In this article learn about:
The various ways supply chain thefts occur
Who's impacted and why it matters
How to detect, prevent, and respond to supply chain theft
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Cargo theft has become one of the most significant threats facing today's supply chain. What was once viewed as an occasional or localized issue has evolved into a sophisticated criminal enterprise that targets goods at every stage of the journey. From freight fraud and fictitious pickups to warehouse theft and cargo diversion, these schemes cost businesses billions of dollars each year and impact suppliers, retailers, carriers, and 3PLs alike.
Where Theft Happens in the Supply Chain
To ease understanding, we’ve outlined where and how supply chain theft occurs. From cargo theft to digital data breaches, criminals use a wide range of tactics to steal goods and profit from them.
Transportation & Logistics
Strategic Cargo Theft
Cargo theft occurs on trucks, ports, and the rail system, with train cargo theft up 40% in 2024, according to the Association of American Railroads. Some companies have also reported major losses from pilferage, where small amounts of goods are taken from larger shipments over time. Both types of theft are common, with the average value of each theft rising to $202,000 in 2025. While the majority of strategic theft occurs through deception, these physical methods are a part of the supply chain theft landscape.
Fictitious Pickups and Identify Fraud
Sometimes, criminals steal freight by obtaining inside information about a scheduled pickup. This can be gathered by paying for the data, planting members as warehouse staff, or hacking the data directly. The criminals then arrive at the warehouse in advance of the client to fraudulently take control of the inventory. This type of theft has surged in recent years, from an average of 66 incidents between 2012 and 2022, to 576 fictitious pickup events in 2023.
Hijackings and GPS Jamming
Another way criminals physically steal goods is with hijacking and GPS jamming. Hijacking occurs by physically taking control of a shipment, and most typically affects ground transportation. Criminals will threaten drivers with weapons and either take control of the truck or physically transfer the goods to their vehicle.
To prevent stolen goods being tracked, supply chain thieves might use a GPS jammer. Logistics and transportation carriers are then unable to locate their own shipments, allowing stolen cargo to be moved quite literally under the radar.
Warehouses and Distribution Centers
Internal Theft
Unfortunately, internal involvement can be a major factor in cargo theft, especially when strategic theft is involved. The fictitious pickups mentioned above often involve inside information about timing and may involve employee impersonation.
Improper Driver and Vehicle Identification
Theft can occur more easily in warehouses with lax check-in/check-out procedures. Supply chain thieves can be more easily identified if the legitimacy of the driver, carrier, and truck numbers are regularly monitored, detailed, and compared against contracts. This allows staff to ensure the legitimacy of the individuals involved.
Exploiting Vulnerable Areas
Supply chain thieves most often take advantage of loading and docking areas with negligent surveillance and security protocols. Bad lighting, shadowed corners, improper camera angles, and lack of camera equipment aid and abet supply chain thieves regularly. These vulnerabilities allow straight theft and strategic theft to thrive.
Retail Theft
Shoplifting and Shrinkage
At the retail level, supply chain theft can occur via shoplifting and tracked via shrinkage. Shoplifting is defined as the act of stealing merchandise from a retail store during business hours, generally by taking items without payment. Shrinkage, an accounting term for retail stores, accounts for payment discrepancies between what owners should have from selling vs. how much was actually made. It can also be defined as a loss of inventory that is attributable to employee theft, shoplifting, or cashier errors.
Organized Retail Theft (ORT)
Also called Organized Retail Crime, this type of theft happens when groups work together to steal large amounts of merchandise and resell it for money, often on Facebook Marketplace, eBay, and with convincingly real online storefronts. Posing real risks to store and customer safety, the inventory can be stolen quickly and destructively. In a recent example of organized retail crime, thieves utilized flash mobs to enter stores and steal merchandise, all at the same time. ORT can also occur with more deceptive practices like stolen credit cards, switched barcodes, and stolen or altered gift cards.
ORT hurts everyone by raising prices, reducing tax revenue, causing store closures, creating unsafe shopping environments, and even risking people’s health if stolen food or medicine isn’t stored or labeled properly.
