one heavy commercial vehicle such as a semi-truck or semi-trailer increased by 17% year over year, while events that involved theft of cargo increased by 20%. Note that a single event record could involve theft of one or more vehicles or shipments. The average value of cargo stolen in an event was $214,104. CargoNet estimates that $223 million in cargo was stolen across all cargo theft events in 2022.

“Increases in theft activity around major intermodal hubs were significant,” the service detailed.

“California remained the top state for reported events in 2022 and theft in the state increased 41% year over year. Computer and green-energy components were some of the most frequently stolen items of the year, partially because California is a major logistics hub for those items.

Theft in Georgia increased by 34%, due in part to organized-crime groups that took advantage of increased traffic to the Port of Savannah. Georgia shut down a state task force to investigate cargo theft in 2020.”

Household items such as appliances and furniture were the most stolen commodity in 2022. There was also a notable increase in theft of shipments of tools and toys. Household items were closely followed by electronics.

Theft of computer electronics decreased by 37% from 2021, but CargoNet noted “theft of those items reached unprecedented highs in 2021 and theft was still elevated compared to baseline. Additionally, theft of televisions and other displays nearly doubled from 2021.”

Fictitious Cargo Pickups Span the Country

Fictitious cargo pickups, involving both identity and cargo theft, spiked in 2022, albeit from a small base. CargoNet recorded 96 more fictitious pickups in 2022 compared to the year prior, a 600% increase year over year.

Most fictitious cargo pickups occurred in California, 74% of total, but the crime is spreading across the country. CargoNet has recently received reports of similar fictitious pickups in Washington State, New Jersey, Pennsylvania, Illinois, Texas, and others. Shipments of solar modules, auto parts, and vehicle maintenance products like engine oil are most at risk, but the threat extends to most categories of goods.

Theft Trends Are Driven by the Economy

While the rate of increase and absolute numbers are surprising, the direction of the trends is not, said Cornell.

“We have seen this coming. The economy drives theft trends. In the 2008-2010 recession we saw a shift in commodities being stolen to food and beverages. Basic goods are in high demand, and for those in particular security tends to be lower because the value of the goods is lower.”

Those trends held until about 2020 when household goods gained the dubious distinction of most stolen. “Thieves steal what they can sell,” Cornell explained.

“In 2021, electronics were back at the top of the list. Last year it was about even among food, household goods, and electronics. All were in high demand.”

The Strategy of Thieves

In terms of the dire warnings about fictitious pickups, Cornell takes issue with that as a catch-all term.

“There is straight theft, where cargo is stolen from where it sits, and there is strategic theft where the crime is arranged in advance. That can include identity theft or something like a double-brokerage scam. There have been spikes in those, and sometimes the theft involves both, but they are different things.”

In many incidents the thieves combine techniques to launder the cargo. They may pose as a trucking company to get a haul, then pretend to be a broker to arrange a cross-dock transfer. In some cases the cargo is ultimately sold to a legitimate wholesaler or retailer.

The reason double brokering and false fronts are becoming more common is that those techniques put distance between the actual thieves and the cargo. In many cases the legitimate companies are conducting business in good faith, never knowing they are dealing with fraudulent counterparties or stolen merchandise.

“If the thieves are caught, or even just suspected, the electronic trail just disappears,” Cornell said ruefully.

“There is also a pernicious economy of scale, not unlike email frauds and phishing. The theft ring may be working two dozen loads at once,” he said. “They only need a few of them to be successful. They’re throwing spaghetti at the wall hoping a few will stick.”

The other irony is that in most crimes, the fewer people involved the better for the bad guys. In the case of fraudulent cargo transactions, the more counterparties involved, especially legitimate brokers or transportation companies, the better camouflage for the crooks.

Keep the Horse in the Barn, Don’t Chase It

The cargo-theft investigation team at Travelers has recovered $85 million in stolen goods for clients since 2011, the year it began tracking recoveries, said Cornell.

“As pleased as we are about that, we would much rather keep the horse in the barn than have to chase it. It is important that insureds understand that law enforcement has limited resources, so the question becomes what they are doing to mitigate theft.

“Are they members of CargoNet or one of the other services? Do they have an insurer with capabilities and expertise? Are they members of regional and global trade organizations such as the Transport & Asset Protection Association? Do they have a plan for what to do at 2 a.m. on a Saturday morning when the driver calls to say the trailer has been taken from truck stop?” Cornell continued.

“Does everyone know the plan? Sure, you call 9-1-1. Then what? You can’t wait until Monday morning. The chances of recovery get very slim the longer you wait.” &

Gregory DL Morris is an independent business journalist currently based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected].

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