Hearings to examine cargo theft, focusing on the threat to consumers and the U.S. supply chain.

1[Senate Hearing 119-126]2[From the U.S. Government Publishing Office]34                                                        S. Hrg. 119-12656                           GRAND THEFT CARGO:7                     EXAMINING THE COSTLY THREAT TO8                  CONSUMERS AND THE U.S. SUPPLY CHAIN910=======================================================================1112                                HEARING1314                               BEFORE THE1516                   SUBCOMMITTEE ON SURFACE TRANSPORTATION,17                       FREIGHT, PIPELINES, AND SAFETY1819                                 OF THE2021                         COMMITTEE ON COMMERCE,22                      SCIENCE, AND TRANSPORTATION23                          UNITED STATES SENATE2425                    ONE HUNDRED NINETEENTH CONGRESS2627                             FIRST SESSION2829                               __________3031                           FEBRUARY 27, 20253233                               __________3435    Printed for the use of the Committee on Commerce, Science, and36                             Transportation3738[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3940                Available online: http://www.govinfo.gov4142                                __________4344                   U.S. GOVERNMENT PUBLISHING OFFICE4561-246 PDF                  WASHINGTON : 20254647-----------------------------------------------------------------------------------4849       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION5051                    ONE HUNDRED NINETEENTH CONGRESS5253                             FIRST SESSION5455                       TED CRUZ, Texas, Chairman56JOHN THUNE, South Dakota             MARIA CANTWELL, Washington,57ROGER WICKER, Mississippi                Ranking58DEB FISCHER, Nebraska                AMY KLOBUCHAR, Minnesota59JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii60DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts61MARSHA BLACKBURN, Tennessee          GARY PETERS, Michigan62TODD YOUNG, Indiana                  TAMMY BALDWIN, Wisconsin63TED BUDD, North Carolina             TAMMY DUCKWORTH, Illinois64ERIC SCHMITT, Missouri               JACKY ROSEN, Nevada65JOHN CURTIS, Utah                    BEN RAY LUJAN, New Mexico66BERNIE MORENO, Ohio                  JOHN HICKENLOOPER, Colorado67TIM SHEEHY, Montana                  JOHN FETTERMAN, Pennsylvania68SHELLEY MOORE CAPITO, West Virginia  ANDY KIM, New Jersey69CYNTHIA LUMMIS, Wyoming              LISA BLUNT ROCHESTER, Delaware70                 Brad Grantz, Republican Staff Director71           Nicole Christus, Republican Deputy Staff Director72                     Liam McKenna, General Counsel73                   Lila Harper Helms, Staff Director74                 Melissa Porter, Deputy Staff Director75                     Jonathan Hale, General Counsel76                                 ------7778 SUBCOMMITTEE ON SURFACE TRANSPORTATION, FREIGHT, PIPELINES, AND SAFETY7980TODD YOUNG, Indiana, Chairman        GARY PETERS, Michigan, Ranking81JOHN THUNE, South Dakota             AMY KLOBUCHAR, Minnesota82ROGER WICKER, Mississippi            BRIAN SCHATZ, Hawaii83DEB FISCHER, Nebraska                EDWARD MARKEY, Massachusetts84DAN SULLIVAN, Alaska                 TAMMY DUCKWORTH, Illinois85ERIC SCHMITT, Missouri               BEN RAY LUJAN, New Mexico86BERNIE MORENO, Ohio                  ANDY KIM, New Jersey87SHELLEY MOORE CAPITO, West Virginia8889                            C O N T E N T S9091                              ----------92                                                                   Page93Hearing held on February 27, 2025................................     194Statement of Senator Young.......................................     195Statement of Senator Peters......................................     296Statement of Senator Fischer.....................................    3797Statement of Senator Lujan.......................................    409899                               Witnesses100101Chief Will Johnson, Chief Special Agent, BNSF Railway Police102  Department, Second Vice President, International Association of103  Chiefs of Police...............................................     4104    Prepared statement...........................................     6105Robert Howell, Chief Supply Chain Officer, Academy Sports and106  Outdoors.......................................................     9107    Prepared statement...........................................    11108Adam Blanchard, Principal and CEO, Tanager Logistics and Double109  Diamond Transport..............................................    12110    Prepared statement...........................................    14111Lewie Pugh, Executive Vice President, Owner-Operator Independent112  Drivers Association............................................    26113    Prepared statement...........................................    27114115                                Appendix116117Hon. Ted Cruz, U.S. Senator from Texas, prepared statement.......    45118Response to written questions submitted to Chief Will Johnson by:119    Hon. Ted Cruz................................................    46120    Hon. Amy Klobuchar...........................................    46121Response to written questions submitted by Hon. Ted Cruz to:122    Robert Howell................................................    47123Response to written questions submitted to Adam Blanchard by:124    Hon. Ted Cruz................................................    47125    Hon. Amy Klobuchar...........................................    49126    Hon. Ben Ray Lujan...........................................    49127Response to written questions submitted by Hon. Ben Ray Lujan to:128    Lewie Pugh...................................................    51129130                           GRAND THEFT CARGO:131                     EXAMINING THE COSTLY THREAT TO132                  CONSUMERS AND THE U.S. SUPPLY CHAIN133134                              ----------135136                      THURSDAY, FEBRUARY 27, 2025137138                               U.S. Senate,139  Subcommittee on Surface Transportation, Freight,140                             Pipelines, and Safety,141        Committee on Commerce, Science, and Transportation,142                                                    Washington, DC.143    The Subcommittee met, pursuant to notice, at 10:21 a.m., in144room SR-253, Russell Senate Office Building, Hon. Todd Young,145Chairman of the Subcommittee, presiding.146    Present: Senators Young, Fischer, Moreno, Peters, Cantwell,147Klobuchar, Markey, and Lujan.148149             OPENING STATEMENT OF HON. TODD YOUNG,150                   U.S. SENATOR FROM INDIANA151152    Senator Young. Good morning. The Subcommittee will come to153order. We are today addressing an urgent and growing concern of154cargo theft on this Subcommittee.155    Last fall, PFL, a third-party logistics company in156Evansville, one of Indiana's transportation hubs, lost a157$60,000 shipment when its cargo was stolen by a previously158trusted carrier. For a small company, this kind of loss is159absolutely devastating, one that employees and customers160ultimately bear. This drives inflation at a time when inflation161is top of mind of our constituents and, of course, undermines162our rule of law.163    PFL is just one of many companies who have fallen victim to164a rising wave of cargo theft across the country, and they are165asking for Congress to take action. They want us to work166together with their industry to address this threat and come up167with some concrete solutions. So I am grateful to all the168stakeholders present today for your participation. I look169forward to hearing your perspectives as we consider how to170respond to this threat.171    Since the COVID pandemic, cargo theft has surged across the172country, reaching, by some calculations, a decade-long high.173Once carried out by crude criminals, now with the rise of e-174commerce, this crime domain includes sophisticated domestic and175international groups, from China, Eastern Europe, and Mexico.176They not only hijack trucks and rob rail cars but they exploit177vulnerabilities in online transactions, concocting elaborate178schemes, tricking businesses and third parties, and stealing or179holding their cargo hostage.180    Cargo theft is so difficult to spot and stop because it181takes so many forms, from spoofing to fictitious pickups, from182phishing to identity theft. Homeland Security Investigations183estimates that the annual loss from cargo theft, quote,184``accounts for 15 to 35 billion dollars annually.''185    Of course, these costs are ultimately shouldered by186customers when retailers raise prices to cover losses. These187crimes are often committed by repeat offenders, and very few, 1188in 10 according to the American Trucking Association, results189in arrest. The Federal Motor Carrier Safety Administration,190which is responsible for regulating motor carriers, does not191have adequate protections in place to identify fraudulent192actors or remove them from its system, nor does the agency have193the statutory authority to assess civil penalties for194violations of its safety or commercial regulations.195    At the state level, cargo theft is under-reported, over196miscategorized as simple property crime. To effectively combat197this evolving threat, we must--must--modernize our safeguards.198I am hopeful that together we can begin the process of199establishing and implementing those safeguard reforms today.200    I look forward to a productive and meaningful discussion201with our witnesses, and I look forward to thoughtful questions202and exchanges initiated by my colleagues.203    So at this time I will recognize Ranking Member Peters. I204am proud to serve with him in this capacity on this Committee.205Mr. Peters, I would like to recognize you to deliver your206opening remarks.207208                STATEMENT OF HON. GARY PETERS,209                   U.S. SENATOR FROM MICHIGAN210211    Senator Peters. Well, thank you, Chairman Young. It is good212to be with you in working on this Committee, and I look forward213to our work together in the years ahead, or in the couple of214years ahead, to do some very meaningful work. There is a lot to215do, a lot on our plate.216    There are many priorities that I hope that we can work217together to tackle in a bipartisan way, from improving roadway218safety, to strengthening innovation in the auto industry, to219addressing issues impacting our railroads and freight supply220chains, to working to reauthorize the surface transportation221bill and deliver new roads, bridges, and other infrastructure222projects to our constituents.223    I want to thank the Chairman today for holding this hearing224on cargo theft, a growing threat to American supply chains and225consumers, and I want to thank each of our witnesses for being226here today. I look forward to hearing your testimony and how we227can address this significant threat.228    As we will learn today, cargo theft takes many forms, but229one constant is that when goods are stolen, consumers230ultimately pay the price with higher cost for everyday items.231We will also hear today about the consequences of theft on232independent truckers and small businesses, who can be driven233out of business by fraudsters looking to make a buck. And234beyond just this economic toll, I want to highlight the very235real danger that cargo theft poses to transportation workers,236some of whom are rail workers and truck drivers that have been237threatened at gunpoint.238    Since 2020, cargo theft occurrences have shot up, according239to both industry reporting as well as agency complaints. A240significant driver of this increase in cargo theft is organized241transnational groups and cyber criminals. In fact, criminals242sitting in Russia, China, and across the world can now steal243physical cargo in the United States by setting up fake244businesses and manipulating our supply chain.245    We are going to hear from our witnesses today that this is246a complex, interstate, and international problem that requires247more Federal law enforcement and attention. The Federal Bureau248of Investigation, Homeland Security Investigations, and the249U.S. Attorney Offices can provide the resources and reach250necessary to address this organized cargo theft.251    However, we know that the Federal law enforcement resources252are stretched very thin, and that is why I am also very deeply253concerned about the Trump administration's actions to gut the254Federal Bureau of Investigation and the Department of Justice,255and why I am disappointed by the lack of pushback on this move256from my Republican colleagues in Congress.257    Since taking office, instead of increasing Federal law258enforcement capacity and effectiveness, which I believe is the259first step that we need to take to address this criminal trend,260like cargo theft and fraud, President Trump has prioritized261politicizing and gutting Federal law enforcement, included by--262and let me just give examples---one, firing much of the FBI263senior leadership, including the head of the Criminal, Cyber264Response and Services Branch, which is actually responsible for265criminal and cyber investigations worldwide.266    Two, firing the heads of multiple critical FBI offices,267firing dozens of prosecutors across the country for working on268January 6th cases, and in one case forcing the resignation of269six prosecutors, in 1 day, when they refused the President's270request to abuse our legal system.271    Three, institute a hiring freeze, preventing law272enforcement agencies from recruiting new talent. If you are273asking for more law enforcement, there is a freeze on new274talent coming into law enforcement.275    Four, in my home state of Michigan, defunding the state276police by freezing resources for homeland security, terrorism277prevention, and more.278    Five, reassigning DOJ law enforcement officers as well as279Homeland Security investigators to focus on immigration instead280of investigating issues like cargo theft, terrorism, and human281trafficking.282    The list goes on. And I do not believe that these issues,283law enforcement or