[Senate Hearing 119-126]
[From the U.S. Government Publishing Office]
S. Hrg. 119-126
GRAND THEFT CARGO:
EXAMINING THE COSTLY THREAT TO
CONSUMERS AND THE U.S. SUPPLY CHAIN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON SURFACE TRANSPORTATION,
FREIGHT, PIPELINES, AND SAFETY
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 27, 2025
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
61-246 PDF WASHINGTON : 2025
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
TED CRUZ, Texas, Chairman
JOHN THUNE, South Dakota MARIA CANTWELL, Washington,
ROGER WICKER, Mississippi Ranking
DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts
MARSHA BLACKBURN, Tennessee GARY PETERS, Michigan
TODD YOUNG, Indiana TAMMY BALDWIN, Wisconsin
TED BUDD, North Carolina TAMMY DUCKWORTH, Illinois
ERIC SCHMITT, Missouri JACKY ROSEN, Nevada
JOHN CURTIS, Utah BEN RAY LUJAN, New Mexico
BERNIE MORENO, Ohio JOHN HICKENLOOPER, Colorado
TIM SHEEHY, Montana JOHN FETTERMAN, Pennsylvania
SHELLEY MOORE CAPITO, West Virginia ANDY KIM, New Jersey
CYNTHIA LUMMIS, Wyoming LISA BLUNT ROCHESTER, Delaware
Brad Grantz, Republican Staff Director
Nicole Christus, Republican Deputy Staff Director
Liam McKenna, General Counsel
Lila Harper Helms, Staff Director
Melissa Porter, Deputy Staff Director
Jonathan Hale, General Counsel
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SUBCOMMITTEE ON SURFACE TRANSPORTATION, FREIGHT, PIPELINES, AND SAFETY
TODD YOUNG, Indiana, Chairman GARY PETERS, Michigan, Ranking
JOHN THUNE, South Dakota AMY KLOBUCHAR, Minnesota
ROGER WICKER, Mississippi BRIAN SCHATZ, Hawaii
DEB FISCHER, Nebraska EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska TAMMY DUCKWORTH, Illinois
ERIC SCHMITT, Missouri BEN RAY LUJAN, New Mexico
BERNIE MORENO, Ohio ANDY KIM, New Jersey
SHELLEY MOORE CAPITO, West Virginia
C O N T E N T S
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Page
Hearing held on February 27, 2025................................ 1
Statement of Senator Young....................................... 1
Statement of Senator Peters...................................... 2
Statement of Senator Fischer..................................... 37
Statement of Senator Lujan....................................... 40
Witnesses
Chief Will Johnson, Chief Special Agent, BNSF Railway Police
Department, Second Vice President, International Association of
Chiefs of Police............................................... 4
Prepared statement........................................... 6
Robert Howell, Chief Supply Chain Officer, Academy Sports and
Outdoors....................................................... 9
Prepared statement........................................... 11
Adam Blanchard, Principal and CEO, Tanager Logistics and Double
Diamond Transport.............................................. 12
Prepared statement........................................... 14
Lewie Pugh, Executive Vice President, Owner-Operator Independent
Drivers Association............................................ 26
Prepared statement........................................... 27
Appendix
Hon. Ted Cruz, U.S. Senator from Texas, prepared statement....... 45
Response to written questions submitted to Chief Will Johnson by:
Hon. Ted Cruz................................................ 46
Hon. Amy Klobuchar........................................... 46
Response to written questions submitted by Hon. Ted Cruz to:
Robert Howell................................................ 47
Response to written questions submitted to Adam Blanchard by:
Hon. Ted Cruz................................................ 47
Hon. Amy Klobuchar........................................... 49
Hon. Ben Ray Lujan........................................... 49
Response to written questions submitted by Hon. Ben Ray Lujan to:
Lewie Pugh................................................... 51
GRAND THEFT CARGO:
EXAMINING THE COSTLY THREAT TO
CONSUMERS AND THE U.S. SUPPLY CHAIN
----------
THURSDAY, FEBRUARY 27, 2025
U.S. Senate,
Subcommittee on Surface Transportation, Freight,
Pipelines, and Safety,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:21 a.m., in
room SR-253, Russell Senate Office Building, Hon. Todd Young,
Chairman of the Subcommittee, presiding.
Present: Senators Young, Fischer, Moreno, Peters, Cantwell,
Klobuchar, Markey, and Lujan.
OPENING STATEMENT OF HON. TODD YOUNG,
U.S. SENATOR FROM INDIANA
Senator Young. Good morning. The Subcommittee will come to
order. We are today addressing an urgent and growing concern of
cargo theft on this Subcommittee.
Last fall, PFL, a third-party logistics company in
Evansville, one of Indiana's transportation hubs, lost a
$60,000 shipment when its cargo was stolen by a previously
trusted carrier. For a small company, this kind of loss is
absolutely devastating, one that employees and customers
ultimately bear. This drives inflation at a time when inflation
is top of mind of our constituents and, of course, undermines
our rule of law.
PFL is just one of many companies who have fallen victim to
a rising wave of cargo theft across the country, and they are
asking for Congress to take action. They want us to work
together with their industry to address this threat and come up
with some concrete solutions. So I am grateful to all the
stakeholders present today for your participation. I look
forward to hearing your perspectives as we consider how to
respond to this threat.
Since the COVID pandemic, cargo theft has surged across the
country, reaching, by some calculations, a decade-long high.
Once carried out by crude criminals, now with the rise of e-
commerce, this crime domain includes sophisticated domestic and
international groups, from China, Eastern Europe, and Mexico.
They not only hijack trucks and rob rail cars but they exploit
vulnerabilities in online transactions, concocting elaborate
schemes, tricking businesses and third parties, and stealing or
holding their cargo hostage.
Cargo theft is so difficult to spot and stop because it
takes so many forms, from spoofing to fictitious pickups, from
phishing to identity theft. Homeland Security Investigations
estimates that the annual loss from cargo theft, quote,
``accounts for 15 to 35 billion dollars annually.''
Of course, these costs are ultimately shouldered by
customers when retailers raise prices to cover losses. These
crimes are often committed by repeat offenders, and very few, 1
in 10 according to the American Trucking Association, results
in arrest. The Federal Motor Carrier Safety Administration,
which is responsible for regulating motor carriers, does not
have adequate protections in place to identify fraudulent
actors or remove them from its system, nor does the agency have
the statutory authority to assess civil penalties for
violations of its safety or commercial regulations.
At the state level, cargo theft is under-reported, over
miscategorized as simple property crime. To effectively combat
this evolving threat, we must--must--modernize our safeguards.
I am hopeful that together we can begin the process of
establishing and implementing those safeguard reforms today.
I look forward to a productive and meaningful discussion
with our witnesses, and I look forward to thoughtful questions
and exchanges initiated by my colleagues.
So at this time I will recognize Ranking Member Peters. I
am proud to serve with him in this capacity on this Committee.
Mr. Peters, I would like to recognize you to deliver your
opening remarks.
STATEMENT OF HON. GARY PETERS,
U.S. SENATOR FROM MICHIGAN
Senator Peters. Well, thank you, Chairman Young. It is good
to be with you in working on this Committee, and I look forward
to our work together in the years ahead, or in the couple of
years ahead, to do some very meaningful work. There is a lot to
do, a lot on our plate.
There are many priorities that I hope that we can work
together to tackle in a bipartisan way, from improving roadway
safety, to strengthening innovation in the auto industry, to
addressing issues impacting our railroads and freight supply
chains, to working to reauthorize the surface transportation
bill and deliver new roads, bridges, and other infrastructure
projects to our constituents.
I want to thank the Chairman today for holding this hearing
on cargo theft, a growing threat to American supply chains and
consumers, and I want to thank each of our witnesses for being
here today. I look forward to hearing your testimony and how we
can address this significant threat.
As we will learn today, cargo theft takes many forms, but
one constant is that when goods are stolen, consumers
ultimately pay the price with higher cost for everyday items.
We will also hear today about the consequences of theft on
independent truckers and small businesses, who can be driven
out of business by fraudsters looking to make a buck. And
beyond just this economic toll, I want to highlight the very
real danger that cargo theft poses to transportation workers,
some of whom are rail workers and truck drivers that have been
threatened at gunpoint.
Since 2020, cargo theft occurrences have shot up, according
to both industry reporting as well as agency complaints. A
significant driver of this increase in cargo theft is organized
transnational groups and cyber criminals. In fact, criminals
sitting in Russia, China, and across the world can now steal
physical cargo in the United States by setting up fake
businesses and manipulating our supply chain.
We are going to hear from our witnesses today that this is
a complex, interstate, and international problem that requires
more Federal law enforcement and attention. The Federal Bureau
of Investigation, Homeland Security Investigations, and the
U.S. Attorney Offices can provide the resources and reach
necessary to address this organized cargo theft.
However, we know that the Federal law enforcement resources
are stretched very thin, and that is why I am also very deeply
concerned about the Trump administration's actions to gut the
Federal Bureau of Investigation and the Department of Justice,
and why I am disappointed by the lack of pushback on this move
from my Republican colleagues in Congress.
Since taking office, instead of increasing Federal law
enforcement capacity and effectiveness, which I believe is the
first step that we need to take to address this criminal trend,
like cargo theft and fraud, President Trump has prioritized
politicizing and gutting Federal law enforcement, included by--
and let me just give examples---one, firing much of the FBI
senior leadership, including the head of the Criminal, Cyber
Response and Services Branch, which is actually responsible for
criminal and cyber investigations worldwide.
Two, firing the heads of multiple critical FBI offices,
firing dozens of prosecutors across the country for working on
January 6th cases, and in one case forcing the resignation of
six prosecutors, in 1 day, when they refused the President's
request to abuse our legal system.
Three, institute a hiring freeze, preventing law
enforcement agencies from recruiting new talent. If you are
asking for more law enforcement, there is a freeze on new
talent coming into law enforcement.
Four, in my home state of Michigan, defunding the state
police by freezing resources for homeland security, terrorism
prevention, and more.
Five, reassigning DOJ law enforcement officers as well as
Homeland Security investigators to focus on immigration instead
of investigating issues like cargo theft, terrorism, and human
trafficking.
The list goes on. And I do not believe that these issues,
law enforcement or addressing cargo theft, should be partisan
in any way. Crimes in our freight supply chain harm consumers,
small businesses, transportation workers, and our economy.
But I am sorry. I just cannot stay quiet about the
dismantling of our Federal law enforcement during a hearing
where our witnesses, rightly, will ask for increased law
enforcement response. Well, just know it is being attacked
right now. Ultimately, to solve this issue, I believe we
actually need to fund the police and not follow what President
Trump is doing in defunding the police, like my state troopers
in Michigan and others across the country.
We need to make sure that we have the people, from field
agents to prosecutors, in place to deal with these complex,
international cybercrimes happening in the freight supply
chain, and this just cannot happen if the attacks we are seeing
at the Department of Justice continues. And I would urge my
colleagues across the aisle to join me in defending our law
enforcement personnel.
I also know the solutions to rising cargo theft go beyond
law enforcement. In the direct jurisdiction of this
Subcommittee, Mr. Chairman, I look forward to hearing from
witnesses about the types of actions that the Federal Motor
Carrier Safety Administration can take to crack down on
criminal organizations impersonating motor carriers or brokers
to defraud shippers as well as to steal goods.
I also know that the FMCSA will need resources and
direction from Congress to do this, and I hope that we can work
across the aisle to make that happen, especially as we begin
discussions of the Surface Transportation Reauthorization bill.
And finally, once again I want to thank our witnesses for
being here today, for your contributions to the critical
national supply chains that really literally form the basis of
the American economy. I look forward to your testimony. Thank
you again for being here.
I yield back.
Senator Young. Well, thank you for your opening statement,
Mr. Peters. We will get to our very distinguished panel
momentarily.
I would just, in response to your comments, your emphasis
on criminal activity and making sure we enforce the laws of the
land, certainly well received. I do wish I had heard more from
my colleagues over the last 4 years when the Take Care Clause
was consistently not observed by the President of the United
States. We had a ``Weekend at Bernie's'' for 4 years, when the
President failed to enforce our border security. Now we are
left with international criminal elements who have permeated
this country, and dealing with the after effects of that. So
perhaps we can work together on that issue. I think the people
of Michigan registered their opinions, as did Indiana, that we
need to secure our border.
Joining us today is Chief Will Johnson, Chief Special Agent
at the BNSF Railway Police Department and Second Vice President
of the International Association of Chiefs of Police. Prior to
joining BNSF, he was the Chief of Police in Arlington, Texas,
for 8 years, and he has been a police officer for 31 years.
Chief Johnson, you are recognized for 5 minutes, and thanks
again for being here, sir.
STATEMENT OF CHIEF WILL JOHNSON, CHIEF SPECIAL AGENT, BNSF
RAILWAY POLICE DEPARTMENT, AND SECOND VICE PRESIDENT,
INTERNATIONAL ASSOCIATION OF CHIEFS OF POLICE
Chief Johnson. Good morning, Chairman Young, Ranking Member
Peters, and members of the Subcommittee. Thank you for the
opportunity to speak with you today on this important issue.
As mentioned, my name is Will Johnson, Chief Special Agent
for BNSF Railway, and I appear before you today in my capacity
as Second Vice President for the International Association of
Chiefs of Police. The IACP is the world's largest association
of law enforcement executives. Today's testimony reflects the
concerns of many police executives as they combat organized
cargo theft in their jurisdiction.
The facts are stark. Strategic cargo theft in the trucking
industry has increased 1,500 percent from 2022 to 2025, and
accounts for 33 percent of all cargo theft reported by
CargoNet.
The Association of American Railroads estimates that over
65,000 theft occurred in 2024, representing a roughly 40
percent increase over the prior year. In many of these cases,
suspects endangered the public by sabotaging rail safety
equipment so that they could commit their crimes.
Regardless of the mode of transit, cargo theft cases often
cross multiple state lines, making jurisdictional coordination,
prosecution, and data collection extremely difficult. The lack
of a coordinated Federal cargo theft enforcement effort hinders
effective prosecution. And food shippers have reported that
criminal tampering with chain of custody seals for U.S. food
shipments has put the Nation's food security at risk, and also
caused inflationary food prices.
Finally, there are frequent reports of armed suspects
engaging in violent takeover-style robberies, or shooting
firearms during the commission of these burglaries. In short
cargo theft is not a low-level property crime.
We generally observe three distinct suspect profiles in the
commission of these crimes: (1) transnational organized crime
members; (2) loosely organized criminal street gangs in urban
areas; and (3) criminal opportunists.
Despite the challenges that each of these offenders
represent, police officers continue to make significant
arrests. In my submitted testimony, I outlined four recent
examples for your review.
The nature of these crimes have evolved over the years, and
a whole-of-government approach is required to address this
challenge. The IACP does not believe that we have all the
answers to this complex problem, but we urge this Subcommittee
and the U.S. Congress to consider the following eight action
items as a starting point for stakeholder engagement to find
effective solutions:
We support the establishment of a Federal Supply Chain
Crime Coordination Center and Supply Chain Fraud and Theft Task
Force to address cargo theft in all aspects of the supply
chain.
To direct funding to dedicated Federal prosecutors to
tackle cargo theft cases.
To modernize the FMCSA vetting process to include stronger
authentication methods, real-time carrier verification, and
implement controls around the sale or transfer of DOT and MC
numbers.
Increase criminal penalties for cargo theft cases and allow
all victims' aggregated harm to be considered in these
offenses.
To encourage public-private partnerships between corporate
security teams, carrier monitoring services, load boards,
insurers, and law enforcement through data-sharing initiatives,
and allow the prosecution venue to be established at the place
of offense, and also at the victim's U.S. corporate place of
residence. This would allow for improved prosecution and
reporting efforts.
To provide law enforcement agencies with the resources to
support investigations into this complex and sophisticated
criminal networks.
And finally, while the United States Customs and Border
Protection has implemented changes to in-bond shipment
processes, there is a further need to ease the burden on crime
victims by allow CBP the authority to waive regulatory fines
when cases are proven that theft had occurred.
Again, the IATP stands ready to work with this Committee
and the U.S. Congress to develop and implement these solutions
and to continue to raise awareness on this important issue.
I am happy to answer any questions now or at the end of all
testimony.
[The prepared statement of Chief Johnson follows:]
Prepared Statement of Chief Will Johnson, Second Vice President,
International Association of Chiefs of Police
Good morning, Chairman Young, Ranking Member Peters, and members of
the Subcommittee on Surface Transportation, Freight, Pipelines, and
Safety. Thank you for the opportunity to speak with you today about a
pressing issue for the policing profession and our communities--the
growing threat of crime directed towards the U.S. Supply Chain. I
appreciate you convening this hearing to raise awareness on this
important topic, as we collectively work to implement solutions.
My name is Chief Will Johnson, Chief Special Agent for the BNSF
Railway Police Department. BNSF Railway is one of the largest railroad
companies in North America, operating in 28 U.S. states and three
Canadian provinces. Prior to joining BNSF, I was the Chief of Police in
Arlington, Texas, for eight years, and I have been a police officer for
31 years. I appear before you today in my capacity as the Second Vice
President of the International Association of Chiefs of Police (IACP).
The IACP is the world's largest association of law enforcement leaders,
with more than 34,000 members in 178 countries. Today's testimony
represents the concerns and challenges many state, county, local,
tribal, and rail police executives are experiencing as they combat
organized cargo theft in their jurisdictions.
Since the COVID-19 pandemic, we have seen a steady rise in
organized cargo crime, with criminals becoming increasingly
sophisticated, emboldened, and aggressive.
The facts are stark:
In the trucking industry:
Strategic cargo theft, or theft by fraud or deception, has
increased 1500 percent from 2022 to 2025 and accounts for 33
percent of all cargo theft reported to CargoNet
Organized crime groups are exploiting gaps in the Federal
Motor Carrier Safety Administration (FMCSA) regulations to
commit strategic cargo theft, misdirected loads, and double-
brokering scams, which impact freight owners and legitimate
carriers.
In the rail industry:
The Association of American Railroads estimates that over
65,000 thefts occurred in 2024, representing a roughly 40
percent increase over the prior year.
Suspects are sabotaging rail safety equipment, such as rail
traffic signal systems and emergency braking systems, to stop
trains in motion to commit cargo theft. This endangers rail
employees, puts communities at risk of potentially hazardous
material rail derailments, disrupts passenger service, and
disrupts vital supplies needed in communities all across
America.
Regardless of the mode of transit:
Cargo theft cases often cross multiple state lines, making
jurisdictional coordination difficult. This fragmented approach
results in reporting barriers for victims, causing significant
crime data collection deficiencies.
State-level police and prosecution efforts are challenged by
a tremendous number of competing priorities for resources, such
as addressing the fentanyl epidemic and violent crime in the
community. This focus has either directly or indirectly
impacted effective property crime enforcement efforts.
Criminals have exploited this vulnerability. An example of this
issue is the reported arrest and release of a cargo theft
burglary suspect four times in one day. This level of
recidivism, while cases are pending, is demoralizing to police
officers working hard to protect the U.S. supply chain.
The lack of coordinated Federal cargo theft enforcement and
prosecution priorities results in inconsistent response levels
across agencies and areas of responsibility.
Beyond the criminal justice system reporting barriers,
victims may be reluctant to report crimes due to concerns for
brand identity, company reputation, and complex insurance
claims, making it difficult to track the full scope of the
problem.
When victims want to report a crime, not all victims are
recognized by the law. The supply chain is a complicated system
of beneficial cargo owners, brokers, shippers, and carriers.
Each entity incurs harm from these criminal acts, but the law
does not aggregate the total harm.
Furthermore, when stolen property is recovered during
arrests or the execution of search warrants, victim
identification is challenging because not all victims are the
product manufacturers.
There are also collateral consequences:
Despite data collection challenges, there is a clear
correlation between the escalation of cargo theft crime and
inflationary pressure on the U.S. economy
Police agencies have reported that stolen cargo is often
combined with illicit proceeds from organized retail theft in
black-market fencing operations and reinserted into the U.S.
economy, further victimizing property owners and unsuspecting
consumers.
Police agencies and food shippers have also reported
organized cargo thieves tampering with the chain of custody
seals for U.S. food shipments, risking national food security
and causing inflationary pressure on food prices.
Although there are no known examples of criminals
specifically targeting Department of Defense equipment in
transit, the evolving risk is a possibility, given crime trends
in other shipments
Finally, there are frequent reports of armed suspects
swarming cargo containers displaying firearms, engaging in
violent ``takeover'' robberies, or shooting firearms during the
commission of these burglaries. In short, cargo theft is not a
low-level property crime.