Return Fraud
Another common example of theft at the retail level of the supply chain is return fraud. This occurs when customers abuse a return or refund process for financial gain. Common forms include receipt fraud, switch fraud, and non-delivery fraud
Digital Theft & Data Breaches
As mentioned above, the sophistication level of supply chain theft increased exponentially over the last several years. The following methods exploit advanced knowledge, relying on deception to trick legitimate shoppers, brokers, and carriers. Supply chain thieves are hacking into digital systems, spoofing information, and using fraudulent digital documents to take control of inventory, often before anyone is the wiser.
Double Brokering Scams
Widely recognized as a growing problem in freight transportation, double brokering scams can result in unpaid carriers, delayed payments, shipment disputes, and costly legal complications.
These types of scams occur when a fraudulent carrier contracts a load of freight under a specific motor carrier number. Then, they re-broker it to another party without the original shipper or broker’s knowledge. The load is picked up and delivered, but the fraudulent company collects the payment and disappears, leaving the legitimate carrier unpaid.
Identity Theft and Business Impersonation
A growing tactic in strategic cargo theft, criminals use the identities of legitimate carriers, including USDOT numbers and Motor Carrier (MC) numbers, to secure loads under false pretenses. The thieves create professional-looking websites with fraudulent business documentation and similarities to the real thing, making the scam very difficult to detect. Criminals can purchase MCs in bulk and utilize similar business email addresses to communicate with customers and obtain sensitive information.
How to Track and Identify Theft
At this point, it might be easy to become overwhelmed at the sheer number of ways criminals can engage in supply chain theft. However, there are a range of methods to combat cargo theft that help legitimate businesses enhance visibility and protect their profits.
Here are some key ways:
Data and Technology Tools
Geofencing for Trucks: Geofencing uses Global Positioning Systems (GPS), Radio Frequency Identification (RFID), or cellular data to define virtual boundaries. For example, if a delivery vehicle crosses a preset line outside of business hours, an automatic alert can be sent out. This can ensure safety and control over delivery routes, storage areas, and more.
Real Time Inventory Management: With such a high cost to the consumer industry, AI-powered monitoring systems are changing the game. They use AI alerts to detect and monitor theft patterns to predict and prevent supply chain theft, and many of these systems also support integrated security systems.
Barcode and Inventory Scanners: With so much of supply chain theft occurring in small consumer packaged goods and so many items in stock, we recommend digital assistance to keep up with large amounts of data. Management sensors can monitor environmental conditions, including shock, light, humidity, and temperature, notifying the correct staff members when unexpected changes occur.
Related Reading: The Future is 2D Barcodes
Pattern Recognition
Another powerful way to combat supply chain theft is through pattern recognition. This is a powerful tool without technology, though some of the systems mentioned above can aid in speeding up the process.
Theft patterns can be found in irregular shipping routes, such as routes outside normal carrier boundaries or pathways. Trends can be spotted in missing or damaged items, or those items disappearing from specific locations or at certain times. Discrepancies can be found between the Advanced Shipping Notice (ASN) and the Bill of Lading/Proof of Delivery, most commonly identifying supply chain theft when there are discrepancies in amounts or square footage.
Internal Audits & Surveillance
A final way to track and identify cargo thieves is through surveillance. Regular security camera reviews can be of use, as well as scheduled and surprise audits of employees, supply chain partners, and drivers. Assessing efficacy and accuracy regularly can reduce the risk in working with partners that engage in or are more commonly victimized by criminal practices. Additionally, employee behavior monitoring and positive workplace cultures can help identify potential fake employees.
How Each Stakeholder Can Prevent Theft
For Suppliers
Suppliers can prevent theft by carefully vetting all transportation partners. Check their references, credentials, and all available reviews. Make sure online information is consistent across all channels to detect fraudulent profiles, as professional-looking websites and email addresses have fooled many people.
Make sure that you have clear labeling protocols and secure packaging to ensure product and inventory security. This consistency will also allow staff to notice if anything is amiss. Some companies may want to use tamper-evident seals to further assist in resale prevention.
Another prevention strategy is to train warehouse staff on all theft red flags. Make sure employees know what methods are used to fool well-meaning warehouse staff, and the protocols in place to prevent it. Proper documentation, surveillance, and identity verification are all key.