addressing cargo theft, should be partisan284in any way. Crimes in our freight supply chain harm consumers,285small businesses, transportation workers, and our economy.286    But I am sorry. I just cannot stay quiet about the287dismantling of our Federal law enforcement during a hearing288where our witnesses, rightly, will ask for increased law289enforcement response. Well, just know it is being attacked290right now. Ultimately, to solve this issue, I believe we291actually need to fund the police and not follow what President292Trump is doing in defunding the police, like my state troopers293in Michigan and others across the country.294    We need to make sure that we have the people, from field295agents to prosecutors, in place to deal with these complex,296international cybercrimes happening in the freight supply297chain, and this just cannot happen if the attacks we are seeing298at the Department of Justice continues. And I would urge my299colleagues across the aisle to join me in defending our law300enforcement personnel.301    I also know the solutions to rising cargo theft go beyond302law enforcement. In the direct jurisdiction of this303Subcommittee, Mr. Chairman, I look forward to hearing from304witnesses about the types of actions that the Federal Motor305Carrier Safety Administration can take to crack down on306criminal organizations impersonating motor carriers or brokers307to defraud shippers as well as to steal goods.308    I also know that the FMCSA will need resources and309direction from Congress to do this, and I hope that we can work310across the aisle to make that happen, especially as we begin311discussions of the Surface Transportation Reauthorization bill.312    And finally, once again I want to thank our witnesses for313being here today, for your contributions to the critical314national supply chains that really literally form the basis of315the American economy. I look forward to your testimony. Thank316you again for being here.317    I yield back.318    Senator Young. Well, thank you for your opening statement,319Mr. Peters. We will get to our very distinguished panel320momentarily.321    I would just, in response to your comments, your emphasis322on criminal activity and making sure we enforce the laws of the323land, certainly well received. I do wish I had heard more from324my colleagues over the last 4 years when the Take Care Clause325was consistently not observed by the President of the United326States. We had a ``Weekend at Bernie's'' for 4 years, when the327President failed to enforce our border security. Now we are328left with international criminal elements who have permeated329this country, and dealing with the after effects of that. So330perhaps we can work together on that issue. I think the people331of Michigan registered their opinions, as did Indiana, that we332need to secure our border.333    Joining us today is Chief Will Johnson, Chief Special Agent334at the BNSF Railway Police Department and Second Vice President335of the International Association of Chiefs of Police. Prior to336joining BNSF, he was the Chief of Police in Arlington, Texas,337for 8 years, and he has been a police officer for 31 years.338    Chief Johnson, you are recognized for 5 minutes, and thanks339again for being here, sir.340341  STATEMENT OF CHIEF WILL JOHNSON, CHIEF SPECIAL AGENT, BNSF342     RAILWAY POLICE DEPARTMENT, AND SECOND VICE PRESIDENT,343         INTERNATIONAL ASSOCIATION OF CHIEFS OF POLICE344345    Chief Johnson. Good morning, Chairman Young, Ranking Member346Peters, and members of the Subcommittee. Thank you for the347opportunity to speak with you today on this important issue.348    As mentioned, my name is Will Johnson, Chief Special Agent349for BNSF Railway, and I appear before you today in my capacity350as Second Vice President for the International Association of351Chiefs of Police. The IACP is the world's largest association352of law enforcement executives. Today's testimony reflects the353concerns of many police executives as they combat organized354cargo theft in their jurisdiction.355    The facts are stark. Strategic cargo theft in the trucking356industry has increased 1,500 percent from 2022 to 2025, and357accounts for 33 percent of all cargo theft reported by358CargoNet.359    The Association of American Railroads estimates that over36065,000 theft occurred in 2024, representing a roughly 40361percent increase over the prior year. In many of these cases,362suspects endangered the public by sabotaging rail safety363equipment so that they could commit their crimes.364    Regardless of the mode of transit, cargo theft cases often365cross multiple state lines, making jurisdictional coordination,366prosecution, and data collection extremely difficult. The lack367of a coordinated Federal cargo theft enforcement effort hinders368effective prosecution. And food shippers have reported that369criminal tampering with chain of custody seals for U.S. food370shipments has put the Nation's food security at risk, and also371caused inflationary food prices.372    Finally, there are frequent reports of armed suspects373engaging in violent takeover-style robberies, or shooting374firearms during the commission of these burglaries. In short375cargo theft is not a low-level property crime.376    We generally observe three distinct suspect profiles in the377commission of these crimes: (1) transnational organized crime378members; (2) loosely organized criminal street gangs in urban379areas; and (3) criminal opportunists.380    Despite the challenges that each of these offenders381represent, police officers continue to make significant382arrests. In my submitted testimony, I outlined four recent383examples for your review.384    The nature of these crimes have evolved over the years, and385a whole-of-government approach is required to address this386challenge. The IACP does not believe that we have all the387answers to this complex problem, but we urge this Subcommittee388and the U.S. Congress to consider the following eight action389items as a starting point for stakeholder engagement to find390effective solutions:391    We support the establishment of a Federal Supply Chain392Crime Coordination Center and Supply Chain Fraud and Theft Task393Force to address cargo theft in all aspects of the supply394chain.395    To direct funding to dedicated Federal prosecutors to396tackle cargo theft cases.397    To modernize the FMCSA vetting process to include stronger398authentication methods, real-time carrier verification, and399implement controls around the sale or transfer of DOT and MC400numbers.401    Increase criminal penalties for cargo theft cases and allow402all victims' aggregated harm to be considered in these403offenses.404    To encourage public-private partnerships between corporate405security teams, carrier monitoring services, load boards,406insurers, and law enforcement through data-sharing initiatives,407and allow the prosecution venue to be established at the place408of offense, and also at the victim's U.S. corporate place of409residence. This would allow for improved prosecution and410reporting efforts.411    To provide law enforcement agencies with the resources to412support investigations into this complex and sophisticated413criminal networks.414    And finally, while the United States Customs and Border415Protection has implemented changes to in-bond shipment416processes, there is a further need to ease the burden on crime417victims by allow CBP the authority to waive regulatory fines418when cases are proven that theft had occurred.419    Again, the IATP stands ready to work with this Committee420and the U.S. Congress to develop and implement these solutions421and to continue to raise awareness on this important issue.422    I am happy to answer any questions now or at the end of all423testimony.424    [The prepared statement of Chief Johnson follows:]425426   Prepared Statement of Chief Will Johnson, Second Vice President,427             International Association of Chiefs of Police428    Good morning, Chairman Young, Ranking Member Peters, and members of429the Subcommittee on Surface Transportation, Freight, Pipelines, and430Safety. Thank you for the opportunity to speak with you today about a431pressing issue for the policing profession and our communities--the432growing threat of crime directed towards the U.S. Supply Chain. I433appreciate you convening this hearing to raise awareness on this434important topic, as we collectively work to implement solutions.435    My name is Chief Will Johnson, Chief Special Agent for the BNSF436Railway Police Department. BNSF Railway is one of the largest railroad437companies in North America, operating in 28 U.S. states and three438Canadian provinces. Prior to joining BNSF, I was the Chief of Police in439Arlington, Texas, for eight years, and I have been a police officer for44031 years. I appear before you today in my capacity as the Second Vice441President of the International Association of Chiefs of Police (IACP).442The IACP is the world's largest association of law enforcement leaders,443with more than 34,000 members in 178 countries. Today's testimony444represents the concerns and challenges many state, county, local,445tribal, and rail police executives are experiencing as they combat446organized cargo theft in their jurisdictions.447    Since the COVID-19 pandemic, we have seen a steady rise in448organized cargo crime, with criminals becoming increasingly449sophisticated, emboldened, and aggressive.450    The facts are stark:451452    In the trucking industry:453454   Strategic cargo theft, or theft by fraud or deception, has455        increased 1500 percent from 2022 to 2025 and accounts for 33456        percent of all cargo theft reported to CargoNet457458   Organized crime groups are exploiting gaps in the Federal459        Motor Carrier Safety Administration (FMCSA) regulations to460        commit strategic cargo theft, misdirected loads, and double-461        brokering scams, which impact freight owners and legitimate462        carriers.463464    In the rail industry:465466   The Association of American Railroads estimates that over467        65,000 thefts occurred in 2024, representing a roughly 40468        percent increase over the prior year.469470   Suspects are sabotaging rail safety equipment, such as rail471        traffic signal systems and emergency braking systems, to stop472        trains in motion to commit cargo theft. This endangers rail473        employees, puts communities at risk of potentially hazardous474        material rail derailments, disrupts passenger service, and475        disrupts vital supplies needed in communities all across476        America.477478    Regardless of the mode of transit:479480   Cargo theft cases often cross multiple state lines, making481        jurisdictional coordination difficult. This fragmented approach482        results in reporting barriers for victims, causing significant483        crime data collection deficiencies.484485   State-level police and prosecution efforts are challenged by486        a tremendous number of competing priorities for resources, such487        as addressing the fentanyl epidemic and violent crime in the488        community. This focus has either directly or indirectly489        impacted effective property crime enforcement efforts.490        Criminals have exploited this vulnerability. An example of this491        issue is the reported arrest and release of a cargo theft492        burglary suspect four times in one day. This level of493        recidivism, while cases are pending, is demoralizing to police494        officers working hard to protect the U.S. supply chain.495496   The lack of coordinated Federal cargo theft enforcement and497        prosecution priorities results in inconsistent response levels498        across agencies and areas of responsibility.499500   Beyond the criminal justice system reporting barriers,501        victims may be reluctant to report crimes due to concerns for502        brand identity, company reputation, and complex insurance503        claims, making it difficult to track the full scope of the504        problem.505506   When victims want to report a crime, not all victims are507        recognized by the law. The supply chain is a complicated system508        of beneficial cargo owners, brokers, shippers, and carriers.509        Each entity incurs harm from these criminal acts, but the law510        does not aggregate the total harm.511512   Furthermore, when stolen property is recovered during513        arrests or the execution of search warrants, victim514        identification is challenging because not all victims are the515        product manufacturers.516517    There are also collateral consequences:518519   Despite data collection challenges, there is a clear520        correlation between the escalation of cargo theft crime and521        inflationary pressure on the U.S. economy522523   Police agencies have reported that stolen cargo is often524        combined with illicit proceeds from organized retail theft in525        black-market fencing operations and reinserted into the U.S.526        economy, further victimizing property owners and unsuspecting527        consumers.528529   Police agencies and food shippers have also reported530        organized cargo thieves tampering with the chain of custody531        seals for U.S. food shipments, risking national food security532        and causing inflationary pressure on food prices.533534   Although there are no known examples of criminals535        specifically targeting Department of Defense equipment in536        transit, the evolving risk is a possibility, given crime trends537        in other shipments538539   Finally, there are frequent reports of armed suspects540        swarming cargo containers displaying firearms, engaging in541        violent ``takeover'' robberies, or shooting firearms during the542        commission of these burglaries. In short, cargo theft is not a543        low-level property crime.544545    As police agencies focus enforcement efforts on this crime trend,546we generally observe three distinct suspect profiles:547548  1.  