Trucks transporting shipping containers are being targeted by organized criminal groups at the Port of Los Angeles on March 6. According to experts and law enforcement officials interviewed by CNBC during a six-month investigation, the supply chain in America is facing unprecedented threats. These criminal networks are engaging in cargo theft across the country, from hijacking trucks on the road to looting warehouses and stealing valuable items from train cars. These crimes are taking advantage of technology meant to streamline supply chain operations, with fraudsters using forged documents to divert high-value products into the hands of criminals by posing as legitimate company personnel. This widespread criminal activity is considered “low risk and high reward” by Keith Lewis, vice president of Verisk CargoNet, a company that monitors theft trends in the industry. The return on investment for these criminals is nearly 100%, and the lack of consequences for getting caught makes it an enticing endeavor. In 2024, Verisk CargoNet reported 3,798 cargo theft incidents, a 26% increase from the previous year, resulting in reported losses exceeding $455 million. However, industry experts believe the actual losses could be much higher, possibly reaching close to $1 billion annually. Train cargo thefts alone spiked by about 40% in 2024, with over 65,000 incidents reported, according to the Association of American Railroads. Additionally, a more sophisticated form of cargo theft known as strategic theft is on the rise, accounting for about one-third of all cargo theft by the end of 2024. This form of theft involves deceptive tactics to trick shippers, brokers, or carriers into surrendering cargo or payments to the criminals. Verisk CargoNet has identified criminal groups from 32 countries attempting to disrupt the U.S. supply chain, making it challenging to track them down, especially if they are based overseas. According to experts, there is a lack of deterrence for these criminals, who can operate from anywhere using basic technology like cell phones and computers.
“To remain vigilant at all times,” Jacobs emphasized. He often reminded his sales team that there was a significant chance of encountering individuals seeking to steal freight. In a February interview with CNBC, Jacobs disclosed an ongoing fraud case where perpetrators had stolen his company’s identity to book shipments. Their scheme involved convincing legitimate trucking companies to transport shipments, ensuring that the criminals, not the actual carriers, received payment.
Jacobs revealed to CNBC the online platform used by brokers for booking shipments, noting listings falsely attributed to his company, orchestrated by the fraudsters. The fallout from the situation continued for weeks, with some loads successfully delivered while others were not. This resulted in stolen cargo and payments, leaving carriers unpaid.
Cargo theft not only impacts businesses but also affects consumers through retail price hikes. Conlon, the CEO of Overhaul, a supply chain security company, highlighted the sophistication of these crime groups in targeting and stealing freight across the U.S. The ease and profitability of cargo theft compared to traditional crimes like bank robbery make it an attractive option for criminals.
Cargo theft, primarily a nonviolent property crime, is often underreported due to the belief that recovery is unlikely. Industry experts anticipate a 22% rise in cargo theft incidents by 2025, underscoring the growing threat. Cornell, from Travelers Insurance, highlighted the strategic nature of organized cargo theft rings, targeting valuable commodities like food and beverages that are difficult to trace due to their consumable nature.
As cargo theft continues to pose a significant challenge for the industry, stakeholders are urged to remain vigilant and take proactive measures to safeguard against such criminal activities.
There is no barcode on a pistachio. According to Verisk CargoNet, household goods are the second most commonly targeted cargo, followed by electronics. Cargo theft is a growing concern for companies, with Meta declining to comment on a $500,000 theft of its products in Texas, and Nike not responding to requests for comment despite being a favorite target of cargo thieves.
Birger Buesching, head of the supply chain at Philips, noted that cargo loss is on the rise, particularly for high-value shipments. Companies like Philips are facing challenges in replacing stolen loads, impacting their ability to fulfill orders on time and meet customer demands. Ellen Kapiloff of Lacoste highlighted how cargo theft can lead to inventory challenges and affect product availability for consumers.
California is a hotspot for cargo theft, with incidents like the recovery of stolen Lacoste footwear in Los Angeles and a million-dollar theft at a Lululemon distribution center. Despite the significant financial impacts of cargo theft, public companies have addressed the issue sparingly in their earnings calls and investor webcasts. Knight-Swift, a major truckload carrier, has mentioned cargo security concerns only once in the past year.
Cargo theft has become a significant concern within the transportation industry in recent months. During a conference call in January, Landstar’s Chief Financial Officer Jim Todd discussed the rise in insurance and claim costs in 2024, largely attributed to an increase in cargo theft and fraud. J.B. Hunt also highlighted the issue, with its president of highway services, Bradley Hicks, mentioning how technology has enabled organized groups to engage in strategic theft through their platform. To address these challenges, J.B. Hunt is implementing security measures to protect their system. On the other hand, C.H. Robinson reported a success rate of 99.999% in deterring theft and fraud, with measures in place to target potential fraudsters.
Various companies, including TQL and Nolan Transportation Group, are investing in technology and personnel to combat cargo theft. DAT Freight and Analytics, a widely used platform by brokers, is actively monitoring and addressing fraudulent activities, particularly identity theft, which accounts for 90% of all cargo industry fraud. DAT’s team is dedicated to identifying and removing bad actors engaging in illegal activities.
“Our customers can rest assured knowing that we have robust protections in place to safeguard their interests.” Highway, a security company headquartered in Dallas, focuses on proactively targeting criminals to prevent disruptions in the supply chain. According to Highway CEO Jordan Graft, criminal activities can spread like a virus within industries and segments, often orchestrated by organized groups rather than individual actors.
Despite Highway’s vigilance, the company itself faces frequent attempts by criminal groups to breach its security measures and interfere with its fraud detection services for clients. Last year, Highway’s software successfully blocked over 914,000 fraud attempts, with nearly 9,829 unauthorized carrier users from various countries trying to access its platform, potentially for identity theft purposes. The majority of these attempts originated from countries such as India, Mexico, Moldova, Pakistan, Serbia, and Uzbekistan.
Highway notifies its customers promptly of any changes to company details on the Federal Motor Carrier Safety Administration’s site, where shippers are registered. Graft highlighted the vulnerability of carriers to cyber attacks, emphasizing the need for better support from regulatory agencies like the FMCSA.
Chris Burroughs, CEO of the Transportation Intermediaries Association, echoed concerns over the susceptibility of the FMCSA system to hacking by sophisticated criminal organizations. The FMCSA, in response, has been implementing security upgrades and initiatives to combat cargo theft, including the introduction of multi-factor authentication and a modernized registration system.
To address the escalating issue of cargo theft, U.S. Rep. David Valadao introduced a bipartisan bill called the Combating Organized Retail Crime Act, aiming to establish a coordination center within the Department of Homeland Security. This center would collaborate with agencies like the FBI and Homeland Security to combat organized crime in the transportation industry.
Meanwhile, the Senate Subcommittee on Surface Transportation, Freight, Pipelines, and Safety has also prioritized efforts to tackle cargo theft, particularly in light of security challenges at the southern border. Efforts are ongoing to pass legislation and strengthen collaboration among government agencies to enhance security measures in the industry.”
“According to Senator Todd Young, who chairs the subcommittee, there has been a rise in criminal activities, such as cargo theft. In a recent interview at his Senate office, Young expressed concerns that the FMCSA lacks the ability to effectively detect and remove fraudulent individuals from online shipping platforms. This poses a significant risk in the era of e-commerce, where consumers rely on these platforms to select reliable shippers. The proposed Household Goods Shipping Consumer Protection Act, a bipartisan legislation in the Senate, aims to grant the FMCSA the power to enforce civil penalties and implement stricter regulations to combat fraudulent practices.”
