From stickups to pickups

By Greg Grisolano, associate editor

Cargo theft was an $5 billion business in 2013, according to data from the FBI. But that might not even be the full picture of the economic impact wrought by the theft of valuable cargo - and at times the tractors hauling it from Point A to Point B.

While the vast majority of reported cargo thefts in the United States result from thieves making off with unattended trailers or tractor and trailer combos, new threats are emerging in the digital age.

At the forefront of the industry's response to these emerging threats is Keith Lewis, vice president of operations for CargoNet, a cargo theft prevention and recovery network. CargoNet uses analytics and information-sharing between law enforcement and transportation industry stakeholders to combat theft. Lewis is in charge of the company's "fusion center," which catalogs thefts, aggregates data, and sends out reports to CargoNet clients advising them of emerging trends and best practices for safety.

Among the emerging threats to cargo security are fictitious pickup scams and so-called "Comchek scams" involving wire fraud. Bad actors impersonate a legitimate carrier or double-broker a load and make off with an advance from the broker, sticking an innocent carrier with a shorted payment upon delivery.

"Make no mistake, theft of trailer is still the most common (type of theft)," Lewis said. "But what we're seeing is a ramp-up on the cybercrime because it's an easier crime to commit and get away with."

Emerging threats

Originally from Chicago, Lewis said his family's business was trucking. His father owned a small trucking company with about a dozen trucks. The son decided to go into the trucking business as well, first working in third-party logistics, then law enforcement. He spent about 15 years as an investigator in the Georgia Bureau of Investigation, working "any type of crime you can imagine" against the supply chain, including cargo theft, cybercrime and warehouse thefts.

Along with Walt Beadling of the Cargo Security Alliance, Lewis co-wrote a 2013 white paper on fictitious pickup schemes. That paper defines fictitious pickups as "criminal schemes that result in the theft of cargo by deception that includes truck drivers using fake IDs and/or fictitious businesses set up for the purpose of diverting and stealing cargo."

Concurrent with "the expansion of web-based brokering, the ability to set up fictitious companies and websites, and the availability of high-quality fraudulent driver's licenses," Lewis said the Internet, along with growth in non-asset-based logistics providers and freight brokers, has played a role in the rise of cargo thefts.

"The 'just in time' supply chain management practices have exacerbated the problem by putting a premium on speed at the expense of performing time-consuming due diligence in vetting," the white paper stated. "More than 50 percent of fictitious pickups occur on Thursdays and Fridays, when shippers and warehouses are busiest."

Lewis said part of the reason crimes like fictitious pickups are becoming more commonplace is because law enforcement has difficulty investigating such crimes from a logistics angle.

"It's an interstate crime. But how does a state officer or a local officer… work a crime where the crime occurred in his state, the victim is in his state, but the load picks up in another state to go to another state - and the bad guy may not even be in this country?" he said.

Another appealing aspect of cybercrimes for criminals: The upfront costs are much less than trying to steal a trailer from a truck stop or other unsecured parking lot.

"You don't even need to have a tractor," he said. "You don't have to have a truck to go out to a truck stop and troll, or fish if you will, for trailers. And sometimes if you steal a trailer, you don't even know what you're getting. You're just getting a load. You open the door and it turns out to be a load of Dixie cups. You're gonna drop that trailer somewhere and go back and steal another one hoping you get a load of laptops."

Comchek scams are also on the rise. Lewis said one of the most common variations of the Comchek scam is impersonating a legitimate carrier booking a load with a broker and calling to request an advance upon pickup.

"(The thief) will call a couple hours later and say, 'Hey, I've got the load; can you give me my Comchek?'" Lewis said. "And they cut you that Comchek for 40 percent of the load. Then a couple of hours later the shipper will call the broker and say 'How come that truck never picked up the load?'"

Another riff on the scheme involves double-brokering loads, which can often ensnare another motor carrier.

"Really, they're using virtual money because they're never going to pay the guy anyway. So they'll take a $2,000 move for market value and repost it for $2,500 or $3,000," he said. "They'll send some innocent carrier in there to pick up the load. The innocent carrier gets in there, picks up the load, and continues down the highway.

"Meanwhile the thieves call the innocent broker and say 'Hey, I've got the load picked up; I've got the bill of lading number. I need my Comchek.' So they cut them the Comchek. … Then when the innocent carrier gets there, delivers the load, sends the invoice in, well they short-pay it (by the amount advanced on the Comchek)."