Transnational Organized Crime Members--These are highly549        sophisticated and well-structured criminal organizations that550        operate across national borders. They often have extensive551        networks and resources, allowing them to plan and execute552        large-scale thefts with precision. Their command-and-control553        operations are persistent, meaning they continuously engage in554        criminal activities, often diversifying their methods to avoid555        detection and, in many instances, have buyers ready to purchase556        the illicit goods even before the product is stolen. These557        groups may use advanced technology to track and steal high-558        value cargo and may use both physical and cyber methods to559        conduct their crimes, making them a significant threat to560        global supply chains.561562  2.  Loosely Organized Criminal Street Gangs--Unlike transnational563        crime groups, these gangs are less structured and operate on a564        smaller scale, typically in urban areas. They typically consist565        of habitual burglars who engage in cargo theft as one of many566        criminal activities. Their operations are more opportunistic567        and may not have the same level of resources as organized crime568        groups, but their frequent and unpredictable actions cause569        substantial losses.570571  3.  Opportunists--This category includes individuals who are not part572        of any organized group but take advantage of theft573        opportunities as they arise. Unhoused individuals may engage in574        cargo theft out of necessity, targeting easily accessible575        goods. Social media-driven flash mobs represent a newer576        phenomenon where groups of people, often organized online,577        converge to exploit a specific theft opportunity. These578        opportunists are typically unorganized and act alone or in579        small, ad-hoc groups, making their actions sporadic but still580        incredibly disruptive.581582    Each group poses unique challenges to law enforcement and security583professionals in preventing and disrupting this transnational crime584across the 140,000 track miles of the U.S. rail network and over four585million highway miles in the U.S.586    Despite these challenges, police officers continue to make587significant arrests. Here are a few recent examples that further588highlight this issue:589590   Feb 7, 2025, three suspects in three box trucks were591        arrested after fleeing from a burglary outside of Barstow, CA.592        At the time of their arrest, they were in possession of 20593        laptop computers, and another 300 computers were located on the594        ground near the original burglary location.595596   Feb 7, 2025, two Mexican Nationals who are illegally in the597        United States are charged with stealing approximately 71 cases598        of construction tools from a freight train traveling through599        the Mojave Desert.\1\600---------------------------------------------------------------------------601    \1\ United States Department of Justice, Central District of602California Press Release 25-030603604   Feb 11, 2025, eleven defendants, including nine aliens605        illegally in the United States, are charged with Possessing606        Over $440,000 of designer shoes stolen from a train in Northern607        Arizona. These suspects are believed to be part of a criminal608        organization that consists primarily of Mexican citizens with609        connections to the Mexican State of Sinaloa, who specialize in610        stealing from trains and have used the technique of cutting air611        hoses to control where trains with valuable cargo come to a612        stop.\2\613---------------------------------------------------------------------------614    \2\ United States Department of Justice, District of Arizona Press615Release 2025-016_Cecena-Castro616617   Feb 18, 2025, police air support advised that approximately618        eight suspects were burglarizing a stopped train on the Cajon619        Subdivision, which is outside of San Bernardino, CA. Police air620        support followed some of the suspects to a local gas station,621        where patrol units made contact. Four suspects were arrested--622        one adult and three juveniles. Stolen property, burglary tools,623---------------------------------------------------------------------------624        and two handguns were recovered during the arrest.625626    These are just a few recent examples highlighting the problem. They627represent safety concerns, lost jobs, higher consumer prices, and628deprive communities of vital tax revenue. They pose a direct threat to629public safety and economic well-being. The nature of these crimes has630evolved over the years, and a whole-of-government approach is required631to address this challenge effectively. Because of the interstate632commerce nexus, this solution must be federally led and involve elected633officials, business owners, transportation, law enforcement, and634prosecution officials.635    The IACP does not believe we have all the answers to this complex636problem, but we urge this subcommittee and the United States Congress637to consider the following actions as a starting point for stakeholder638engagement to find effective solutions:639640  1.  Direct funding to dedicated Federal prosecutors to tackle cargo641        theft cases642643  2.  Modernize the FMCSA vetting processes to include stronger644        authentication methods, real-time carrier verification, and645        implement controls around the sale or transfer of DOT and MC646        numbers.647648  3.  Increase criminal penalties for cargo theft cases and allow all649        victims' aggregated harm to be considered.650651  4.  Encourage private-sector collaboration between corporate security652        teams, carrier monitoring services, load boards, insurers, and653        law enforcement through data-sharing initiatives to include654        cargo tracking and known offender tracking.655656  5.  Allow the prosecution venue to be at the place of offense or the657        victim's U.S. corporate place of residence. This will improve658        prosecution and reporting efforts.659660  6.  Provide law enforcement agencies with the resources and support661        to effectively investigate and combat these sophisticated662        criminal networks.663664  7.  Support the establishment of a Federal Supply Chain Crime665        Coordination Center and Supply Chain Fraud and Theft Task Force666        to address supply chain fraud and theft throughout the rail,667        motor carrier, and intermodal systems and detect, disrupt, and668        deter organized theft groups targeting all stages of the supply669        chain.670671  8.  While the U.S. Customs and Border Protection (CBP) has672        implemented changes to the in-bond shipment process to improve673        tracking and reporting, when cargo is stolen there is a further674        need to ease the burden of importers/suppliers in filing675        petitions for relief by allowing CBP the authority to waive676        fines in cases where theft is proven. While this issue largely677        affects oceanic customers, a major source of complaints and678        frustration is when they are receiving regulatory fines after679        being the victim of a crime.680    Again, the IACP stands ready to work with this committee and the681United States Congress to develop and implement these solutions and to682continue raising awareness of this issue.683684    Senator Young. Thank you, Chief Johnson, for that685testimony, the recommendations associated with it. We will most686certainly have some questions for you.687    Our next witness is Robert Howell, Senior Vice President688and Chief Supply Officer for Academy Sports and Outdoors.689Academy Sports operates 298 stores in 19 states and 3690distribution centers, in Texas, Tennessee, and Georgia. Mr.691Howell brings 25 years of experience in supply chain692management. We are grateful to have him here.693    Mr. Howell, you are recognized for 5 minutes, sir.694695STATEMENT OF ROBERT HOWELL, CHIEF SUPPLY CHAIN OFFICER, ACADEMY696                      SPORTS AND OUTDOORS697698    Mr. Howell. Good morning and thank you, Chairman Young,699members of the Committee and Subcommittee, for the opportunity700to testify here today on a critical topic of cargo theft. I am701Rob Howell, Senior Vice President, Chief Supply Chain Officer702for Academy Sports and Outdoors, and in my role I am703responsible for distribution and both domestic and704international logistics.705    Academy is a leading sporting goods and outdoor recreation706retailer, headquartered in Katy, Texas, a suburb of Houston. We707employ approximately 22,000 members across 298 stores in 19708states, including Texas, Illinois, Indiana, and Ohio. We also709operate distribution centers in Texas, Tennessee, and Georgia.710    We were founded in 1938, in San Antonio, and today Academy711offers a broad assortment of outdoor, apparel, footwear, sports712and recs products, including leading national brands and a713portfolio of private-labeled products. Academy's mission is for714us to provide fun for all, and we fulfill this promise through715a localized assortment and the value that connects a broad716range of customers.717    During today's testimony I hope to increase the awareness718of the impacts of cargo theft.719    Organized cargo theft is rapidly growing and broad720reaching, impacting supply chain networks both on the road and721on the rail. Like many retailers, our goods are first shipped722from a point of origin to our distribution centers through an723interstate network. This allows us to efficiently move724merchandise and equip our stores with the products families725want, at a competitive price they appreciate, and when they726need them.727    In my 25 years in the supply chain I have never seen cargo728theft this prevalent, and there has been a dramatic increase in729the last two years. These types of thefts include load730interception, identity theft, double brokering, and cyber731fraud. There is a robust cargo theft network comprised of bad732actors who demonstrate increasing levels of sophistication.733    In the past, cargo theft typically represented as a bad734actor stealing a truckload or duplicitously obtaining a DOT735motor carrier number. In today's environment it has rapidly736progressed, and it is common to experience cyber theft of737online credentials and systems, perpetrators that cut doors on738trucks so they do not break the security seal, stealing the739product, fraudulently editing transportation documents,740reattaching those doors, all in one transaction while eluding741prosecution.742    Recently we had shipment of what we call private-label743swimwear. It was intercepted on its way from Nevada to our744Texas distribution center. As you can imagine, this is critical745at this time of the year for the season. Unfortunately, we had746to react when that load was stolen and repurpose and reposition747product throughout our network. You can imagine that takes748incremental costs, incremental transportation, but we had to749get this product available for our customers in time for the750season.751    If we did not get that product there, not only would our752customers not be able to get that product they need but we risk753losing that customer's loyalty and losing that relationship754with that customer. Apart from the cost of lost merchandise,755this also results in additional cost on us, shipment delays,756and ultimately that impact to the consumer.757    This type of theft impacts a variety of stakeholders.758Third-party service providers, brokers, and carriers are759attentive to the issue. When products are stolen we are760notified by these third-party providers, and they launch761investigations, engage authorities, and activate their762mitigation teams. We then seek financial restitution for the763cost of goods. It results in lost sales for our companies that764can also be reflected in increased costs for more secure765transportation. Additionally, we have had to intervene and make766investments, tracking and tracing technology, GPS, as well as767enhanced cybersecurity to protect the delivery of secured768information.769    Cargo theft also disrupts how we operate our business. In770addition to the impact on merchandising, inventory management,771and distribution centers teams as they work to replace the772stolen merchandise, it also creates a need for additional time773and resources to pursue the exploration and implementation of774additional in-house solutions.775    Most importantly, though, once again, cargo theft impacts776the customer. When goods are stolen in transit we lose that777individual sale, potentially that customer, and the ability to778build loyalty long-term. This issue is exacerbated by the fact779that some goods are seasonal, limited time or limited780availability products, and we cannot easily replenish those781goods. These lost sales can reduce sales tax revenue for the782local communities we serve.783    Partnering with industry leaders, like the Retail Industry784Leaders Association, enables us to stay on top of best785practices to help protect Academy Sports and Outdoors. There is786a need for greater support to inform coordination,787communication, with collaboration among local, state, Federal788agencies, as well as the private sector, to mitigate the impact789of retailers, brokers, carriers, and customers.790    Thank you for the opportunity to share our experience, and791I look forward to your questions.792    [The prepared statement of Mr. Howell follows:]793794   Prepared Statement of Rob Howell, Senior Vice President and Chief795            Supply Chain Officer, Academy Sports + Outdoors796    Good morning.797    Thank you Chairman Cruz, Ranking Member Cantwell, Chairman Young,798Ranking Member Peters, and members of the U.S. Senate Committee on799Commerce, Science, & Transportation, and the Subcommittee on Surface800Transportation, Freight, Pipelines, and Safety, for the opportunity to801testify before you today on the critical topic of cargo theft.802    I'm Rob Howell, Senior Vice President and Chief Supply Chain803Officer at Academy Sports + Outdoors. In my role, I'm responsible for804our supply chain operations, including our distribution centers, and805domestic and international logistics.806    Academy is a leading sporting goods and outdoor recreation retailer807headquartered in Katy, Texas, a suburb