The would-be thief, posing as a driver for a legitimate trucking company, could have pulled away from Nebraska Beef with $163,000 worth of meat.
But a suspicious freight booker checked his insurance documents and alerted the Omaha packer. Nebraska Beef called Omaha police, who were waiting when the man showed up.
That was in January 2012, but meatpackers and other consumer goods manufacturers increasingly are on alert as thieves turn to a deceptively simple tactic to steal huge shipments of valuable cargo: posing as truckers and loading freight onto their own tractor-trailers.
“It’s an ongoing problem for anybody that trucks anything right now,” Nebraska Beef spokesman James Timmerman said.
The most common cargo theft crime is still the “straight theft” of trailers left unattended in parking lots or at truck stops. In Nebraska and Iowa in recent years these have included thefts of trailers containing clothing, razors, toilet paper, sausage, margarine and metals, according to FreightWatch International, an Austin, Texas, logistics security firm.
But as truck security measures such as GPS systems and high-tech locks grow more sophisticated, the new trucking scams are growing at a rapid 6 percent each quarter, according to CargoNet, a theft-prevention network that provides information to the insurance industry. Of the average three to five truckloads stolen each day in the United States, at least one involves what are known in the industry as fraudulent or fictitious pickups.
Another Nebraska slaughterhouse, Gibbon Packing, was hit by a similar attempt. Two men were arrested Feb. 21, 2012, after showing up to pick up a load of beef valued at $60,000, said Maj. Mark Funkhouser of the Nebraska State Patrol.
“Gibbon Pack was suspicious of these guys, and we were able to have troopers respond to the packing plant and they caught the people before they left,” Funkhouser said. The men’s semitrailer had stolen plates, Funkhouser said.
Helping to drive the scams, experts say, is the Internet, which offers thieves easy access to vast amounts of information about the trucking industry. Online databases allow con men to assume the identities of legitimate freight haulers and to trawl for specific commodities they want to steal.
Besides hurting the nation’s trucking industry — which moves more than 68 percent of all domestic shipments — the thefts have real-world consequences for consumers, including raising prices and potentially allowing unsafe food and drugs to reach store shelves.
News reports from across the country recount just a few of the thefts: 80,000 pounds of walnuts worth $300,000 in California, $200,000 of Muenster cheese in Wisconsin, ribeye steaks valued at $82,000 in Texas, $25,000 pounds of king crab worth $400,000 in California.
The Hughson Nut Co. fell victim twice last year, losing two loads valued at $189,000. Each time, the impostor truckers showed up at the Livingston, Calif., nut processor on a Friday with all the proper paperwork to pick up a load of almonds.
On the Monday following the second theft, a customer called to complain that the almonds had never arrived in Arizona. The company’s quality assurance manager, Raquel Andrade, recalled getting a sinking feeling: “Uh-oh. I think it happened again.”
In the end, “the consumer winds up paying the toll on this,” said Keith Lewis, vice president of CargoNet. The economic results go beyond adding a few nickels or dimes to retail prices. The “consequential damages” from stolen cargo easily run into the millions of dollars, far exceeding the value of the lost shipments.
For example, a stolen load of pharmaceuticals might necessitate a worldwide recall of every drug with that lot number to ensure none of the product ends up back in the market in case it gets tampered with.
Stolen food shipments pose similar health concerns.
“It might be low value, but that load of poultry could be high-risk,” Lewis said, explaining that if it spoils and gets back into the supply chain, hundreds or thousands of people could get sick.
The scheme works like this: Thieves assume the identity of a trucking company, often by reactivating a dormant Department of Transportation carrier number from a government website for as little as $300. That lets them pretend to be a long-established firm with a seemingly good safety record. The fraud often includes paperwork such as insurance policies, fake driver’s licenses and other documents.
Then the con artists offer low bids to freight brokers who handle shipping for numerous companies. When the truckers show up at a company, everything seems legitimate. But once driven away, the goods are never seen again.
The thieves target mostly shipments of food and beverages, which are easy to sell on the black market and hard to trace. Some end up on the shelves of small grocery stores. Others go to huge distribution warehouses like the one authorities raided in August in North Hollywood, Calif. It was filled with stolen steaks, shrimp, energy drinks, ice cream and other frozen foods.
Last year, carriers reported nearly 1,200 cargo thefts of all kinds nationwide, about the same as the previous year, according to CargoNet, a division of Verisk Crime Analytics, which estimated losses that year at nearly $216 million. Since many thefts go unreported, the real figure is almost certainly far higher.
Fraudulent pickups emerged three or four years ago and are now “the latest, greatest thing” for organized groups seeking to steal freight, said J.J. Coughlin, vice president for law enforcement services at LoJack SCI, a supply chain protection company.
LoJack examined 947 cargo thefts last year and identified 45 of them as fictitious pickups. So far this year, the number of fictitious pickups has probably already doubled, Coughlin said. The average loss last year was more than $170,000 per incident.
Although cargo thieves prey on companies across the nation, the hot spots are places with shipping ports or rail hubs. California leads the nation. Large numbers of thefts have also been reported in Texas, Florida, New Jersey, Michigan, Illinois, Georgia, Pennsylvania and Tennessee.
Scott Cornell, national manager of a special investigation group focusing on supply chain security at the insurance company Travelers, said the thieves take advantage of the Internet, which allows them to do “so many things online where nobody sees you,” including setting up a company and bidding on loads.
Food and beverages were the most commonly stolen items, accounting for 23 percent of all thefts last year, followed by metals at 16 percent, and electronics and household goods at 12 percent each. Other products made up the remaining 37 percent, including pharmaceuticals at 3 percent, according to CargoNet’s 2012 report.
One reason food shipments are popular targets is because they have a lower value than electronics or pharmaceuticals, which are often more heavily protected. Plus, food generally does not have any serial numbers to trace.
“It’s very difficult to locate that load once it leaves,” Funkhouser said. Thieves may switch tractors, license plates or company logos to throw officers off the trail.
It’s more effective to focus on prevention.
The Nebraska State Patrol is analyzing the crimes for patterns, working closely with other law enforcement agencies and sharing prevention tips with shippers, Funkhouser said. He advises them to work only with familiar haulers, or to take extra steps to check the background of an unfamiliar trucker. Funkhouser even recommends the shipper take a thumbprint from an unfamiliar trucker.
Another solution is increasing the use of radio frequency identification tags, which combined with GPS track cargo as it moves through different points on the supply chain, said Larry Johnson, president of the Nebraska Trucking Association.
Johnson said the tags, along with cargo cameras, are making it harder to steal cargo and slip away undetected.
“Technology is our best friend right now,” he said. “The only thing really holding it back is the price.”
World-Herald staff writer Barbara Soderlin contributed to this report.