State of Fraud in Logistics The logistics and transportation sectors are under siege from increasingly sophisticated and organized fraud schemes.
However, increased reliance on computer networks and vulnerable software also “has introduced new entryways for fraudulent actors to intercept and falsify data, making cyber and social engineering attacks common,” Healy says. Cyber-crime techniques “were ported over to the real world during the pandemic,” Pelli adds. “Everyone was sitting around, including criminals, and cyber crime migrated to the trucking industry, which was particularly unprepared for this type of threat.” Technologically adept criminals employ digital trickery to engage in phishing and identity theft schemes. For example, they impersonate real brokers or trucking companies through email or unsecured online platforms, hack computer systems to gain access to freight, or divert shipments through crossdocks and create false documentation to intercept loads. “These thieves have call centers or routing centers across the world. They are organized and sophisticated,” Jenner says. “Unsophisticated thieves are a thing of the past.” Today’s bad actors, she says, buy thousands of motor carrier (MC) numbers at a time, along with carrier phone numbers, email addresses, customer lists, and more. “They use several MC numbers legitimately for a year or two before setting up strategic thefts, stealing tons of loads before abandoning those MC numbers and moving on to the next ones. We call them sleeper cells,” Jenner says.
43 % of TIA survey respondents say unlawful brokerage scams are their primary concern as financial fraud becomes increasingly common. 1 in 5 19% of respondents say they spend an entire day each quarter on fraud prevention— diverting time from business operations and aecting productivity.
“Financially, the direct cost of stolen goods can be staggering, especially when high-value goods are involved,” Healy says. “Beyond this, replacement costs, claims processing, and increased insurance premiums add to the burden.” Indirect costs to implement or boost security measures, investigate theft events, and recover stolen goods also add heavily to a company’s bottom line and impact pro t margins. A brand’s reputation can also suffer severely if victimized by crime. “Customers expect reliability and a single incident can strain relationships, reduce trust, and ultimately harm future business opportunities,” Healy notes. A brand whose products end up on the black market can be tainted by adverse events and publicity. Stolen food, for instance, may spoil before it’s sold on the secondary market. Consumers may become sick and the resulting bad press could cause long-term damage to the brand. The legal stakes are also high because any failure to comply with regulatory standards or security standards, or a breach of contract can result in nes and sanctions. Small companies are at increased risk because losing one shipment to 600 % Cargo theft , the most prevalent form of fraud, has seen a dramatic increase—up 600% between November 2022 and March 2023. 98 % of survey respondents say truckload freight is the most vulnerable.
Source: Transportation Intermediaries Association (TIA) survey
fraud or theft can have a greater impact than it would for a larger corporation. For all companies, “other indirect costs can include product recalls and manufacturing or product launch delays, which can far exceed the cost of stolen shipments,” Sandager adds. Ultimately, consumers pay more as businesses raises prices to cover the losses. “This doesn’t help anyone, full circle,” Jonkman says.
FIGHT BACK WITH BEST PRACTICES
“Mitigating cargo theft is a game of offense and defense,” Sandager says. “Organizations across industries must continuously audit their existing operations to identify any vulnerabilities while also working proactively by staying informed on the latest theft and prevention methods.” Experts agree on the following best practices for playing offense and defense against theft and fraud. RAISE AWARENESS. The rst step to mitigating theft is simply understanding the landscape. Investing in dedicated expert personnel responsible for staying informed about emerging tactics, commonly targeted goods, and high-risk regions is essential.
SUPPLY CHAIN WEAK SPOT
Another weak spot is “the global nature of today’s supply chains,” Sandager says. “Goods often pass through multiple checkpoints, each with potential risk.” The more high-danger spots a load crosses, the more opportunity for criminals to strike. The consequences of fraud and theft are broad and far-reaching for shippers.
114 Inbound Logistics • January 2025
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