of Houston. We employ808approximately 22,000 Team Members--or employees--across 298 stores in80919 states including Texas, Illinois, Ohio, and Florida. We operate810three distribution centers in Texas, Tennessee, and Georgia, and our811Corporate office is also located in Texas.812    Founded in 1938 in San Antonio, today Academy offers a broad813assortment of outdoor, apparel, footwear and sports & recreation814products including leading national brands and a portfolio of private815label brands. Academy's mission is to provide ``Fun for All'' and we816fulfill this promise through a localized merchandising strategy and817value proposition that connects with a broad range of consumers.818The Rising Impact of Cargo Theft819    Cargo theft is affecting shoppers across the country and disrupting820their ability to find the items they need, when they need them.821Organized cargo theft is rapidly growing and broad-reaching, impacting822supply chain networks both on the road and on the rail system. Like823many retailers, our goods are first shipped from the point of origin to824our distribution centers through an interstate network. This enables us825to efficiently move merchandise and equip our stores with the products826customers want to purchase, at competitive price points they827appreciate, at the time of need.828    In my 25 years in supply chain I've never seen cargo theft this829prevalent--and there has been a dramatic increase in the last 18-24830months including:831832   Load interception--Diverting shipments from their intended833        destination834835   Identity theft--Impersonating legitimate carriers to steal836        shipments837838   Double brokering--Carriers or brokers subcontracting loads839        illegally or inadvertently to fraudulent carriers who then840        intercept the goods841842   Cyber fraud--Stealing of online credentials or infiltration843        of transportation systems844845    In today's retail landscape, there is a robust cargo theft network846comprised of bad actors who demonstrate increasing levels of847sophistication. In the past, cargo theft typically presented as a bad848actor stealing a truckload or duplicitously obtaining a DOT motor849carrier number. In today's environment, it has rapidly progressed. It850is common to experience cybertheft of online credentials and systems,851perpetrators that cut doors on trucks--so they don't break the security852seal--to steal the products, fraudulently edit the transport853documentation, and reattach the doors all in one transaction . . .854while still eluding prosecution.855    At Academy we work only with reputable third-party companies that856subcontract our loads to carriers from the point of origin to our857distribution centers. In our experience, we most often see cargo theft858in the form of identity theft or fraud.859    For example, we had a shipment of private-label swimwear860intercepted in transit in Nevada. The entire load was stolen, forcing861us to reallocate swimsuits already in the Academy network to the862intended destination of the shipment, our southern stores. It was863shopping season for swimwear--this product was in demand and we knew if864we didn't immediately reallocate merchandise we would lose those sales,865and potentially, those customers, in the long-term. Apart from the cost866of lost merchandise, this also resulted in additional transportation867costs, shipment delays, and possible customer impact.868Real-World Impact on Retailers and Consumers869    Cargo theft impacts a variety of stakeholders, including:870871   Third-party service providers--Brokers and carriers are872        attentive to the issue. When products are stolen, we are873        notified by the third-party service provider, which then874        launches an investigation, engages authorities, and activates875        their internal loss prevention team. We then seek financial876        restitution. However, we are only eligible to be reimbursed for877        the inventory at cost--not retail. This results in lost sales878        for our company and can also be reflected in increased costs879        for more secure transportation. Additionally, we've had to880        intervene and make investments in how products are sealed,881        tracked and traced via technology and GPS, as well as882        moderating cybersecurity threats to ensure information is883        delivered securely.884885   Retailers--Cargo theft also disrupts how we operate our886        business. In addition to its impact on our merchandising,887        inventory management, and distribution center teams as they888        work to replace stolen merchandise, it also creates the need889        for additional time and resources to pursue the exploration890        and/or implementation of additional in-house systems.891892   Customers--When goods are stolen in transit, it means893        customers cannot buy them from us (either in-store or online).894        We lose that individual sale. We also potentially lose that895        customer and the ability to build loyalty with that customer in896        the long-term, as they may shop from another retailer with897        product available. The issue is exacerbated by the fact that898        some goods are seasonal--limited time or limited availability--899        and cannot be easily replenished. Those missed sales can also900        mean less revenue, through sales tax, for the local communities901        we serve.902Conclusion903    Partnering with industry thought leaders like the Retail Industry904Leaders Association (RILA) enables us to stay aware of best practices905and trends to help protect Academy Sports + Outdoors. We also remain in906constant communication with our third party partners. But that is not907enough.908    There is a need for greater support to inform coordination,909communication, and collaboration among local, state, and Federal910agencies, as well as the private sector, to mitigate impact to911retailers, brokers, carriers, and customers.912    Thank you for the opportunity to share our experience, and I look913forward to your questions.914915    Senator Young. Well, thank you so much for being here. Our916next witness today is Adam Blanchard. Mr. Blanchard is917Principal and CEO of Tanager Logistics and Double Diamond918Transport. Mr. Blanchard founded his companies in 2014, and he919currently operates 90 trucks and employs over 20 freight920brokers.921    Mr. Blanchard, you are recognized for five minutes.922923    STATEMENT OF ADAM BLANCHARD, PRINCIPAL AND CEO, TANAGER924             LOGISTICS AND DOUBLE DIAMOND TRANSPORT925926    Mr. Blanchard. Thank you, Senator Young. Subcommittee927members, thank you for the opportunity to testify. My name is928Adam Blanchard, and I am the Co-Founder and CEO of Double929Diamond Transport and Tanager Logistics.930    Our trucking company was launched following a conversation931I had with a close friend around my kitchen table. We put our932first truck on the road in 2014, and we formed our brokerage933shortly thereafter. Like small business owners, we faced daily934challenges, yet we were blessed with an exceptional team.935    Together we persevered and built a company that everyone in936our organization can be proud of. We created dozens of jobs in937the San Antonio, Texas, area, and today we operate about 90938trucks and 280 trailers.939    About a year ago, our American dream turned into a940nightmare when some unscrupulous criminals stole our identity.941By capitalizing on our good name, they tarnished the reputation942we had spent over a decade to earn. The scam worked like this.943Posing as Tanager Logistics, the criminals brokered loads to944unsuspecting motor carriers who delivered the cargo while the945scammers pocketed the money. In just one example, they diverted946a full truckload of energy drinks with a retail value well over947six figures, over a thousand miles, from Texas to California.948Because the spoofed my company's e-mails, the driver was949tricked into believing we had made the request for the950transportation of that load.951    While the criminals were using our name to enrich952themselves, we were playing Whack-a-Mole, trying to counter953their sophisticated techniques to mimic our website, e-mails,954and operating authority. Even at this very moment, two Tanager955Logistics are listed on the FMCSA's official website, my956company and an imposter. We provided this evidence to FMCSA,957but they refused to take it down.958    Simultaneously, we were on the receiving end of misdirected959rage from motor carriers who had also been scammed. Through no960fault of our own, we were blacklisted by factoring companies961for fraudulent invoices and nonpayment to those motor carriers.962    We sought to report these crimes, but kept hitting dead963ends with Federal, state, and local law enforcement agencies.964My insurance company would not get involved because technically965we did not have any cargo claims. The Texas Department of966Public Safety informed us this was not their jurisdiction. The967FBI recorded our information but never returned our call. The968Department of Homeland Security met with us but refused to969investigate. We did our due diligence, but the message was970clear--you are on your own.971    We might be on our own, but we are far from alone. Cargo972theft is rapidly becoming a crisis, costing the industry up to973$35 billion annually. Strategic theft has risen 1500 percent974since the first quarter of 2021. The average value per theft is975now over $200,000.976    Cargo theft comes in many forms, whether it is imitating a977legitimate company, pilfering goods over time, breaking into978parked tractor trailers, or double-brokering fraud. These are979complex, multijurisdictional crimes often involving980organizational theft groups, yet there is no unified, dedicated981Federal response.982    Thieves emboldened by the lack of investigations and983prosecutions are growing the size and sophistication of their984theft operations. But there are a few common-sense steps we985believe Congress can take to counter this.986    First, direct FMCSA, the Federal Motor Carrier Safety987Administration, to remove illegitimate carriers and brokers988from the SAFER website. The industry should be able to trust989that SAFER publicizes only legitimate entities so that we can990make informed decisions when vetting business partners.991    Second, pass the Safeguarding Our Supply Chains Act, which992would establish a Federal task force dedicated to cargo theft.993    Third, pass the Household Goods Shipping Consumer994Protection Act, which would strengthen penalties against bad995actors and protect consumers.996    Currently, criminals view trucking as a low-risk, high-997reward target. We must invert that calculus. When we were998finally able to contact the thieves who stole our identity, the999mere threat of law enforcement involvement was enough to deter1000them. The bad news is, if they are not scamming us, they are1001scamming someone else.1002    Trucking is a tough business, and we have no shortage of1003grit and determination. But our industry is not equipped to1004deal with organized theft groups on our own. We need help from1005Federal agencies and law enforcement with the resources and1006advanced technical capabilities to take this on. We implore1007Congress to provide resources and direction to pursue criminals1008who are exploiting small businesses that families have spent1009years, decades, or even generations to build.1010    Thank you for the opportunity to be here before you today,1011and I look forward to your questions.1012    [The prepared statement of Mr. Blanchard follows:]10131014        Prepared Statement of Adam Blanchard, Principal and CEO,1015      Tanager Logistics and Double Diamond Transport on behalf of1016                   The American Trucking Associations1017Introduction:1018    Chairman Young, Ranking Member Peters, and members of the1019subcommittee, I appreciate the opportunity to testify before you today1020on behalf of the American Trucking Associations (ATA).\1\ My name is1021Adam Blanchard, and I am the Principal & CEO of both Tanager Logistics1022and Double Diamond Transport, headquartered in San Antonio, Texas. I am1023also a proud serving member of the Texas Trucking Association and am1024grateful for the opportunity to share with this subcommittee the1025challenges that I, my peers in Texas, and the trucking and supply chain1026logistics industry nationwide are experiencing with supply chain fraud1027and cargo theft.1028---------------------------------------------------------------------------1029    \1\ The American Trucking Associations is the largest national1030trade association for the trucking industry. Through a federation of 501031affiliated state trucking associations and industry-related conferences1032and councils, ATA is the voice of the industry America depends on most1033to move our Nation's freight.1034---------------------------------------------------------------------------1035    ATA is a 90-year-old federation and the largest national trade1036organization representing the 8.5 million men and women working in the1037trucking industry. As a 50-state federation that encompasses 37,0001038motor carriers and suppliers, ATA proudly represents every sector of1039the industry. From less-than-truckload to truckload carriers, from1040agriculture and livestock transporters to auto haulers and household1041goods movers, and from large fleets to mom-and-pop one-truck operators,1042ATA serves as the single unified voice of the trucking industry.1043    Since founding Double Diamond Transport and Tanager Logistics in1044San Antonio in 2014, we have been fortunate to grow the company to1045operate 90 trucks and employ over 20 freight brokers. As a full-service1046transportation provider, we offer reliable truckload transportation1047services using the latest technology and equipment to provide top-tier1048customer service. We are proud to have been recognized by Inc. Series10495000 as one of the fastest-growing private companies in San Antonio.1050    Our experience as both a trucking company and logistics provider1051has exposed us to the numerous ways in which bad actors are1052infiltrating our Nation's domestic supply chains. We have seen how easy1053it is for criminals to create fraudulent trucking companies and1054brokerages and steal cargo from the stream of legitimate commerce with1055near impunity, all while undermining the integrity of the trucking1056industry. I have been a victim of freight fraud numerous times, and1057unfortunately there is virtually no recourse for me or my company. I1058look forward to sharing the challenges I experienced working with1059federal, state, and local law enforcement, as well as Federal1060regulators, and discussing solutions to help our Nation better combat1061supply chain fraud and theft.1062    Thank you for convening today's hearing to consider these critical1063issues. I, along with the ATA, look forward to working with you to1064share information and inform potential legislative solutions to promote1065the safe and efficient movement of our Nation's goods.1066What is Freight Fraud?:1067    Thieves, Organized Theft Groups (OTGs), and Transnational Criminal1068Organizations (TCOs) are currently infiltrating and exploiting the1069Nation's transportation and distribution networks because these1070criminal schemes are considered low-risk and high-reward. In other1071words, there is significant money to be made and very little risk of1072criminal exposure. According to the National Insurance Crime Bureau1073(NICB), cargo theft in the United States is a $15 to $35 billion1074industry.