As police agencies focus enforcement efforts on this crime trend,
we generally observe three distinct suspect profiles:
1. Transnational Organized Crime Members--These are highly
sophisticated and well-structured criminal organizations that
operate across national borders. They often have extensive
networks and resources, allowing them to plan and execute
large-scale thefts with precision. Their command-and-control
operations are persistent, meaning they continuously engage in
criminal activities, often diversifying their methods to avoid
detection and, in many instances, have buyers ready to purchase
the illicit goods even before the product is stolen. These
groups may use advanced technology to track and steal high-
value cargo and may use both physical and cyber methods to
conduct their crimes, making them a significant threat to
global supply chains.
2. Loosely Organized Criminal Street Gangs--Unlike transnational
crime groups, these gangs are less structured and operate on a
smaller scale, typically in urban areas. They typically consist
of habitual burglars who engage in cargo theft as one of many
criminal activities. Their operations are more opportunistic
and may not have the same level of resources as organized crime
groups, but their frequent and unpredictable actions cause
substantial losses.
3. Opportunists--This category includes individuals who are not part
of any organized group but take advantage of theft
opportunities as they arise. Unhoused individuals may engage in
cargo theft out of necessity, targeting easily accessible
goods. Social media-driven flash mobs represent a newer
phenomenon where groups of people, often organized online,
converge to exploit a specific theft opportunity. These
opportunists are typically unorganized and act alone or in
small, ad-hoc groups, making their actions sporadic but still
incredibly disruptive.
Each group poses unique challenges to law enforcement and security
professionals in preventing and disrupting this transnational crime
across the 140,000 track miles of the U.S. rail network and over four
million highway miles in the U.S.
Despite these challenges, police officers continue to make
significant arrests. Here are a few recent examples that further
highlight this issue:
Feb 7, 2025, three suspects in three box trucks were
arrested after fleeing from a burglary outside of Barstow, CA.
At the time of their arrest, they were in possession of 20
laptop computers, and another 300 computers were located on the
ground near the original burglary location.
Feb 7, 2025, two Mexican Nationals who are illegally in the
United States are charged with stealing approximately 71 cases
of construction tools from a freight train traveling through
the Mojave Desert.\1\
---------------------------------------------------------------------------
\1\ United States Department of Justice, Central District of
California Press Release 25-030
Feb 11, 2025, eleven defendants, including nine aliens
illegally in the United States, are charged with Possessing
Over $440,000 of designer shoes stolen from a train in Northern
Arizona. These suspects are believed to be part of a criminal
organization that consists primarily of Mexican citizens with
connections to the Mexican State of Sinaloa, who specialize in
stealing from trains and have used the technique of cutting air
hoses to control where trains with valuable cargo come to a
stop.\2\
---------------------------------------------------------------------------
\2\ United States Department of Justice, District of Arizona Press
Release 2025-016_Cecena-Castro
Feb 18, 2025, police air support advised that approximately
eight suspects were burglarizing a stopped train on the Cajon
Subdivision, which is outside of San Bernardino, CA. Police air
support followed some of the suspects to a local gas station,
where patrol units made contact. Four suspects were arrested--
one adult and three juveniles. Stolen property, burglary tools,
---------------------------------------------------------------------------
and two handguns were recovered during the arrest.
These are just a few recent examples highlighting the problem. They
represent safety concerns, lost jobs, higher consumer prices, and
deprive communities of vital tax revenue. They pose a direct threat to
public safety and economic well-being. The nature of these crimes has
evolved over the years, and a whole-of-government approach is required
to address this challenge effectively. Because of the interstate
commerce nexus, this solution must be federally led and involve elected
officials, business owners, transportation, law enforcement, and
prosecution officials.
The IACP does not believe we have all the answers to this complex
problem, but we urge this subcommittee and the United States Congress
to consider the following actions as a starting point for stakeholder
engagement to find effective solutions:
1. Direct funding to dedicated Federal prosecutors to tackle cargo
theft cases
2. Modernize the FMCSA vetting processes to include stronger
authentication methods, real-time carrier verification, and
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. This will improve
prosecution and reporting efforts.
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 detect, disrupt, and
deter organized theft groups targeting all stages of the supply
chain.
8. While the U.S. Customs and Border Protection (CBP) 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. While this issue largely
affects oceanic customers, a major source of complaints and
frustration is when they are receiving regulatory fines after
being the victim of a crime.
Again, the IACP stands ready to work with this committee and the
United States Congress to develop and implement these solutions and to
continue raising awareness of this issue.
Senator Young. Thank you, Chief Johnson, for that
testimony, the recommendations associated with it. We will most
certainly have some questions for you.
Our next witness is Robert Howell, Senior Vice President
and Chief Supply Officer for Academy Sports and Outdoors.
Academy Sports operates 298 stores in 19 states and 3
distribution centers, in Texas, Tennessee, and Georgia. Mr.
Howell brings 25 years of experience in supply chain
management. We are grateful to have him here.
Mr. Howell, you are recognized for 5 minutes, sir.
STATEMENT OF ROBERT HOWELL, CHIEF SUPPLY CHAIN OFFICER, ACADEMY
SPORTS AND OUTDOORS
Mr. Howell. Good morning and thank you, Chairman Young,
members of the Committee and Subcommittee, for the opportunity
to testify here today on a critical topic of cargo theft. I am
Rob Howell, Senior Vice President, Chief Supply Chain Officer
for Academy Sports and Outdoors, and in my role I am
responsible for distribution and both domestic and
international logistics.
Academy is a leading sporting goods and outdoor recreation
retailer, headquartered in Katy, Texas, a suburb of Houston. We
employ approximately 22,000 members across 298 stores in 19
states, including Texas, Illinois, Indiana, and Ohio. We also
operate distribution centers in Texas, Tennessee, and Georgia.
We were founded in 1938, in San Antonio, and today Academy
offers a broad assortment of outdoor, apparel, footwear, sports
and recs products, including leading national brands and a
portfolio of private-labeled products. Academy's mission is for
us to provide fun for all, and we fulfill this promise through
a localized assortment and the value that connects a broad
range of customers.
During today's testimony I hope to increase the awareness
of the impacts of cargo theft.
Organized cargo theft is rapidly growing and broad
reaching, impacting supply chain networks both on the road and
on the rail. Like many retailers, our goods are first shipped
from a point of origin to our distribution centers through an
interstate network. This allows us to efficiently move
merchandise and equip our stores with the products families
want, at a competitive price they appreciate, and when they
need them.
In my 25 years in the supply chain I have never seen cargo
theft this prevalent, and there has been a dramatic increase in
the last two years. These types of thefts include load
interception, identity theft, double brokering, and cyber
fraud. There is a robust cargo theft network comprised of bad
actors who demonstrate increasing levels of sophistication.
In the past, cargo theft typically represented as a bad
actor stealing a truckload or duplicitously obtaining a DOT
motor carrier number. In today's environment it has rapidly
progressed, and it is common to experience cyber theft of
online credentials and systems, perpetrators that cut doors on
trucks so they do not break the security seal, stealing the
product, fraudulently editing transportation documents,
reattaching those doors, all in one transaction while eluding
prosecution.
Recently we had shipment of what we call private-label
swimwear. It was intercepted on its way from Nevada to our
Texas distribution center. As you can imagine, this is critical
at this time of the year for the season. Unfortunately, we had
to react when that load was stolen and repurpose and reposition
product throughout our network. You can imagine that takes
incremental costs, incremental transportation, but we had to
get this product available for our customers in time for the
season.
If we did not get that product there, not only would our
customers not be able to get that product they need but we risk
losing that customer's loyalty and losing that relationship
with that customer. Apart from the cost of lost merchandise,
this also results in additional cost on us, shipment delays,
and ultimately that impact to the consumer.
This type of theft impacts a variety of stakeholders.
Third-party service providers, brokers, and carriers are
attentive to the issue. When products are stolen we are
notified by these third-party providers, and they launch
investigations, engage authorities, and activate their
mitigation teams. We then seek financial restitution for the
cost of goods. It results in lost sales for our companies that
can also be reflected in increased costs for more secure
transportation. Additionally, we have had to intervene and make
investments, tracking and tracing technology, GPS, as well as
enhanced cybersecurity to protect the delivery of secured
information.
Cargo theft also disrupts how we operate our business. In
addition to the impact on merchandising, inventory management,
and distribution centers teams as they work to replace the
stolen merchandise, it also creates a need for additional time
and resources to pursue the exploration and implementation of
additional in-house solutions.
Most importantly, though, once again, cargo theft impacts
the customer. When goods are stolen in transit we lose that
individual sale, potentially that customer, and the ability to
build loyalty long-term. This issue is exacerbated by the fact
that some goods are seasonal, limited time or limited
availability products, and we cannot easily replenish those
goods. These lost sales can reduce sales tax revenue for the
local communities we serve.
Partnering with industry leaders, like the Retail Industry
Leaders Association, enables us to stay on top of best
practices to help protect Academy Sports and Outdoors. There is
a need for greater support to inform coordination,
communication, with collaboration among local, state, Federal
agencies, as well as the private sector, to mitigate the impact
of retailers, brokers, carriers, and customers.
Thank you for the opportunity to share our experience, and
I look forward to your questions.
[The prepared statement of Mr. Howell follows:]
Prepared Statement of Rob Howell, Senior Vice President and Chief
Supply Chain Officer, Academy Sports + Outdoors
Good morning.
Thank you Chairman Cruz, Ranking Member Cantwell, Chairman Young,
Ranking Member Peters, and members of the U.S. Senate Committee on
Commerce, Science, & Transportation, and the Subcommittee on Surface
Transportation, Freight, Pipelines, and Safety, for the opportunity to
testify before you today on the critical topic of cargo theft.
I'm Rob Howell, Senior Vice President and Chief Supply Chain
Officer at Academy Sports + Outdoors. In my role, I'm responsible for
our supply chain operations, including our distribution centers, and
domestic and international logistics.
Academy is a leading sporting goods and outdoor recreation retailer
headquartered in Katy, Texas, a suburb of Houston. We employ
approximately 22,000 Team Members--or employees--across 298 stores in
19 states including Texas, Illinois, Ohio, and Florida. We operate
three distribution centers in Texas, Tennessee, and Georgia, and our
Corporate office is also located in Texas.
Founded in 1938 in San Antonio, today Academy offers a broad
assortment of outdoor, apparel, footwear and sports & recreation
products including leading national brands and a portfolio of private
label brands. Academy's mission is to provide ``Fun for All'' and we
fulfill this promise through a localized merchandising strategy and
value proposition that connects with a broad range of consumers.
The Rising Impact of Cargo Theft
Cargo theft is affecting shoppers across the country and disrupting
their ability to find the items they need, when they need them.
Organized cargo theft is rapidly growing and broad-reaching, impacting
supply chain networks both on the road and on the rail system. Like
many retailers, our goods are first shipped from the point of origin to
our distribution centers through an interstate network. This enables us
to efficiently move merchandise and equip our stores with the products
customers want to purchase, at competitive price points they
appreciate, at the time of need.
In my 25 years in supply chain I've never seen cargo theft this
prevalent--and there has been a dramatic increase in the last 18-24
months including:
Load interception--Diverting shipments from their intended
destination
Identity theft--Impersonating legitimate carriers to steal
shipments
Double brokering--Carriers or brokers subcontracting loads
illegally or inadvertently to fraudulent carriers who then
intercept the goods
Cyber fraud--Stealing of online credentials or infiltration
of transportation systems
In today's retail landscape, there is a robust cargo theft network
comprised of bad actors who demonstrate increasing levels of
sophistication. In the past, cargo theft typically presented as a bad
actor stealing a truckload or duplicitously obtaining a DOT motor
carrier number. In today's environment, it has rapidly progressed. It
is common to experience cybertheft of online credentials and systems,
perpetrators that cut doors on trucks--so they don't break the security
seal--to steal the products, fraudulently edit the transport
documentation, and reattach the doors all in one transaction . . .
while still eluding prosecution.
At Academy we work only with reputable third-party companies that
subcontract our loads to carriers from the point of origin to our
distribution centers. In our experience, we most often see cargo theft
in the form of identity theft or fraud.
For example, we had a shipment of private-label swimwear
intercepted in transit in Nevada. The entire load was stolen, forcing
us to reallocate swimsuits already in the Academy network to the
intended destination of the shipment, our southern stores. It was
shopping season for swimwear--this product was in demand and we knew if
we didn't immediately reallocate merchandise we would lose those sales,
and potentially, those customers, in the long-term. Apart from the cost
of lost merchandise, this also resulted in additional transportation
costs, shipment delays, and possible customer impact.
Real-World Impact on Retailers and Consumers
Cargo theft impacts a variety of stakeholders, including:
Third-party service providers--Brokers and carriers are
attentive to the issue. When products are stolen, we are
notified by the third-party service provider, which then
launches an investigation, engages authorities, and activates
their internal loss prevention team. We then seek financial
restitution. However, we are only eligible to be reimbursed for
the inventory at cost--not retail. This results in lost sales
for our company and can also be reflected in increased costs
for more secure transportation. Additionally, we've had to
intervene and make investments in how products are sealed,
tracked and traced via technology and GPS, as well as
moderating cybersecurity threats to ensure information is
delivered securely.
Retailers--Cargo theft also disrupts how we operate our
business. In addition to its impact on our merchandising,
inventory management, and distribution center teams as they
work to replace stolen merchandise, it also creates the need
for additional time and resources to pursue the exploration
and/or implementation of additional in-house systems.
Customers--When goods are stolen in transit, it means
customers cannot buy them from us (either in-store or online).
We lose that individual sale. We also potentially lose that
customer and the ability to build loyalty with that customer in
the long-term, as they may shop from another retailer with
product available. The issue is exacerbated by the fact that
some goods are seasonal--limited time or limited availability--
and cannot be easily replenished. Those missed sales can also
mean less revenue, through sales tax, for the local communities
we serve.
Conclusion
Partnering with industry thought leaders like the Retail Industry
Leaders Association (RILA) enables us to stay aware of best practices
and trends to help protect Academy Sports + Outdoors. We also remain in
constant communication with our third party partners. But that is not
enough.
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.
Thank you for the opportunity to share our experience, and I look
forward to your questions.
Senator Young. Well, thank you so much for being here. Our
next witness today is Adam Blanchard. Mr. Blanchard is
Principal and CEO of Tanager Logistics and Double Diamond
Transport. Mr. Blanchard founded his companies in 2014, and he
currently operates 90 trucks and employs over 20 freight
brokers.
Mr. Blanchard, you are recognized for five minutes.
STATEMENT OF ADAM BLANCHARD, PRINCIPAL AND CEO, TANAGER
LOGISTICS AND DOUBLE DIAMOND TRANSPORT
Mr. Blanchard. Thank you, Senator Young. Subcommittee
members, thank you for the opportunity to testify. My name is
Adam Blanchard, and I am the Co-Founder and CEO of Double
Diamond Transport and Tanager Logistics.
Our trucking company was launched following a conversation
I had with a close friend around my kitchen table. We put our
first truck on the road in 2014, and we formed our brokerage
shortly thereafter. Like small business owners, we faced daily
challenges, yet we were blessed with an exceptional team.
Together we persevered and built a company that everyone in
our organization can be proud of. We created dozens of jobs in
the San Antonio, Texas, area, and today we operate about 90
trucks and 280 trailers.
About a year ago, our American dream turned into a
nightmare when some unscrupulous criminals stole our identity.
By capitalizing on our good name, they tarnished the reputation
we had spent over a decade to earn. The scam worked like this.
Posing as Tanager Logistics, the criminals brokered loads to
unsuspecting motor carriers who delivered the cargo while the
scammers pocketed the money. In just one example, they diverted
a full truckload of energy drinks with a retail value well over
six figures, over a thousand miles, from Texas to California.
Because the spoofed my company's e-mails, the driver was
tricked into believing we had made the request for the
transportation of that load.
While the criminals were using our name to enrich
themselves, we were playing Whack-a-Mole, trying to counter
their sophisticated techniques to mimic our website, e-mails,
and operating authority. Even at this very moment, two Tanager
Logistics are listed on the FMCSA's official website, my
company and an imposter. We provided this evidence to FMCSA,
but they refused to take it down.
Simultaneously, we were on the receiving end of misdirected
rage from motor carriers who had also been scammed. Through no
fault of our own, we were blacklisted by factoring companies
for fraudulent invoices and nonpayment to those motor carriers.
We sought to report these crimes, but kept hitting dead
ends with Federal, state, and local law enforcement agencies.
My insurance company would not get involved because technically
we did not have any cargo claims. The Texas Department of
Public Safety informed us this was not their jurisdiction. The
FBI recorded our information but never returned our call. The
Department of Homeland Security met with us but refused to
investigate. We did our due diligence, but the message was
clear--you are on your own.
We might be on our own, but we are far from alone. Cargo
theft is rapidly becoming a crisis, costing the industry up to
$35 billion annually. Strategic theft has risen 1500 percent
since the first quarter of 2021. The average value per theft is
now over $200,000.
Cargo theft comes in many forms, whether it is imitating a
legitimate company, pilfering goods over time, breaking into
parked tractor trailers, or double-brokering fraud. These are
complex, multijurisdictional crimes often involving
organizational theft groups, yet there is no unified, dedicated
Federal response.
Thieves emboldened by the lack of investigations and
prosecutions are growing the size and sophistication of their
theft operations. But there are a few common-sense steps we
believe Congress can take to counter this.
First, direct FMCSA, the Federal Motor Carrier Safety
Administration, to remove illegitimate carriers and brokers
from the SAFER website. The industry should be able to trust
that SAFER publicizes only legitimate entities so that we can
make informed decisions when vetting business partners.
Second, pass the Safeguarding Our Supply Chains Act, which
would establish a Federal task force dedicated to cargo theft.
Third, pass the Household Goods Shipping Consumer
Protection Act, which would strengthen penalties against bad
actors and protect consumers.
Currently, criminals view trucking as a low-risk, high-
reward target. We must invert that calculus. When we were
finally able to contact the thieves who stole our identity, the
mere threat of law enforcement involvement was enough to deter
them. The bad news is, if they are not scamming us, they are
scamming someone else.
Trucking is a tough business, and we have no shortage of
grit and determination. But our industry is not equipped to
deal with organized theft groups on our own. We need help from
Federal agencies and law enforcement with the resources and
advanced technical capabilities to take this on. We implore
Congress to provide resources and direction to pursue criminals
who are exploiting small businesses that families have spent
years, decades, or even generations to build.
Thank you for the opportunity to be here before you today,
and I look forward to your questions.
[The prepared statement of Mr. Blanchard follows:]
Prepared Statement of Adam Blanchard, Principal and CEO,
Tanager Logistics and Double Diamond Transport on behalf of
The American Trucking Associations
Introduction:
Chairman Young, Ranking Member Peters, and members of the
subcommittee, I appreciate the opportunity to testify before you today
on behalf of the American Trucking Associations (ATA).\1\ My name is
Adam Blanchard, and I am the Principal & CEO of both Tanager Logistics
and Double Diamond Transport, headquartered in San Antonio, Texas. I am
also a proud serving member of the Texas Trucking Association and am
grateful for the opportunity to share with this subcommittee the
challenges that I, my peers in Texas, and the trucking and supply chain
logistics industry nationwide are experiencing with supply chain fraud
and cargo theft.
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\1\ The American Trucking Associations is the largest national
trade association for the trucking industry. Through a federation of 50
affiliated state trucking associations and industry-related conferences
and councils, ATA is the voice of the industry America depends on most
to move our Nation's freight.
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ATA is a 90-year-old federation and the largest national trade
organization representing the 8.5 million men and women working in the
trucking industry. As a 50-state federation that encompasses 37,000
motor carriers and suppliers, ATA proudly represents every sector of
the industry. From less-than-truckload to truckload carriers, from
agriculture and livestock transporters to auto haulers and household
goods movers, and from large fleets to mom-and-pop one-truck operators,
ATA serves as the single unified voice of the trucking industry.
Since founding Double Diamond Transport and Tanager Logistics in
San Antonio in 2014, we have been fortunate to grow the company to
operate 90 trucks and employ over 20 freight brokers. As a full-service
transportation provider, we offer reliable truckload transportation
services using the latest technology and equipment to provide top-tier
customer service. We are proud to have been recognized by Inc. Series
5000 as one of the fastest-growing private companies in San Antonio.
Our experience as both a trucking company and logistics provider
has exposed us to the numerous ways in which bad actors are
infiltrating our Nation's domestic supply chains. We have seen how easy
it is for criminals to create fraudulent trucking companies and
brokerages and steal cargo from the stream of legitimate commerce with
near impunity, all while undermining the integrity of the trucking
industry. I have been a victim of freight fraud numerous times, and
unfortunately there is virtually no recourse for me or my company. I
look forward to sharing the challenges I experienced working with
federal, state, and local law enforcement, as well as Federal
regulators, and discussing solutions to help our Nation better combat
supply chain fraud and theft.
Thank you for convening today's hearing to consider these critical
issues. I, along with the ATA, look forward to working with you to
share information and inform potential legislative solutions to promote
the safe and efficient movement of our Nation's goods.