'Unattended' trucks and trailers still the biggest risk

Industry experts agree that getting a firm grasp on the size and scope of the cargo theft problem in the United States is difficult because of the lack of hard data. Thefts are generally thought to be underreported, or misreported altogether.

Consider that in April 2015 the FBI announced an update specifically about reporting cargo theft in its Uniform Crime Reporting Program. The agency expressly stated that "more reporting is needed to provide a realistic picture of national cargo theft trends."

The April press release noted that in 2013, only seven states - Delaware, Florida, Indiana, Maine, Michigan, Tennessee and Virginia - chose to report cargo theft incidents to the agency's UCR program, resulting in 189 reported incidents of cargo theft, with a total value of property loss of more than $11.9 million.

Compare that number to 951 - the number of theft incidents reported by FreightWatch International in 2013 - which was nearly five times more than the number reported by states.

FreightWatch, which specializes in tracking supply chain information and cargo thefts around the globe, estimated that cargo thefts occurred in the United States that year on average nearly 80 times per month. CargoNet meanwhile, recorded 1,098 theft incidents that same year.

Although cybercrimes may be an emerging modus operandi for thieves, the vast majority of those cargo thefts still occur while the trailer, or the truck and trailer are stationary and unattended. Per FreightWatch, roughly 90 percent of all cargo thefts in 2014 occurred when the truck was stationary or unattended.

Security experts recommend drivers use secure parking lots that provide sufficient barriers to prevent theft or unauthorized access and use additional security features like kingpin or landing gear locks, electronic security locks and active alarm systems.

But Doug Morris, OOIDA security operations director, said the unattended trailer theft issue is correlated to another issue most drivers face on a daily basis - finding safe and secure parking.

"Parking is a huge concern for the trucking industry and finding safe and secure parking is even a bigger concern," he said. "This issue is brought up on a continuous basis with Department of Transportation, Department of Homeland Security, and the Food and Drug Administration. The major agencies that have cross-sector concerns within trucking are well aware of the problem, but solutions seem to be years away."

Morris said he expects the issue to be further exacerbated by a mandate for electronic logging devices on trucks. OOIDA is currently suing the Federal Motor Carrier Safety Administration to block the reg from taking effect.

He said smarter logistics and route-planning may be the solution. He said there are smartphone apps in development that will help drivers in the future to know the best possible route based on known algorithms such as weather, traffic patterns, road construction, truck parking, and facilities along the route.

"These routes may be a bit longer via mileage, but the driver will get from point A-Z quicker and safer," he said. "A lot of the so-called old-timers knew these routes, times and known issues for years. The rookies seem to use the interstates as mileage wise it appears to be faster, and generally don't know the traffic patterns and times to stay off the interstate in a particular area."

More tips and best practices

When it comes to avoiding getting roped into a fictitious pickup or similar cyber scheme, Lewis said the best way for drivers, particularly owner-operators, to protect themselves from fraudulent schemes is to "trust, but verify."

"If you pick up a load on a load board, do a little research," he said. "Google the phone number. Run those numbers through some databases. … If they're using the name of a big broker and they've got an address that goes to a P.O. Box at Mailboxes Etc., there's a clue right there, as we say in my business."

Lewis said to also look for the home address or the banking information. Call the bank and get some references on the broker.

The same advice about doing due diligence is applicable for brokers as well, he said.

"A year ago, trucks were really, really tight. Nobody could get trucks. Brokers couldn't get trucks. So the vetting process goes away," he said. "This year, it's a whole different ballgame. Trucks are plentiful and we're seeing a downturn in theft because the brokers are using their more secure, more reputable drivers and carriers than a year ago when truck (capacity was) super-tight."

Lewis also advocated that drivers observe the so-called "Red Zone Rule." Once a load is picked up, the driver shouldn't stop for at least 200 to 250 miles.

"If they're going to follow the driver to steal a load, usually they're going to fall off about 150 miles," he said."

Morris said a few commonsense suggestions, like being aware of your surroundings and not discussing any high-value loads you may be hauling with strangers, can go a long way to minimizing a driver's risk of being targeted.

"(Criminals) are just looking for an easy opportunity to steal a load or a truck," he said. "The states that have the highest movement of freight will always remain high on the list of stolen freight as there is more opportunity. And it's much easier to find a victim as the turnover rates of drivers in these areas are also high.

"Experienced drivers very seldom become victims of cargo theft because they know the bad areas and either stay away from them or are more cautious in those areas," he said. "The word gets out pretty quick among experienced drivers where an increase in truck and cargo thefts are occurring. I receive calls on a regular basis from our members telling me as much." LL