The freight industry faces an average fraud cost of $402,344.47 per company, with truckload freight identified as the most vulnerable mode, according to the Transportation Intermediaries Association’s most recent report on the state of the fraud in the U.S. transportation and logistics industry.

Out of 200 TIA members surveyed, nearly 98% pointed to truckload freight as the primary target, with unlawful brokerage scams, spoofing, and identity theft among the top threats.

“We are an industry under siege right now and we are not getting the support from government and law enforcement authorities to help us combat this scourge on the supply chain,” said Anne Reinke, president and chief executive officer of TIA. “When people think of fraud in the supply chain, they only see what is happening to a business, they are not seeing the trickle-down effect to consumers and economy. Fraud is a multimillion-dollar problem that needs to be addressed today.”

The report identified eight types of fraud that is prevalent in the industry: spoofing, unlawful brokerage scams, fictitious pickups, phishing, identity theft, email and virus attacks, inbound phone calls, and text message frauds. Over 70% of respondents say they are experiencing at least three different types of fraud.

The average gross cost of fraud reported by respondents was $402,344.47 per company, with the per-load cost averaging $40,760.17. Beyond direct losses, these fraudulent activities drive up the cost of goods, creating a ripple effect that impacts the entire supply chain and ultimately burdens consumers.

But cargo theft remains one of the most prevalent forms of fraud – there was a 600% increase in cargo theft between November 2022 and March 2023, according to TIA.

Financial schemes like unlawful brokerage and fraudulent invoicing are becoming increasingly common, too. Unlawful brokerage scams were identified as the most common type of fraud, with 43% of respondents marking it as their primary concern.

Meanwhile, identity theft fraud – where criminal impersonate legitimate companies – often leads to significant financial losses and damage to a company’s reputation, with 17% of respondents noting spoofing emails and another 11% citing identity theft as their top fraud concerns. At the same time, internal theft and data theft are common too. TIA says that cyber-attacks targeting sensitive company information are on the rise, with hackers using this data to execute more complex fraud schemes.

Fraud prevention efforts

In response to these growing threats, companies are dedicating significant time and resources to fraud prevention.

Nearly one in five respondents reported spending an entire day each quarter on fraud prevention, while 16% indicated spending more than four hours a day, and 34% dedicated over two hours daily to these efforts. Even those spending less than two hours a day make up 30% of the respondents. This time investment in fraud monitoring, verification, and response diverts attention from other essential business operations, reducing overall productivity and increasing operational costs.

Certain states have emerged as high-risk areas, with California, Texas, Illinois, Georgia, and Florida identified as the most frequent origins of theft incidents, as these regions serve as key logistics and transport hubs, making them attractive targets for criminals.

As to the commodities that are frequently targeted, those include electronics, solar panels, and household goods due to their high value and ease of resale.

Recommendations for combating fraud

The TIA report calls for a multi-layered strategy to tackle fraud, focusing on thorough carrier vetting, technological investments, and collaboration among industry stakeholders.

Companies are urged to adopt enhanced verification methods, use tools like GPS tracking, and invest in advanced technologies such as AI for real-time fraud detection. The report also emphasizes the need for stronger regulatory enforcement to close loopholes exploited by criminals. Industry-wide information sharing and the use of resources like the TIA Watchdog platform are highlighted as crucial steps to build a more secure supply chain and protect businesses and consumers.