What is Freight Fraud?:
Thieves, Organized Theft Groups (OTGs), and Transnational Criminal
Organizations (TCOs) are currently infiltrating and exploiting the
Nation's transportation and distribution networks because these
criminal schemes are considered low-risk and high-reward. In other
words, there is significant money to be made and very little risk of
criminal exposure. According to the National Insurance Crime Bureau
(NICB), cargo theft in the United States is a $15 to $35 billion
industry.\2\ The fraud and cargo theft plaguing the trucking industry,
and our Nation's supply chains more broadly, materialize in many ways.
There are two main categories of cargo theft: straight theft and
strategic theft.
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\2\ National Insurance Crime Bureau. On the Rise: Cargo Theft, a
Billion Dollar Industry. https://www.nicb.org/news/blog/rise-cargo-
theft-billion-dollar-industry.
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Straight Theft
Straight theft is the most common form of theft and has been around
for as long as trucks have been delivering freight. Straight theft
refers to thieves physically stealing cargo from a shipment. Thieves
typically target products that can be sold quickly on the market, and
this type of theft can be very profitable. Examples include:
1. Burglary--Thieves steal goods directly from truck trailers,
usually when truck drivers are stopped along their routes at
truck stops, parking lots, roadside parking, terminals, drop
lots, and other areas where cargo could be left unattended,
especially in retail store parking lots or other empty parking
lots on weekends.
2. Pilferage--Thieves only steal some of the freight off a single
trailer. Criminals pilfer small amounts, often over long
periods of time. By taking only small amounts of freight at a
time, thieves are able to avoid detection for much longer and
pocket hundreds or even thousands of dollars of merchandise
without much effort or risk.
3. Hijacking--Thieves use force, deception, or intimidation to seize
the truck and its contents. Thieves may trick drivers into
pulling over by signaling that something may be wrong with the
truck, which then allows them to steal the freight. OTGs may
target entire trucks or containers by using violence or other
tactics to overpower drivers and seize the cargo. This can be
opportunistic, or a truck can be tracked from its departure
point and robbed at its first stop.
Strategic Theft
Strategic theft involves the use of fraud and deception to trick
shippers, brokers, and carriers into handing loads over to thieves
instead of the legitimate carrier. Strategic theft often involves
identity theft and advanced cyber tactics to manipulate data. Strategic
cargo theft is extremely profitable and lower risk relative to straight
theft because strategic theft can be accomplished remotely and does not
require thieves to physically touch the cargo. Examples include:
1. Fictitious Pickups--Thieves impersonate legitimate drivers and
carriers by using altered paperwork, fake uniforms, and vehicle
logos to steal shipments. The legitimate driver will often
arrive to find that the shipment has already been released.
2. Fraudulent Bills of Lading--Thieves use the forged identity of a
legitimate carrier to pick up a shipment, steal a portion of
the freight, and re-create the bill of lading to disguise the
theft. In this process, the unit count, weight, and seal
numbers are altered on the bill of lading before the shipments
are delivered to the final destination, where the unknowing
receivers sign off. This type of theft can go undetected for
months.
3. Double Brokering Fraud--A double brokering scam can take various
forms in the trucking and logistics industry. Sometimes, the
criminals pose as either legitimate brokers or motor carriers
(i.e., owning trucks, trailers, equipment, or drivers), or
both, but they, of course, have no intention of moving the
freight to the destination requested by the shipper. Instead,
the criminals steal cargo by subcontracting the work to
unwitting carriers who transport the freight to a different
delivery point than the location specified by the shipper. The
criminals do this by either convincing the legitimate carrier
to deliver to a different destination or changing the bill of
lading. Often, criminals engaged in double brokering fraud are
not located in the U.S. and conduct their crimes through cyber
means without ever physically touching the freight. It is also
common for criminals to steal the identity of an existing
broker or motor carrier by creating and using website domain
names and business names that are very similar to the existing
business information of real companies. For example, a real
trucking company might use the website domain
ABCMotorCarrier.com, and the criminal may create a fraudulent
company with a slightly different website domain such as
ABCMotorCarrierLLC.com. There are multiple victims with double
brokering scams: the owner of the double-brokered freight, the
motor carrier that unknowingly delivered the freight for the
criminal and won't receive payment for their service, and the
legitimate broker whose operations and integrity are undermined
by fraudulent actors.
4. Hostage Freight--Freight can be held hostage by a broker,
carrier, or rogue driver. Hostage freight refers to scenarios
where brokers, carriers, or rogue drivers refuse to complete a
delivery until their demands are met. Drivers or service
providers may hold loads hostage when they think they are not
being paid fairly, or as a means to renegotiate the terms of
the initial agreement. These situations can be complicated when
associated with double brokering fraud. Hostage freight schemes
are also fairly common in the moving and storage industry and
occur when a moving entity holds a customer's belongings
hostage by refusing to deliver them until the customer pays a
significantly higher price than the original estimate. Thieves
will use the customer's belongings as leverage to extort
additional money. In many cases, the customer's goods are never
returned even if the additional money is paid.\3\
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\3\ WTW. (2024, December 18). High-value shipments at risk: The
growing threat of strategic cargo theft. https://www.wtwco.com/en-us/
insights/2024/12/high-value-shipments-at-risk-the-growing-threat-of-
strategic-cargo-theft.
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USDOT & MC Number Fraud
The trucking industry and broader supply chain's growing experience
with cargo theft is often tied to sophisticated fraud tactics
undertaken by criminal organizations and lone bad actors. In many
instances, these bad actors exploit vulnerabilities in the Federal
Motor Carrier Safety Administration's (FMCSA) current carrier and
broker registration system by stealing, falsifying, or creating
counterfeit information to unlawfully acquire U.S. Department of
Transportation (USDOT) numbers, Motor Carrier (MC) numbers, operating
authority identifiers, and other critical data. USDOT requires the
trucking industry to use these unique identifiers to ensure that only
legitimate, authorized carriers operate on our roads.
Unfortunately, bad actors are increasingly targeting USDOT numbers,
MC numbers, and other business identifiers to carry out their illicit
schemes under the guise of legitimacy. Some common tactics include
hacking into carrier databases, exploiting weak security practices, and
phishing schemes. In some cases, these scammers create entirely
fabricated carrier companies using stolen or purchased credentials.
Fraudsters may register new companies using stolen information by
extracting USDOT and MC numbers from publicly accessible databases or
using phishing schemes to deceive companies into revealing sensitive
information, including PINs and other personal details.
In other instances, they hijack existing carrier profiles by
hacking FMCSA accounts via elaborate phishing schemes or online data
mining. The fraudsters use the stolen credentials to establish a fake
entity and alter legitimate company information in official records,
like the MCS-150 form, to redirect communications to themselves. They
then create websites and e-mail addresses that closely resemble those
of legitimate companies (i.e., spoofing), using fake phone numbers and
e-mails to communicate with brokers and shippers and conduct what
appears to be legitimate business.
Another common and concerning practice is the buying and selling of
both stolen and legitimate business identifiers. It is relatively easy
to find ``black markets'' online that feature USDOT and MC numbers in
good standing. These markets often operate in plain sight on open
Facebook forums and other public domains.\4\ Importantly, the buying,
selling, and transferring of MC numbers on its own is not illegal, so
there are limited means to ``police'' this practice and stop bad actors
from purchasing unique identifiers with malintent.\5\ Additionally,
trucking businesses are frequently purchased and consolidated, meaning
the transfer of such credentials is inevitable and, in many cases, done
for legal purposes. However, fraudsters often operate in a legal gray
area by using legally obtained MC numbers to evade FMCSA's compliance
guardrails and then conduct illegal operations.
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\4\ Examples of Facebook groups and domains where USDOT and MC
numbers are exchanged: (1) ``MC number buy/sell/assistance,'' https://
www.facebook.com/groups/808090098179571; (2) ``Operating Authority for
sale (MC and USDOT),'' https://www.facebook.com/groups/7644
65795015988; (3) ``MC Number. Sale or buy,'' https://www.facebook.com/
groups/7423215
97745830; (4) https://dotnumberstore.com/.
\5\ Lockie, Alex. (2024, October 10). FMCSA guidance on buying and
selling MC numbers. Overdrive. https://www.overdriveonline.com/
regulations/article/15705499/fmcsa-guidance-on-buying-and-selling-mc-
numbers.
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Notably, fraudsters and cargo thieves specifically seek out the
USDOT and MC numbers of companies that have strong safety records and
established operational histories to both appear more credible and
evade the scrutiny of law enforcement and regulatory bodies. By
acquiring the business identifiers of companies with strong safety
records, fraudsters can avoid certain compliance checks and bypass
certain vetting processes that would otherwise expose them. Bad actors
often offer registered carriers with excellent safety ratings tens of
thousands of dollars to obtain their ``valuable'' MC numbers. They will
pay even more to also obtain carriers' registration account credentials
and other personal or business information to seamlessly infiltrate
their established business networks.\6\
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\6\ Lockie, Alex. (2024, September 30). How much is your MC worth?
Maybe as much as $30,000. Overdrive. https://www.overdriveonline.com/
channel-19/article/15704468/your-author
ity-might-be-worth-30000-to-freight-fraudsters.
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While domestic bad actors certainly play a role in targeting the
vulnerabilities of FMCSA's current registration system, a significant
amount of fraud originates internationally, particularly from TCOs and
fraudsters operating in places like Eastern Europe, Central Asia,
Southeast Asia, West Africa, and Latin America. These criminals often
target U.S.-based registration systems to exploit the relatively easier
access to legitimate identifiers like USDOT and MC numbers. Moreover,
given how technology is embedded in nearly all aspects of the U.S.
supply chain, it is relatively easy for bad actors in overseas
locations to capitalize on technological vulnerabilities and perpetrate
freight fraud.
My Experience With Identity Theft
Unfortunately, about a year ago, the business identity of my
company, Tanager Logistics, was stolen by a bad actor. The identity
thieves communicated directly with our business to tender a load on
behalf of a trucking company and subsequently posed as Tanager
Logistics to broker that load, as well as other loads, to motor
carriers. While we still do not know today how exactly the fraudster
obtained the sensitive business information that allowed them to
impersonate our company, we believe they may have used publicly
available information and setup packets to gain legitimacy. They
brokered loads under our name, deceiving both shippers and carriers.
This led to massive business disruptions, with angry trucking companies
calling us and demanding payment for loads that the real Tanager
Logistics did not broker or authorize. Worse, the fraudster used our
identity to steal high-value freight, including truckloads of Red Bull,
which were then diverted to suspicious warehouses in California and
ostensibly shipped out of the country. Despite reaching out to our
insurance provider, law enforcement, and even the Department of
Homeland Security, we were met with indifference and red tape. The
fraudulent actors used VPNs and domain spoofing techniques, making it
nearly impossible for us to track them down on our own. This experience
exposed a major flaw in the industry--there is virtually no recourse
for businesses facing this kind of fraud. FMCSA and other regulatory
bodies need stronger mechanisms to detect and respond to these scams in
real-time. More importantly, Federal agencies must prioritize cyber
capabilities to track and shut down these criminals before they can
continue defrauding legitimate businesses like mine.
To this day, FMCSA's SAFER website still features two companies
under the name ``Tanager Logistics LLC'': my company--the real Tanager
Logistics LLC \7\--and another fraudulent business \8\ purporting to be
my company. It is disappointing and aggravating that the Federal agency
responsible for improving the safety of the trucking industry routinely
publicizes fraudsters on a system intended to share ``company safety
data to industry and the public over the internet.'' \9\
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\7\ Tanager Logistics LLC. USDOT Number: 2543054
\8\ Tanager Logistics LLC. USDOT Number: 4326934
\9\ U.S. Department of Transportation. FMCSA. About SAFER. https://
safer.fmcsa.dot.gov/about.aspx.
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Industry & Broader Public Safety Impacts
USDOT and MC number fraud not only victimizes legitimate carriers,
brokers, and shippers, it also poses significant risks to public
safety. Illegitimate carriers often operate unsafe vehicles, hire
unqualified and uncredentialed drivers, and avoid regulatory oversight
altogether. In some instances, these bad actors also engage in
fraudulent insurance practices, further compromising the safety and
integrity of USDOT's registration system and industry norms. Criminals
use stolen or unethically purchased numbers to facilitate illegal
activities beyond cargo theft, including human trafficking and the
transportation of illicit substances and goods. Thus, the impact of
this fraud extends far beyond the trucking industry itself, threatening
the U.S. marketplace, public safety, and national security.
Without the deterrence of reliable investigations and prosecutions,
the trucking industry is constantly vulnerable to potential fraud, and
legitimate carriers must expend significant human capital and financial
resources to protect themselves. Unfortunately, many smaller carriers
and brokers lack the means, staffing, and financial resources to make
such robust investments needed to protect themselves and their
customers' cargo. This Committee plays a key role in safeguarding our
Nation's transportation networks and supply chains. We urge you to
consider how the prevalence of fraud and absence of any real deterrent
undercuts the trucking industry's ability to enhance the safety and
efficiency of our fleets to keep up with America's transportation and
supply chain needs.
FMCSA's Actions to Combat Fraud
FMCSA established a dedicated fraud prevention team in June 2024 to
identify and respond to suspected cases of motor carrier and broker
fraud and assist registrants who have fallen victim to fraud.\10\ While
the team is still relatively new, FMCSA's goal is to play a role in
actively mitigating the fraud that is occurring within the industry.
The agency has also enhanced its practices and scrutiny around
registration applications and documentation submitted via paper--a key
source of many fraud incidents--and has begun transitioning towards
more secure, encrypted online processes. Another short-term fix FMCSA
has identified and undertaken is the suspension of online PIN requests
to thwart fraudulent actors from using this tool to access the FMCSA
registration system illegally. All PIN number requests are now
completed by FMCSA mailing the information to a physical address on
file.
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\10\ Gallagher, John. (2024, April 24). FMCSA standing up
registration fraud team. FreightWaves. https://www.freightwaves.com/
news/fmcsa-standing-up-registration-fraud-team.
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FMCSA has also announced several planned upgrades to the
registration system that build upon ongoing modernization efforts to
further bolster security and deter bad actors. Importantly, FMCSA plans
to eliminate MC and other operating authority numbers and instead
require a single identifier (USDOT number followed by a suffix
indicating operating authority type). While the move to consolidate
these numbers into a single USDOT number is intended to simplify
regulatory oversight and improve efficiency, it is also a key step in
reducing fraud by centralizing carrier verification and compliance
checks--moving away from siloed or one-off verification processes for
multiple business identifiers. FMCSA believes a single-number system
could help reduce vulnerabilities that allow bad actors to manipulate
or steal MC numbers to deceive brokers and shippers. Other planned
upgrades include the issuance of safety registrations that will be
attached to the carrier's USDOT number, as well as more robust business
verification processes and streamlined systems for identifying active
and prohibited system users.
I, and ATA, strongly encourage the Committee to exercise robust
oversight as these changes are put in place by the agency. While many
of these updates will require formal rulemakings, the trucking industry
welcomes changes to FMCSA's system that enhance security and deter
fraud while maintaining user accessibility. In introducing these
registration system enhancements, FMCSA must take caution to avoid
creating undue administrative or regulatory burdens for carriers and
brokers.
Organized Theft Groups and the Rise of Strategic Theft:
While cargo theft is not a new phenomenon, in recent years, it has
evolved from a domestic enterprise into a sophisticated, international
effort perpetrated by hostile entities. Organized criminal syndicates
all over the globe have the means and wherewithal to create fraudulent
trucking companies and brokerages and profit off vulnerabilities in
U.S. supply chains, all without ever stepping foot on U.S. soil. These
crime rings are predominately located in Eastern Europe, Africa, and
South America. They continue to harm unsuspecting American companies,
and ultimately consumers, because of the notable absence of any real
deterrence (i.e., investigations, prosecutions, and justice).
The COVID-19 pandemic precipitated the meteoric rise in frequency
and sophistication of cargo theft. CargoNet logged 1,106 reported
incidents of theft in 2019 and 1,181 reported incidents in 2018.\11\
During this time, the vast majority of reported thefts could be
categorized as straight theft. These crimes were carried out by
relatively unsophisticated thieves who would steal freight when the
opportunity presented itself. These thieves would sell the stolen goods
at a deep discount, usually pennies on the dollar, in the same area
where the goods were stolen. The thieves would live off those proceeds
until exhausting their resources, at which point they would strike
again.
---------------------------------------------------------------------------
\11\ Wolf, C. D. (2021, June 10). Truck cargo thefts skyrocketed
amid COVID-19. Transport Topics. https://www.ttnews.com/articles/truck-
cargo-thefts-skyrocketed-amid-covid-19.
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Beginning in 2021, however, the trucking industry saw a dramatic
shift in the cargo theft landscape. Strategic theft has risen by over
1500 percent since the first quarter of 2021.\12\ Unlike the thieves of
the past who engaged predominantly in straight theft, those engaged in
strategic theft utilize fraud and deception to maximize profit and
maintain a safe, physical distance from the theft itself. These
criminals are often members of OTGs that operate massive networks
within and outside the United States. The shift from opportunistic
thieves to large OTGs gave rise to more complex and convincing fraud
operations. Less than a decade ago, when smaller and less sophisticated
groups were apprehended by law enforcement, it would take around 6-7
months for them to restart theft operations. Nowadays, when law
enforcement successfully disrupts a large criminal network, it takes 30
days or fewer for that group to resume their freight fraud operations
because of the relative ease with which bad actors can reinvent
operations online. The constant cycle of seemingly futile efforts to
combat crime as criminals simply move their operations elsewhere
resembles a game of ``whack-a-mole.''
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\12\ Wolf, C. D. (2024, October 4). Cargo theft experts warn of
peak season fraud. Transport Topics. https://www.ttnews.com/articles/
cargo-theft-season.
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Some OTGs are so vast and sophisticated that they have established
their own call centers to manage their illegal supply chains. In many
cases, these groups also operate seemingly legitimate warehouses and
online marketplaces to store and sell stolen goods. In these scenarios,
stolen goods are often exported out of the United States, repackaged,
and then sold, sometimes for more than market value. A good example of
this would be energy drinks. Certain energy drinks sold in the U.S. are
banned in other countries, so thieves take advantage of the strong
demand and sell the stolen drinks at an incredible mark-up in those
foreign markets. Additionally, these types of products are usually seen
as low-risk and high-value since they are easy to move and have high
resale potential.
There are several factors and trends that are responsible for this
uptick in frequency and sophistication of freight fraud. First, the
COVID-19 global pandemic offered criminals a prime opportunity to
exploit the vulnerabilities caused by a supply chain thrown into chaos
by dramatic shifts in global supply and demand. Second, the
digitization of domestic and international supply chains has created
new vulnerabilities and thus opportunities for OTGs to exploit gaps
using sophisticated and ever-evolving cyber capabilities. These groups
can steal freight remotely by exploiting the technology that has been
embedded into supply chains to move cargo more efficiently. Third, the
erosion of traditional in-person direct business transactions--a past
staple of traditional supply chain relationships--has created further
opportunities for exploitation. Doing business with unknown companies
and drivers has become normalized given that more shipments are now
brokered via load boards and online platforms. This has made it
relatively easy for the criminals to pose as legitimate brokers or
carriers and fraudulently engage in business transactions with
unwitting supply chain partners. Finally, the lack of coordinated
investigations and prosecutions has emboldened these actions. Thieves
have quickly realized that federal, state, and local law enforcement do
not have the resources to stop them nor the interest to pursue sweeping
investigations.
Many U.S. motor carriers are expending significant capital to
protect themselves against these crimes, but obviously not all
companies have the resources to do so. Several companies offer vetting
services to motor carriers and brokers, but those services, while
highly effective, come with an added cost. So, many in the trucking
industry are often victims in one of two ways: either they lose
significant sums of money through stolen freight, or they have to spend
significant sums of money for services and advanced security measures
to mitigate risk. With the speed at which our supply chain and cyber
technologies are evolving, it costs more and more to fortify our
businesses. Success in the transportation industry is no longer simply
a matter of having the best drivers and the right equipment; motor
carriers must now invest immense resources to have the strongest IT
systems and the most diligent security personnel. In today's trucking
environment, a strong defense is necessary for survival.
Commonly Targeted Freight
In general, thieves and fraudsters target goods that they can steal
and sell quickly. This means that lower-value shipments, which are
presumably less secure, are very attractive to cargo thieves.
Accordingly, food and beverage items are targeted frequently and were
the most commonly stolen type of freight in 2024.\13\ Thieves prefer
food and beverage products because there is consistently high demand,
law enforcement typically does not initiate investigations of
perishable goods quickly, and it is nearly impossible to track these
items after they have been stolen.
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\13\ Verisk CargoNet. (2025, January 21). 2024 supply chain risk
trends analysis. https://www.cargonet.com/news-and-events/cargonet-in-
the-media/2024-theft-trends/.
