According to American Trucking Associations (ATA) data, America's 13 million trucks move 72.6% of all US freight, drive 327 billion miles every year and generate $940 billion in gross annual revenue. Of the 750,000 active motor carriers and 3.54 million truck drivers in this country as of 2023, 95.8% operated 10 or fewer trucks, and 99.7% operated 100 or fewer trucks.
On the whole, all transportation services activities contribute roughly 6.7% to the US gross domestic product (GDP) in 2019, coming in fourth behind housing, healthcare and food.
One problem facing this critical sector is theft. Cargo theft and cyber theft both are becoming more prevalent across the transportation industry, driven by savvy criminals taking advantage of unsecured loads and vulnerabilities introduced by new technologies.
Cargo Theft Leading to Losses
Just as retailers must deal with theft in their stores, transportation carriers are increasingly having to address the potential loss of cargo directly from their trucks. "That includes true theft by third parties as well as concerns within trucking companies around the possibility of organized theft rings targeting their loads," observes Eden Hancock, area senior vice president with Risk Placement Services (RPS) in Atlanta.
"Anything that's easily disposed of like food, alcohol, meat, electronics, anything that they can quickly sell off that can't really be tracked that easily" is vulnerable to theft, explains RPS Vice President of National Transportation Mark Gallagher. "It's a hot-button issue in our industry, and it's certainly driving up the loss cost within that segment."
According to the cargo-theft prevention and recovery network CargoNet, incidents of cargo theft increased by 57% from 2022 to 2023 and increased by another 10% in just the first quarter of 2024, with an average loss of more than $280,000 per shipment. California, Texas and Illinois together account for 61% of all cargo theft cases.
The issue has become so concerning that Representative David Valadao (R-CA) in June, 2024, introduced the Safeguarding Our Supply Chains Act, which would create the Supply Chain Fraud and Theft Task Force to address cargo theft as well as broader supply chain fraud.
ATA Senior Vice President of Legislative Affairs Henry Hanscom applauded the move, saying that trucks have "increasingly become a prime target for organized crime rings, putting truck drivers at risk and raising costs for consumers. ATA commends Congressman Valadao for introducing legislation to address this alarming trend and safeguard our supply chain. The Supply Chain Fraud and Theft Task Force created by this bill would strengthen the partnership between motor carriers, law enforcement, the government and other supply chain partners to strike an effective blow against organized crime."
Many insurance companies are forming their own investigative units to recover stolen cargo, given that local police departments are stretched thin and need to focus their resources on bodily injuries and other pressing cases. Having these dedicated investigative units can help insurers mitigate some theft costs and accelerate the process. For insureds, on-time claims reporting can play a big role in recovery as well. The faster theft victims begin the process of filing a claim, the quicker their insurance company can start their loss mitigation investigation and reach a resolution.
Cyber Theft Becoming More Prevalent
According to a recent study by SOAX that used Identity Theft Resource Center data, transportation and shipping account for nearly half of all cyberattack targets, with 101 data violations in 2023 alone. In fact, the number of cyber cases in the transportation industry is up more than 181% year-over-year, matching the number of cases from the previous three years combined. No other industry has seen such a large increase in attacks in recent years, with only financial services coming close with a 177% increase.
In transportation, this increase is playing out in many different ways. For example, cyber theft is becoming more common among truck brokering firms, which broker loads between shippers and truckers. Thieves are falsifying invoices and inserting themselves in the process, redirecting payment to themselves instead of the trucking company. They're effectively creating a phantom shipper so they can accept jobs and get paid, despite never hauling any freight.
Says Hancock, "There is a lot for commercial transportation carriers to focus on right now in terms of theft."
Learn more about what's next for the Transportation insurance market in the RPS 2024 Transportation Market Outlook.
