The sharp and sustained rise of cargo theft in the U.S. is a major point of discussion in the supply chain discourse. Just last year, there were 1,183 reported incidents, resulting in a loss of $694 million in stolen goods. These figures reflect a 57% increase in incidents and a 67% increase in average loss per incident compared to 2022 numbers. Forecasts for 2024 show no sign of stabilization either, with some predicting a 35% increase in incidents.
The Causes of Cargo Theft
Explaining the surge in cargo theft is difficult, as multiple factors are at play. From an economic perspective, some suggest that inflation increased the value of goods, making them more alluring for theft. The societal argument claims that the growing dependence on fast shipping has incentivized certain retail consolidators and shipping companies to prioritize expediency over security and compliance. Finally, some resort to the force majeure explanation, which posits that rare events like pandemics or wars can expose vulnerabilities in the global supply chain.
However, the main driver behind the increase in cargo theft stems from the digitization of supply chain processes. While digitization allows shippers to efficiently expand their operations, it also leaves them vulnerable to cyberattacks from criminal networks. In addition to opportunistic theft, modern thieves can infiltrate transportation management systems or masquerade as legitimate brokers and carriers, effectively making out like bandits—literally and figuratively.
To counteract the “cyberization” of cargo theft, stakeholders must respond in kind by implementing robust cybersecurity measures. Given the prevalence of identity theft and sham logistics companies, the ability to distinguish between friends and frauds is also more important than ever. For these reasons, shippers can look to partner with cybersecurity-conscious third-party logistics (3PL) companies to manage, broker and process their orders securely and reliably.
The Evolution of Cargo Theft
Back when shippers relied on pen and paper, the kind of theft they had to contend with was predominantly restricted to “straight theft”. Think of opportunists staking out a freight truck at a rest stop, breaking into the cargo and pilfering its merchandise. Particularly daring criminals may even hijack the truck itself.
While incidents of straight theft persist, “strategic theft” has been gaining momentum in recent years. Facilitated by technological advancements, strategic theft involves deceiving shippers of their merchandise at different stages of the supply chain.
One common scheme is the “fictitious pick-up”, in which a group of thieves poses as real brokers or carriers to collect cargo from shippers. At its simplest, this practice entails swindling small or new shippers by posting enticing offers on online load boards or by creating convincing websites that mimic those of reputable logistics companies. Tech-savvy criminals can even hack into these firms, stealing their credentials and passing off as their employees to earn the confidence of shippers.
Q2 of 2023 saw an increase of nearly 700% in fictitious pick-ups compared to Q2 of 2022. This surge has led to substantial losses for shippers, as fictitious pick-ups enable thieves to target higher-value loads. Consequently, the average shipment value lost per incident has jumped from $100,000 in 2022 to $260,703 in 2023.
A Two-Pronged Approach to Cargo Security
As cargo thieves employ increasingly creative and sophisticated methods to achieve their nefarious ends, shippers and brokers must re-evaluate their security measures accordingly.
Improving electronic surveillance around warehouses and supply terminals and outfitting cargos with more advanced locking mechanisms can deter straight theft. Yet, these steps prove inadequate when thieves can impersonate genuine carriers or brokers, gaining unfettered access to goods in the process. Even installing GPS trackers on trucks is no longer a reliable anti-theft solution, as thieves can effortlessly disrupt the GPS signal using jammers.
Combating modern cargo theft requires shippers to sniff out theft attempts before their goods even leave the warehouse. This entails taking cybersecurity seriously and curating a network of trustworthy partners within the supply chain.
Cybersecurity measures that can discourage strategic theft include deploying firewalls and intrusion detection systems (IDS), encrypting sensitive data and implementing multi-factor authentication (MFA). Firewalls and IDS serve as an effective first line of defense against hackers, thwarting their attempts to breach the shipper’s systems. Encryption and MFA ensure that, in the event of a security intrusion, access to critical information, such as manifests, inventories, and route details would remain difficult. Apart from strengthening cybersecurity measures, training employees on cybersecurity best practices can also be beneficial. This includes training them on recognizing phishing attempts perpetrated by phony brokers and carriers.
The other half of the solution, partnering with trustworthy logistics firms within the supply chain, speaks to the importance of effective vetting practices. Thorough background checks allow shippers to verify the legitimacy and history of their partners, thereby screening out deceptive entities or those that lack transparency. Furthermore, the vetting process can also reveal the compliance records and security measures implemented by potential partners. A legitimate company that performs poorly in these aspects may be more vulnerable to cargo theft within the supply chain.
By putting in place strong cybersecurity protocols and restricting business to credible partners, shippers can create a robust defense against the evolving tactics of cargo theft.
Partnering with a Technology-Driven 3PL Company
Third-party logistics companies are integral to the supply chain, helping shippers manage and coordinate shipments, ensure compliance, and connect with dependable carriers. As central nodes within the logistics network, 3PL companies hold a unique advantage in implementing the aforementioned solution against cargo theft.
For example, their comprehensive oversight of the supply chain allows them to identify security risks within the network that may go unnoticed by other participants. Many 3PL companies are also technology experts, with ample experience leveraging tracking systems, delivering real-time data to shippers through dashboards and integrating AI into their processes. This makes them perfect candidates for meeting these new cybersecurity challenges head on. Finally, 3PL companies practice the most rigorous vetting procedures—not the least thanks to their strategic position within the supply chain.
The escalation of cargo theft, especially of the strategic type, is certainly daunting, but shippers can join forces with a technology-driven 3PL company to shield themselves against cyber threats and fraud attempts. The upcoming years will be pivotal as the arms race between logistics companies and criminals intensifies.
