Theft in the cargo industry has skyrocketed in recent years. In the first half of 2024, cargo thefts rose 49 percent and the average loss per shipment by 83 percent. Given these dramatic spikes in cargo theft, policyholders whose operations rely on the safe transportation and trade of cargo should take steps to mitigate against the potential losses of a cargo-theft event. We discuss below the insurance coverage options available to policyholders that can help protect against the risks and losses associated with cargo-related theft if such a loss occurs.

The Spike in Cargo Theft

Certain types of cargo thefts have skyrocketed; between 2022 and 2024, strategic theft (theft by trickery or deception) increased 1455 percent. Similarly, between the last quarters of 2021 and 2022, double brokering rose 400 percent. Other types of theft include forging or altering documents, impersonating legitimate shippers, and simple theft (physically stealing items or shipments).

The causes of this peak vary. The nearly tenfold increase in the cost to move containers between the U.S. and China and worldwide inflation has made shipping that much more expensive. Cost-cutting measures in response to higher costs have eroded the relationships between industry players—notably, many shipments are moved by posting on a load board rather than through a trusted shipping company or professional intermediary—and normalized transacting with strangers. At the same time, thieves have become more familiar with technology and obtained access to powerful tools such as AI to fool industry players.

The Impacted Players

The owners of the stolen cargo are not the only players impacted when cargo is stolen. Any number of parties in the supply chain may suffer losses if a shipment is stolen. Manufacturers and retailers lose property. Shippers lose goodwill and reputation among their clients and may be liable to those clients for the property loss. Recently, brokers have lost, too, as other parties in the chain allege that broker negligence in managing shipments allowed thieves to submit bids, double broker, or reroute shipments.

Insurance Offerings to Protect Against Cargo-Related Theft and Related Losses

Wherever your organization is located in the supply chain, insurance can help offset losses from theft. While traditional forms of insurance may be helpful, insurers have responded to the increased needs of the transportation industry by creating a number of specialized products targeting specific risks. 

Cargo Insurance. Cargo insurance—a form of property insurance sometimes called “all risk” because it covers all perils except those specifically excluded—is typically obtained by shippers and protects goods in transit. It is often broken up into ocean marine (transit over the ocean) and inland marine (transit over land). Some insurers offer insurance products further tailored to the type of party, risk, or goods being shipped, allowing shippers who handle high-value loads to obtain additional peace of mind. Brokers may consider contingent cargo loss insurance, which helps protect brokers when the shipper’s cargo insurance policy does not cover a loss and the manufacturer turns to the broker to pay.

When obtaining a cargo insurance policy, it is important to review the conditions of coverage and exclusions. Cargo policies may require the policyholder to implement certain security measures to protect the shipment or pack the shipment in a certain way (which could result in delayed payment or litigation while the facts are investigated). They may also exclude some shipments, notably high-value goods or goods that thieves often target.

Liability Insurance. A staple of any good risk management program, liability insurance covers defense (attorneys’ fees) and indemnity (damages) costs in a lawsuit to recover the costs of a shipment. Shippers should consider general liability insurance, which covers losses from damage to a third party’s property as well as defense costs in the lawsuit. Brokers may obtain a comprehensive policy that bundles general liability insurance with other types of coverages, such as contingent cargo and errors and omissions (“E&O,” which covers defense and indemnity costs from the broker’s alleged negligence in brokering the shipment—for example, if double brokering occurs).

Cyber Insurance. All parties in the supply chain should consider obtaining cyber insurance. As noted above, thieves are increasingly technologically savvy, using AI and other digital tools to impersonate shippers and brokers. Cyber insurance may cover costs incurred when thieves access credentials or digital information and then use that information to scam third parties. It may also cover costs to expel intruders from company computer systems or pay to recover data ransomed by thieves. Cyber policies are often custom and negotiated on a policyholder-by-policyholder basis, so companies should carefully review their offers of coverage and potential exclusions before buying a policy.

Conclusion

Events like cargo-theft—which are on the rise—can cause significant lost profits, extra expenses, and supply-chain disruptions. Commercial policyholders whose operations involve cargo should ensure they can protect against these events and resultant losses. Policyholders should carefully review their existing insurance policies to determine which coverages exist, and whether additional or modified terms are warranted in the event of a cargo-related loss.