Theft Trends and Risk Mitigation

Jaki Ferenz | Avalon Risk Management

Criminals continue targeting the transportation industry as more trucks and freight travel across North America than ever before. Containers are raided, trucks disappear from rest stops, and drivers can be hijacked at gunpoint. Today’s offenders also constantly develop new techniques to counter fraud prevention and advanced security methods.

ID: 1044059527; Preechar Bowonkitwanchai/Shuttesrtock.comYet the statistics are everywhere – cargo theft is decreasing. 2017 was one of the safest years on record as reported by CargoNet, and the latest numbers follow the same decline revealing a 23 percent drop in the first quarter of 2018.

Despite the decline, cargo theft continues to be a major problem in supply chains, and transportation brokers and trucking companies remain at risk. Companies can help mitigate that risk when they understand the latest trends and how to proactively address vulnerabilities.

Double Brokering

When a carrier agrees to transport for a broker but then assigns the load to another carrier, the freight has been double brokered. The practice is illegal under Federal Motor Carrier Safety Administration (FMCSA) regulations. Even if the first carrier complies with federal law by also holding brokerage authority, it’s never acceptable to transfer a load without the transportation broker’s consent. In these instances, the broker won’t know who actually hauls the freight, how the carrier was vetted, or if the cargo was transferred to a thief.

There are a variety of ways double brokering can occur. Let’s take, for example, a broker who has an opportunity to book a high value load. Through their vetting process, the broker decides to hire a motor carrier that has their own authority, insurance and acceptable safety ratings. The broker has even worked with this carrier within the past few months without any issues. Unfortunately, what was not transparent to the freight broker was the relationship the carrier had with their ring of carrier thieves.

The broker didn’t know the hired motor carrier had 25 other subsidiaries of one- to two-unit operators. When they found a shipment of good interest to steal, they would illegally double broker the load to one of their subsidiaries. Once the load was transferred to the second carrier, that carrier would then quickly sell and disperse the load on the black market. Profit from the sale of the load would then be split amongst the first carrier and their con-subsidiaries. During this whole transaction, the broker is unaware the load was double brokered – that is until the consignee called to ask about non-delivery of their goods. Claiming to know nothing about the stolen load, the crooked carrier may continue for a short period working under their own authority and then abruptly disappear. The crooked carrier reappears using one of their 24 other active motor carrier con-friends, repeating the scam over and over again.

How Can a Broker Mitigate the Risk of Double Brokering?

First, establish a carrier vetting process. Confirm that motor carriers are licensed, authorized, and insured. But as the scenario above has shown, one must be extra diligent in the vetting process.

Make it a rule to:

  • Not broker a high-value, high-risk load to an unfamiliar carrier – reserve those loads for regularly hired, top tier carriers.
  • Enact a company policy for new carrier on-boarding that includes a threshold of trust.
  • Add language to new carrier agreements that forbid double brokering and requires the carrier to provide service from origin to destination in vehicles they own and operate.
  • Have management approval on any deviation from standard company policy.

The thieves scout load board sites for clues indicating desirable goods: loads with high insurance minimums, requirements for driver teams, or locations like technology hubs where they are familiar with commodities hauled to and from the particular location.

Fictitious Pickup

In one scheme known as fictitious pickup, criminals pose as a legitimate truck driver, or set up a fake transportation business and trick companies into releasing cargo. The thieves scout load board sites for clues indicating desirable goods: loads with high insurance minimums, requirements for driver teams, or locations like technology hubs where they are familiar with commodities hauled to and from the particular location. They may even find a reputable carrier’s schedule, and then arrive early with fraudulent paperwork to pick up a shipment. With the felon’s use of falsified credentials to pose as truckers or an existing company, days may pass before a cargo owner even knows they were robbed.

Unattended Cargo

There’s an old saying that “cargo at rest is cargo at risk.” Burglars can bust through locks in less than 60 seconds, and it’s even easier if a trailer is unattended. Organized crime syndicates target shipping facilities, noting shift changes and departure times to track valuable cargo. They’ll follow a truck for hundreds of miles, waiting for an opportunity to steal or transfer the goods to another trailer. Criminals may also monitor radio and social media channels to locate drivers and identify shipments.

Know These Facts to Lessen the Risk for a Fictitious Pickup and Unattended Cargo

Educating employees is one step in mitigating risks – make sure they are aware of the facts and stay on high alert during vulnerable times.

  • Fictitious pickups spike on Thursdays and Fridays when warehouses are busiest for outbound shipments. If employees stress due to a sense of urgency, driver and carrier screening may slip.
  • Unattended cargo, however, increases during the weekend and at times of inclement weather. Criminals take advantage of distractions when drivers, warehouse employees, and office staff prepare for storms.
  • Be extra cautious during long holiday weekends. Over the past five years, CargoNet reported the number of stolen incidents spiked during the Memorial Day weekend.
  • The top three states most targeted are California, Florida and Texas with food and beverage being the most targeted commodity.

Deploy Technology to Alleviate the Risk of Unattended Cargo

Pairing a proactive technology strategy with a common-sense approach is one way to lessen the chances of cargo being stolen. Trackers can pinpoint shipments in real-time, scan documents, and provide alerts when a trailer’s doors are open. At the same time, criminals leverage the latest in technology to spoof the emails and phone numbers of legitimate carriers. Use the FMCSA’s Safety and Fitness Electronic Records (SAFER) database for verification. When a carrier calls or emails with questions, call back using the phone number listed in SAFER. If another person asks questions that were already answered, use SAFER to verify the legitimacy of the caller or advise them to speak with a contact internally at their own company. Trackers can provide notifications when shipments arrive, but keep shippers informed on who actually provides pick up or delivery. If another carrier arrives, they should immediately call their broker.

Finally, use reporting. Compare the physical address, units, and commodities in SAFER to information provided by the carrier. If the MCS 150 form was recently changed, add an additional layer of vetting because a fraudster could have submitted the changes. Use both TIA’s Watchdog and CargoNet’s database to check if any issues were reported with a new motor carrier being considered. And of course, quickly report all theft to law enforcement.

Combating cargo theft and minimizing risk requires strong collaboration in the supply chain, and transportation brokers face a unique set of exposures. The right mitigation plan isn’t one-size-fits-all. Identify top concerns and develop a customized program in partnership with insurance representatives, specialized attorneys, technology vendors and company leadership. Combining company policies with the right technology and insurance will help transportation brokers stay profitable and meet customers’ needs.

Jaki Ferenz is Vice President at Avalon Risk Management. She can be reached at [email protected] or 206-784-6376.

Photo Credit:
Preechar Bowonkitwanchai/