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Furthermore, thieves and OTGs are always adapting to their
environment and changing their tactics to reduce risk and maximize
profit. As soon as the trucking industry, our supply chain partners,
and law enforcement agencies identify theft trends and patterns, the
criminals have already pivoted to new tactics and new targets that are
presumably less secure. The trends of targeted commodities thus reflect
the state of the market and transportation security at any given time.
For example, during the COVID-19 pandemic, thieves targeted shipments
of medical supplies and household supplies.\14\ Due to the ongoing
outbreaks of highly pathogenic avian influenza (HPAI) and the related
egg shortage, approximately 100,000 eggs were stolen from a semi-
trailer in Pennsylvania earlier this month.\15\ Thieves are very
perceptive to market conditions and will adjust their criminal schemes
to capitalize on consumer demand.
---------------------------------------------------------------------------
\14\ Wolf, C. D. (2021, June 10). Truck cargo thefts skyrocketed
amid COVID-19. Transport Topics. https://www.ttnews.com/articles/truck-
cargo-thefts-skyrocketed-amid-covid-19.
\15\ Hume, J. (2025, February 14). 100,000 eggs stolen: Breaking
news or an old cargo theft trend? FleetOwner. https://
www.fleetowner.com/safety/article/55267606/egg-heist-highlights-food-
and-beverage-cargo-theft-risks-but-is-it-a-trend.
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Recent Examples of Cargo Theft in the News
The U.S. Attorney's Office for the Northern District of
Georgia announced that four men have been sentenced to prison
for multiple cargo thefts of electronics, copper, and apparel
throughout the Southeastern United States totaling more than
$1.7 million. The stolen goods were then taken to Florida and
sold. The case was investigated by the Federal Bureau of
Investigation (FBI) with assistance from the Miami-Dade County
Police Department, Economic Crime Bureau, and the FBI Miami
Field Office.\16\
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\16\ U.S. Attorney's Office, Northern District of Georgia. (2024,
June 26). Members of a Cargo Theft Ring Sentenced to Prison. https://
www.justice.gov/usao-ndga/pr/members-cargo-theft-ring-sentenced-prison.
The Tulare County Sheriff's Office in Central California
linked Mexican cartels to a $2.25 million theft of heavy
agricultural equipment and machinery. The individuals arrested
face charges of grand theft, conspiracy, and receiving stolen
property. A deputy district attorney says the maximum sentence
would be three years behind bars.\17\
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\17\ Rodriguez, Rich. (2024, October 29). Sheriff links Mexican
cartels to $2.25 million theft of Central California farm equipment.
abc3340. https://abc3340.com/news/nation-world/sheriff-links-mexican-
cartels-to-225-million-theft-of-central-california-farm-equipment.
The U.S. Attorney's Office for the Northern District of
Illinois announced the indictment of a Lithuanian national for
stealing over $9.5 million in goods in the Chicago area. He
allegedly exploited vulnerabilities in a Federal motor carrier
registration system to obtain fictitious names, truck carriers,
and brokers. He would then use these aliases to divert freight
deliveries to alternate warehouses where he would then steal
them.\18\
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\18\ U.S. Attorney's Office, Northern District of Illinois. (2024,
June 7). Suburban Chicago Man Charged in Federal Court With Stealing
More Than $9.5 Million in Interstate Shipments. https://
www.justice.gov/usao-ndil/pr/suburban-chicago-man-charged-federal-
court-stealing-
more-95-million-
interstate#: :text=The%20indictment%20alleges%20that%20Zigmantas,of%20
theft%20of%20interstate%20shipments.
The New Jersey State Police arrested four men from
Philadelphia in a sting called ``Operation Beef Bandit.'' The
organized cargo theft ring broke into parked trailers at
service areas while drivers were sleeping and stole ``high-
value goods'' such as meat, alcohol, and seafood. The men are
facing numerous charges, including receiving stolen property,
possession of burglary tools, conspiracy to commit cargo theft,
and criminal mischief.\19\
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\19\ Hartman, Trish. (2024, September 17). 4 Philadelphia men
arrested in 'Operation Beef Bandit' in connection to organized cargo
theft ring. 6abc. https://6abc.com/post/4-men-philadelphia-arrested-
operation-beef-bandit-connection-organized-cargo-theft-ring-tri-state/
15314427/.
The California Highway Patrol (CHP) announced that a
monthslong multi-agency investigation into a cargo and vehicle
theft operation in Southern California yielded more than 50
arrests, hundreds of thousands in U.S. currency, and over $8
million in stolen cargo. During the investigation,
investigators also recovered 425 pounds of methamphetamine, 48
gallons of liquid methamphetamine, a clandestine
methamphetamine lab, 20 rifles and handguns, and 20 stolen
vehicles.\20\
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\20\ DuBose, Josh. (2024, June 27). Cargo theft sting nets $325K in
cash, $8M in stolen goods and 51 arrests. KTLA5. https://ktla.com/news/
local-news/cargo-theft-sting-nets-325k-in-cash-8m-in-stolen-goods-and-
51-arrests/.
The U.S. Attorney's Office for the District of New Jersey
announced that three men pleaded guilty to their roles in a
conspiracy to burglarize approximately 55 United Parcel Service
warehouses across the United States, resulting in the theft of
over $1.6 million worth of merchandise. The men sought parcels
marked with ``lithium-ion battery'' warnings, which indicated
that the packages contained high-value electronic devices such
as cell phones.\21\
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\21\ U.S. Attorney's Office, District of New Jersey. (2024, March
28). Three Philadelphia Men Admit Roles in Conspiracy to Burglarize
United Parcel Service Warehouses Across United States, Stealing over
$1.6 Million in Packages. https://www.justice.gov/usao-nj/pr/three-
philadelphia-men-admit-roles-conspiracy-burglarize-united-parcel-
service.
The Grapevine Police Department uncovered a multimillion-
dollar cargo theft ring and charged seven suspects with
engaging in organized criminal activity. The theft ring was
responsible for burglaries of electronics and high-value
merchandise totaling more than $10 million in five cities:
Grapevine, Plano, Fort Worth, Coppell, and Dallas.\22\
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\22\ Myers, Doug and J.D. Miles, S.E. Jenkins. (2024, November 19).
7 charged with organized criminal activity in multimillion-dollar North
Texas cargo theft ring. CBS News. https://www.cbsnews.com/texas/news/
seven-charged-in-north-texas-multimillion-dollar-cargo-theft-ring-
bust/.
CHP's Organized Retail Crime Task Force and Cargo Theft
Interdiction Program conducted a statewide enforcement
operation called ``Operation Overloaded,'' which targeted
individuals involved in a cargo theft scheme believed to have
stolen over $150 million worth of goods from more than 200
cargo loads. CHP arrested 40 people during the operation and
seized over $50 million worth of stolen merchandise and 20
stolen cargo trailers. The authorities also confiscated several
vehicles, multiple firearms (including ghost guns), over
$550,000 in cash, and 13 gold bars. The suspects involved in
the theft scheme face several felony charges, including
conspiracy to commit grand theft, grand theft of cargo, vehicle
theft, and identity theft.\23\
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\23\ FCCR (2023, May 8). 40 Individuals Linked to $150 Million
Cargo Theft Scheme Arrested. https://fccr.co/40-individuals-linked-to-
150-million-cargo-theft-scheme-arrested/?srsltid=AfmBO
oon6CFDIDj0SvU-QR5A5c8VLS0Mq-pjEZgqOYJG3_PKvopVrzdl.
The U.S. Attorney's Office for the Southern District of
Florida announced that the final member of a cargo theft ring
had been convicted of stealing 19,000 pounds of Perry Ellis
perfume worth over $230,000. The shipment was destined for
Laredo, Texas, but 22 of the 24 pallets of perfume never left
Hialeah, Florida, because of the theft.\24\
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\24\ U.S. Attorney's Office, Southern District of Florida. (2024,
January 31). Final Member of Cargo Theft Ring Convicted of Stealing
19,000 Pounds of Perry Ellis Perfume Worth Over $230,000. https://
www.justice.gov/usao-sdfl/pr/final-member-cargo-theft-ring-convicted-
stealing
-19000-pounds-perry-ellis-perfume.
The Kentucky State Police announced that its Vehicle
Investigations Branch had ended a year-and-a-half-long
investigation into an organized theft ring allegedly
responsible for around $10 million in stolen freight. During
the investigation, the Kentucky State Police opened 16 cargo
theft investigations, resulting in 10 Federal indictments and
seven arrests. Investigators had noted a rise in stolen freight
throughout the state that specifically targeted the food and
beverage industry, as well as an increase in incidents of
copper theft.\25\
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\25\ Witkowski, Ryan. (2023, December 22). Cargo theft
investigators recover over $5M in stolen property. Landline. https://
landline.media/cargo-theft-investigators-recover-over-5-million-in-sto
len-property/.
The U.S. Attorney's Office for the Middle District of
Florida announced that four men have pleaded guilty to charges
involving cargo theft of an interstate shipment of goods and
receipt and possession of stolen goods. The men stole a tractor
trailer containing $500,000 worth of Patron tequila that was
parked near U.S. Route 301 in Tampa. The tequila was an
interstate shipment from Texas that was enroute to a business
in Lakeland, Florida.\26\
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\26\ U.S. Attorney's Office, Middle District of Florida. (2020,
October 29). Four Individuals Plead Guilty In Tequila Cargo Theft Ring.
https://www.justice.gov/usao-mdfl/pr/four-individuals-plead-guilty-
tequila-cargo-theft-ring.
The U.S. District Court for the Central District of
California issued a final judgment against a moving company for
repeated unauthorized transportation of household goods, in
violation of FMCSA's registration requirements, and ordered to
pay $25,000 in fines.\27\
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\27\ Federal Motor Carrier Safety Administration (2024, December
6). FMCSA Wins Landmark Judgement Against Moving Company. https://
www.fmcsa.dot.gov/newsroom/fmcsa-wins-landmark-judgement-against-
moving-company.
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Challenges With Understanding the Scope of Freight Fraud:
Because fraud and cargo theft within our supply chains are
increasing at such an alarming rate, it is difficult to aggregate data
that accurately represents the current breadth and scope of this
problem.
Underreporting of Cargo Theft and Poor Data
Cargo theft is severely underreported in crime statistics. The
FBI's Universal Crime Reporting program attempts to generate reliable
statistics on cargo theft, but the most recent report was published in
2019, and local agencies are under no obligation to report.
Additionally, industry reporting of cargo theft is not mandatory. The
utilization of voluntary data on cargo theft from law enforcement and
industry certainly understates the scope and value of cargo theft.
Importantly, freight fraud and cargo theft are regularly
underreported by industry because transportation companies fear
publicity that could damage their business reputations. They do not
want to be perceived by clients or competitors as having weak security
or poor management, which would risk customer relationships and future
business growth opportunities.
Another factor contributing to industry underreporting is general
confusion about appropriate reporting protocols. Motor carriers and
brokers may not know the correct jurisdiction to which the crime should
be reported because they may not know where or when exactly the theft
took place. There are also situations when victims may reach out to law
enforcement to report a crime and seek assistance for cases of fraud or
theft, but rather than assistance, they are met with confusion and
dismissiveness. Often, when trucking companies attempt to file a report
with local and state law enforcement agencies, they are told to file a
claim with their insurance company instead. This happens usually
because local and state law enforcement officers often do not have the
necessary training to recognize that cargo theft is not simply a
property crime. Alternatively, law enforcement officers will note
jurisdictional issues given the interstate nature of the crime and
direct motor carriers to report elsewhere. Importantly, it should be
noted that, for many motor carriers and logistics companies, it does
not make financial sense to file theft claims with insurance because
the value of the stolen freight is often less than their deductible.
Cargo theft is misunderstood for many reasons. First, the law that
criminalizes cargo theft at the Federal level never mentions or defines
the term, ``cargo theft.'' \28\ Furthermore, the state statutes
defining and criminalizing cargo theft and other types of freight fraud
are different for each state. As highlighted in a recent report from
the Federal Maritime Commission (FMC), this inconsistency creates a lot
of confusion for law enforcement, especially since these crimes usually
involve bad actors who cross state lines.\29\ It is not always clear
which crimes constitute cargo theft and which agencies have the
authorities to investigate and prosecute these offences. Jurisdictional
confusion leads to ineffective enforcement of applicable cargo theft
laws, and the absence of criminal investigations and prosecutions
emboldens criminals to continue their illegal activities.
---------------------------------------------------------------------------
\28\ 18 U.S.C. Sec. 659
\29\ Bentzel, C. W. (2024, December). Cargo theft: Evaluation of
the challenge of combatting cargo theft with recommendations on how to
reduce the impact of cargo theft. Federal Maritime Commission. https://
news.tianet.org/wp-content/uploads/sites/3/2024/12/2024.12-FMC-Bent
zel-Cargo-Theft-Report.pdf
---------------------------------------------------------------------------
Fundamental misunderstandings about cargo theft among law
enforcement officers, especially at the state and local levels, are not
simply the result of negligent policing. Shifting priorities and the
loss of dedicated funding means that law enforcement officers are not
properly equipped to address this dynamic and complex issue. The sharp
decline of experienced cargo theft investigators at state and local
levels has been a common trend over the past several years. For
example, the State of Georgia previously had a state-wide, leading-edge
frontline task force dedicated to investigating cargo thefts. But in
2018, the task force was disbanded due to a lack of support from the
state government.\30\
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\30\ Lockridge, D. (2025, February 20). Cargo theft likely to spike
over the next seven days. Commercial Carrier Journal. https://
www.ccjdigital.com/workforce/safety/article/15281505/cargo-theft-
likely-to-spike-over-the-next-seven-days.
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Current Cargo Theft Data
With the prevalence of underreporting in mind, there are groups
that have attempted to estimate the impact of these types of crimes.
One such organization is CargoNet, which is a subscription-based
information-sharing network that collects data about instances of cargo
theft that are voluntarily submitted by companies, law enforcement, and
other sources. In 2024, 3,625 theft incidents were reported to
CargoNet, a 27 percent increase compared to the previous year. It is
believed that this figure represents only a small percentage of the
total thefts committed. In 2024, CargoNet estimated the total loss to
industry at more than $450 million. Per incident, the estimated average
value stolen was $202,364, up from $187,895 in 2023.\31\
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\31\ Verisk CargoNet. (2025, January 21). 2024 supply chain risk
trends analysis. CargoNet. https://www.cargonet.com/news-and-events/
cargonet-in-the-media/2024-theft-trends/.
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Overhaul, another company that provides various services in the
cargo theft mitigation space, publishes a report annually that details
significant theft incidents in the United States and Canada. According
to their most recent annual report, Overhaul recorded a total of 2,217
cargo thefts throughout the United States in 2024. These numbers
represent a 49 percent increase in volume and a 17 percent increase in
average value when compared to 2023.\32\
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\32\ Overhaul (2025, January). United States & Canada: Annual Cargo
Theft Report 2024. https://over-haul.com/wp-content/uploads/2025/02/US-
and-Canada-Annual-Cargo-Theft-Report-2024.pdf.
---------------------------------------------------------------------------
Companies like CargoNet and Overhaul are publishing data based on
the incidents that are reported, but as previously stated, cargo theft
is notoriously underreported. With that in mind, we are of the opinion
that the problem is even bigger than what these organizations' data
show. And we are not alone. NICB,\33\ Homeland Security Investigations
(HSI),\34\ and the FBI \35\ have all estimated that cargo theft in the
United States is a $15 to $35 billion industry.
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\33\ National Insurance Crime Bureau. (2024, November 15). The rise
of cargo theft: A billion-dollar industry. NICB. https://www.nicb.org/
news/blog/rise-cargo-theft-billion-dollar-industry.
\34\ U.S. Immigration and Customs Enforcement. Operation Boiling
Point. https://www.ice.gov/about-ice/hsi/news/hsi-insider/op-boiling-
point.
\35\ Josephs, L. (2023, March 25). Cargo theft led by food and
beverage is surging across the U.S. CNBC. https://www.cnbc.com/2023/03/
25/cargo-theft-led-by-food-and-beverage-is-surging-across-the-us.html.
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Barriers to Investigation and Prosecution:
ATA has been engaging with representatives from the FBI, the
Department of Justice (DOJ), HSI, and USDOT. While these agencies know
cargo theft is a significant problem in the U.S., often they lack the
resources to make a dent in the problem.
State and local authorities could better help these Federal
agencies by identifying and demonstrating links between various cargo
theft cases in order to connect seemingly isolated thefts to an OTG.
Establishing connections between multiple theft incidents will enable
Federal authorities to take prosecutorial action, since the standard
for Federal involvement is much higher. In order for DOJ to even
consider prosecuting a cargo theft case, the value of the goods stolen
must total at least $1.5 million, according to the United States
Sentencing Commission.\36\ This threshold can be met in two ways:
either a single theft incident totals at least $1.5 million in losses,
or multiple related theft incidents (potentially targeting multiple
victims) total at least $1.5 million in losses.
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\36\ U.S.S.C, Sec. 2B1.1
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Given that the estimated average value per theft in 2024 was
$202,364,\37\ it is imperative that state and local law enforcement
better track incidents of cargo theft because most single incidents do
not reach the monetary threshold to warrant Federal involvement. When
dots are connected, DOJ can become involved, thieves can be prosecuted,
and victims can receive justice. If law enforcement identifies a link
(i.e., a single OTG stealing multiple trailers) DOJ will have the green
light to utilize more resources and dedicate more manpower to bringing
these criminals to justice. Additionally, more prosecutions will serve
as a deterrent, and hefty sentences will hopefully make potential
offenders aware of the consequences of their actions.
---------------------------------------------------------------------------
\37\ Verisk CargoNet. (2025, January 21). 2024 supply chain risk
trends analysis. CargoNet. https://www.cargonet.com/news-and-events/
cargonet-in-the-media/2024-theft-trends/.
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One of the major reasons why it can be difficult for law
enforcement agencies to connect individual theft cases is due to the
inconsistency in the statutory definition of cargo theft across
jurisdictions. As previously mentioned, statutes defining and
criminalizing cargo theft are different for each state. Additionally,
the law that criminalizes cargo theft at the Federal level never
mentions or defines the term, ``cargo theft.'' \38\ These differences
create confusion and make is difficult for investigators and
prosecutors to combine efforts to combat cargo theft. Given that these
crimes usually involve freight that crosses state lines, questions of
jurisdictional authority regularly arise. Relatedly, as mentioned in
the FMC report,\39\ definitional differences often result in a struggle
to form a unified assessment of offenses and to use the assessment to
coordinate law enforcement response. Overall, jurisdictional confusion
leads to ineffective enforcement of applicable cargo theft laws, and
the absence of criminal investigations emboldens criminals to continue
their illegal activities.
---------------------------------------------------------------------------
\38\ 18 U.S.C. Sec. 659
\39\ Bentzel, C. W. (2024, December). Cargo theft: Evaluation of
the challenge of combatting cargo theft with recommendations on how to
reduce the impact of cargo theft. Federal Maritime Commission. https://
news.tianet.org/wp-content/uploads/sites/3/2024/12/2024.12-FMC-Bent
zel-Cargo-Theft-Report.pdf
---------------------------------------------------------------------------
How Congress Can Help Combat Freight Fraud and Safeguard U.S. Supply
Chains:
Economic security is national security, and the unfortunate reality
is that our national security has been compromised because OTGs and
TCOs have successfully infiltrated our domestic supply chains and
exploited enforcement gaps in the stream of interstate commerce. The
trucking industry and U.S. supply chains are both interstate by
nature--goods cross state lines and move through ports of entry nearly
every second of every day--which is why ATA and our supply chain
partners are urging a Federal response to the alarming rise of freight
fraud across the country. OTGs have identified the glaring gaps between
local, state, and Federal law enforcement regimes as low-risk, high-
reward opportunities to build out sophisticated fraud and theft schemes
and remain undetected. OTGs are exploiting U.S. transportation and
distribution networks with impunity because there is no concerted
effort from the Federal government to investigate and prosecute. And
without those critical deterrence factors, criminals will continue to
infiltrate our supply chains, profit off the vulnerability of American
businesses, and fund other illicit enterprises with the money generated
from fraud and theft schemes. The costs of inaction are enormous, both
in terms of financial losses and the denigration of national security.
Therefore, we urge Congress to embrace its responsibilities
pursuant to the Commerce Clause of the U.S. Constitution and leverage
the cross-cutting enforcement capabilities of the Federal government to
help combat rampant supply chain fraud and theft. We are grateful to
Senators Fischer and Duckworth for tackling the issue of fraud in the
moving and storage industry by introducing the Household Goods Shipping
Consumer Protection Act (S. 337). This legislation provides FMCSA with
the necessary tools, resources, and authorities to protect consumers
from fraud, while also helping small businesses in the household goods
shipping industry protect their businesses and reputations. The
Household Goods Shipping Consumer Protection Act will help prevent bad
actors from preying on individuals and families during stressful
relocation events.