\2\ The fraud and cargo theft plaguing the trucking industry,1075and our Nation's supply chains more broadly, materialize in many ways.1076There are two main categories of cargo theft: straight theft and1077strategic theft.1078---------------------------------------------------------------------------1079    \2\ National Insurance Crime Bureau. On the Rise: Cargo Theft, a1080Billion Dollar Industry. https://www.nicb.org/news/blog/rise-cargo-1081theft-billion-dollar-industry.1082---------------------------------------------------------------------------1083Straight Theft1084    Straight theft is the most common form of theft and has been around1085for as long as trucks have been delivering freight. Straight theft1086refers to thieves physically stealing cargo from a shipment. Thieves1087typically target products that can be sold quickly on the market, and1088this type of theft can be very profitable. Examples include:10891090  1.  Burglary--Thieves steal goods directly from truck trailers,1091        usually when truck drivers are stopped along their routes at1092        truck stops, parking lots, roadside parking, terminals, drop1093        lots, and other areas where cargo could be left unattended,1094        especially in retail store parking lots or other empty parking1095        lots on weekends.10961097  2.  Pilferage--Thieves only steal some of the freight off a single1098        trailer. Criminals pilfer small amounts, often over long1099        periods of time. By taking only small amounts of freight at a1100        time, thieves are able to avoid detection for much longer and1101        pocket hundreds or even thousands of dollars of merchandise1102        without much effort or risk.11031104  3.  Hijacking--Thieves use force, deception, or intimidation to seize1105        the truck and its contents. Thieves may trick drivers into1106        pulling over by signaling that something may be wrong with the1107        truck, which then allows them to steal the freight. OTGs may1108        target entire trucks or containers by using violence or other1109        tactics to overpower drivers and seize the cargo. This can be1110        opportunistic, or a truck can be tracked from its departure1111        point and robbed at its first stop.1112Strategic Theft1113    Strategic theft involves the use of fraud and deception to trick1114shippers, brokers, and carriers into handing loads over to thieves1115instead of the legitimate carrier. Strategic theft often involves1116identity theft and advanced cyber tactics to manipulate data. Strategic1117cargo theft is extremely profitable and lower risk relative to straight1118theft because strategic theft can be accomplished remotely and does not1119require thieves to physically touch the cargo. Examples include:11201121  1.  Fictitious Pickups--Thieves impersonate legitimate drivers and1122        carriers by using altered paperwork, fake uniforms, and vehicle1123        logos to steal shipments. The legitimate driver will often1124        arrive to find that the shipment has already been released.11251126  2.  Fraudulent Bills of Lading--Thieves use the forged identity of a1127        legitimate carrier to pick up a shipment, steal a portion of1128        the freight, and re-create the bill of lading to disguise the1129        theft. In this process, the unit count, weight, and seal1130        numbers are altered on the bill of lading before the shipments1131        are delivered to the final destination, where the unknowing1132        receivers sign off. This type of theft can go undetected for1133        months.11341135  3.  Double Brokering Fraud--A double brokering scam can take various1136        forms in the trucking and logistics industry. Sometimes, the1137        criminals pose as either legitimate brokers or motor carriers1138        (i.e., owning trucks, trailers, equipment, or drivers), or1139        both, but they, of course, have no intention of moving the1140        freight to the destination requested by the shipper. Instead,1141        the criminals steal cargo by subcontracting the work to1142        unwitting carriers who transport the freight to a different1143        delivery point than the location specified by the shipper. The1144        criminals do this by either convincing the legitimate carrier1145        to deliver to a different destination or changing the bill of1146        lading. Often, criminals engaged in double brokering fraud are1147        not located in the U.S. and conduct their crimes through cyber1148        means without ever physically touching the freight. It is also1149        common for criminals to steal the identity of an existing1150        broker or motor carrier by creating and using website domain1151        names and business names that are very similar to the existing1152        business information of real companies. For example, a real1153        trucking company might use the website domain1154        ABCMotorCarrier.com, and the criminal may create a fraudulent1155        company with a slightly different website domain such as1156        ABCMotorCarrierLLC.com. There are multiple victims with double1157        brokering scams: the owner of the double-brokered freight, the1158        motor carrier that unknowingly delivered the freight for the1159        criminal and won't receive payment for their service, and the1160        legitimate broker whose operations and integrity are undermined1161        by fraudulent actors.11621163  4.  Hostage Freight--Freight can be held hostage by a broker,1164        carrier, or rogue driver. Hostage freight refers to scenarios1165        where brokers, carriers, or rogue drivers refuse to complete a1166        delivery until their demands are met. Drivers or service1167        providers may hold loads hostage when they think they are not1168        being paid fairly, or as a means to renegotiate the terms of1169        the initial agreement. These situations can be complicated when1170        associated with double brokering fraud. Hostage freight schemes1171        are also fairly common in the moving and storage industry and1172        occur when a moving entity holds a customer's belongings1173        hostage by refusing to deliver them until the customer pays a1174        significantly higher price than the original estimate. Thieves1175        will use the customer's belongings as leverage to extort1176        additional money. In many cases, the customer's goods are never1177        returned even if the additional money is paid.\3\1178---------------------------------------------------------------------------1179    \3\ WTW. (2024, December 18). High-value shipments at risk: The1180growing threat of strategic cargo theft. https://www.wtwco.com/en-us/1181insights/2024/12/high-value-shipments-at-risk-the-growing-threat-of-1182strategic-cargo-theft.1183---------------------------------------------------------------------------1184USDOT & MC Number Fraud1185    The trucking industry and broader supply chain's growing experience1186with cargo theft is often tied to sophisticated fraud tactics1187undertaken by criminal organizations and lone bad actors. In many1188instances, these bad actors exploit vulnerabilities in the Federal1189Motor Carrier Safety Administration's (FMCSA) current carrier and1190broker registration system by stealing, falsifying, or creating1191counterfeit information to unlawfully acquire U.S. Department of1192Transportation (USDOT) numbers, Motor Carrier (MC) numbers, operating1193authority identifiers, and other critical data. USDOT requires the1194trucking industry to use these unique identifiers to ensure that only1195legitimate, authorized carriers operate on our roads.1196    Unfortunately, bad actors are increasingly targeting USDOT numbers,1197MC numbers, and other business identifiers to carry out their illicit1198schemes under the guise of legitimacy. Some common tactics include1199hacking into carrier databases, exploiting weak security practices, and1200phishing schemes. In some cases, these scammers create entirely1201fabricated carrier companies using stolen or purchased credentials.1202Fraudsters may register new companies using stolen information by1203extracting USDOT and MC numbers from publicly accessible databases or1204using phishing schemes to deceive companies into revealing sensitive1205information, including PINs and other personal details.1206    In other instances, they hijack existing carrier profiles by1207hacking FMCSA accounts via elaborate phishing schemes or online data1208mining. The fraudsters use the stolen credentials to establish a fake1209entity and alter legitimate company information in official records,1210like the MCS-150 form, to redirect communications to themselves. They1211then create websites and e-mail addresses that closely resemble those1212of legitimate companies (i.e., spoofing), using fake phone numbers and1213e-mails to communicate with brokers and shippers and conduct what1214appears to be legitimate business.1215    Another common and concerning practice is the buying and selling of1216both stolen and legitimate business identifiers. It is relatively easy1217to find ``black markets'' online that feature USDOT and MC numbers in1218good standing. These markets often operate in plain sight on open1219Facebook forums and other public domains.\4\ Importantly, the buying,1220selling, and transferring of MC numbers on its own is not illegal, so1221there are limited means to ``police'' this practice and stop bad actors1222from purchasing unique identifiers with malintent.\5\ Additionally,1223trucking businesses are frequently purchased and consolidated, meaning1224the transfer of such credentials is inevitable and, in many cases, done1225for legal purposes. However, fraudsters often operate in a legal gray1226area by using legally obtained MC numbers to evade FMCSA's compliance1227guardrails and then conduct illegal operations.1228---------------------------------------------------------------------------1229    \4\ Examples of Facebook groups and domains where USDOT and MC1230numbers are exchanged: (1) ``MC number buy/sell/assistance,'' https://1231www.facebook.com/groups/808090098179571; (2) ``Operating Authority for1232sale (MC and USDOT),'' https://www.facebook.com/groups/7644123365795015988; (3) ``MC Number. Sale or buy,'' https://www.facebook.com/1234groups/7423215123597745830; (4) https://dotnumberstore.com/.1236    \5\ Lockie, Alex. (2024, October 10). FMCSA guidance on buying and1237selling MC numbers. Overdrive. https://www.overdriveonline.com/1238regulations/article/15705499/fmcsa-guidance-on-buying-and-selling-mc-1239numbers.1240---------------------------------------------------------------------------1241    Notably, fraudsters and cargo thieves specifically seek out the1242USDOT and MC numbers of companies that have strong safety records and1243established operational histories to both appear more credible and1244evade the scrutiny of law enforcement and regulatory bodies. By1245acquiring the business identifiers of companies with strong safety1246records, fraudsters can avoid certain compliance checks and bypass1247certain vetting processes that would otherwise expose them. Bad actors1248often offer registered carriers with excellent safety ratings tens of1249thousands of dollars to obtain their ``valuable'' MC numbers. They will1250pay even more to also obtain carriers' registration account credentials1251and other personal or business information to seamlessly infiltrate1252their established business networks.\6\1253---------------------------------------------------------------------------1254    \6\ Lockie, Alex. (2024, September 30). How much is your MC worth?1255Maybe as much as $30,000. Overdrive. https://www.overdriveonline.com/1256channel-19/article/15704468/your-author1257ity-might-be-worth-30000-to-freight-fraudsters.1258---------------------------------------------------------------------------1259    While domestic bad actors certainly play a role in targeting the1260vulnerabilities of FMCSA's current registration system, a significant1261amount of fraud originates internationally, particularly from TCOs and1262fraudsters operating in places like Eastern Europe, Central Asia,1263Southeast Asia, West Africa, and Latin America. These criminals often1264target U.S.