How To Combat Fraud in Supply Chain

Cargo theft and freight fraud have long plagued the supply chain industry, with large containers of expensive goods previously being the prime targets for thieves. Advancements in technology have made it easier for these offenders to target high-value shipments and bypass established security protocols. To stay ahead of criminals, it is crucial to routinely assess supply chain processes for any potential vulnerabilities.

The Cargo Theft Crisis

Cargo theft is now an $800 million crisis for the supply chain sector. Criminal activities lead to significant operational disruptions, harm the reputations of vendors, manufacturers and shippers, and result in heightened security and compliance expenses. The situation has continued to escalate to such an extent that the Federal Motor Carrier Safety Administration (FMCSA) system has also fallen prey to phishing, identity theft and various other scams. Understanding the different ways in which these thieves operate can help you stay wary of potential danger for your shipments.

How Do Bad Actors Do It?

Most cargo theft and fraud fall under two main categories: straight theft and strategic theft. Straight theft describes a situation when cargo is physically stolen from a location, while strategic theft occurs when thieves use deception to pass themselves off as legitimate carriers. Within these categories, there are many different tactics used by thieves to commit cargo theft:

Traditional cargo theft falls under the straight theft category and includes all crimes where the cargo is physically stolen. This could be from a trailer, a drop lot or any area in which cargo is left unattended.

Fraud and identity theft describe practices used to deceive shippers, brokers and carriers into sending shipments to the thieves instead of the intended carriers. With the increase in technology, criminals have employed more advanced methods by targeting loads with tight deadlines to prey on any weaknesses within the vetting process. This falls under strategic theft.

Sniffing attacks is a form of strategic theft that refers to the use of technology to        detect GPS devices within a trailer to identify a high-value shipment. Thieves then          use a jammer to block the signal of the tracker, which allows the criminals to steal               and relocate the entire trailer and its contents.

Cyberattacks are technology-based attacks, typically committed through phishing              emails, malware, data breaches and information leaks. This is another form of strategic theft. The information gained through these attacks is then used to                         commit fictitious pickups and identity theft.

Pilferage, otherwise known as petty theft, involves the theft of small items or             portions of a shipment. Because of the nature of these crimes, these small                     disappearances often go unnoticed but can add up, creating a major loss over time.    Depending on the circumstances, this can be seen as both straight theft or strategic       theft.

What Can be Done?

It may seem daunting to fight back against the rising rate of cargo theft and fraud, but there are always ways to protect your business against thieves. It is important to familiarize yourself with the sophisticated methods employed by criminals. Protect your supply chain by implementing additional security measures to ensure that your cargo stays safe and secure.

Start by consistently reviewing and updating your vetting processes to ensure that you are thoroughly screening all brokers, carriers, insurance providers, regardless of the time constraints your shipments face. It is crucial that everyone remains vigilant for threats such as fictitious pickups, identity theft, blind shipments and stolen or compromised MC numbers. Additionally, MC numbers are being sold all of the time, so it is important to check for any MCS-150 changes within the last 6 months. That warrants further vetting.

Establishing safety protocols is an important first step, but updating your process regularly can help you catch weaknesses and prevent thieves from knowing how to circumvent your vetting process.

Ensure all personnel responsible for handling your shipments are aware that they should never leave a loaded trailer unattended. Consider implementing high-security rear door and air cuff locks or even investing in landing gear locks for staged or dropped loads. There are also many ELD systems out there that can be used to track your shipments but make sure that your partner has a tracking system that cannot be altered.

Research your contacts and their affiliated companies through the FMCSA, the internet and established carrier vetting and onboarding companies prior to them picking up your shipment. At the point of pickup, verify the identity of the driver and that it matches the expected contact. Be sure to record the driver’s name, date, time, truck number, trailer number and make a photocopy of their license. Additionally, check identifying information on the truck or trailer characteristics and utilize secure pickup numbers for an additional layer of verification.

Ensure that all of your security software is updated to reinforce your cybersecurity. One of the easiest ways to protect yourself is by limiting the availability of critical company information to the public and training all employees to recognize and avoid phishing emails.

Moving Forward: Strengthening the Fight Against Fraud

While thieves have steadily deployed more advanced methods of deception, there are a variety of strategies you can take to protect your freight. Ultimately, building a culture of security awareness and resilience within your organization will not only help mitigate the risks associated with freight theft but also foster trust and reliability with both partners and customers.

Pullout Quote

“Paying close attention to detail can be the difference between shipments getting from point A to point B or falling victim to cargo theft and fraud.” -Jessica Renner

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Tips to keep cargo safe

• Adopt a multi-faceted approach, including both technological and solutions and strategic training
• Implement advanced tracking systems and real-time monitoring tools
• Train employees to recognize and report potential threats
• Conduct regular audits and assessments to identify vulnerabilities within the supply chain.

Jessica Renner is the Cargo Claims & Risk Manager at Jarrett. You can reach her at jrenner@gojarrett.com