A report from the Transportation Intermediaries Association says the freight industry is “under siege from increasingly sophisticated and organized fraud schemes” and must evolve to fight the growing problem.
The professional organization for 3PLs said in its 12-page report that 3PLs have experienced a “dramatic” rise in fraud, prompting an increased need for countermeasures. The TIA collected 200 responses from members from February to August to analyze key trends in fraud.
Fraud has become more sophisticated, leading to calls for action on a federal level, including for a task force to curtail the crime.
The most common form of fraud is cargo theft, which saw a 600% increase between November 2022 and March 2023, the report said. The National Insurance Crime Bureau reports that cargo theft amounts to $15 billion to $30 billion each year.
Financial schemes are growing, including unlawful brokerage and fraudulent invoicing. Other types of fraud include identity theft, in which people impersonate legitimate companies to commit fraud; internal theft, in which employees participate in the scheme; and data theft from cyberattacks.
The average gross cost of fraud reported by respondents was about $402,000. Some companies reported over $1 million in losses, the report said. The average amount lost to fraud per load is over $40,000.
The report highlighted stories from those in the logistics industry impacted by fraud.
Rob Hoffman, CEO of Dedicated Carriers, received ransom demands when someone stole one of his loads and threatened to steal more unless he paid $40,000. Hackers gained access to CBT Inc.’s load board account last year from a phishing scam and posted fraudulent listings under CBT’s name.
Other things identified in the report:
- California, Texas, Illinois, Georgia and Florida reported the most incidents. Forty-eight percent of fraud incidents originated in California alone.
- The most commonly stolen items are electronics, solar panels and household goods.
- Truckload freight is the primary target of fraud.
Companies are investing heavily in solutions to fight fraud, the report said. Efforts include technology investments.
In addition to spending money to stop theft, companies are spending significant time tackling the problem. This affects productivity, the report said. About 20% of respondents told the TIA they spend one day per quarter on fraud prevention.
The most-targeted commodities have a high and easy resale value, meaning companies should implement extra security measures for these goods, the report said.
The report outlined these strategies to fight fraud:
- Collaborate with shippers, brokers and carriers.
- Advocate for regulatory oversight.
- Invest in enhanced technology.
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