-based registration systems to exploit the relatively easier1265access to legitimate identifiers like USDOT and MC numbers. Moreover,1266given how technology is embedded in nearly all aspects of the U.S.1267supply chain, it is relatively easy for bad actors in overseas1268locations to capitalize on technological vulnerabilities and perpetrate1269freight fraud.1270My Experience With Identity Theft1271    Unfortunately, about a year ago, the business identity of my1272company, Tanager Logistics, was stolen by a bad actor. The identity1273thieves communicated directly with our business to tender a load on1274behalf of a trucking company and subsequently posed as Tanager1275Logistics to broker that load, as well as other loads, to motor1276carriers. While we still do not know today how exactly the fraudster1277obtained the sensitive business information that allowed them to1278impersonate our company, we believe they may have used publicly1279available information and setup packets to gain legitimacy. They1280brokered loads under our name, deceiving both shippers and carriers.1281This led to massive business disruptions, with angry trucking companies1282calling us and demanding payment for loads that the real Tanager1283Logistics did not broker or authorize. Worse, the fraudster used our1284identity to steal high-value freight, including truckloads of Red Bull,1285which were then diverted to suspicious warehouses in California and1286ostensibly shipped out of the country. Despite reaching out to our1287insurance provider, law enforcement, and even the Department of1288Homeland Security, we were met with indifference and red tape. The1289fraudulent actors used VPNs and domain spoofing techniques, making it1290nearly impossible for us to track them down on our own. This experience1291exposed a major flaw in the industry--there is virtually no recourse1292for businesses facing this kind of fraud. FMCSA and other regulatory1293bodies need stronger mechanisms to detect and respond to these scams in1294real-time. More importantly, Federal agencies must prioritize cyber1295capabilities to track and shut down these criminals before they can1296continue defrauding legitimate businesses like mine.1297    To this day, FMCSA's SAFER website still features two companies1298under the name ``Tanager Logistics LLC'': my company--the real Tanager1299Logistics LLC \7\--and another fraudulent business \8\ purporting to be1300my company. It is disappointing and aggravating that the Federal agency1301responsible for improving the safety of the trucking industry routinely1302publicizes fraudsters on a system intended to share ``company safety1303data to industry and the public over the internet.'' \9\1304---------------------------------------------------------------------------1305    \7\ Tanager Logistics LLC. USDOT Number: 25430541306    \8\ Tanager Logistics LLC. USDOT Number: 43269341307    \9\ U.S. Department of Transportation. FMCSA. About SAFER. https://1308safer.fmcsa.dot.gov/about.aspx.1309---------------------------------------------------------------------------1310Industry & Broader Public Safety Impacts1311    USDOT and MC number fraud not only victimizes legitimate carriers,1312brokers, and shippers, it also poses significant risks to public1313safety. Illegitimate carriers often operate unsafe vehicles, hire1314unqualified and uncredentialed drivers, and avoid regulatory oversight1315altogether. In some instances, these bad actors also engage in1316fraudulent insurance practices, further compromising the safety and1317integrity of USDOT's registration system and industry norms. Criminals1318use stolen or unethically purchased numbers to facilitate illegal1319activities beyond cargo theft, including human trafficking and the1320transportation of illicit substances and goods. Thus, the impact of1321this fraud extends far beyond the trucking industry itself, threatening1322the U.S. marketplace, public safety, and national security.1323    Without the deterrence of reliable investigations and prosecutions,1324the trucking industry is constantly vulnerable to potential fraud, and1325legitimate carriers must expend significant human capital and financial1326resources to protect themselves. Unfortunately, many smaller carriers1327and brokers lack the means, staffing, and financial resources to make1328such robust investments needed to protect themselves and their1329customers' cargo. This Committee plays a key role in safeguarding our1330Nation's transportation networks and supply chains. We urge you to1331consider how the prevalence of fraud and absence of any real deterrent1332undercuts the trucking industry's ability to enhance the safety and1333efficiency of our fleets to keep up with America's transportation and1334supply chain needs.1335FMCSA's Actions to Combat Fraud1336    FMCSA established a dedicated fraud prevention team in June 2024 to1337identify and respond to suspected cases of motor carrier and broker1338fraud and assist registrants who have fallen victim to fraud.\10\ While1339the team is still relatively new, FMCSA's goal is to play a role in1340actively mitigating the fraud that is occurring within the industry.1341The agency has also enhanced its practices and scrutiny around1342registration applications and documentation submitted via paper--a key1343source of many fraud incidents--and has begun transitioning towards1344more secure, encrypted online processes. Another short-term fix FMCSA1345has identified and undertaken is the suspension of online PIN requests1346to thwart fraudulent actors from using this tool to access the FMCSA1347registration system illegally. All PIN number requests are now1348completed by FMCSA mailing the information to a physical address on1349file.1350---------------------------------------------------------------------------1351    \10\ Gallagher, John. (2024, April 24). FMCSA standing up1352registration fraud team. FreightWaves. https://www.freightwaves.com/1353news/fmcsa-standing-up-registration-fraud-team.1354---------------------------------------------------------------------------1355    FMCSA has also announced several planned upgrades to the1356registration system that build upon ongoing modernization efforts to1357further bolster security and deter bad actors. Importantly, FMCSA plans1358to eliminate MC and other operating authority numbers and instead1359require a single identifier (USDOT number followed by a suffix1360indicating operating authority type). While the move to consolidate1361these numbers into a single USDOT number is intended to simplify1362regulatory oversight and improve efficiency, it is also a key step in1363reducing fraud by centralizing carrier verification and compliance1364checks--moving away from siloed or one-off verification processes for1365multiple business identifiers. FMCSA believes a single-number system1366could help reduce vulnerabilities that allow bad actors to manipulate1367or steal MC numbers to deceive brokers and shippers. Other planned1368upgrades include the issuance of safety registrations that will be1369attached to the carrier's USDOT number, as well as more robust business1370verification processes and streamlined systems for identifying active1371and prohibited system users.1372    I, and ATA, strongly encourage the Committee to exercise robust1373oversight as these changes are put in place by the agency. While many1374of these updates will require formal rulemakings, the trucking industry1375welcomes changes to FMCSA's system that enhance security and deter1376fraud while maintaining user accessibility. In introducing these1377registration system enhancements, FMCSA must take caution to avoid1378creating undue administrative or regulatory burdens for carriers and1379brokers.1380Organized Theft Groups and the Rise of Strategic Theft:1381    While cargo theft is not a new phenomenon, in recent years, it has1382evolved from a domestic enterprise into a sophisticated, international1383effort perpetrated by hostile entities. Organized criminal syndicates1384all over the globe have the means and wherewithal to create fraudulent1385trucking companies and brokerages and profit off vulnerabilities in1386U.S. supply chains, all without ever stepping foot on U.S. soil. These1387crime rings are predominately located in Eastern Europe, Africa, and1388South America. They continue to harm unsuspecting American companies,1389and ultimately consumers, because of the notable absence of any real1390deterrence (i.e., investigations, prosecutions, and justice).1391    The COVID-19 pandemic precipitated the meteoric rise in frequency1392and sophistication of cargo theft. CargoNet logged 1,106 reported1393incidents of theft in 2019 and 1,181 reported incidents in 2018.\11\1394During this time, the vast majority of reported thefts could be1395categorized as straight theft. These crimes were carried out by1396relatively unsophisticated thieves who would steal freight when the1397opportunity presented itself. These thieves would sell the stolen goods1398at a deep discount, usually pennies on the dollar, in the same area1399where the goods were stolen. The thieves would live off those proceeds1400until exhausting their resources, at which point they would strike1401again.1402---------------------------------------------------------------------------1403    \11\ Wolf, C. D. (2021, June 10). Truck cargo thefts skyrocketed1404amid COVID-19. Transport Topics. https://www.ttnews.com/articles/truck-1405cargo-thefts-skyrocketed-amid-covid-19.1406---------------------------------------------------------------------------1407    Beginning in 2021, however, the trucking industry saw a dramatic1408shift in the cargo theft landscape. Strategic theft has risen by over14091500 percent since the first quarter of 2021.\12\ Unlike the thieves of1410the past who engaged predominantly in straight theft, those engaged in1411strategic theft utilize fraud and deception to maximize profit and1412maintain a safe, physical distance from the theft itself. These1413criminals are often members of OTGs that operate massive networks1414within and outside the United States. The shift from opportunistic1415thieves to large OTGs gave rise to more complex and convincing fraud1416operations. Less than a decade ago, when smaller and less sophisticated1417groups were apprehended by law enforcement, it would take around 6-71418months for them to restart theft operations. Nowadays, when law1419enforcement successfully disrupts a large criminal network, it takes 301420days or fewer for that group to resume their freight fraud operations1421because of the relative ease with which bad actors can reinvent1422operations online. The constant cycle of seemingly futile efforts to1423combat crime as criminals simply move their operations elsewhere1424resembles a game of ``whack-a-mole.''1425---------------------------------------------------------------------------1426    \12\ Wolf, C. D. (2024, October 4). Cargo theft experts warn of1427peak season fraud. Transport Topics. https://www.ttnews.com/articles/1428cargo-theft-season.1429---------------------------------------------------------------------------1430    Some OTGs are so vast and sophisticated that they have established1431their own call centers to manage their illegal supply chains. In many1432cases, these groups also operate seemingly legitimate warehouses and1433online marketplaces to store and sell stolen goods. In these scenarios,1434stolen goods are often exported out of the United States, repackaged,1435and then sold, sometimes for more than market value. A good example of1436this would be energy drinks. Certain energy drinks sold in the U.S. are1437banned in other countries, so thieves take advantage of the strong1438demand and sell the stolen drinks at an incredible mark-up in those1439foreign markets. Additionally, these types of products are usually seen1440as low-risk and high-value since they are easy to move and have high1441resale potential.1442    There are several factors and trends that are responsible for this1443uptick in frequency and sophistication of freight fraud. First, the1444COVID-19 global pandemic offered criminals a prime opportunity to1445exploit the vulnerabilities caused by a supply chain thrown into chaos1446by dramatic shifts in global supply and demand. Second, the1447digitization of domestic and international supply chains has created1448new vulnerabilities and thus opportunities for OTGs to exploit gaps1449using sophisticated and ever-evolving cyber capabilities. These groups1450can steal freight remotely by exploiting the technology that has been1451embedded into supply chains to move cargo more efficiently. Third, the1452erosion of traditional in-person direct business transactions--a past1453staple of traditional supply chain relationships--has created further1454opportunities for exploitation. Doing business with unknown companies1455and drivers has become normalized given that more shipments are now1456brokered via load boards and online platforms. This has made it1457relatively easy for the criminals to pose as legitimate brokers or1458carriers and fraudulently engage in business transactions with1459unwitting supply chain partners. Finally, the lack of coordinated1460investigations and prosecutions has emboldened these actions. Thieves1461have quickly realized that federal, state, and local law enforcement do1462not have the resources to stop them nor the interest to pursue sweeping1463investigations.1464    Many U.S. motor carriers are expending significant capital to1465protect themselves against these crimes, but obviously not all1466companies have the resources to do so. Several companies offer vetting1467services to motor carriers and brokers, but those services, while1468highly effective, come with an added cost. So, many in the trucking1469industry are often victims in one of two ways: either they lose1470significant sums of money through stolen freight, or they have to spend1471significant sums of money for services and advanced security measures1472to mitigate risk. With the speed at which our supply chain and cyber1473technologies are evolving, it costs more and more to fortify our1474businesses. Success in the transportation industry is no longer simply1475a matter of having the best drivers and the right equipment; motor1476carriers must now invest immense resources to have the strongest IT1477systems and the most diligent security personnel. In today's trucking1478environment, a strong defense is necessary for survival.1479Commonly Targeted Freight1480    In general, thieves and fraudsters target goods that they can steal1481and sell quickly. This means that lower-value shipments, which are1482presumably less secure, are very attractive to cargo thieves.1483Accordingly, food and beverage items are targeted frequently and were1484the most commonly stolen type of freight in 2024.\13\ Thieves prefer1485food and beverage products because there is consistently high demand,1486law enforcement typically does not initiate investigations of1487perishable goods quickly, and it is nearly impossible to track these1488items after they have been stolen.1489---------------------------------------------------------------------------1490    \13\ Verisk CargoNet. (2025, January 21). 