Risky Business

Thieves post as truckers to steal cargo loads

Hi everyone,

I'm busy with a big project I'll tell you all about next week, but in the meantime since I didn't have time to blog myself I thought I'd post something that the A.P. reported on which was discussed at last week's TRS Transportation Risk Specialist seminar.  This is written by Roxana Hegeman, and I thought it was an interesting story:
 

WICHITA, Kan. (AP) — To steal huge shipments of valuable cargo, thieves are turning to a deceptively simple tactic: They pose as truckers, load the freight onto their own tractor-trailers and drive away with it.

It's an increasingly common form of commercial identity theft that has allowed con men to make off each year with millions of dollars in merchandise, often food and beverages. And experts say the practice is growing so rapidly that it will soon become the most common way to steal freight.

A generation ago, thieves simply stole loaded trucks out of parking lots. But the industry's widening use of GPS devices, high-tech locks and other advanced security measures have pushed criminals to adopt new hoaxes.

Helping to drive the scams, experts say, is the Internet, which offers thieves easy access to vast amounts of information about the trucking industry. Online databases allow con men to assume the identities of legitimate freight haulers and to trawl for specific commodities they want to steal.

Besides hurting the nation's trucking industry — which moves more than 68 percent of all domestic shipments — the thefts have real-world consequences for consumers, including raising prices and potentially allowing unsafe food and drugs to reach store shelves.

News reports from across the country recount just a few of the thefts: 80,000 pounds of walnuts worth $300,000 in California, $200,000 of Muenster cheese in Wisconsin, rib-eye steaks valued at $82,000 in Texas, $25,000 pounds of king crab worth $400,000 in California.

The Hughson Nut Co. fell victim twice last year, losing two loads valued at $189,000. Each time, the impostor truckers showed up at the Livingston, Calif., nut processor on a Friday with all the proper paperwork to pick up a load of almonds.

On the Monday following the second theft, a customer called to complain that the almonds had never arrived in Arizona. The company's quality assurance manager, Raquel Andrade, recalled getting a sinking feeling: "Uh-oh. I think it happened again."

The thefts are little-known and seldom discussed outside the world of commercial trucking. Companies that have been victimized are often reluctant to talk about their losses. But crime reports and Associated Press interviews with law enforcement and industry leaders reveal an alarming pattern that hurts commerce, pushes up consumer prices and potentially puts Americans' health and safety at risk.

"In the end, the consumer winds up paying the toll on this," said Keith Lewis, vice president of CargoNet, a theft-prevention network that provides information to the insurance industry.

The economic results go beyond adding a few nickels or dimes to retail prices. The "consequential damages" from stolen cargo easily run into the millions of dollars, far exceeding the value of the lost shipments. For example, a stolen load of pharmaceuticals might necessitate a worldwide recall of every drug with that lot number to ensure none of the product ends up back in the market in case it gets tampered with.

Stolen food shipments pose similar health concerns.

 

"It might be low value, but that load of poultry could be high-risk," Lewis said, explaining that if it spoils and gets back into the supply chain, hundreds or thousands of people could get sick.

The scheme works like this: Thieves assume the identity of a trucking company, often by reactivating a dormant Department of Transportation carrier number from a government website for as little as $300. That lets them pretend to be a long-established firm with a seemingly good safety record. The fraud often includes paperwork such as insurance policies, fake driver's licenses and other documents.

Then the con artists offer low bids to freight brokers who handle shipping for numerous companies. When the truckers show up at a company, everything seems legitimate. But once driven away, the goods are never seen again.

The thieves target mostly shipments of food and beverages, which are easy to sell on the black market and hard to trace. Some end up on the shelves of small grocery stores. Others go to huge distribution warehouses like the one authorities raided in August in North Hollywood, Calif. It was filled with stolen steaks, shrimp, energy drinks, ice cream and other frozen foods.

Last year, carriers reported nearly 1,200 cargo thefts of all kinds nationwide, about the same as the previous year, according to CargoNet, a division of Verisk Crime Analytics, which estimated losses that year at nearly $216 million. Since many thefts go unreported, the real figure is almost certainly far higher.

The most common crime is still the "straight theft" of trailers left unattended in parking lots or at truck stops. But CargoNet says the new trucking scams are growing at a rapid 6 percent each quarter. Of the average three to five truckloads stolen each day in the United States, at least one involves what are known in the industry as fraudulent or fictitious pickups.

 

The thefts emerged three or four years ago and are now "the latest, greatest thing" for organized groups seeking to steal freight, said J.J. Coughlin, vice president for law enforcement services at LoJack SCI, a supply chain protection company.

LoJack examined 947 cargo thefts last year and identified 45 of them as fictitious pickups. So far this year, the number of fictitious pickups has probably already doubled, Coughlin said. The average loss last year was more than $170,000 per incident.

Although cargo thieves prey on companies across the nation, the hot spots are places with shipping ports or rail hubs. California leads the nation. Large numbers of thefts have also been reported in Texas, Florida, New Jersey, Michigan, Illinois, Georgia, Pennsylvania and Tennessee.

Scott Cornell, national manager of a special investigation group focusing on supply chain security at the insurance company Travelers, said the thieves take advantage of the Internet, which allows them to do "so many things online where nobody sees you," including setting up a company and bidding on loads.

Within a few years, Lewis said, identity theft-related scams are expected to become the most prevalent method of cargo theft.

Experienced thieves know where the major manufacturers are located. And some are savvy enough to pick out which brand of electronics or appliances to steal by bidding on loads posted online. Someone wanting to steal a truckload of copper, for instance, would target shipments coming out of Carrollton, Ga., where a major copper-wire manufacturer is located.

 

Food and beverages were the most commonly stolen items, accounting for 23 percent of all thefts last year, followed by metals at 16 percent, and electronics and household goods at 12 percent each. Other products made up the remaining 37 percent, including pharmaceuticals at 3 percent, according to CargoNet's 2012 report.

One reason food shipments are popular targets is because they have a lower value than electronics or pharmaceuticals, which are often more heavily protected. Plus, food generally does not have any serial numbers to trace.

The loads are also difficult to recover. Companies often do not know they have been scammed until their shipments fail to show up, usually four to five days after they were stolen, Coughlin said.

By that time, the goods have probably already been sold on the black market.

The trucking and insurance industries are fighting back, urging freight brokers to take extra precautions, such as checking information before awarding shipping contracts to unfamiliar truckers.

The California Farm Bureau Federation warns about clues that could indicate a suspicious hauler: temporary name placards or identification numbers on the truck, abrupt changes in the time of the pickup and lack of a GPS tracking system on the truck.

Another suggestion is to get a thumbprint from the truck driver.

"This is growing at such a rapid, scary rate," said Sam Rizzitelli, national director for transportation at Travelers Inland Marine Division. "It warrants a lot of attention."