Specifically, this bill restores FMCSA's ability to impose civil
penalties against unauthorized brokers and other bad actors, allowing
the agency to act swiftly in meting out penalties. The bill also
requires companies operating in the household goods sector to maintain
a legitimate place of business. Too often, consumers fall victim to
scammers who set up freight businesses that exist only on paper and who
have no sincere intention of helping them move. The Household Goods
Shipping Consumer Protection Act gives states the ability to use
Federal funds to enforce consumer protection laws and root out
fraudulent actors before they strike. This bipartisan legislation is a
critical element of a broader Federal response to freight fraud, and we
hope that Congress advances it expeditiously.
We hope that this Committee will take further action to help combat
freight fraud by supporting the Safeguarding Our Supply Chains Act
(H.R. 8834 from the 118th Congress). The robust coalition of
stakeholder support for the Safeguarding Our Supply Chains Act is a
testament to the breadth and scope of U.S. industries that are impacted
by supply chain fraud and theft. No industry wants to be seen as the
target of criminal activity, but the situation has become so dire that
the American Trucking Associations, along with the Association of
American Railroads, the National Association of Manufacturers, the
National Milk Producers Federation, the National Retail Federation,
NATSO, the Retail Industry Leaders Association, the Transportation
Intermediaries Association, the U.S. Chamber of Commerce, the U.S.
Dairy Export Council, and the World Shipping Council have all joined
together in advocating for Federal intervention through the
Safeguarding Our Supply Chains Act.
The legislation directs HSI, in conjunction with the Attorney
General and the FBI, to establish a Federal task force to prevent and
reduce organized crime throughout all stages of the supply chain--
including production, transportation, freight brokerage, processing,
storage, distribution, and retail--as well as detect, disrupt, and
deter OTGs and individuals that are targeting all stages of the supply
chain. The legislation also directs HSI to establish a coordination
center to collect and analyze data related to fraud and theft at all
stages of the supply chain and identify regions in the United States,
modes of transportation, distribution networks, and retail stores that
are experiencing high volumes of organized crime. The intelligence
generated by the coordination center will inform the personnel and
resource allocations of the task force to ensure a dynamic and
efficient response to evolving criminal tactics.
This legislation was modeled after the Jaime Zapata Border
Enforcement Security Task Force Act, which was signed into law by
President Obama in 2012. This law established the Border Enforcement
Security Task Force (BEST) within the Department of Homeland Security
(DHS) and is a premier example of successful collaboration between
federal, state, local, tribal, and foreign law enforcement agencies to
execute coordinated activities in furtherance of national security
objectives. The task force established by the Safeguarding Our Supply
Chains Act mirrors the BEST's highly successful framework to similarly
incentivize collaboration between law enforcement agencies. Because of
the interstate nature of supply chain fraud and theft and its relation
to organized conspiracy, the Federal government must take a leadership
role in coordinating enforcement activities and connecting the dots.
Moreover, given HSI's unique cross-border authorities and trade
expertise, the FBI's role as the lead Federal agency in enforcing the
Federal law on cargo theft (18 U.S.C. Sec. 659), and FMCSA's exclusive
authority to challenge fraudulent broker licensing, it is imperative
that the Federal government harmonize its disparate functions to
address the gaps in our supply chain that are currently being
exploited.
Congress should also consider opportunities to address supply chain
fraud and theft through the appropriations process. The FY 2025
Homeland Security Appropriations bill as passed by the House of
Representatives directs Homeland Security Investigations (HSI) to
establish a Supply Chain Fraud and Theft Task Force and provides $2
million to fund the initiative. The FY 2025 Commerce, Justice, Science,
and Related Agencies Appropriations bill as reported by the House
Committee on Appropriations directs DOJ to allocate no less than $2
million for the purpose of prosecuting crimes involving cargo theft and
instructs several United States Attorneys' Offices to assign at least
one attorney to prioritize cargo theft prosecutions. The FY 2025
Transportation, Housing and Urban Development Appropriations bill as
passed by the Senate Appropriations Committee also directs a
coordinated effort from the USDOT, DOJ, DHS's Supply Chain and
Resilience Center, and relevant stakeholders to confront the issue of
cargo theft.
Additionally, we encourage this Committee to oversee and support
the critical work already underway at the FMCSA to address registration
fraud and facilitate a smooth transition to the newly modernized and
enhanced FMCSA Registration System.
Passage of the Household Goods Shipping Consumer Protection Act and
the Safeguarding Our Supply Chains Act, Congressional oversight of
FMCSA's transition to the new system, and enactment of key
appropriations provisions that direct funding and Federal attention to
the growing threat of organized supply chain crime are vital to our
Nation's economic security.
In Conclusion:
Chairman Young, Ranking Member Peters and members of the
subcommittee, thank you again for the opportunity to testify before you
today on behalf of the American Trucking Associations. Supply chain
fraud and cargo theft are imperiling the trucking and supply chain
logistics industry. My companies, Tanager Logistics and Double Diamond
Transport, have experienced these threats first-hand, and we have been
forced to navigate a complex and often ineffective response from
varying law enforcement agencies and Federal regulators. My peers in
Texas, across the nation, and up and down the supply chain are
confronting similar challenges. These challenges are sophisticated and
are disrupting the supply chain, harming the economy, and ultimately,
hitting the consumer.
It is imperative that action is taken at the federal, state, and
local levels to confront and neutralize this growing threat. We need
more cooperation and interagency information-sharing, as well as a more
robust investigative and prosecutorial posture, to tackle these
challenges head-on. Importantly, we need a commitment from Congress to
provide the tools and resources necessary to facilitate that unified
response.
The trucking and supply chain logistics industry stands ready to
collaborate with every stakeholder committed to halting the rise of
supply chain fraud and cargo theft, and we welcome the opportunity to
work with this subcommittee, Congress, and the new Administration in
that effort. Thank you for your attention and leadership in holding
today's hearing. We look forward to a continued dialogue.
Senator Young. Thank you, Mr. Blanchard. We will look
forward to posing some questions. We are sorry about your
troubles. You did a great job of personalizing those and making
those real to us.
Our final witness, Lewie Pugh, is the Executive Vice
President for the Owner-Operator Independent Drivers
Association. Before joining OOIDA--well, that was close, right,
Mr. Pugh?--Mr. Pugh was a truck owner-operator for nearly 23
years, and he earned the Million Miles Safe Drivers Award.
Mr. Pugh, you are recognized for five minutes, sir.
STATEMENT OF LEWIE PUGH, EXECUTIVE VICE PRESIDENT, OWNER-
OPERATOR INDEPENDENT DRIVERS ASSOCIATION
Mr. Pugh. Yes, Chairman Young, Ranking Member Peters, and
members of the Subcommittee, I am Lewie Pugh, the Executive
Vice President of the Owner-Operator Independent Drivers
Association. I have over 30 years in the industry. Nearly 23 of
those prior to working at OOIDA was being a small business
trucker. And with those I accumulated about 2.5 million miles
of safe driver. And prior to that I was a truck driver in the
United States Army and still hold my CDL to this day.
OOIDA is the largest national trade association
representing small business truckers and employee drivers. We
have approximately 150,000 members, who cumulatively own about
240,000 pieces of equipment, or operate.
OOIDA's mission is to promote and protect the interests of
our members and any issues that impact their safety and
success, which increasingly includes freight fraud. In
trucking, freight fraud is so easy to commit, it does not even
take a savvy or experienced criminal to pull it off.
As you can tell from this panel of professionals, everyone
from shippers, motor carriers, brokers are vulnerable targets.
Often, the perpetrators of these crimes are based
internationally, far beyond the reach of the American
enforcement agencies. While certainly these cases of physical
theft are occurring within our industry, most of the problems
small business truckers face involves being scammed by
fraudsters or swindled by unscrupulous brokers.
There are several factors contributing to this recent
explosion in freight fraud--weak freight rates, overcapacity,
we have had increased competition leading to greater
susceptibility among small trucking businesses. Advanced
technology and lack of Federal oversight and enforcement has
also created an environment where fraudulent actors can thrive.
Unfortunately, small trucking businesses are both the most
vulnerable to fraud and the least likely to be able to recover
from it.
Most commonly, motor carriers are held responsible for the
loss of the cargo due to fraud, with costs ranging from tens of
thousands to hundreds of thousands of dollars per incident.
Several OOIDA members have lost their entire business after
falling prey to a single case of freight fraud. This is not a
hyperbole. It only takes one scam to completely ruin a small
trucking business.
Fraudulent activities include double-brokering, criminals
posing as legitimate brokers, rerouting schemes, identity
theft, purchase of authority by fraudsters, and more. Truckers
are doing all they can to protect themselves, but they are
limited in their capabilities. For example, an OOIDA member
does not have the resources to identify most of the
sophisticated scammers. They lack the authority to ensure
brokers are complying with existing transparency regulations.
While there are systems in place that can help combat fraud,
the Federal Government is struggling to provide support to
shippers, motor carriers, and brokers is needed.
The first step Congress must take to improve this condition
is passing Senate Bill 337, which is bipartisan legislation
introduced by Senators Fischer and Duckworth. This bill, which
is supported by a wide variety of industry and stakeholders,
gives the Federal Motor Carrier Administration the authority to
level civil penalties against fraudsters. It also requires
brokers to register with a physical address--this is something
carriers have had to do for years--and it is a minor change
that could have a major impact on protecting motor carriers.
Congress must also use its oversight to ensure existing
programs can help prevent fraud or better prioritize. This
includes improving FMCSA's National Consumer Complaint Data
base, or NCCDB, which OOIDA has advocated for, for years.
Congress must also support regulatory efforts that are
currently underway, such as insurance compliance with the
broker bond requirements and creating a new registration
system. Additionally, if FMCSA fails to produce a final rule
that ensures compliance with existing broker transparency
regulations, Congress must compel the agency to do so.
Since I began my testimony, a small business trucker has
likely fallen prey to fraud that could jeopardize their entire
business. That is how commonplace freight fraud is becoming in
trucking.
We believe we have identified several critical steps
Congress and FMCSA must take to weed out fraudulent actors, and
look forward to working with these and answering your questions
throughout the hearing. Thank you.
[The prepared statement of Mr. Pugh follows:]
Prepared Statement of Lewie Pugh, Executive Vice President,
Owner-Operator Independent Drivers Association
Chairman Young, Ranking Member Peters, and members of the
Subcommittee, my name is Lewie Pugh and I am the Executive Vice
President of the Owner-Operator Independent Drivers Association
(OOIDA). Prior to working at OOIDA, I was a small-business trucker for
nearly 23 years with 2.5 million miles of safe driving. Before
operating my own trucking business, I drove a truck during my service
in the United States Army. I still proudly hold a Commercial Driver's
License (CDL).
About OOIDA
The Owner-Operator Independent Drivers Association (OOIDA) is the
largest trade association representing small-business truckers and
professional truck drivers. OOIDA has approximately 150,000 members
located in all fifty states that collectively own and operate more than
240,000 individual heavy-duty trucks. OOIDA's mission is to promote and
protect the interests of our members on any issues that impact their
economic well-being, working conditions, and the safe operation of
commercial motor vehicles (CMVs) on our Nation's highways.
Almost all freight in the United States is carried by a truck at
some point and over 70 percent is carried exclusively by truckers.
Small trucking businesses, like those we represent, account for 96
percent of registered motor carriers in the United States, making them
a key component of the Nation's supply chain. We are undoubtedly the
safest and most diverse operators on our Nation's roads. Every region
of our country and segment of our economy relies upon long-haul truck
drivers. Our members are an integral part of the global supply chain
and have a unique perspective on the many challenges our Nation faces
in moving freight in the safest, most efficient manner.
Introduction
Cargo theft and freight fraud are so incredibly easy to commit it
doesn't even take a savvy or experienced criminal to pull it off.
Everyone from shippers, receivers, motor carriers, and brokers are
vulnerable targets. Too often, the perpetrators of these crimes are
based internationally--predominantly Asia and Eastern Europe--far
beyond the reach of American enforcement agencies. While there are
certainly cases of physical theft occurring within our industry, most
of the problems truckers face involves being scammed by fraudulent
actors or swindled by unscrupulous brokers.
These illegal activities exploded in recent years, increasing by
600 percent over the course of just 5 months between 2022 and 2023,\1\
and have shown no signs of slowing. Estimates indicate these crimes
cost our industry roughly $1 billion annually.\2\ The full impact on
our economy and the American people is difficult to assess, but it
undoubtedly contributes to higher consumer prices, as shippers and
receivers look to recoup their losses with remaining products.
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\1\ State of Fraud in the Industry, Transportation Intermediaries
Association, 2024
\2\ State of Fraud in the Industry, Transportation Intermediaries
Association, 2024
---------------------------------------------------------------------------
There are several factors contributing to the recent rise in cargo
theft and freight fraud. Weak freight rates and overcapacity in the
trucking industry have increased competition, leading to greater
susceptibility to fraud among motor carriers. Advanced technology,
coupled with a lack of Federal oversight and enforcement of regulated
entities in the freight industry, have created an environment where
fraudulent actors can thrive with little fear of being caught or
punished for their crimes.
Most small-business truckers--who aren't contracted with a larger
motor carrier--acquire loads from brokers on platforms called load
boards. As shippers have become less likely to work directly with small
carriers, reliance on load boards has increased dramatically over the
years among owner-operators. Unfortunately, these platforms have
simultaneously become fertile ground for nefarious actors. While the
operators of load boards regularly use data to restrict access to
truckers they believe may be scammers, very little is being done to
crack down on the pervasiveness of fraudulent and unscrupulous brokers.
Unfortunately, small trucking businesses are both the most
vulnerable to fraud and the least likely to be able to recover from an
incident. Most commonly, motor carriers are held responsible for the
loss of cargo due to fraud, with costs ranging from tens-of-thousands
to hundreds-of-thousands of dollars per incident. In fact, several
OOIDA members have lost their entire business after falling prey to a
single case of freight fraud. That's not hyperbole. While large
carriers are better equipped to absorb the cost of fraud, it only takes
a single occurrence to ruin a small trucking business.
Types of Cargo Theft and Freight Fraud in Trucking
OOIDA members who have been victimized by freight fraud are most
often targeted by scammers posing as legitimate brokers. This practice
occurs in two distinct ways. First, many small trucking businesses fall
victim to `double brokering'. This is when criminals pose as motor
carriers to acquire loads from brokers, then pose as brokers looking
for truckers to complete hauls. When the freight is delivered, the
legitimate broker issues a payment to the fraudulent actor, and the
trucker who actually hauled the cargo is left high and dry. It is
entirely possible brokers are unaware any fraudulent activity has
occurred in these cases, but there are instances of fake motor carriers
working closely with unscrupulous brokers to take advantage of small
trucking businesses via double brokering.
The second type of scam involves the theft of a broker's identity
to arrange the shipment of a load with a motor carrier. The trucker
delivers the load and submits the appropriate paperwork to the fake
broker, who then forwards the documents to the real broker, collects
the payment, and disappears. Making matters worse for our members,
small trucking businesses are also forced to absorb all the additional
costs associated with moving the freight, including fuel, tolls,
maintenance, and other expenses.
Some motor carriers have also fallen victim to reroute schemes.
While hauling a fraudulently brokered load, the scammers contact the
unknowing trucker with a new delivery address, often offering extra
payment for covering the additional miles. Once delivered, the load is
transferred to another truck and stolen, leaving the carrier
responsible for the lost freight.
In other cases, a motor carrier's identity is stolen and used to
secure a load from a broker. The fraudster then delivers the load to a
warehouse, where it is transferred and stolen. The legitimate motor
carrier, whose authority was compromised, is ultimately held liable for
the value of the stolen load. And it's not particularly difficult to
accomplish this type of scam. Every motor carrier is assigned a USDOT
Number, which, along with addresses and phone numbers, can be easily
viewed on FMCSA's website. As a result, it is incredibly easy to take
that information, hijack the authority of a legitimate motor carrier,
acquire loads, and receive payments. To make matters worse, fraudsters
can also assess the safety records of motor carriers to choose victims
that are most likely to be selected by brokers.
OOIDA recognizes motor carriers aren't the only victims of cargo
theft and freight fraud. Several OOIDA members that also operate as
brokers have been victimized by various scams as well. One member
recently shared a story where they unknowingly hired a carrier whose
identity had been stolen. The scammer made subtle changes, like
altering a single letter in an e-mail address and providing a new phone
number, to pose as a legitimate trucking business. Trusting the
relationship, the broker assigned the load, only for the scammer to
vanish with the freight--leaving the broker liable for the loss.
Our members also fall victim to nefarious actors offering large
payments--anywhere from $2,000 to $40,000 depending on the age and
safety record of the motor carrier--to sell their authority. Once the
sale is complete, these bad actors masquerade as the original operator
to fleece unsuspecting brokers who think they are working with a
reputable and safe business.
When fraud is committed, brokers often attempt to hold our members
responsible. While OOIDA supports calls to eliminate most transfers of
authority as a productive means to combat fraud, there are exceptions
that must be allowed. There are circumstances, such as the death or
disability of the principal or sole proprietor of a motor carrier,
where it would be appropriate for the spouse or child who has been
involved in the business to assume control without having to file for
new registration. These valid transfers must be preserved.
The Lack of Federal Oversight and Enforcement
In July 2024, the Federal Motor Carrier Safety Administration
(FMCSA) issued a report on illegal broker activity in the trucking
industry. Two key aspects of the report were extremely frustrating for
stakeholders.
First, the agency indicated it lacked the data necessary to
determine if fraudulent activity, including double brokering,
negatively impacts highway safety. Small-business truckers operate on
the slimmest of margins and being victimized by scammers comes at a
high cost. This often forces them to reduce or delay maintenance and
repair of their trucks, which unquestionably effects safety. This also
ignores the likelihood that those illegally posing as legitimate motor
carriers lack the training, licensing, and insurance to lawfully and
safely operate a CMV. Unfortunately, with this position, FMCSA is
unlikely to unilaterally take the necessary steps to fully combat fraud
in the trucking industry.
Second, the agency lacks the statutory authority to
administratively adjudicate and assess civil penalties for violations.
This has routinely resulted in the referral of cases to the Department
of Justice (DOJ). In our experience, DOJ lacks the training,
experience, resources, and motivation to effectively handle these
cases. At this point, our members are often told to contact their local
law enforcement agencies, who also lack the capability to properly
address these crimes. In the end, fraud complaints bounce from agency
to agency without anyone taking responsibility.
Furthermore, FMCSA's National Consumer Complaint Database (NCCDB)
has proven to be an ineffective tool for motor carriers to report
unscrupulous brokers and cases of freight fraud. Typically, truckers do
not receive a satisfactory response when they call the NCCDB hotline or
submit their problem via the online portal--if they receive one at all.
The lack of response from FMCSA discourages truckers from using the
NCCDB to submit cases, which also contributes to a lack of
understanding of the scope of the problem within the agency. FMCSA must
increase their response level to motor carriers after a complaint is
filed, but likely lacks the resources and proper authority to do so. We
also believe something as simple as changing the name of the program to
better reflect its purpose in trucking would improve its utilization.
Section 23016 of the Bipartisan Infrastructure Law required the
Government Accountability Office (GAO) to examine the NCCDB and
evaluate the effectiveness of efforts to consider and follow-up on
complaints submitted to the database, the types of complaints, and
awareness of the database. The GAO published their findings in
September 2023 stating that, ``FMCSA has not designed sufficient
controls to help ensure its policy for reviewing complaints related to
motor carriers is followed.'' \3\ The report made 14 separate
recommendations to FMCSA, including:
---------------------------------------------------------------------------
\3\ GAO Report to Congressional Committees, ``Motor Carrier
Operations: Improvements Needed to Federal System for Collecting and
Addressing Complaints against Truck, Moving, and Bus Companies,''
September 19, 2023, (GAO-23-105972, https://www.gao.gov/assets/d231059
72.pdf.
Ensure FMCSA updates its complaint review guidance to define
---------------------------------------------------------------------------
each category of complaint.
Ensure the NCCDB website is consistently mobile-friendly.
Ensure the website appropriately targets key audiences,
including by defining acronyms and technical terms, and
providing more detailed or relevant examples of complaints that
may be filed by truck and bus drivers.
Develop an outreach plan for the website that aligns with
leading practices for outreach.
FMCSA agreed with 13 of GAO's recommendations, but has indicated
that the necessary changes will not be implemented until Fiscal Year
2026. To better understand and combat cargo theft and freight fraud, we
believe the agency must expedite these updates and promote greater
awareness of NCCDB among truckers.