2024 supply chain risk1491trends analysis. https://www.cargonet.com/news-and-events/cargonet-in-1492the-media/2024-theft-trends/.1493---------------------------------------------------------------------------1494    Furthermore, thieves and OTGs are always adapting to their1495environment and changing their tactics to reduce risk and maximize1496profit. As soon as the trucking industry, our supply chain partners,1497and law enforcement agencies identify theft trends and patterns, the1498criminals have already pivoted to new tactics and new targets that are1499presumably less secure. The trends of targeted commodities thus reflect1500the state of the market and transportation security at any given time.1501For example, during the COVID-19 pandemic, thieves targeted shipments1502of medical supplies and household supplies.\14\ Due to the ongoing1503outbreaks of highly pathogenic avian influenza (HPAI) and the related1504egg shortage, approximately 100,000 eggs were stolen from a semi-1505trailer in Pennsylvania earlier this month.\15\ Thieves are very1506perceptive to market conditions and will adjust their criminal schemes1507to capitalize on consumer demand.1508---------------------------------------------------------------------------1509    \14\ Wolf, C. D. (2021, June 10). Truck cargo thefts skyrocketed1510amid COVID-19. Transport Topics. https://www.ttnews.com/articles/truck-1511cargo-thefts-skyrocketed-amid-covid-19.1512    \15\ Hume, J. (2025, February 14). 100,000 eggs stolen: Breaking1513news or an old cargo theft trend? FleetOwner. https://1514www.fleetowner.com/safety/article/55267606/egg-heist-highlights-food-1515and-beverage-cargo-theft-risks-but-is-it-a-trend.1516---------------------------------------------------------------------------1517Recent Examples of Cargo Theft in the News1518   The U.S. Attorney's Office for the Northern District of1519        Georgia announced that four men have been sentenced to prison1520        for multiple cargo thefts of electronics, copper, and apparel1521        throughout the Southeastern United States totaling more than1522        $1.7 million. The stolen goods were then taken to Florida and1523        sold. The case was investigated by the Federal Bureau of1524        Investigation (FBI) with assistance from the Miami-Dade County1525        Police Department, Economic Crime Bureau, and the FBI Miami1526        Field Office.\16\1527---------------------------------------------------------------------------1528    \16\ U.S. Attorney's Office, Northern District of Georgia. (2024,1529June 26). Members of a Cargo Theft Ring Sentenced to Prison. https://1530www.justice.gov/usao-ndga/pr/members-cargo-theft-ring-sentenced-prison.15311532   The Tulare County Sheriff's Office in Central California1533        linked Mexican cartels to a $2.25 million theft of heavy1534        agricultural equipment and machinery. The individuals arrested1535        face charges of grand theft, conspiracy, and receiving stolen1536        property. A deputy district attorney says the maximum sentence1537        would be three years behind bars.\17\1538---------------------------------------------------------------------------1539    \17\ Rodriguez, Rich. (2024, October 29). Sheriff links Mexican1540cartels to $2.25 million theft of Central California farm equipment.1541abc3340. https://abc3340.com/news/nation-world/sheriff-links-mexican-1542cartels-to-225-million-theft-of-central-california-farm-equipment.15431544   The U.S. Attorney's Office for the Northern District of1545        Illinois announced the indictment of a Lithuanian national for1546        stealing over $9.5 million in goods in the Chicago area. He1547        allegedly exploited vulnerabilities in a Federal motor carrier1548        registration system to obtain fictitious names, truck carriers,1549        and brokers. He would then use these aliases to divert freight1550        deliveries to alternate warehouses where he would then steal1551        them.\18\1552---------------------------------------------------------------------------1553    \18\ U.S. Attorney's Office, Northern District of Illinois. (2024,1554June 7). Suburban Chicago Man Charged in Federal Court With Stealing1555More Than $9.5 Million in Interstate Shipments. https://1556www.justice.gov/usao-ndil/pr/suburban-chicago-man-charged-federal-1557court-stealing-1558more-95-million-1559interstate#::text=The%20indictment%20alleges%20that%20Zigmantas,of%201560theft%20of%20interstate%20shipments.15611562   The New Jersey State Police arrested four men from1563        Philadelphia in a sting called ``Operation Beef Bandit.'' The1564        organized cargo theft ring broke into parked trailers at1565        service areas while drivers were sleeping and stole ``high-1566        value goods'' such as meat, alcohol, and seafood. The men are1567        facing numerous charges, including receiving stolen property,1568        possession of burglary tools, conspiracy to commit cargo theft,1569        and criminal mischief.\19\1570---------------------------------------------------------------------------1571    \19\ Hartman, Trish. (2024, September 17). 4 Philadelphia men1572arrested in 'Operation Beef Bandit' in connection to organized cargo1573theft ring. 6abc. https://6abc.com/post/4-men-philadelphia-arrested-1574operation-beef-bandit-connection-organized-cargo-theft-ring-tri-state/157515314427/.15761577   The California Highway Patrol (CHP) announced that a1578        monthslong multi-agency investigation into a cargo and vehicle1579        theft operation in Southern California yielded more than 501580        arrests, hundreds of thousands in U.S. currency, and over $81581        million in stolen cargo. During the investigation,1582        investigators also recovered 425 pounds of methamphetamine, 481583        gallons of liquid methamphetamine, a clandestine1584        methamphetamine lab, 20 rifles and handguns, and 20 stolen1585        vehicles.\20\1586---------------------------------------------------------------------------1587    \20\ DuBose, Josh. (2024, June 27). Cargo theft sting nets $325K in1588cash, $8M in stolen goods and 51 arrests. KTLA5. https://ktla.com/news/1589local-news/cargo-theft-sting-nets-325k-in-cash-8m-in-stolen-goods-and-159051-arrests/.15911592   The U.S. Attorney's Office for the District of New Jersey1593        announced that three men pleaded guilty to their roles in a1594        conspiracy to burglarize approximately 55 United Parcel Service1595        warehouses across the United States, resulting in the theft of1596        over $1.6 million worth of merchandise. The men sought parcels1597        marked with ``lithium-ion battery'' warnings, which indicated1598        that the packages contained high-value electronic devices such1599        as cell phones.\21\1600---------------------------------------------------------------------------1601    \21\ U.S. Attorney's Office, District of New Jersey. (2024, March160228). Three Philadelphia Men Admit Roles in Conspiracy to Burglarize1603United Parcel Service Warehouses Across United States, Stealing over1604$1.6 Million in Packages. https://www.justice.gov/usao-nj/pr/three-1605philadelphia-men-admit-roles-conspiracy-burglarize-united-parcel-1606service.16071608   The Grapevine Police Department uncovered a multimillion-1609        dollar cargo theft ring and charged seven suspects with1610        engaging in organized criminal activity. The theft ring was1611        responsible for burglaries of electronics and high-value1612        merchandise totaling more than $10 million in five cities:1613        Grapevine, Plano, Fort Worth, Coppell, and Dallas.\22\1614---------------------------------------------------------------------------1615    \22\ Myers, Doug and J.D. Miles, S.E. Jenkins. (2024, November 19).16167 charged with organized criminal activity in multimillion-dollar North1617Texas cargo theft ring. CBS News. https://www.cbsnews.com/texas/news/1618seven-charged-in-north-texas-multimillion-dollar-cargo-theft-ring-1619bust/.16201621   CHP's Organized Retail Crime Task Force and Cargo Theft1622        Interdiction Program conducted a statewide enforcement1623        operation called ``Operation Overloaded,'' which targeted1624        individuals involved in a cargo theft scheme believed to have1625        stolen over $150 million worth of goods from more than 2001626        cargo loads. CHP arrested 40 people during the operation and1627        seized over $50 million worth of stolen merchandise and 201628        stolen cargo trailers. The authorities also confiscated several1629        vehicles, multiple firearms (including ghost guns), over1630        $550,000 in cash, and 13 gold bars. The suspects involved in1631        the theft scheme face several felony charges, including1632        conspiracy to commit grand theft, grand theft of cargo, vehicle1633        theft, and identity theft.\23\1634---------------------------------------------------------------------------1635    \23\ FCCR (2023, May 8). 40 Individuals Linked to $150 Million1636Cargo Theft Scheme Arrested. https://fccr.co/40-individuals-linked-to-1637150-million-cargo-theft-scheme-arrested/?srsltid=AfmBO1638oon6CFDIDj0SvU-QR5A5c8VLS0Mq-pjEZgqOYJG3_PKvopVrzdl.16391640   The U.S. Attorney's Office for the Southern District of1641        Florida announced that the final member of a cargo theft ring1642        had been convicted of stealing 19,000 pounds of Perry Ellis1643        perfume worth over $230,000. The shipment was destined for1644        Laredo, Texas, but 22 of the 24 pallets of perfume never left1645        Hialeah, Florida, because of the theft.\24\1646---------------------------------------------------------------------------1647    \24\ U.S. Attorney's Office, Southern District of Florida. (2024,1648January 31). Final Member of Cargo Theft Ring Convicted of Stealing164919,000 Pounds of Perry Ellis Perfume Worth Over $230,000. https://1650www.justice.gov/usao-sdfl/pr/final-member-cargo-theft-ring-convicted-1651stealing1652-19000-pounds-perry-ellis-perfume.16531654   The Kentucky State Police announced that its Vehicle1655        Investigations Branch had ended a year-and-a-half-long1656        investigation into an organized theft ring allegedly1657        responsible for around $10 million in stolen freight. During1658        the investigation, the Kentucky State Police opened 16 cargo1659        theft investigations, resulting in 10 Federal indictments and1660        seven arrests. Investigators had noted a rise in stolen freight1661        throughout the state that specifically targeted the food and1662        beverage industry, as well as an increase in incidents of1663        copper theft.\25\1664---------------------------------------------------------------------------1665    \25\ Witkowski, Ryan. (2023, December 22). Cargo theft1666investigators recover over $5M in stolen property. Landline. https://1667landline.media/cargo-theft-investigators-recover-over-5-million-in-sto1668len-property/.16691670   The U.S. Attorney's Office for the Middle District of1671        Florida announced that four men have pleaded guilty to charges1672        involving cargo theft of an interstate shipment of goods and1673        receipt and possession of stolen goods. The men stole a tractor1674        trailer containing $500,000 worth of Patron tequila that was1675        parked near U.S. Route 301 in Tampa. The tequila was an1676        interstate shipment from Texas that was enroute to a business1677        in Lakeland, Florida.\26\1678---------------------------------------------------------------------------1679    \26\ U.S. Attorney's Office, Middle District of Florida. (2020,1680October 29). Four Individuals Plead Guilty In Tequila Cargo Theft Ring.1681https://www.justice.gov/usao-mdfl/pr/four-individuals-plead-guilty-1682tequila-cargo-theft-ring.16831684   The U.S. District Court for the Central District of1685        California issued a final judgment against a moving company for1686        repeated unauthorized transportation of household goods, in1687        violation of FMCSA's registration requirements, and ordered to1688        pay $25,000 in fines.\27\1689---------------------------------------------------------------------------1690    \27\ Federal Motor Carrier Safety Administration (2024, December16916). FMCSA Wins Landmark Judgement Against Moving Company. https://1692www.fmcsa.dot.gov/newsroom/fmcsa-wins-landmark-judgement-against-1693moving-company.1694---------------------------------------------------------------------------1695Challenges With Understanding the Scope of Freight Fraud:1696    Because fraud and cargo theft within our supply chains are1697increasing at such an alarming rate, it is difficult to aggregate data1698that accurately represents the current breadth and scope of this1699problem.1700Underreporting of Cargo Theft and Poor Data1701    Cargo theft is severely underreported in crime statistics. The1702FBI's Universal Crime Reporting program attempts to generate reliable1703statistics on cargo theft, but the most recent report was published in17042019, and local agencies are under no obligation to report.1705Additionally, industry reporting of cargo theft is not mandatory. The1706utilization of voluntary data on cargo theft from law enforcement and1707industry certainly understates the scope and value of cargo theft.1708    Importantly, freight fraud and cargo theft are regularly1709underreported by industry because transportation companies fear1710publicity that could damage their business reputations. They do not1711want to be perceived by clients or competitors as having weak security1712or poor management, which would risk customer relationships and future1713business growth opportunities.1714    Another factor contributing to industry underreporting is general1715confusion about appropriate reporting protocols. Motor carriers and1716brokers may not know the correct jurisdiction to which the crime should1717be reported because they may not know where or when exactly the theft1718took place. There are also situations when victims may reach out to law1719enforcement to report a crime and seek assistance for cases of fraud or1720theft, but rather than assistance, they are met with confusion and1721dismissiveness. Often, when trucking companies attempt to file a report1722with local and state law enforcement agencies, they are told to file a1723claim with their insurance company instead. This happens usually1724because local and state law enforcement officers often do not have the1725necessary training to recognize that cargo theft is not simply a1726property crime. Alternatively, law enforcement officers will note1727jurisdictional issues given the interstate nature of the crime and1728direct motor carriers to report elsewhere. Importantly, it should be1729noted that, for many motor carriers and logistics companies, it does1730not make financial sense to file theft claims with insurance because1731the value of the stolen freight is often less than their deductible.1732    Cargo theft is misunderstood for many reasons. First, the law that1733criminalizes cargo theft at the Federal level never mentions or defines1734the term, ``cargo theft.'' \28\ Furthermore, the state statutes1735defining and criminalizing cargo theft and other types of freight fraud1736are different for each state. As highlighted in a recent report from1737the Federal Maritime Commission (FMC), this inconsistency creates a lot1738of confusion for law enforcement, especially since these crimes usually1739involve bad actors who cross state lines.