For Retailers
Retailers can prevent supply chain theft in a few different ways. One of the most important is to utilize item-level tracking as opposed to case-level or pallet-level tracking. Additionally, back rooms and warehouse areas should be secured and inaccessible without credentials. Retailers can keep an eye on POS data to look for fraud patterns. Noticing any repeating missing items or pallets is helpful for prevention. All retailers should work with law enforcement or Organized Retail Crime task forces when supply chain theft is suspected.
For Transportation & 3PLs
With most supply chain theft occurring in this sector of the industry, it is imperative that transportation and 3PLs counter the risk with prevention strategies. Background checks should be conducted for warehouse workers, drivers, and anyone accessing shipping information. Training staff to recognize suspicious activity is important, as real employees can be taken advantage of, and planted employees can cause major damage.
It’s important to ensure all parking areas are secure. Transportation companies should also consider installation of truck security systems, trailer locks, and camera surveillance systems. Transportation companies and 3PLs can also invest in software that allows them to monitor route deviations in real time.
Related Reading: How to Select a Freight Carrier
How To Deal With Supply Chain Theft
Despite all our best efforts at prevention, theft can still happen. Here’s what to do if it happens to you.
Immediate Response
As soon as possible, file a police report in the county your business operates in. Depending on the situation and type of theft, you may be asked to file a report in the state where the theft occurred. Lock down all impacted systems or facilities, digital and physical. This is key to prevent further theft in the future. Inform all affected supply chain partners, so that miscommunication doesn’t aid in more theft.
Investigation
Next, you should conduct an internal audit of affected areas. Pull all surveillance material, route logs, and access logs as well as any shipping documents. Interview staff and drivers to uncover as much information as possible to prepare for the claims and recovery process.
If theft occurs, industry organizations can help. The Transported Asset Protection Association (TAPA) provides cargo theft prevention resources and security best practices. CargoNet helps businesses report theft, coordinate recovery efforts, and connect with law enforcement agencies across North America.
Claims and Recovery
Businesses that suffer from supply chain theft should contact their insurance providers and legal representatives to file a claim. Some insurance providers have special investigation groups who can help recover stolen goods.
Building a Theft-Resilient Supply Chain
The increasing severity of supply chain fraud has led to increased costs in every sector. It’s more important than ever to share the responsibility of better practices across the supply chain. Making proactive investments in people, processes, and technology makes a difference.
Frequently Asked Questions
What is cargo theft?
Cargo theft is the unlawful theft or diversion of goods anywhere in the supply chain, including during transportation, warehousing, or delivery. It can involve physical theft, fictitious pickups, carrier impersonation, or fraud schemes that allow criminals to take control of inventory before it reaches its destination.
What is double brokering?
Double brokering occurs when a freight load is assigned to another carrier without the shipper's or broker's knowledge or approval. In fraudulent cases, a scammer accepts the load, re-brokers it to a legitimate carrier, collects payment, and disappears, leaving others unpaid and creating costly disputes.
What is shrinkage?
Shrinkage is the loss of inventory caused by theft, fraud, damage, or other discrepancies between recorded and actual stock levels. Retailers closely monitor shrinkage because it reduces profitability and can signal broader operational issues.
What is organized retail theft?
Organized retail theft (ORT) occurs when individuals or groups coordinate the large-scale theft of merchandise for resale or financial gain. Unlike typical shoplifting, ORT operations are often planned, involve multiple participants, and may use online marketplaces to distribute stolen goods.
What is fictitious pickup fraud?
Fictitious pickup fraud occurs when criminals impersonate a legitimate carrier and collect a shipment before the authorized driver arrives. Using stolen credentials, fake documentation, or insider information, they take possession of freight and disappear before the theft is discovered.
Invest In Security with More Insights
Supply chain theft is difficult to eliminate entirely, but greater visibility can make it easier to identify discrepancies, investigate losses, and respond more quickly when issues occur. SPS Commerce helps retailers and suppliers gain deeper insight into inventory movement, deductions, and shipment performance. Learn how better visibility can support a more resilient supply chain.