Cargo theft is a massive problem – what can be done about it?

Last week, a Senate subcommittee outlined the growing problem of cargo theft along the U.S. supply chain.

“Since the COVID pandemic, cargo theft has surged across the country, reaching by some calculations a decade-long high,” said Sen. Todd Young, R-Ind. “Homeland Security investigations estimate that the annual loss of cargo theft accounts between $15 billion and $35 billion annually.”

The wide range of crime includes hijacked trucks and rail cars, identity theft, double brokering, cybersecurity vulnerabilities and reroute schemes.

So, the good news is that the problem has been identified. But what can be done to fix it?

The Senate Surface Transportation, Freight, Pipelines and Safety hearing on Thursday, Feb. 27 invited witnesses from trucking, rail, retail and logistics to offer potential solutions.

Lewie Pugh, executive vice president of the Owner-Operator Independent Drivers Association, told senators that steps must be taken to protect vulnerable small-business truckers from falling prey to freight fraud and other types of cargo theft.

Pass the Household Goods Shipping Consumer Protection Act

First, Pugh encouraged lawmakers to support the Household Goods Shipping Consumer Protection Act. The bipartisan bill, which was introduced in the Senate by Sen. Deb Fischer, R-Neb., would restore the Federal Motor Carrier Safety Administration’s authority to issue civil penalties against bad actors. The legislation also would require brokers, freight forwarders and carriers to provide a valid business address to FMCSA before acquiring operating authority.

“It will pay dividends if we can get it across the finish line,” Pugh said.

OOIDA also is encouraging regulators to issue a final rule to strengthen existing broker transparency regulations. A proposal is open for public comment through March 20.

Pugh also called for an overhaul of FMCSA’s National Consumer Complaint Database, which is where truckers are prompted to file complaints about freight fraud and other issues.

“From our experience with our members … this seems to be where all complaints go to die at FMCSA,” Pugh said. “Either they hear nothing back or if they get anything, it’s just ‘Thanks for letting us know.’ Also, we’ve said for a long time that it would probably be good to have a different name. Most of our small-business truckers don’t even realize this is a place for them to go file a complaint.”

OOIDA also believes fraud could be reduced if the agency increased the vetting process before someone could become a motor carrier or broker.

“FMCSA needs to step back and take a long look at making the barrier of entry to being a motor carrier or broker much harder and much stricter,” Pugh said. “We pretty much let people file for insurance and pay for it … We don’t know who these people are and if they even know what they’re doing. And maybe 12 to 18 months later, we audit them.”

FMCSA, Congress must act

Adam Blanchard, CEO of Tanager Logistics and Double Diamond Transport, said that tackling this problem starts with FMCSA.

“We have to start with them … First, we need Congress to direct FMCSA on the things that need to occur and the coordination necessary to address this very issue that we’re dealing with,” Blanchard said. “They need to be able to distinguish between fraudulent businesses and legitimate businesses. DOT needs enhanced cyber-capabilities and real-time fraud-detection tools and greater agency collaboration with law enforcement to identify these frauds. FMCSA needs to be directed to remove fraudulent companies from the SAFER website. We rely on that heavily to vet companies that we work with. FMCSA needs to explicitly authorize to withhold registration from applicants who fail to provide verifications.”

Additionally, Blanchard asked Congress to reintroduce the Safeguarding Our Supply Chains Act, which aims to improve communication between federal agencies and state and local law enforcement. The bill was introduced in the 118^th Congress by Rep. David G. Valadao, R-Calif., but has yet to be introduced in the new session.

Blanchard also recommended passage of the Household Goods Shipping Consumer Protection Act as well as improvements to the National Consumer Complaint Database.

Establish a task force

Chief Will Johnson, chief special agent of the BNSF Railway Police Department, offered eight recommendations, including the establishment of a task force.

1. Direct funding to dedicated federal prosecutors to tackle cargo theft cases.
2. Modernize the FMCSA vetting processes to include stronger authentication methods and real-time carrier verification and to implement controls around the sale or transfer of DOT and MC numbers.
3. Increase criminal penalties for cargo theft cases and allow all victims’ aggregated harm to be considered.
4. Encourage private-sector collaboration between corporate security teams, carrier monitoring services, load boards, insurers and law enforcement through data-sharing initiatives to include cargo tracking and known offender tracking.
5. Allow the prosecution venue to be at the place of offense or the victim’s U.S. corporate place of residence.
6. Provide law enforcement agencies with the resources and support to effectively investigate and combat these sophisticated criminal networks.
7. Support the establishment of a federal Supply Chain Crime Coordination Center and Supply Chain Fraud and Theft Task Force to address supply chain fraud and theft throughout the rail, motor carrier and intermodal systems and to detect, disrupt and deter organized theft groups targeting all stages of the supply chain.
8. While the U.S. Customs and Border Protection has implemented changes to the in-bond shipment process to improve tracking and reporting, when cargo is stolen, there is a further need to ease the burden of importers/suppliers in filing petitions for relief by allowing CBP the authority to waive fines in cases where theft is proven.

“The nature of these crimes has evolved over the years, and a whole-of-government approach is required to address this challenge effectively,” Johnson wrote. “Because of the interstate commerce nexus, this solution must be federally led and involve elected officials, business owners, transportation, law enforcement and prosecution officials.”

Increase communication

Robert Howell, the chief supply chain officer of Academy Sports and Outdoors, said the company has had to make investments in how products are sealed, tracked and traced as part of an effort to prevent cargo theft.

However, Howell said coordination between multiple sectors and agencies is necessary.

“There is a need for greater support to inform coordination, communication and collaboration among local, state and federal agencies, as well as the private sector, to mitigate impact to retailers, brokers, carriers and customers.” LL