In recent years, FMCSA has acknowledged that freight fraud is
plaguing the industry and is working on various solutions that could
potentially mitigate unscrupulous activity. We commend the agency for
holding listening sessions, reviewing public comments, and hosting
registration modernization stakeholder events. As a result of industry
feedback, the agency has recently established a Registration Fraud Team
to investigate fraudulently registered companies as well as cases where
legitimate companies had their identities stolen. Furthermore, FMCSA is
expected to begin rolling out a comprehensive, modernized registration
system in phases beginning this year. We support the intent of these
programs, but remain skeptical that they will achieve their objectives.
We are unclear if the Registration Fraud Team has the resources to
properly conduct the amount of necessary investigations that would
substantively root out fraudulent activity. As mentioned, we also know
the agency lacks statutory authority to administratively adjudicate and
assess civil penalties for freight fraud violations.
The long-awaited Federal Registration System is expected to include
features such as identity verification software, new business
verification processes, and information edit checks that can reduce
fraud. However, these updates must be implemented in a user-friendly
fashion that protects motor carriers' personal data and prioritizes
cybersecurity best practices. These safeguards cannot be taken for
granted considering the vulnerabilities of FMCSA's information
technology systems.
Each year, FMCSA receives hundreds-of-millions of dollars for
enforcement purposes, a large portion of which is devoted to ensuring
compliance with regulations that have little to do with highway safety.
While OOIDA is not in favor of increasing overall enforcement funding
for FMCSA, we encourage Congress to repurpose many of these dollars--
derived largely from user fees imposed on motor carriers--to reform
NCCDB and other FMCSA programs in a manner that finally makes the
agency a formidable and trusted ally for identifying and eradicating
fraudulent actors.
The Fight for Broker Transparency
Existing regulations (49 CFR 371.3) require brokers to keep records
of transactions with motor carriers. Under Part 371.3, each party to a
brokered transaction also has the right to review the record of the
transaction. This allows our members to know precisely how much a
shipper paid the broker and how much the broker then paid the motor
carrier. These regulations also enable carriers to verify claims
charged against them after they finish hauling a load. As motor
carriers are increasingly victimized by freight fraud, unpaid claims,
dubious charges, unpaid loads, double brokered loads, and load phishing
schemes, the current lack of transparency has left them little to no
means to defend themselves from fraud.
Unfortunately, brokers have a long history of circumventing
transparency requirements in two ways:
1. Many motor carriers sign contracts with brokers that waive Part
371.3 requirements. OOIDA discourages this, but the practice is
so prevalent that truckers often have no other choice if they
want to haul a brokered load. Even many of the most reputable
brokers use these clauses to avoid complying with the
requirement. Here is an example from one of the nation's
largest brokers: ``[Redacted] shall not be required to disclose
the amount of its broker's commission to Carrier, and Carrier
expressly waives its right to receive and review information,
including broker's commission information, pursuant to 49 CFR
Sec. 371.3.'' This flies in the face of Part 371.3. In effect,
brokers are exempting themselves from Federal regulations.
2. The few brokers who do provide transaction records usually put in
place hurdles they know will prevent a carrier from ever seeing
them. In fact, some only allow a carrier to access records at
the broker's office during normal business hours. Brokers know
this makes it virtually impossible for most carriers to access
records. Further, when a carrier tries to assert his/her right
to review this information, the broker is unlikely to contract
with them again. These tactics further undermine Part 371.3.
Small-business truckers would never get away with blatantly and
deliberately evading Federal regulations. Brokers must be held to the
same standard. Unfortunately, rampant evasion is increasingly resulting
in carriers assuming--fairly or not--that brokers have something to
hide.
In order to protect against fraud and scams, we tell our members
that they should closely examine documentation and verify that all
information is legitimate. If brokers are allowed to continue waiving
Federal regulations in contracts, it makes it difficult for carriers to
determine who is adhering to the rules or who may be trying to scam
them. In short, practices that undermine trust and transparency will
make it harder to determine who is a bad actor.
In May 2020, OOIDA submitted a Petition for Rulemaking with FMCSA
to ensure compliance with 371.3. The petition requested that brokers
automatically provide an electronic copy of each transaction record
within 48 hours after the contractual service has been completed and
asked that brokers be prohibited from including any provision in their
contracts that requires a carrier to waive their rights to access
transaction records. Our rulemaking was granted by the FMCSA during the
first Trump Administration.
During the Spring of 2020, while truckers protested in Washington,
DC, about the overdue need for transparency, President Trump tweeted
his support: ``I'm with TRUCKERS all the way. Thanks for the meeting at
the White House with my representatives from the Administration. It is
all going to work out well!'' And on Fox News, he exclaimed truckers
are ``price gouged,'' referring to complaints that brokers may be
tampering with the price transactions they set up between truck drivers
and shippers.
Since the launch of the rulemaking in August 2020, OOIDA and its
membership submitted thousands of comments to FMCSA, conducted meetings
with regulators and lawmakers, and participated in public listening
sessions supporting the push for transparency. These efforts culminated
in the Biden Administration publishing a Notice of Proposed Rulemaking
(NPRM) in November 2024, demonstrating that ensuring transparency has
bipartisan appeal. The public comment period is scheduled to close on
March 20, 2025.
Unfortunately, the NPRM did not include the two significant reforms
we recommended. However, the proposal will help ensure that carriers
finally have access to fundamental transactional documentation and
restore a level playing field between carriers, shippers, and brokers.
We have submitted separate comments detailing what FMCSA must do to
strengthen the rulemaking, such as clarifying how they will enforce the
rules and closing all loopholes that let brokers waive transparency
rights. If supplemented properly, this rulemaking will contribute to a
more ethical, fair, and efficient freight brokerage marketplace.
If FMCSA is unable to finalize a rule that fully prevents brokers
from evading Federal transparency regulations, it is imperative that
Congress compel the agency to do so.
The Importance of Broker Bonds
All brokers and freight forwarders are required to maintain a bond
to cover debts in cases where the broker doesn't pay for a carrier's
services. These bonds are meant to ensure that a carrier is paid when a
broker fails to provide compensation. In 2012, MAP-21 established
financial security standards for brokers and freight forwarders,
including a minimum security level of $75,000 and a requirement that a
broker's authority be suspended as soon as their bond falls below this
amount.
In too many instances, a broker will let multiple claims on the
$75,000 bond accrue, forcing truckers to settle for a fraction of what
they should be paid. In other words, a broker can continue to contract
with motor carriers even if they have no intention of paying them. This
loophole allows them to broker loads well past the point where they
have any financial security in place to cover their debts.
FMCSA has unnecessarily delayed compliance with its 2023 final rule
that would suspend the operating authority of a broker if their
available financial security falls below $75,000. Originally scheduled
for January 16, 2025, the agency has added an extra year to comply
because the New Registration System is still not ready. OOIDA warned of
potential delays and questioned if the system will be fully operational
by January 2026, which in and of itself is an impediment to combating
fraud. However, current and additional delays in compliance will allow
unscrupulous brokers to continue stealing transportation services in
excess of the bond amount. This is simply unacceptable, as freight
fraud remains commonplace within the industry.
Current Legislative Solutions
OOIDA, along with numerous other trucking industry stakeholders,
strongly supports bipartisan legislation introduced by Senators Deb
Fischer (R-NE) and Tammy Duckworth (D-IL) to combat freight fraud. S.
337, the Household Goods Shipping Consumer Protection Act, would
restore FMCSA's authority to impose civil penalties on unauthorized
brokers, require physical addresses for brokers, compel the agency to
analyze trends and commonalities among companies applying for shipping
authority to identify potentially bad actors before they commit fraud,
and allow states to use Federal funds to enforce consumer protection
laws relating to freight movement. We encourage all Senators,
especially members of this Subcommittee, to support this important
legislation.
Conclusion
Fraud is on the rise in trucking, as criminals have discovered many
vulnerabilities within our industry. Stakeholders are doing all they
can to protect themselves from criminals, but their capabilities are
extremely limited. A small-business trucker lacks the resources to
prevent scams originating overseas or the authority to ensure brokers
comply with existing transparency regulations. There are systems and
regulations in place that can help reverse the growing trend of fraud,
but the Federal Government is struggling to provide the support
shippers, motor carriers, and brokers need. We believe we have
identified several critical steps Congress and the Trump Administration
must take to improve our shared objective of weeding out fraudulent
actors, and look forward to working on these issues with members of the
Committee.
Senator Young. Thank you, Mr. Pugh. You bring an important
perspective to this hearing, and a sterling safe driver record.
Truckload freight, we know, is overwhelmingly the primary
target of fraud. Ninety-eight percent of respondents identified
truckload freight as the most vulnerable mode. This
Subcommittee oversees the FMCSA, and I would like to better
understand how bad actors are acquiring USDOT numbers, MC
numbers, and other business identifiers to carry out their
illicit schemes under the guise of legitimacy.
Mr. Blanchard, in your opening statement you described how
a bad actor posed as Tanager Logistics to steal shipments, even
added their counterfeit company to the FMCSA's Safety and
Fitness Electronic Record, or SAFER, website to appear legit.
Can you describe how bad actors are able to insert themselves
so easily into the supply chain? Maybe elaborate on that,
please.
Mr. Blanchard. Yes, Senator. They are able to do this now
through a whole multitude of ways. We have experienced
everything, from what I stated in my testimony, where they are
spoofing our e-mails and otherwise representing themselves on
behalf of our company. There are instances out there now where
individuals are actually purchasing MC and DOT numbers on a
black market. That is a major issue that we have to address,
and the FMCSA must do a more efficient job, in our opinion, of
ensuring that they go through those companies that are
authorized to transport freight in the United States and remove
those that are illegitimate.
Senator Young. Do you have any visibility into how these
purchases, that you referenced, might occur? Is it the so-
called dark web? Are there individual criminal agents who will
visit people in person and make these transactions? Or do you
know?
Mr. Blanchard. My understanding, Senator, is that this is
occurring on various websites. So I do not know if it is
necessarily happening on the dark web, but certainly they are
on different platforms that are available on the internet.
Senator Young. I do not even know exactly what the dark web
is. It is just this furtive thing, right, that we all hear
about. For the record.
Do any of our other witnesses have any visibility into how
those transactions are made?
Chief Johnson. Just one other point----
Senator Young. Yes, Chief.
Chief Johnson.--I might add to that is we have seen
instances where companies that are going out of business, they
actually auction off their number, similar to how they would
auction off equipment that they are no longer using. So
individuals could buy this number through a business
liquidation process, and then they already have an established
footprint, and then assume illicit operations under a previous
legitimate. That is just one example that I have heard from the
field.
Senator Young. That is an important contingency for us to
keep in mind. Thank you.
Back to Mr. Blanchard, when you approached DOT about the
fake Tanager Logistics company that was listed on the SAFER
website, what did they say? It seems puzzling to me that they
would not remove the fictitious one. What did they say?
Mr. Blanchard. When we reached out to the Federal Motor
Carriers Safety Administration, Senator, they informed us that
unless there is a third party or another group out there that
is actively using our MC or DOT number that they did not have
the ability to investigate any further into this other company
that was representing us. The concern I had, Senator, with
that, is that we provided them the information that we knew at
the time. First is that the individual that was behind the
other Tanager Logistics, from our investigation, was determined
to be somebody from Africa. We also did some investigation,
both internally and through our attorneys, that determined that
the address that was listed on the SAFER website, that is
provided by the FMCSA, was a residential address in Ohio of a
woman that had no affiliation to Logistics whatsoever.
Senator Young. And you thought those overlap of facts
looked suspicious.
Mr. Blanchard. Yes, sir. Yes we did, Senator.
Senator Young. I can understand that.
Mr. Blanchard. And to be fair to FMCSA, there are many
instances in which you have companies with the same name that
have operating authority in the United States. So certainly we
are not here to interrupt that or ask the FMCSA to involve
themselves. But if there are facts sufficient to provide them
enough information that there is very likely an active fraud
situation going on, we believe it would be very helpful for
Congress to direct them to do so.
Senator Young. I want to get to my colleagues' questions
momentarily, but let me just sort of get to where I hope we end
up with many of these lines of inquiry, which is what should
Congress consider to ensure FMCSA is equipped to root out
rampant fraud, better support of legitimate motor carriers and
brokers? You listed off a number of things, but maybe you could
connect what we have just discussed to a solution or two.
Mr. Blanchard. Yes, Senator. And what is, in my opinion,
very important is to provide the directive and resources as
needed to the FMCSA in order to increase their cyber
capabilities. One issue that we have seen constantly is that
they are falling further and further behind the sophistication
of these criminal organizations. We have even had an instance
in which our profile with FMCSA was hacked, and somebody
changed our address and phone number in an attempt to engage in
another fraud that, fortunately, we had stayed on top of to
prevent.
But FMCSA needs to be the group that quarterbacks a unified
Federal group of agencies and law enforcement groups in order
to address these issues, in order to create a database and a
repository of data so that it can be coordinated appropriately
amongst not only Federal law enforcement but state law
enforcement, and also increasing that cybersecurity that they
have to prevent these kinds of things from happening.
Senator Young. That strikes me as reasonable and bipartisan
and something even Senator Peters and I can work together on. I
am just kidding, Senator Peters. We are actually really good
friends, believe it or not.
Would any of you like to add to Mr. Blanchard's suggestion
about what we can do to address these situations? I know you
offer recommendations in your statements, but a situation like
Mr. Blanchard's, do any of you have additional thoughts about
how we can address that, and equip FMCSA to be more helpful, or
other authorities?
Chief Johnson. I think the question of venue is
particularly important.
Senator Young. Yes, Chief.
Chief Johnson. As an individual who has focused on
providing services to victims for the better part of 30 years,
it is really disappointing to me to sit with esteemed
colleagues that have really been victimized and had no way to
have resolution.
Senator Young. Yes.
Chief Johnson. A lot of that is happening because of the
venue of where the offense is happening, and because this
freight is inherently mobile, crime scene identification, venue
where the offense takes place is difficult, at times, to
establish. So expanding venue to also include the location
where the business resides could help strengthen communications
within the criminal justice community, both local, state, and
Federal, to help businesses more effectively report challenges
that they have, to bring those grievances forward to the court.
Senator Young. Right. There is clearly not a lot of clarity
when every law enforcement entity--FBI, locals--are pointing to
someone else. So that is our job. We have to help clarify and
facilitate interstate commerce.
OK. Senator Peters.
Senator Peters. Thank you. Thank you, Mr. Chairman. And
just as an example of how we are friends and we work together,
the Chairman has taken many of my questions, and I am not mad
at him at all.
[Laughter.]
Senator Peters. I think it just shows that we are like one
mind, you know, minds that think alike.
Senator Young. That is right. Midwestern.
Senator Peters. Midwestern common sense. For the record,
Midwest common sense, right?
Senator Young. Agreed.
Senator Peters. Mr. Pugh, in your written testimony you
described how the burden posed by cargo theft can really
threaten safety, generally, across the board. Would you want to
talk a little bit more about that, how this is a safety issue
in addition to a fraud and theft problem?
Mr. Pugh. Yes, this is a huge safety issue for truckers, in
small business and all, because if they are not getting paid,
they haul loads, they still have to pay for fuel, they still
have to pay for maintenance, and these types of things. So if
they haul a load for X amount of dollars and they have all
these expenses--and trucking is a very slim profit margin
business, very slim profits--so when something like this they
get beat out of, you know, $3,000 to $4,000, and they are
planning to use these for maintenance repairs and stuff like
that, it puts an owner-operator or a small business guy like I
was, into a point where you have to start deciding, can I stay
in business, am I able to keep my truck to meet the safety
regulations.
And the long and short of it is that it can get so bad that
they will end up having to close their business and sell your
truck. And the realized safety aspect of this is, most small
business owner-operators have 20-some years' experience or
more. So you are taking a well-trained, experienced trucker off
the highway, which is the people we should be keeping, not
losing.
Senator Peters. Yes, great. Thank you.
Mr. Howell, I think we can all agree that we continue to
face affordability crisis in this country, and cargo theft
obviously is a direct harm to those who have invested in those
goods. And when they are stolen, the loss is very clear. But
perhaps you could describe to this Committee how cargo theft
also contributes to increases in prices, really across the
board. This is a problem that really everybody in our country
faces, and maybe give us some quantification of that. But
everybody in our country should be concerned about this
problem. Is that accurate?
Mr. Howell. Yes. Thank you, Ranking Member Peters. At
Academy Sports and Outdoor we pride ourselves in being a value
retailer, so we are really always focused on how everything we
do affects the individual consumer and those families that are
buying our products.
When it comes to cargo theft, the number one concern we
have is (a), it is a rapidly growing issue. Over the last 2
years it has really accelerated. You have heard numbers quoted
by other, 40, 50 percent. We are seeing similar numbers. I
think second to that, the second most concerning issue is we
have actually never recovered any of the cargo that has been
stolen. I can speak to in the last year. And to the best of our
knowledge, nobody has ever been apprehended or caught in any of
the incidents we have been involved with. So it is a growing
issue.
So to your point, it is driving costs throughout the entire
supply chain. So as part of my job, we have got to find more
sophisticated partners that can try to manage this freight more
effectively. We are tending to move off of brokers and onto
more asset-based carriers, as we call them. That way, we know
the individual driver. We know the equipment that is actually
picking up. It does not always prevent the crime.
We also have to handle double-handling. We have to manage
sometimes double transportation on our own network, to recover
when products are stolen.
So obviously all of these costs add up to the supply chain.
You heard my colleague at the OOIDA. They are handling freight
they never get paid for. There is a lot of cost, I am sure,
with the transportation teams and trying to fight for their own
identity. All that ends up rolling it to us as we have to move
freight. Our costs are getting higher.
Considering it is relatively new, I cannot tell you exactly
how much is going directly to pricing, but if this continues at
the rate it is going, absolutely, those costs will have to
borne in future price increases.
Senator Peters. Yes. Thank you. Chief Johnson, in cases of
inbound shipment, cargo by passes the port of entry inspection
and travels closer to its final destination before undergoing
required inspection by Customs and Border Protection. I am the
Ranking Member of Homeland Security, overseeing Customs and
Border Protection, and I am very interested in how we can make
sure that they are dealing with some of these challenges.
Your testimony mentions the additional harm that is
inflicted when cargo theft occurs prior to the CBP inspection.
So if you could please, for the Committee, detail specific and
additional risks associated with theft of inbound shipments and
what actions do you believe that Customs and Border Protection
could take in order to work with the supply chain to reduce
this type of crime.
Chief Johnson. Thank you, Senator, for that question. First
and foremost, when you are talking about CBP inspections, it is
important to also think about Homeland Security Investigations
as the investigative authority beyond just the inspection
process. So whether the inbound shipment is cleared at the port
or it is cleared at a location closer to destination, once an
inbound shipment is attacked and that seal is broken, we really
have three risks. Number one is we know what was declared in
that load, but there has not been an inspection process. So
just from a shipment integrity perspective, that is a point to
reflect on.
Two, having greater engagement from HSI in the
investigative process, whenever there is an inbound shipment
seal breach. So presently the regulatory functions kick in,
where the shipper is responsible for any regulatory fines
because that shipment arrived at the facility without its
bonded seal. But there is no complementary criminal
investigation from the Federal Government on what happened in
that process.
So the shipper is ultimately victimized twice. One, their
product is stolen while it is being shipped, and then second,
they are facing an administrative process to have those
regulatory fines reviewed. Presently, CBP has shared that they
cannot consider waiving those regulatory fees until after the
citations have been issued and then the victim responds in an
administrative process.
So there is really a lot to unpack in the complexity of
those inbound shipments, but we know that there is a fair
amount of cargo proceeds that are currently under bond that are
being targeted by these transnational organizations.
Senator Peters. Great. Thank you. That is something I would
love to work with you on, to try to unpack that more and figure
out how we can do things better. I appreciate that.
Thank you, Mr. Chairman.
Senator Young. Well, thank you, Senator Peters.
Senator Fischer.
STATEMENT OF HON. DEB FISCHER,
U.S. SENATOR FROM NEBRASKA
Senator Fischer. Thank you, Mr. Chairman. Thank you, Mr.
Pugh and Mr. Blanchard, for referencing my bill. I appreciate
you doing that. I appreciate the support for the bill. I think
it is extremely important that we get that to move. It is the
Household Goods Shipping Consumer Protection Act that I have
introduced with Senator Duckworth. And as you know, it would
allow the FMCSA to impose those civil penalties against the
unauthorized brokers, and it would require companies in the
household goods sector to establish a principal place of
business to prohibit that fraudulent companies from skirting
those existing regulations.
I would like to thank you also for bringing up suggestions
on what else we can do to be able to combat this. It is eye-
opening the amount of money, harm to companies, but also to
consumers, when we add all this together. So thank you for
that.
Chief Johnson, in your testimony you referenced
jurisdictional concerns that often arise when investigating
cargo theft crimes. And I believe it is particularly important
that local and state law enforcement agencies have the support
of the Federal Government when dealing with crimes that pertain
to interstate commerce.
