Cargo theft is costing everyone — including consumers

The cargo was loaded in Indiana, Kentucky, and Ohio. Trucks full of Oculus headsets, Bose speakers, and products from Bath & Body Works were destined for warehouses all over the country. But they never made it there. When drivers took breaks to eat, sleep or refuel, thieves swooped in.

“They stole the trailer, obviously changed the identifying markers on the trailer,” and drove the goods down to Florida to be resold, said Timothy O’Malley, the special agent in charge of the Indianapolis field office at the FBI.

Over 18 months, a group of men staked out warehouses and tracked drivers. In total, they swiped more than a dozen trucks. These were not like the dramatic heists you see on TV. Cargo thefts usually aren’t.

“This one was kind of more just plain old bad guys watching trucks and then waiting for an opportunity to steal those loads,” O’Malley said.

When most people think about retail theft, they probably think of smash-and-grabs or someone sliding an extra apple or two into their bag at self-checkout. But the crime that’s perhaps affecting companies the most right now happens before any products make it to store: cargo theft.

It’s when people steal pallets off trucks or even whole trucks of goods. Last year was likely the biggest for cargo theft on record, according to the American Trucking Association. And the nature of the crime has changed.

“It went from fathers, sons, uncles, cousins, brothers all making up the crew to now massive international crime rings,” said Scott Cornell, chair of the Transported Asset Protection Association.

As logistics technology has gotten better so have thieves. And every time goods exchange hands, it creates an opportunity to steal. It’s why cargo theft is most common near major logistics hubs, places with ports and warehouses like California and Texas. And thieves steal really anything and everything, from pharmaceuticals to livestock. The most popular category is food.

“There’s no barcode on frozen chicken. There’s no serial number on frozen meat,” Cornell said. “The evidence is consumed.”

Most stolen goods end up on third-party selling sites like eBay and Facebook Marketplace, or they get shipped overseas. Often the big boss is somewhere abroad, operating online.

David Mitsui, director of risk and compliance at freight brokerage Total Quality Logistics, said this kind of theft, called strategic theft, is becoming more common. 

“We had a carrier. It was a legitimate carrier that we contracted for a load,” said Mitsui, whose company brokered a haul for a driver picking up a truckful of copper. While on the road, the driver got an email from someone he thought was from Total Quality Logistics. 

“They said, ‘Hey, I know that this load is supposed to be going to X. Instead of delivering there, we’re going to have you take it to this warehouse that’s really close to where you are right now,’” Mitsui said.

The copper was eventually recovered. But even in this best case type of scenario, there are consequences.

“A lot of times if it’s a food and beverage, even if you recover it you have to dispose of it because you’ve lost chain of custody,” Mitsui said.

All of this, of course, comes with a price. Total Quality Logistics’s anti-theft team has grown from four to 40 in the last two years.

Janelle Griffith, North American logistics practice leader at Marsh, a supply chain and logistics consultancy, said a lot of cases go unreported, partly because it’s hard to decide which party — the warehouse, the freight broker, or the trucking company — should file an insurance claim.

“Is it theft? Is it fraud? Is it a cyber intrusion?” she said. “Who was the one at fault?”

Still, insurance claims have increased, said Griffith, which means so has the cost of insurance.

“I’ve had underwriters that’ve said if this continues in this vein it very well might be that cargo becomes uninsurable,” she said.

And at the end of the day, all these costs trickle down to consumers, baked into the price of, say, a Warm Vanilla Sugar candle from Bath & Body Works.