A steep rise in the number of ‘strategic thefts’ worldwide has cargo owners investigating ways to tighten supply-chain operations without interrupting the flow of trade.
In North America, overall cargo thefts rose a comparative 49% in the first half this year (2024) as increasingly tech-savvy thieves targeted warehouses and shipments moving by land. According to that account, the average loss per shipment grew 83% for the period (against 1H 2023), highlighting the growing ability of criminals to specifically target shipments of high-value goods.
The rise in ‘strategic thefts’ - loosely defined as those using methods that deceive the custodians of goods into handing them over (as opposed to ‘opportunistic’ thefts) - wasn’t isolated to North America, where the F.B.I. believes U.S.-based incidents of cargo theft cost the local economy US$30bn each year.
In the European Union (EU), the number of road thefts grew by just over 35% in 2023 (against 2022’s numbers) with the total value of stolen goods skyrocketing 438% year on year. In the broader EMEA region, which includes the Middle East and Africa, the number of incidents grew almost 700% over the same period; estimated losses for 2023 reached €724 million (about US$776m).
Globally, road transport was the biggest victim in 2023, accounting for about 71% of cargo thefts.
In trucking, the root causes of the rise in strategic thefts are actively debated. One theory holds that a 10-fold rise in the post-pandemic cost of shipping containers between the U.S. and China fueled the rise of freight brokers and ‘load boards’ – as cost-cutting measures – on which the transport of goods is contracted.
Traditional supply-chain relationships were broken; dealing with unknown companies and drivers was normalized. Security policies and procedures were eroded by cost-cutting, and through the proliferation of brokering load boards, criminal networks were provided with real-time information into the types of goods being moved.
Worldwide inflation also played a role. The range of goods that are attractive to thieves has expanded; for example, food and beverage (F&B) shipments accounted for 22% of all thefts last year (2023), according to the British Standards Institution, up from just 14% in 2021, when the most recent inflationary trend started.
In fact, F&B shipments are the number 1 target in the U.S. this year. As food prices rise, global reports of stolen shipments of higher value items such as stores of cheese, ham and even olive oil are becoming more commonplace.
However, most observers believe the global surge in strategic thefts predominantly reflects how criminal networks have expanded their abilities to capture new opportunities in the digital age. Arguably, their IT fluency has been growing more rapidly than the transport community’s ability to defend itself.
At a basic level, load boards and customs sites have proven to be rich sources for information on where and when specific types of goods are being moved. Shippers of luxury goods have been advised to disguise company names on packaging to avoid being targeted. National authorities, such as the U.S. Customs and Border Patrol, are offering ‘masking’ services for publicly available data, but modern criminals continue to adapt.
Once stolen goods are in their hands, thieves are increasingly using technology to aid their escapes. For example, while global positioning systems (GPS) are strongly recommended worldwide to track shipments, few countries make them mandatory and there are growing reports of GPS blockers being used to make the shipments appear to be on route, when in fact they have been hijacked and are being unloaded elsewhere. Simply put, blockers are now part of the criminal arsenal.
The same technology that’s protecting commercial shipping’s growing dark fleet at sea has made its way onto land; in fact, some experts note that criminal networks are exploiting the same technologies that transport firms are adopting to drive operational efficiency.
In that environment, numerous internet and software-enabled types of fraud schemes are also emerging to target commercial hauliers, including:
Altered bills of lading: Thieves use the forged identity of a legitimate carrier to pick up a shipment, steal a portion of the freight and re-create the bill of lading (BoL). After scanning, the unit count, weight and seal number are altered on the BoL before the shipments are delivered to the original destination, where the unknowing receivers sign off. The shortage can go undetected for months until payment demands are made.
Hostage loads: Thieves use the identities of legitimate motor carriers and a broker’s load board to gain possession of the cargo. After moving it, they call the shipper to demand money to get the shipment back. Many goods are never returned even if ransom is paid.
Impostor pick-ups: Thieves pose as legitimate drivers and carriers by using altered paperwork, fake uniforms and vehicle logos to steal shipments. The legitimate driver will often arrive to find the shipment has already been released.
Double brokering: After thieves steal a shipment by impersonating a carrier, they ‘re-broker’ the load to another legitimate carrier, who follows the pick-up and delivery instructions without ever knowing it was stolen.
With the methods deployed by criminal networks constantly evolving, defending against strategic theft is complex. Insurance is part of the solution but, increasingly, cargo owners and their transport providers are calling their brokers in search of operational risk management solutions.
There’s multilayered generic advice, such as enhancing existing security protocols – both physical and cyber - to fit the risks present by the rise in strategic theft, and ensuring that training programs are updated to include the risks of strategic theft, in addition to robust background checks for new employees.
Although GPS systems are proving vulnerable, they still, for the most part, provide real-time visibility of shipments; regular risk assessments (monthly/quarterly) need to be conducted to respond to dynamic risk theater presented by strategic theft, and the findings used to update security measures.
It’s also important to recognize that the rise in strategic theft can have implications for hard-won company reputations. With speed to market a supply chain imperative, more and more contracts are being canceled with cargo owners, transport firms and warehousing facilities who do not deliver or protect goods consistently.
More generic advice can be found online.
Creating more complex, company-specific risk transfer solutions will require discussions with specialist advisors who can help to lessen supply chain risks, while building effective policy structures to help defend against the rising tide of strategic theft.
For more information on how WTW can help, please contact us.