In your experience, what is the relationship like between
law enforcement and agencies like the FBI and the HSI when
investigating cargo theft that crosses state lines?
Chief Johnson. Ma'am, the short answer is they are good
relationships. The challenge is not necessarily with the
relationships but the capacity of organizations to be able to
balance or juggle the myriad of threats that they are faced
with. Cargo theft, historically, has not risen to the same
level of attention as maybe some other competing interests have
for these Federal entities.
Also, it is important to understand how those agencies
prioritize the work within their AOR or area of responsibility,
and that is largely a local decision, by local executive
leaderships for those agencies involved, absent some sort of
national direction coming out of headquarters or the Attorney
General's Office.
I think for this topic, national direction, either
authorized by Congress for the task force that we have
mentioned previously, or prosecutorial direction coming out of
the Attorney General's Office, directing all of the United
States attorneys to prioritize this issue and focus resources
on effective prosecutions will aid in the assistance of
bringing these cases forward.
Senator Fischer. Thank you. You know, Mr. Blanchard, you
spoke about your frustration in trying to just bring it to the
attention of authorities--Federal, state, I assume local, as
well, that you were trying to work with. And when you mentioned
some of your suggestions, I know Mr. Pugh wanted to chime in,
so I will let you chime in now, on what needs to be done. And I
do not think it is just throwing more money at being able to
have more enforcement out there, necessarily. I think it is
also to be able to put some teeth in what we need to do here,
and just have more awareness.
But anyone on the panel, but we will start with you.
Mr. Blanchard. I would be happy to start, Senator, and
again, thank you for your support of our industry and your
introduction of the Household Goods Shipping Consumer
Protection Act. I think that is certainly a great first step.
As I have come to understand, Senator, is currently, to
piggyback off of Chief Johnson, the current threshold that is
established by the United States Sentencing Commission for the
DOJ to interdict in cargo theft cases requires the instance to
be at least $1.5 million in losses. The average loss in a cargo
case is around $200,000 today. So, therefore, to reach that
threshold of $1.5 million is going to require law enforcement
agencies to be directed to look into the continual criminal
activity of these organizations, to meet that threshold, or for
Congress to otherwise change that and create a new directive in
order for them to start pursuing these through a unified task
force, which is something that we have included in the
Safeguarding our Supply Chains Act, which has not been filed,
but certainly would appreciate any member of this Committee to
review that bill, and the willingness to author that would be
fantastic.
Senator Fischer. We will review it.
Mr. Blanchard. Yes, and that would provide the coordination
between agencies and law enforcement.
And I think really, Senator, this begins with the FMCSA,
and to further elaborate on Senator Young's question earlier,
in terms of the FMCSA, we have to start with them. I think, to
your point, Senator Fischer, throwing money at the problem I
would agree is not the solution. I think 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 are
dealing with. 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 interagency 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 in order to vet companies that we work
with. FMCSA needs to explicitly authorize to withhold
registration from applicants who fail to provide verifications.
Also, Congress, we believe, should conduct rigorous
oversight of FMCSA's transition to a single USDOT number, which
we believe they are going to do in the future, or are
considering doing, without placing undue burden on legitimate
carriers. And DOT should expeditiously implement the 13
recommendations issued by the Government Accountability Office
to strengthen FMCSA's National Consumer Complaint Data base.
So those are things we believe that Congress could do
without the necessity of additional funding, in order to
provide the coordinated effort necessary for law enforcement,
because we simply do not have the tools, Senator, to be able to
do the reverse IP searches, to break through the cyberspace in
order to find who is spoofing our e-mails. I have a very
sophisticated IT director, and he is great, but only law
enforcement agencies have that capability.
Senator Fischer. Thank you. Mr. Chairman, can I ask for Mr.
Pugh to be able to respond, as well?
Senator Young. Please, yes.
Senator Fischer. Since both you and Senator Peters went
over time.
Senator Young. You are correct. Go ahead.
Senator Fischer. And thank you for your support on OOIDA,
as well.
Mr. Pugh. I thank you, Senator Fischer, and you and Senator
Duckworth on your bill. We very much appreciate that and are
glad you are trying to do something different and to help these
things. It will pay dividends if we can get it across the
finish line.
A couple of things is this whole National Consumer
Complaint Data base, it seems FMCSA needs to be directed more
to do something with that. From our experience, and with our
members, and we tell members to send these complaints, plus
many other complaints that happen to them in trucking, it seems
like this is where all complaints go to die at FMCSA. Usually
they hear nothing back, or if they get anything it is just,
``Hey, thanks for letting us know.''
Also, you know, we have said for a long time it would
probably be helpful to have a different name. Most of our small
business people and truckers, they do not even realize that
this is a place for them to go file a complaint. National
Consumer Complaint Data base--who would think that is a
trucking complaint hotline? So that would be helpful.
We feel FMCSA probably has enough funds to do some
investigating on this. It is just to reallocate where they are
putting it, because they continually say that there is not a
safety effect to this, so that is why they do not have to do
anything with this. But we know there is, because it is putting
people out of business, it is causing people not to go maintain
their equipment. So there is definitely a safety thing here.
Plus who knows what happens to a trucker, if something happens
at gunpoint, or something like that.
And I would agree with my colleague here. FMCSA is the
first line of defense on this, 100 percent. They have all this
information. They have everybody's registrations and all that.
And finally I would say, FMCSA needs to step back and take
a long look at making the barrier of entry into being a motor
carrier or a broker much harder, much stricter. We pretty much
let people file for insurance, pay for it. We do not know who
these people are. We have no idea if they even know what they
are doing. And maybe 12 to 18 months later we audit them.
Senator Young. Thank you. Thank you so much, Mr. Pugh. All
these concrete and actionable recommendations have been very
helpful, and I know to all of us up here.
Mr. Lujan.
STATEMENT OF HON. BEN RAY LUJAN,
U.S. SENATOR FROM NEW MEXICO
Senator Lujan. Thank you very much, Mr. Chairman. Chief
Johnson, my state is home to a number of land ports, including
Santa Teresa Port of Entry, which is a multimodal transit hub
that has been a major site of economic growth in recent years.
At Santa Teresa we are experiencing trucking thefts on the
Mexico side of the border, meaning the materials and products
businesses and consumers are waiting for never make it into the
United States.
Chief Johnson, yes or no, do you believe it is important
for the U.S. law enforcement to coordinate with Mexican law
enforcement?
Chief Johnson. Absolutely.
Senator Lujan. The Department of Homeland Security has
estimated that cargo theft accounts for up to $35 billion in
losses annually. These thefts impact our truckers and
railroads, agricultural producers, businesses big and small.
They also impact consumer prices, which are currently on the
rise.
Mr. Howell, yes or no, when the entire industry experiences
regular thefts of merchandise, does it affect the prices that
consumers see on the shelves?
Mr. Howell. Senator, yes, it eventually will.
Senator Lujan. Chief Johnson, you noted the following in
your testimony, quote, ``State level police and prosecution
efforts are challenged by a tremendous number of competing
priorities for resources such as addressing the fentanyl
epidemic and violent crime in the community. This focus has
either directly or indirectly impacted effective property crime
enforcement efforts. Criminals have exploited this
vulnerability.''
Do you believe law enforcement needs more resources or less
resources to address the full slate of challenges in our
community?
Chief Johnson. Well certainly local law enforcement needs
more resources directed toward this issue, and as we look at
the three offender profiles, certainly the transnational
organized crime has got the greatest Federal nexus. But when
you drop down to the criminal street gang profile and the
criminal opportunist, those are most directly targeted by local
law enforcement efforts and state charges, and certainly having
the capacity in communities to be able to address cargo theft-
related crimes at a local level with state charges would be
tremendously complementary to the Federal response that has
been discussed today.
Senator Lujan. So Chief Johnson, having fewer law
enforcement officers could make this worse? Having fewer law
enforcement officers at the local level could make this worse?
Chief Johnson. Absolutely. Currently, IACP has experienced
and reported on just a national challenge in recruitment and
retention in policing. Surveying our members, we believe that
across the Nation many agencies are experiencing a 10 to 15
percent vacancy rate in terms of positions that they have
available but are unfilled. And we need to aggressively, as a
complete society, focus on improving the opportunity to recruit
and retain police offices into the profession, to strengthen
the safety and security of our communities.
Senator Lujan. I appreciate that thorough response.
Last week, before the Senate passed its budget resolution,
I introduced an amendment to provide increased resources for
local law enforcement through initiatives such as the Cops
Hiring Program. I was surprised when only one of my Republican
colleagues voted for it. This is a bipartisan area that we
should be working together, to make sure that there is more
resource available to ensure that we are able to hire, secure,
keep, and recruit all the folks that we need. So I appreciate
that response.
Mr. Blanchard, advanced technology is one of our strongest
tools in the fight against drug trafficking, which is why I
have long advocated for a 100 percent screening, using
nonintrusive inspection technologies at the southern border.
Yes or no, do you believe we should implement NII technology at
our land ports of entry?
Mr. Blanchard. Yes, sir, I do.
Senator Lujan. Reports indicate that fentanyl precursor
chemicals are being smuggled through the United States
transportation networks, as well, including through cargo and
rail, before making their way to Mexico for fentanyl
production. Yes or no, would implementing comprehensive
screening of all cargo, both entering and exiting the United
States, enhance our ability to detect and disrupt this supply
chain?
Mr. Blanchard. Senator, we do not do much cross-border
freight, but certainly we have always, as an industry, been
very supportive of more inspections, so long that it is not
overburdensome. And I think, without question, the new
technology and the technologies that you have mentioned provide
increased efficiency with advanced throughput on those
inspections.
So I personally--I certainly would not feel comfortable
speaking on behalf of my entire industry--but myself, and on
behalf of my company, we would welcome that. We want to get the
bad actors out of our industry, and I think any advanced
technologies that would provide assistance to law enforcement
in that effort, I would be very supportive of.
Senator Lujan. I appreciate that response. Acknowledging
the importance of technology that is not going to slow down
commerce, but it is going to let us get 100 percent view of
what is leaving the country with some of these precursor
chemicals that are rolling through the United States and then
going to Mexico, or the bad stuff that is coming in.
I am always surprised with the very low number of passenger
vehicles that are actually screened entering the United States,
and reports coming out of the Department of Homeland Security
suggest that 90 percent of the fentanyl that is being found in
the United States is coming through the southern border in
passenger vehicles, driven by Americans. We have got to stop
this stuff, and the only way we are going to be able to stop it
if we can see what is in those vehicles, but make sure that
people can also move so we are not hindering commerce.
Mr. Blanchard, one final question. The importance of the
work that is needed to ensure that we are keeping an eye on the
bad folks and that there is actually something being done when
it comes to the Federal staff, experts, things of that nature,
to be able to implement the law, to hold people accountable, to
prosecute, things of that nature, will that require more staff
or less staff?
Mr. Blanchard. At this time, Senator, I am not in a
position to know whether we would need more or less staff, and
let me explain why I say that. The reason I do not know if
there is sufficient law enforcement as we sit here today is
because there has not been any directive by Congress to assign
agencies to look into these cargo thefts and cargo fraud
issues.
So I am of the personal belief, Senator, that first we
really need Congress to direct these agencies to start
investigating these. That is why we have the Safeguarding our
Supply Chains Act, to direct these agencies to work in
coordination, to begin to investigate these claims, so that we
can start prosecuting and convicting these bad actors out
there. Because currently, from what we can tell, they are going
essentially without any recourse whatsoever into these criminal
activities.
So I certainly believe we should start there, but I think
it would be very logical that as we begin that process, that
the gravity of the situation and the severity of what we are
experiencing in the industry likely would require some
additional resources for some of these Federal law enforcement
agencies in order to be able to tackle this issue.
Senator Lujan. I appreciate that, and Mr. Chairman, I
appreciate your acknowledgement of many of the ideas that have
been shared today alone, in addition to the research staff has
done in this space. This is something that Congress needs to
get done, and we can work together on this. Whether we are
looking at just domestic transport or we are looking at
international crossings, as well, we have to do better in this
space. So I very much appreciate this hearing that you
scheduled, and I thank all the panelists for being here today.
Senator Young. Thank you for your questions, Senator. I
agree, this panel has been outstanding.
You know, I would like to read into the record some just
compelling staff work that I think needs to be read into the
record, related to international organized crime and the nexus
they have with this very challenge that we are discussing in
this hearing.
Law enforcement investigations have found international
criminal organizations have strong ties to Eastern Europe and
South Asia. For years, large-scale theft rings have been linked
to Armenian gangs who use a mixture of straight and strategic
cargo theft to steal freight.
One stakeholder reported their load was stolen by an
Armenian gang operating in California and then resold to a
Colombia crime ring. Additionally, reports indicate an
organized crime ring from India, referred to as the Singe
Syndicate, is operating in both the U.S. and Canada, all using
the name Singe. In 2023, Canadian officials conducted an
investigation dubbed ``Project Big Rig,'' that disrupted the
operations of this crime ring by arresting 15 individuals
running a major cargo theft ring. Canadian authorities
recovered over $9 million in stolen goods. It goes on and on.
They have a presence in Ohio.
Investigators have also found ties to the Mexican cartels
in cargo theft rings. On January 13 of this year, over $440,000
worth of Nike shoes were stolen off of a BNSF train whose
airbrakes were cut as it traveled on tracks north of Phoenix,
Arizona. Federal officials have linked this activity to a
cartel operating out of Sinaloa. Eleven men were arrested. Nine
of the men were in the United States illegally, and the other
six are residents of Sinaloa. BNSF reported that these tactics
of cutting brakes and forcing trains to slow down have
increased over the past two years.
So I just find that connection compelling. Sometimes I like
to connect the work that we do in this Committee or, in
particular, subcommittees or committees with some of the
conversations we have in other committees. This is very much
linked to border security, in various ways.
I would also note that my colleague's emphasis on resources
is important, and in many cases correct.
I would say if we are going to look holistically at this
challenge we should also look at the limitation we have on
Federal judges, so that if you do identify bad actors, you need
to be able to get into court over a reasonable period of time
and not wait years and years and years to have your case heard.
Otherwise, the law is of little effect.
So we have got some work to do. The JUDGES Act, it is
neither here nor there, but it was vetoed, for those who are
checking your recent record, by our last President in the final
days of his administration, for what seemed to be purely
partisan and vindictive reasons.
Are there any additional connections to international
cartels that our witnesses feel like we should be making, or
any reflections you have on that issue that you would like to
get on the record? I will ask Chief Johnson.
Chief Johnson. Thank you, sir, for the opportunity, and I
would like to compliment staff's research that was read into
the record, with one additional point of clarify. I would like
to thank the men and women of the BNSF police force that are on
the front lines every day, challenging these bad actors. And
those arrests that you referenced were the result of their hard
work and connecting Federal authorities to their
investigations. So I am very proud of the work that they are
doing to protect the U.S. supply chain and also our customers'
goods and services.
The concept of transnational organized crime I think has
been well covered. The Mexican national nexus for rail freight
is the strongest Eastern European, certain Armenian in the
trucking industry, very pronounced. And having the ability to
have a federally directed task force with the United States
Attorney's Office is the only way that we are going to be able
to peer into those organized networks and dismantle the command
and control that is taking place, because the cops in the
field, they can keep arresting the bad actors every day. Until
we take out the command and control elements of these
organizations, this crime threat is going to persist.
Senator Young. Mr. Blanchard.
Mr. Blanchard. Senator Young, to expand upon Chief
Johnson's comments, and again, I would reiterate I thank your
staff and the rest of the Senators' staff on the diligent
research they did. There are things that you just stated into
the record that I was not even aware of.
But one thing I wanted to bring to this Committee's
attention is that because these actors, these organized
criminal groups, are acting with impunity, because there is no
real law enforcement effort to stop them, I would feel certain
that this is a crime that is occurring. Cargo theft is
something that is generating a tremendous amount of revenue for
these criminal organizations, that are then, in turn, engaging
in other criminal activity.
So I think it is important to make that point, because this
seems to me to be a money-maker for these bad actors that I am
sure are engaging in it. If they are engaging in cargo theft,
they are certainly engaging in other criminal activity that is
impacting our communities.
Senator Young. Right. This is probably one of many streams
of revenue for these criminal elements. Point well taken. Mr.
Pugh.
Mr. Pugh. Yes. My staff takes a lot of these calls from our
members calling. With 150,000 members, we get calls weekly on
this. And we have seen, and we are sure that some of these
folks are from other countries, like I said, stretching on our
border, some domestic. We had a lot of people in the beginning
that were in a certain area of Southern California, kind of
north of L.A. There are a couple of counties there that this
was being traced back to. And since then we have found and
uncovered where these bad actors, like there will be 8 or 10 of
them using the same address. They shut down, and they come
right back with another address, the same address with another.
So I am sure this is being, like I said, both foreign and
domestic.
Senator Young. Well, we have come to the end. We have
covered a lot of ground. I would welcome any additional
submissions or points that you wanted to make. You could submit
those to the Committee in writing. We can keep the record open
for a short period of time to accommodate any of that.
But my hope is that we will take your recommendations and
see where we can come to some measure of consensus, and then
act on those recommendation. That can sometimes be challenging
up here. But I would agree with Senator Peters. This is one of
these issues that lends itself to common sense and action right
now, and the American people deserve that.
Senators will have until the close of business on Thursday,
March 6, to submit questions for the record. And the witnesses,
I am informed by our very diligent and competent staff, have
until the end of the day on Thursday, March 20, to respond to
those questions for the record.
This concludes today's hearing. The Committee stands
adjourned.
[Whereupon, at 11:36 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Ted Cruz, U.S. Senator from Texas
Good morning. Thank you, Chairman Young and Ranking Member Peters.
And I'd like to welcome each of our witnesses.
The hearing today is an opportunity to shine a light and raise
awareness on a growing issue impacting commercial supply chains: cargo
theft.
Cargo theft, particularly strategic theft, is disrupting every
segment of the supply chain--from ports and railyards to brokers and
trucking--and ultimately raising prices for American consumers.
It is a problem that costs companies billions of dollars each year
and harms the security of supply chains, especially in vital markets
like baby formula, medicines, perishable foods, and semiconductors.
Criminals are monitoring freight routes, using insider information,
posing as legitimate freight companies and using fake identities to
steal millions of goods each year in the U.S.
Strategic cargo theft skyrocketed since COVID-19 with a 27 percent
surge in incidents. The FBI now estimates between $15 and $30 billion
in annual losses to the U.S. economy.
My state of Texas is one of the biggest targets for cargo theft
because of its proximity to the border. Our state saw a 39 percent
surge in theft in 2024 with criminal enterprises increasing their
tactics to attack all vulnerable points along the supply chain.
I've heard how these international criminal organizations will use
the Federal Aviation Administration's publicly accessible drone
database to track police drones that help with surveillance protection
and wait to rob freight trains when drones move elsewhere.
It is modern day stagecoach robbery with sophisticated criminals
using technology to avoid detection to hit high value targets. Many
times, the victims do not realize they have been scammed for weeks or
even months later until an audit report shows an incomplete or partial
delivery. Victims range from major retail chains to mom-and-pop
businesses that lose customers when products are not delivered on time
or available on the store shelves.
For instance, a boutique tequila company lost two truckloads of
product because of a double brokering scam during the holiday season.
It happened before the busiest time of the year, and they were forced
to lay off employees when they didn't have any product to sell.
These gangs run like an enterprise venture, setting up fake call
centers and warehouses, forging billing documents, operating stolen
trucks and using registered USDOT motor carrier numbers to wreak havoc
across the supply chain.
It is such a widespread issue that insurance companies have
dedicated staff to investigate cargo theft and attempt to recover at
least some of their stolen goods and losses. Some police departments
have dedicated units where detectives only work on cargo theft.
Perhaps most surprisingly, these aren't just random thugs operating
independently. These criminals are connected to highly organized crime
networks in Armenia, Colombia, India, and Mexico. Police detectives all
over the country have found that many of these criminals are exploiting
our weak immigration system by coming into this country illegally or
overstaying their visas. Just last month, a large group of illegal
aliens with ties to the Sinaloa cartel stole millions in Nike sneakers
from a BNSF train in the Mojave Desert.
The Biden administration's open border and soft-on-crime policies
led to a lack of prosecution and enforcement in states like California,
where criminals are arrested and released with nothing more than a slap
on the wrist. As you will hear today, one criminal was arrested four
times in the same day--for crimes that are costing American businesses
more than $200,000 per theft.
Cargo theft may not be widely known by the public, but it's the
public who pays the price as the cost of theft is passed down to store
shelves, reflecting the huge economic losses incurred by the freight
industry.
I look forward to hearing from our witnesses today, and to working
with Subcommittee Chairman Young, Subcommittee Ranking Member Peters,
and Ranking Member Cantwell as we work to address industry concerns and
protect our supply chains.
Thank you.
