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Cargo thieves embrace work-from-home vulnerabilities

A spike in extortion, fraud, theft and cyber risk accompanies supply chain disruptions, remote-work options and inventory confusion
Locked cargo containers

North America’s cargo thieves have embraced the remote work revolution sparked by the global pandemic.

Why commute to an office when you can work from the comfort of your home, or – in the case of cargo theft kingpins – the comfort of your country?

For thieves, the ease with which people can now work from anywhere using the internet and the 21st century’s digital communication toolbox makes business sense, according to Keith Lewis, vice-president of operations for CargoNet, a subsidiary of multinational analytics and risk assessment company Verisk Analytic Inc.

“It is 100 per cent safer [than working in North America], because there is zero chance of being arrested. So, you know, why be in the States when I can be over here? And if something goes wrong, I just disconnect my number. Nobody’s going to come over here and arrest me for something I’m doing over there.”

What they are doing over here in Canada and the United States from over there (overseas), as Lewis pointed out, is stealing cargo, diverting cargo, holding cargo to ransom and hijacking goods that are in high demand in consumer and other markets.

Numbers from CargoNet, which has been collecting property crime data from North American insurance companies for the past 10 years, show that cargo theft reports in Canada and the United States jumped 57 per cent in 2023’s second quarter compared with the same quarter in 2022.

Overall reported cargo thefts have spiked 63 per cent to 1,252 this year compared with 2022, Lewis said, and identity theft, fictitious pickups, freight diversion and other forms of cargo fraud, are up around 656 per cent this year to 363 compared with the same period in 2022.

According to CargoNet’s data base, thieves stole more than US$44 million in cargo shipments in 2023’s second quarter, and the average per-theft value of that cargo stolen increased between US$100,000 and US$260,000 compared with numbers gathered in 2022’s second quarter.

The second-quarter increase follows the estimated 31.2 per cent jump in North American cargo theft in 2022’s fourth quarter compared with the same quarter in 2021. Total estimated losses this year: around US$71 million.

But those numbers are based on reported thefts only; many go unreported. Large gaps in reporting cargo theft make it difficult to accurately estimate the number and value of goods stolen once they leave any of Canada’s major ports of entry.

U.S. Homeland Security Investigations has estimated cargo theft annually accounts for between US$15 billion and US$35 billion in losses. Estimates for Canada range around $5 billion.

According to CargoNet, shipment misdirection, phantom deliveries, identity theft, cybersecurity breaches and other fraudulent game plans are driving the rise in cargo lost to criminal gangs.

Supply chain cyber risks are multiplying for a wide variety of critical industries. In its Energy Cyber Priority 2023 report, DNV notes that while digital technologies are driving the energy transition of advanced energy companies, the industry cannot reap the benefits of that transition without robust cyber security.

Energy supply chain vulnerability is a top concern. According to the global risk management provider, only 36 per cent of energy professionals are confident that their organizations have invested enough in cyber security.

Lewis said extortion has also hit North America’s supply chain hard.

“We see a lot of step-by-step extortion, where people are picking up a load and then claiming, ‘Well, you did my friend wrong or my partner wrong four years ago; you short-paid them, and then you short-paid my other partner. And we’re all carrier partners now. And you’re going to have to pay us $30,000 if you want this load delivered.’”

Lewis added that shipping companies should not expect much help from police in extortion cases.

“There’s no law enforcement anywhere on the planet that’s going to jump in on something like this. Because it’s going to be looked at as a civil matter or business dispute. Even though it’s really not; it’s theft by extortion.”

It also involves unknowns ranging from the load’s location to the extortionists’ location.

The bottom-line result, according to Lewis: “It’s crippling a lot of these companies. They’re having to pay these crazy, crazy dollars to get their loads back.”

Or they do not pay to get the loads back. Instead, they write it off as the price of doing business and file an insurance claim in an accelerated supply chain that leaves less and less time for the due diligence that is the first line of defence for cargo movement integrity.

Also, because that supply chain is a complex network of inter-connected and inter-dependent companies and businesses, a criminal pressure point squeezing one link has a knock-on effect up and down the logistics line.

That, as Mark Brown points out, increases an extortionist’s leverage.

Quoted in BSI’s 2023 Supply Chain Risk Insights Report, the global managing director of digital trust consulting for the U.K. national standards company said, “The increase of ransomware targeting the supply chain is significant [because] the perpetrators know they are likely to be paid a ransom given the impact it has not just on a single company but on a whole ecosystem of companies within a supply chain, making it more likely that the attacked company will pay the ransom to recover as quickly as possible.”

Atop cargo thieves’ list of products to steal this year, according to Lewis, are solar panels and energy drinks.

TT Club’s 2022 Cargo Theft Report also points to an increase in criminals targeting food and beverages, automotive parts and fuel.

The company, which supplies insurance and related risk management services to the transport and logistics industry, noted that higher inflation and lower consumer purchasing power have made basic goods a high-priority theft target.

Electronics and other high-value goods continue to be key targets for crooks.

The TT Club report also noted that the downshift from pandemic economy port congestion to 2023’s trade slowdown on the transpacific and other major shipping routes is shifting the focus for cargo crooks.

Supply chain congestion stranded a lot of cargo in ports and port terminals, which are more secure than warehouses, container cargo holding yards and other links further along the supply chain.

As TT Club pointed out, thefts from those facilities consequently increased to 26 per cent of cargo thefts in 2022 from 24 per cent in 2021 while cargo hijackings decreased to 16 per cent from 24 per cent in 2021.

According to CargoNet, thefts of full trailers and other loaded cargo carriers increased 17 per cent in 2023’s second quarter compared with 2022’s second quarter.

Fictitious cargo pickups, in which shipments are subcontracted to legitimate truckers and then misdirected to warehouses where they are offloaded into the criminal supply chain, targeted 39 different product categories in 2023’s second quarter.

CargoNet data shows the main targets for cargo crooks are alcoholic beverages, solar power energy generation equipment and automobile supplies.

“For the last 12 months, it seems the supply chain can’t keep up with an uncertain market,” BSI’s Brown said, “and this unbalanced supply and demand between countries has driven product shortages, delays and made cargo susceptible to tampering and theft.”

Supply chain disruptions, such as this year’s ILWU Canada strike at B.C. ports, also multiply cargo theft opportunities.

What to do?

Lewis told BIV that there is no magic bullet here, no emerging cargo theft technology deterrent.

There is, however, a low-tech option.

“My advice never changes [but] nobody ever takes my advice. It is slow your roll. We’re moving this freight at light speed on load boards. We need to slow it down a little, just dial it down a notch, and do a deeper dive into vetting and making sure that we don’t have any bad history with this company. Run the MC [motor carrier] numbers through your system; run those numbers through our system … a double check, triple check, maybe, but it is hard to do when you are moving thousands of loads a day.”

He likened cargo theft victims to people who get burned using an online dating website.

“From a law enforcement perspective, they’re both the same thing. You met somebody, you met a company on the internet, and things didn’t go well. Well, you know, you should be more careful next time. And that’s law enforcement’s take on this … because you don’t know where the person is. You don’t know where the freight is. There’s no witnesses. There’s no video. There’s no IP address because they’re using VPNs. So, it’s a very, very difficult crime to work. If you can work it at all.”

He added that sharing data and using history to prevent repetition of swindles and fraud are two other key strategies in the fight against cargo crime.

“And sooner or later the bad guy is going to get caught if somebody is looking, because when they are doing these types of crimes, they’re leaving a breadcrumb trail.” •