Cargo theft rates are climbing as sophisticated scammers increasingly target transportation companies using high-tech schemes, according to reports. Freight thefts that involve identity theft, double brokering and online scams are surging, Business Insurance recently reported, with virtual thefts making it possible for criminals to target companies from anywhere in the world.
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“Cargo theft has continued to rise,” said Gene’ Cain, Broker, Transportation, Burns & Wilcox Brokerage, Atlanta, Georgia. “A lot of it now has been more virtual, where criminals have stolen someone’s identity and new drivers in the industry may not be trained on some of the techniques to ensure they are delivering to the right individual.”
Trucking companies are also facing an alarming rise in the average value of a stolen shipment, which soared to $281,757 in the first quarter of 2024 compared to $102,000 in the first quarter of 2023, Business Insurance reported. As cargo thefts become more frequent and more high-tech, Motor Truck Cargo Insurance becomes even more crucial for transportation companies.
Cargo theft has continued to rise. A lot of it now has been more virtual, where criminals have stolen someone’s identity and new drivers in the industry may not be trained [to detect it].
“We are definitely seeing an uptick in claims,” said Fernando Batista, Manager, Transportation, Burns & Wilcox, Toronto, Ontario. “What we are seeing now is the kind of fraud that goes hand in hand with financial crimes. It could be somebody on a laptop in their basement and if they are able to steal an identity, then it is possible to commit whatever crime they put their mind to.”
Scammers using fraudulent companies to steal loads
In Texas, a “regional hotspot” for cargo theft, incidents were up 22% in May compared to the previous year, Fox 7 Austin reported. One recent case of virtual cargo theft involved hackers exploiting a logistics system to impersonate a trucking company and divert a $50,000 shipment of yogurt to New Jersey and then demand a $40,000 ransom from the freight broker, Business2Community reported in March.
By operating virtually, less effort is required for cargo thieves to pull off their scams. “Now, all it takes is somebody with a laptop,” Batista said. “They can set up a fraudulent trucking company, set up loads and steal loads. What could take two weeks to organize now takes 10 minutes. What shocks me is the speed, and it is mostly coming from trucking companies that do not even exist. These load brokers are setting up a load with a company that does not even exist.”
Other types of cargo theft continue to plague the industry as well, including break-ins when trucks are left unattended and thefts that occur in unsecured lots. In April, police in Philadelphia responded to a theft of 56 cases of pork valued at more than $12,000; the trucker hauling the load was asleep in the cab at the time of the theft, Lane Line Now reported. At the time, it was the 37th cargo theft incident so far this year in the city, with many cases occurring overnight and linked to a lack of safe truck parking, the publication noted.
[Criminals] can set up a fraudulent trucking company, set up loads and steal loads. What could take two weeks to organize now takes 10 minutes.
In the Atlanta, Georgia, area, trucks are often left to line up along highways due to a lack of parking, Cain said. “The parking situation can lead to thefts,” she said. “They cannot find anywhere to park, and some drivers will leave their units unattended.”
Break-ins are “an ongoing risk that really never goes away,” Batista said. “It comes down to due diligence. That criminal element will always be there,” he said. “The more digitized we become and the more automation we introduce, the more processes and controls we need to have in place.”
When a transportation company experiences a cargo theft loss, its Motor Truck Cargo Insurance could cover theft under a separate sublimit, depending on the policy, Cain said. “Some do not have any exclusions, and some of them provide a sublimit,” she said. “There could also be a warranty on the policy stating that certain precautions have to be in place. Companies have to put in the effort and the training to teach these drivers what to do and what to watch out for.”
Cargo can be insured either by its declared value or at a standard price per pound, Batista said. “You want to make sure you are buying adequate coverage and the coverage that you need,” he said. “Not all policies are built the same. Essentially, you want to ensure the goods of others are protected while it is in your care, custody and control.”
Targeted items may shift based on economy
Some of the most highly-targeted items for cargo theft include electronics, home and garden supplies, clothing and shoes, and food and drinks, DC Velocity reported in June. “Food and beverage are higher risk because they are easy to be miscounted or misplaced,” Cain said, adding that refrigerated items are more likely to have a sublimit for theft under Motor Truck Cargo Insurance. “The economy has a lot to do with theft.”
According to Batista, what criminals target most may vary based on economic conditions. “Typically, what we might consider high-target loads would be something like electronics or car parts, but I have found over the last 20 years that if the economy fluctuates, so does that high-target list,” he said. “The target commodities become food and clothing. Thieves want things they can turn around quickly.”
While Motor Truck Cargo Insurance is the primary insurance policy that could cover cargo theft losses, other Transportation Insurance policies including Truckers Auto Liability Insurance or Auto Physical Damage Insurance could be triggered depending on the incident. When seeking insurance, transportation companies should avoid working “with an insurance broker who does not understand trucking,” Cain emphasized. “That is always a challenge,” she said, as Motor Truck Cargo Insurance policies can be more restrictive than other types of insurance. “They really need to work with an insurance broker who specializes in that coverage.”
Make sure you understand any exclusions and the what-ifs. That is huge from a Motor Truck Cargo Insurance standpoint.
Given the growth of virtual cargo theft, trucking companies should also consider their need for Cyber & Privacy Liability Insurance, which could respond in the event the company’s systems or data were breached in a cyberattack. Transportation firms face an increasing risk of cyberattacks, Today’s Trucking reported in November of 2023, with the transportation sector seeing a 400% increase in automotive cyberattacks between 2017 and 2022. “These companies need to recognize that they have a cyber exposure as well,” Cain said.
‘Culture of due diligence’ needed
It is important for business owners in the transportation industry to read their insurance policies in full and understand what coverage would be available in the event of a loss. “Read your policy and ask questions,” Cain advised. “Make sure you understand any exclusions and the what-ifs. That is huge from a Motor Truck Cargo Insurance standpoint. Auto Physical Damage Insurance and Auto Liability Insurance are pretty straightforward, but Cargo is one of those areas that they may not be as educated about and may not ask questions about until after the loss.”
In addition to carrying Motor Truck Cargo Insurance and other policies, which will often be required as a condition of transporting another company’s goods, trucking companies should also strengthen their security protocols and ensure they are training their employees on how to avoid being victimized by a cargo theft scam.
“All businesses are going to have their vulnerabilities. It would be prudent for trucking companies to evaluate what those vulnerabilities are and work with an expert to close those potential gaps and stop criminals from entering their IT infrastructure,” Batista said. “As we expand further into the digital age, it is a good idea not only to invest in your staff, your equipment and your location, but also to take your cybersecurity measures into consideration.”
Insurance is there as a layer of your plan but it should not be your only layer; it should start with you doing your due diligence and making sure your staff is properly trained to recognize the threats.
As criminals become more high-tech, “we have no choice but to always try to stay one step ahead,” Batista said.
“It really comes down to a culture of safety and a culture of due diligence,” he said. “A lot of companies are making last-minute decisions. The longer the runway you have to examine your threats, the more robust of a solution you can put into place. Insurance is there as a layer of your plan, but it should not be your only layer; it should start with you doing your due diligence and making sure your staff is properly trained to recognize the threats.”