______
Response to Written Questions Submitted by Hon. Ted Cruz to
Chief Will Johnson
Question 1. The U.S. Attorney General in the District of Arizona
charged eleven defendants, including ten illegally in the U.S., for
cutting the airbrakes of a train moving 70 miles per hour to steal half
a million dollars' worth of Nike sneakers. These individuals were
Mexican citizens with ties to the Sinaloa Cartel. What has law
enforcement uncovered regarding transnational organized crime when
investigating cargo theft?
Answer. Generally speaking, law enforcement is dealing with three
suspect profiles when attacking incidents of cargo theft: opportunist
burglars, loosely organized criminal street gangs, and transnational
organized crime. Multiple types of transnational organized crime groups
attack the U.S. supply chain in different areas. Mexican nationals from
the state of Sinaloa are being paid to sabotage rail safety systems to
stop trains and are stealing products while the trains are in transit
in proximity to the U.S. southern border. These groups are also
attacking cargo loads at truck stops and other locations where truckers
pause their route for food, fuel or rest. Law enforcement has tracked
these suspects from rail and truck stops and back to urban areas where
these organizations sell their stolen goods.
Other transnational criminal organizations include Eastern European
and Southern Eastern Asian crime syndicates targeting the trucking
industry and logistics centers in strategic theft operations. Strategic
theft occurs when criminal suspects attempt to steal loads through
fraud or deception. Law enforcement is aware of these groups and is
aggressively working with in both the state and Federal prosecution
systems to arrest offenders, but greater Federal coordination and
support is required to dismantle the command and control elements of
these operations.
Question 2. How have state and local governments' soft-on-crime
policies hindered the enforcement and prosecution of repeat offenders?
Answer. Prosecuting cargo theft cases is difficult due to the
challenging nature of these crimes. Victim identification, the
aggregation of total harm of the offense, changes to local and state
venues for prosecution, and artificial jurisdictional boundaries of
Federal U.S. Attorney Offices create an environment where the system
isn't responding to the crime threat with the unified level of urgency
necessary to address the threat. A coordinated Federal approach that
leverages a whole of government solution is required to change the
current dynamics of this problem.
______
Response to Written Questions Submitted by Hon. Amy Klobuchar to
Chief Will Johnson
Food Shipment Break-Ins. As you discussed, food shippers are often
collateral damage in cargo theft. In search of high-value retail goods
like TVs and electronics, criminals accidentally break into food
shipments. One dairy protein export company in Minnesota has reported
an average of one to three break-ins per month in containers of dry
milk powder. When this happens, shippers must bear the cost of
returning the container and disposing of the compromised food product.
Question 1. What can be done to ensure the safety and security of
food products containers moving by rail?
Answer. Rail companies focus significant resources on safety and
security. Rail police agencies have deployed police officers to protect
customer freight, work with local, state, and Federal law enforcement
departments to prevent crime and aggressively arrest offenders.
Additionally, rail companies have deployed technology such as drones,
surveillance cameras with AI power analytical functionality, and asset
trackers to recover stolen goods. Food Shippers are encouraged to adopt
additional security measures similar to other at-risk commodities, such
as security bolt seals, additional locks applied to containers, and
upper container braided steel ``figure eight'' locks. Food shippers can
also increase the written notices on either the outside of the
container or on a rear ``barrier wall'' near the container doors that
indicate the load is a food shipment.
Question 2. What improvements can be made to cargo break-in
reporting to ensure that these criminals are apprehended and
prosecuted?
Answer. Written testimony offered a possible solution that includes
encouraging private-sector collaboration between organizations and law
enforcement. Several possible action items include developing a portal
for direct reporting to overcome the present fragmented reporting
process. Additionally, offering victims (businesses) the opportunity to
maintain anonymity in the reporting process may encourage greater
participation in the business community.
Retail Crime. Each year, retail theft results in more than $100
billion in losses. These crimes can force stores to close, and place
workers and customers in danger. That's why I cosponsor Senator
Grassley's bipartisan Combating Organized Retail Crime Act to establish
a coordinated multi-agency response to tackle this issue.
Question 3. You mentioned that stolen cargo is often combined with
proceeds from organized retail crime. How are cargo and retail theft
operations related, and what kind of Federal response is needed to
counter this issue?
Answer. The tactics between organized cargo theft and organized
retail theft are very different. The similarities between the two have
been the nexus of how criminals ``fence'' or sell stolen properties.
During the execution of police search warrants, law enforcement has
discovered stolen cargo theft and stolen retail products at the same
location. This suggests that some fences are engaged in distributing
stolen goods regardless of how the product was obtained.
There is certainly a need for law enforcement to focus on both
types of crime. Reviewing the Combating Organized Retail Crime Act
there are certainly favorable actions that would benefit policing and
prosecution responses to this challenge. The bill currently does not
cover all the complexities of organized cargo theft, which is why
complementary bipartisan legislation focused specifically on that issue
was introduced in Congress last year (see H.R. 8834 from Congressmen
David Valadao (R-CA) and Brad Schneider (D-Il)).
Law Enforcement Resources. As a former County Attorney, I know how
important Federal support is for state and local law enforcement
agencies. That is why I have long championed the COPS program to help
departments hire more officers and have fought to maintain funding for
the Byrne JAG program, which helps law enforcement agencies buy the
equipment they need.
Question 4. Do you agree that we need to be doing more to support
our law enforcement by providing them the resources they need?
Answer. Yes
______
Response to Written Questions Submitted by Hon. Ted Cruz to
Robert Howell
Question 1. With reports of losses exceeding $400,000 per company
on average, what does this level of financial strain mean for
businesses?
Answer. Cargo theft impacts a variety of stakeholders and without
proper mitigation could eventually result in higher costs for
customers, retailers, and suppliers.
Question 2. Are there specific types of merchandise or locations
that are most frequently targeted for cargo theft?
Answer. We experience cargo theft most frequently when trucks
carrying products such as fashion footwear are in transit from the
point of origin, on the East or West Coast, to our distribution centers
which are located in Texas, Tennessee, and Georgia.
______
Response to Written Questions Submitted by Hon. Ted Cruz to
Adam Blanchard
Question 1. You mentioned in your testimony that organized theft
groups and transnational criminal organizations are exploiting
transportation networks because such targets are considered low-risk
and high-reward. How are these schemes growing without triggering a
response from law enforcement or the U.S. Department of Transportation?
Answer. Thank you for the question, Chairman Cruz. There are
several reasons why law enforcement response has not kept pace with the
increasing frequency and sophistication of cargo thefts. First and
foremost, cargo theft typically involves multiple jurisdictions and
criminals crossing state lines, so reporting is a challenge for both
industry and law enforcement. Motor carriers and brokers may not know
the correct jurisdiction to which the crime should be reported because
they may not know where or when exactly the theft took place. There are
also situations when victims may reach out to law enforcement to report
a crime and seek assistance for cases of fraud or theft, but rather
than assistance, they are met with confusion and dismissiveness. Often,
when trucking companies attempt to file a report with local and state
law enforcement agencies, they are told to file a claim with their
insurance company instead. This happens usually because local and state
law enforcement officers often do not have the necessary training to
recognize that cargo theft is not simply a property crime.
Alternatively, law enforcement officers will note jurisdictional issues
given the interstate nature of the crime and direct motor carriers to
report elsewhere.
While 18 U.S.C. Sec. 659 is the Federal law establishing the
ability to prosecute cargo theft, the authority to enforce this law is
split between various Federal agencies; the FBI is the lead Federal
agency responsible for enforcing the Federal law on cargo theft, but
Homeland Security Investigations (HSI) enforces this statute when there
is a transnational nexus. Additionally, the Federal Motor Carrier
Safety Administration (FMCSA) has authority to challenge fraudulent
broker licensing, and the Federal Maritime Commission (FMC) has the
authority to determine whether ocean or non-vessel common carriers,
marine terminals have engaged in unreasonable receiving, handling,
storing or delivery practices. A major challenge with law enforcement
more generally is that they are stretched too thinly, and even if they
are made aware of the theft, they may not have the necessary resources
to consistently enforce 18 U.S.C. Sec. 659.
There is also the matter of meeting the prosecutorial threshold set
by the United States Sentencing Commission. In order for DOJ to even
consider prosecuting a cargo theft case, the value of the goods stolen
must total at least $1.5 million. This threshold can be met in two
ways: either a single theft incident totals at least $1.5 million in
losses, or multiple related theft incidents (potentially targeting
multiple victims) total at least $1.5 million in losses. Given that the
estimated average value per theft in 2024 was $202,364,37 it is
imperative that state and local law enforcement better track incidents
of cargo theft because most single incidents do not reach the monetary
threshold to warrant Federal involvement. When dots are connected, DOJ
can become involved, thieves can be prosecuted, and victims can receive
justice. If law enforcement identifies a link (i.e., a single OTG
stealing multiple trailers) DOJ will have the green light to utilize
more resources and dedicate more manpower to bringing these criminals
to justice. Ultimately, more prosecutions will serve as a deterrent,
and hefty sentences will hopefully make potential offenders aware of
the consequences of their actions.
One of the major reasons why it can be difficult for law
enforcement agencies to connect individual theft cases is because of
inconsistencies in the statutory definitions of cargo theft across
jurisdictions i.e., the statutes defining and criminalizing cargo theft
are different for each state. These differences create confusion and
make it difficult for investigators and prosecutors to connect the dots
necessary to warrant a Federal cargo theft charge. Overall,
jurisdictional and definitional confusion leads to ineffective
enforcement of applicable cargo theft laws, and the absence of criminal
investigations emboldens criminals to continue their illegal
activities.
Question 2. Despite industry calls for stronger enforcement,
fraudulent actors continue to exploit loopholes in regulations. What
are the most critical gaps in Federal oversight that need immediate
attention?
Answer. Thank you for the question, Chairman Cruz. The biggest gap
in Federal oversight is the lack of coordination among federal, state,
and law enforcement agencies. Many law enforcement agencies acknowledge
that cargo theft is a growing and dangerous problem, but no agency has
dedicated the resources necessary to consistently enforce 18 U.S.C.
Sec. 659 and applicable state laws. Organized theft groups all over the
world know that the United States' federal, state, and local law
enforcement agencies do not have the resources to stop them nor the
interest to pursue sweeping investigations.
It is crucial that Federal law enforcement take the lead on
combatting cargo theft due to the interstate (and at times
international) nature of the crime, as well as its relation to
organized conspiracy. Without clear direction and prioritization from
the Federal government, cargo thieves will continue to exploit the gaps
in enforcement and further destabilize the supply chain.
______
Response to Written Question Submitted by Hon. Amy Klobuchar to
Adam Blanchard
Workforce Training. A resilient supply chain relies on a strong
workforce. We need to focus on training workers for in-demand jobs
where we continue to see shortages, like truck driving. I recently
introduced the bipartisan Freedom to Invest in Tomorrow's Workforce Act
with Senator Marshall to expand tax-advantaged savings plans so they
can be used for skills training, certifications, and credentials--
including commercial drivers licenses.
Question. How can we address the shortage of truck drivers and
build a strong supply chain workforce?
Answer. Thank you for the question, Senator Klobuchar. And thank
you for your leadership in introducing the Freedom to Invest in
Tomorrow's Workforce Act. I, along with the American Trucking
Associations, strongly support this legislation and believe all
solutions should be on the table to recruit the next generation of
talent to the skilled trades. The skilled trades are critical to the
continuity of our supply chains and economy, and jobs in trucking offer
family-sustaining salaries and great benefits. Moreover, the trucking
industry will need to hire over 1 million drivers over the next 10
years to replace an aging workforce and meet growing demand. Americans
should be able to leverage existing financial resources to pursue
careers in whatever areas suit their unique needs and ambitions, and
that should include both the skilled trades and traditional 4-year
college degrees.
In addition to expanding 529 account eligibility to allow
individuals to pay for training programs and certifications required
for employment in the skilled trades, we encourage you and your
colleagues to consider expanding Pell Grant eligibility as well. The
Bipartisan Workforce Pell Act would enable individuals to utilize Pell
Grants to pay for truck driver training programs, and I, along with the
American Trucking Associations, strongly support that legislation. A
similar bill with significant bipartisan support, the JOBS Act, is a
step in the right direction, but it would exclude students from using
Pell for programs at for-profit institutions. Since most truck driver
training schools are for-profit, this bill is not as beneficial for
prospective truck drivers as the Bipartisan Workforce Pell Act.
Another bill that would help the trucking industry address the
persistent truck driver shortage is the LICENSE Act, which was
introduced by Senators Lummis and Kelly and falls within the Senate
Commerce Committee's jurisdiction. The LICENSE Act makes permanent
several successful COVID-era testing flexibilities; specifically, the
legislation would codify two Federal Motor Carrier Safety
Administration (FMCSA) waivers to streamline the commercial driver's
license (CDL) testing process while maintaining Federal safety
standards.
The first waiver allows state or third-party CDL test examiners
qualified to administer the skills driving test to also administer the
written knowledge test. The CDL knowledge test is well-suited to be
outsourced to third-party entities given its objective nature and
format of questions (i.e., primarily consisting of multiple choice or
matching type questions) and thus the ability to consistently and
reliably train and deploy knowledge examiners.
The second waiver allows states to conduct CDL driving skills tests
for applicants regardless of where that driver obtained prior CDL
training, with the goal of providing more flexibility for applicants.
This common-sense update acknowledges the interjurisdictional nature of
the trucking industry and the practical needs of applicants who live
near state borders or face long testing delays. Importantly, all CDL
applicants must complete minimum training standards under FMCSA's
entry-level driver training (ELDT) before completing skills testing
regardless of their training state. FMCSA's ELDT requires all states to
meet or exceed Federal training standards, ensuring only qualified
drivers receive a CDL and relevant endorsements, and that all new CMV
operators are held to a shared understanding of the applicable rules
and regulations that apply to CDL holders. The LICENSE Act builds on
the past successes of these COVID-era waivers and is a prime example of
how Congress can advance regulatory relief without compromising safety.
______
Response to Written Questions Submitted by Hon. Ben Ray Lujan to
Adam Blanchard
According to the Truck Safety Coalition, New Mexico has the second
highest rate of fatal truck crashes per 100,000 population in the
country. I have been working with my colleagues on this Committee to
put an end to all preventable deaths on our roadways, including by
eliminating drunk driving and equipping vehicles with commonsense
technology and tools to prevent deadly crashes.
Mr. Blanchard, you note a few different kinds of cargo theft in
your testimony. In the case of `hijacking' and `fictitious pickups,'
drivers who do not have the proper licensure or paperwork steal the
full truck of freight and operate on our roadways.
I have concerns that this introduces safety issues, because these
rogue drivers are not held to hours-of-service requirements, are not
held to drug and alcohol testing standards, and often may not even be
licensed to drive a commercial vehicle.
Question 1. Mr. Blanchard, do you believe that rogue drivers who
are participating in cargo theft present a safety risk on our roadways?
Answer. Thank you for the question, Senator Lujan. Yes, rogue
drivers who are intentionally engaging in cargo theft present a safety
risk on our roadways. Illegitimate carriers often operate unsafe
vehicles, hire unqualified and uncredentialed drivers, and avoid
regulatory oversight altogether. In some instances, these bad actors
also engage in fraudulent insurance practices, further compromising the
safety and integrity of USDOT's registration system and industry norms.
Criminals use stolen or unethically purchased numbers to facilitate
illegal activities beyond cargo theft, including human trafficking and
the transportation of illicit substances and goods. Thus, the impact of
this fraud extends far beyond the trucking industry itself, threatening
the U.S. marketplace, public safety, and national security.
Notably, when fraudsters and cargo thieves use existing USDOT and
MC numbers to carry out their illicit schemes under the guise of
legitimacy, they will specifically seek out the USDOT and MC numbers of
companies that have strong safety records and established operational
histories to both appear more credible and evade the scrutiny of law
enforcement and regulatory bodies. By acquiring the business
identifiers of companies with strong safety records, fraudsters can
avoid certain routine compliance checks and bypass certain vetting
processes that would otherwise expose them.
Question 2. Mr. Blanchard, can you give a little more detail on how
these fraudulent actors are getting their trucks to steal loads--are
they buying them legitimately, or are they also stealing the fleet they
use to commit these crimes?
Answer. Thank you for the question, Senator Lujan. Fraudsters can
steal freight in a variety of ways, and some ways involve seemingly
legitimate business transactions, and some ways would be considered
more overt theft.
Fraudsters who play the long game will start out legitimately and
build relationships with business partners over the span of weeks or
months. Once they have established themselves as a credible business
partner, they will begin pilfering freight. By taking only small
amounts of freight at a time, thieves are able to avoid detection for
much longer and pocket hundreds or even thousands of dollars of
merchandise without much effort or risk. Often, business partners do
not become aware of pilfering schemes until months later, and by that
point, there is no way to recover the missing freight. Once business
partners become aware of the ongoing fraud and theft, the bad actors
will shutter their companies and go dark. It is nearly impossible for
the business community to track these individuals once they go dark,
and neither law enforcement nor regulatory agencies have effective
means of identifying these bad actors and pursuing justice once this
happens.
In other cases, fraudsters will steal loads without ever setting
foot in the United States. This is typically accomplished through
double brokering fraud. A double brokering scam can take various forms
in the trucking and logistics industry. Sometimes, the criminals pose
as either legitimate brokers or motor carriers (i.e., owning trucks,
trailers, equipment, or drivers), or both, but they, of course, have no
intention of moving the freight to the destination requested by the
shipper. Instead, the criminals steal cargo by subcontracting the work
to unwitting carriers who transport the freight to a different delivery
point than the location specified by the shipper. The criminals do this
by either convincing the legitimate carrier to deliver to a different
destination or changing the bill of lading. Often, criminals engaged in
double brokering fraud are not located in the U.S. and conduct their
crimes through cyber means without ever physically touching the
freight. It is also common for criminals to steal the identity of an
existing broker or motor carrier by creating and using website domain
names and business names that are very similar to the existing business
information of real companies. For example, a real trucking company
might use the website domain ABCMotorCarrier.com, and the criminal may
create a fraudulent company with a slightly different website domain
such as ABCMotorCarrierLLC.com. There are multiple victims with double
brokering scams: the owner of the double-brokered freight, the motor
carrier that unknowingly delivered the freight for the criminal and
won't receive payment for their service, and the legitimate broker
whose operations and integrity are undermined by fraudulent actors.
The more overt theft schemes are typically considered straight
theft, which is the most common form of theft and has been around for
as long as trucks have been delivering freight. Straight theft refers
to thieves physically stealing cargo from a shipment. Thieves typically
target products that can be sold quickly on the market, and this type
of theft can be very profitable.
______
Response to Written Questions Submitted by Hon. Ben Ray Lujan to
Lewie Pugh
Mr. Pugh, you mentioned in your testimony the importance of
improving FMCSA's National Consumer Complaint Database.
Question 1. Can you elaborate on how FMCSA could improve this
program?
Answer. The first, and we believe easiest, step that FMCSA should
take is renaming the National Consumer Complaint Database (NCCDB) to
better reflect its value to the trucking industry and professional
drivers. The name of the system doesn't imply in any way that it should
be used by truckers to report possible safety violations or incidents
of freight fraud.
Aside from this commonsense improvement, FMCSA should fully and
promptly implement the recommendations from GAO's congressionally-
mandated report on the program and its deficiencies.
Question 2. You noted that FMCSA often does not respond at all to
complaints filed in this system. Can you elaborate on how implementing
GAO's recommendation to make filed complaints public could help improve
safety?
Answer. In general, GAO's report and recommendations paint a
picture of a system that is not well-organized with insufficient
internal tracking and controls to monitor a complaint's status. For
one, GAO found that FMCSA is not using its existing capabilities to run
reports on the status of safety complaints, which GAO says may limit
the agency's ability to review and respond to concerns submitted by our
members. As a result, the report found that, ``as of August 2022, FMCSA
had not documented the status for 35 percent of the 75,000 complaints
submitted from January 2017 through December 2021.'' Recommendation 8
would address this by ensuring that FMCSA is reviewing reports on the
status of complaints.
Recommendation 6 would also help FMCSA provide drivers updates on
their cases by ensuring that the agency's internal processes document
key determinations in complaint case files. As mentioned during
testimony, drivers commonly report not hearing any developments in
their cases from FMCSA and are typically unable to receive updates on
the status of their complaints. If FMCSA improves their internal
controls to address this, drivers' confidence in the program should
increase dramatically.
Taken together, these and the other GAO recommendations would
provide better feedback to drivers on the status and final
determinations of their case. This would in turn give drivers more
faith that their complaints are actually being taken seriously and
that, if warranted, penalties or other corrective measures are being
taken. Right now, many drivers see NCCDB as largely a waste of time; if
FMCSA can show they are working on complaints, then more drivers will
be encouraged to report safety issues. Furthermore, the program could
become a resource for FMCSA to better understand and address
problematic behaviors in trucking, including emerging and evolving
safety concerns.
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