\29\ It is not always clear1740which crimes constitute cargo theft and which agencies have the1741authorities to investigate and prosecute these offences. Jurisdictional1742confusion leads to ineffective enforcement of applicable cargo theft1743laws, and the absence of criminal investigations and prosecutions1744emboldens criminals to continue their illegal activities.1745---------------------------------------------------------------------------1746    \28\ 18 U.S.C. Sec. 6591747    \29\ Bentzel, C. W. (2024, December). Cargo theft: Evaluation of1748the challenge of combatting cargo theft with recommendations on how to1749reduce the impact of cargo theft. Federal Maritime Commission. https://1750news.tianet.org/wp-content/uploads/sites/3/2024/12/2024.12-FMC-Bent1751zel-Cargo-Theft-Report.pdf1752---------------------------------------------------------------------------1753    Fundamental misunderstandings about cargo theft among law1754enforcement officers, especially at the state and local levels, are not1755simply the result of negligent policing. Shifting priorities and the1756loss of dedicated funding means that law enforcement officers are not1757properly equipped to address this dynamic and complex issue. The sharp1758decline of experienced cargo theft investigators at state and local1759levels has been a common trend over the past several years. For1760example, the State of Georgia previously had a state-wide, leading-edge1761frontline task force dedicated to investigating cargo thefts. But in17622018, the task force was disbanded due to a lack of support from the1763state government.\30\1764---------------------------------------------------------------------------1765    \30\ Lockridge, D. (2025, February 20). Cargo theft likely to spike1766over the next seven days. Commercial Carrier Journal. https://1767www.ccjdigital.com/workforce/safety/article/15281505/cargo-theft-1768likely-to-spike-over-the-next-seven-days.1769---------------------------------------------------------------------------1770Current Cargo Theft Data1771    With the prevalence of underreporting in mind, there are groups1772that have attempted to estimate the impact of these types of crimes.1773One such organization is CargoNet, which is a subscription-based1774information-sharing network that collects data about instances of cargo1775theft that are voluntarily submitted by companies, law enforcement, and1776other sources. In 2024, 3,625 theft incidents were reported to1777CargoNet, a 27 percent increase compared to the previous year. It is1778believed that this figure represents only a small percentage of the1779total thefts committed. In 2024, CargoNet estimated the total loss to1780industry at more than $450 million. Per incident, the estimated average1781value stolen was $202,364, up from $187,895 in 2023.\31\1782---------------------------------------------------------------------------1783    \31\ Verisk CargoNet. (2025, January 21). 2024 supply chain risk1784trends analysis. CargoNet. https://www.cargonet.com/news-and-events/1785cargonet-in-the-media/2024-theft-trends/.1786---------------------------------------------------------------------------1787    Overhaul, another company that provides various services in the1788cargo theft mitigation space, publishes a report annually that details1789significant theft incidents in the United States and Canada. According1790to their most recent annual report, Overhaul recorded a total of 2,2171791cargo thefts throughout the United States in 2024. These numbers1792represent a 49 percent increase in volume and a 17 percent increase in1793average value when compared to 2023.\32\1794---------------------------------------------------------------------------1795    \32\ Overhaul (2025, January). United States & Canada: Annual Cargo1796Theft Report 2024. https://over-haul.com/wp-content/uploads/2025/02/US-1797and-Canada-Annual-Cargo-Theft-Report-2024.pdf.1798---------------------------------------------------------------------------1799    Companies like CargoNet and Overhaul are publishing data based on1800the incidents that are reported, but as previously stated, cargo theft1801is notoriously underreported. With that in mind, we are of the opinion1802that the problem is even bigger than what these organizations' data1803show. And we are not alone. NICB,\33\ Homeland Security Investigations1804(HSI),\34\ and the FBI \35\ have all estimated that cargo theft in the1805United States is a $15 to $35 billion industry.1806---------------------------------------------------------------------------1807    \33\ National Insurance Crime Bureau. (2024, November 15). The rise1808of cargo theft: A billion-dollar industry. NICB. https://www.nicb.org/1809news/blog/rise-cargo-theft-billion-dollar-industry.1810    \34\ U.S. Immigration and Customs Enforcement. Operation Boiling1811Point. https://www.ice.gov/about-ice/hsi/news/hsi-insider/op-boiling-1812point.1813    \35\ Josephs, L. (2023, March 25). Cargo theft led by food and1814beverage is surging across the U.S. CNBC. https://www.cnbc.com/2023/03/181525/cargo-theft-led-by-food-and-beverage-is-surging-across-the-us.html.1816---------------------------------------------------------------------------1817Barriers to Investigation and Prosecution:1818    ATA has been engaging with representatives from the FBI, the1819Department of Justice (DOJ), HSI, and USDOT. While these agencies know1820cargo theft is a significant problem in the U.S., often they lack the1821resources to make a dent in the problem.1822    State and local authorities could better help these Federal1823agencies by identifying and demonstrating links between various cargo1824theft cases in order to connect seemingly isolated thefts to an OTG.1825Establishing connections between multiple theft incidents will enable1826Federal authorities to take prosecutorial action, since the standard1827for Federal involvement is much higher. In order for DOJ to even1828consider prosecuting a cargo theft case, the value of the goods stolen1829must total at least $1.5 million, according to the United States1830Sentencing Commission.\36\ This threshold can be met in two ways:1831either a single theft incident totals at least $1.5 million in losses,1832or multiple related theft incidents (potentially targeting multiple1833victims) total at least $1.5 million in losses.1834---------------------------------------------------------------------------1835    \36\ U.S.S.C, Sec. 2B1.11836---------------------------------------------------------------------------1837    Given that the estimated average value per theft in 2024 was1838$202,364,\37\ it is imperative that state and local law enforcement1839better track incidents of cargo theft because most single incidents do1840not reach the monetary threshold to warrant Federal involvement. When1841dots are connected, DOJ can become involved, thieves can be prosecuted,1842and victims can receive justice. If law enforcement identifies a link1843(i.e., a single OTG stealing multiple trailers) DOJ will have the green1844light to utilize more resources and dedicate more manpower to bringing1845these criminals to justice. Additionally, more prosecutions will serve1846as a deterrent, and hefty sentences will hopefully make potential1847offenders aware of the consequences of their actions.1848---------------------------------------------------------------------------1849    \37\ Verisk CargoNet. (2025, January 21). 2024 supply chain risk1850trends analysis. CargoNet. https://www.cargonet.com/news-and-events/1851cargonet-in-the-media/2024-theft-trends/.1852---------------------------------------------------------------------------1853    One of the major reasons why it can be difficult for law1854enforcement agencies to connect individual theft cases is due to the1855inconsistency in the statutory definition of cargo theft across1856jurisdictions. As previously mentioned, statutes defining and1857criminalizing cargo theft are different for each state. Additionally,1858the law that criminalizes cargo theft at the Federal level never1859mentions or defines the term, ``cargo theft.'' \38\ These differences1860create confusion and make is difficult for investigators and1861prosecutors to combine efforts to combat cargo theft. Given that these1862crimes usually involve freight that crosses state lines, questions of1863jurisdictional authority regularly arise. Relatedly, as mentioned in1864the FMC report,\39\ definitional differences often result in a struggle1865to form a unified assessment of offenses and to use the assessment to1866coordinate law enforcement response. Overall, jurisdictional confusion1867leads to ineffective enforcement of applicable cargo theft laws, and1868the absence of criminal investigations emboldens criminals to continue1869their illegal activities.1870---------------------------------------------------------------------------1871    \38\ 18 U.S.C. Sec. 6591872    \39\ Bentzel, C. W. (2024, December). Cargo theft: Evaluation of1873the challenge of combatting cargo theft with recommendations on how to1874reduce the impact of cargo theft. Federal Maritime Commission. https://1875news.tianet.org/wp-content/uploads/sites/3/2024/12/2024.12-FMC-Bent1876zel-Cargo-Theft-Report.pdf1877---------------------------------------------------------------------------1878How Congress Can Help Combat Freight Fraud and Safeguard U.S. Supply1879        Chains:1880    Economic security is national security, and the unfortunate reality1881is that our national security has been compromised because OTGs and1882TCOs have successfully infiltrated our domestic supply chains and1883exploited enforcement gaps in the stream of interstate commerce. The1884trucking industry and U.S. supply chains are both interstate by1885nature--goods cross state lines and move through ports of entry nearly1886every second of every day--which is why ATA and our supply chain1887partners are urging a Federal response to the alarming rise of freight1888fraud across the country. OTGs have identified the glaring gaps between1889local, state, and Federal law enforcement regimes as low-risk, high-1890reward opportunities to build out sophisticated fraud and theft schemes1891and remain undetected. OTGs are exploiting U.S. transportation and1892distribution networks with impunity because there is no concerted1893effort from the Federal government to investigate and prosecute. And1894without those critical deterrence factors, criminals will continue to1895infiltrate our supply chains, profit off the vulnerability of American1896businesses, and fund other illicit enterprises with the money generated1897from fraud and theft schemes. The costs of inaction are enormous, both1898in terms of financial losses and the denigration of national security.1899    Therefore, we urge Congress to embrace its responsibilities1900pursuant to the Commerce Clause of the U.S. Constitution and leverage1901the cross-cutting enforcement capabilities of the Federal government to1902help combat rampant supply chain fraud and theft. We are grateful to1903Senators Fischer and Duckworth for tackling the issue of fraud in the1904moving and storage industry by introducing the Household Goods Shipping1905Consumer Protection Act (S. 337). This legislation provides FMCSA with1906the necessary tools, resources, and authorities to protect consumers1907from fraud, while also helping small businesses in the household goods1908shipping industry protect their businesses and reputations. The1909Household Goods Shipping Consumer Protection Act will help prevent bad1910actors from preying on individuals and families during stressful1911relocation events.1912    Specifically, this bill restores FMCSA's ability to impose civil1913penalties against unauthorized brokers and other bad actors, allowing1914the agency to act swiftly in meting out penalties. The bill also1915requires companies operating in the household goods sector to maintain1916a legitimate place of business. Too often, consumers fall victim to1917scammers who set up freight businesses that exist only on paper and who1918have no sincere intention of helping them move. The Household Goods1919Shipping Consumer Protection Act gives states the ability to use1920Federal funds to enforce consumer protection laws and root out1921fraudulent actors before they strike. This bipartisan legislation is a1922critical element of a broader Federal response to freight fraud, and we1923hope that Congress advances it expeditiously.1924    We hope that this Committee will take further action to help combat1925freight fraud by supporting the Safeguarding Our Supply Chains Act1926(H.R. 8834 from the 118th Congress). The robust coalition of1927stakeholder support for the Safeguarding Our Supply Chains Act is a1928testament to the breadth and scope of U.S. industries that are impacted1929by supply chain fraud and theft. No industry wants to be seen as the1930target of criminal activity, but the situation has become so dire that1931the American Trucking Associations, along with the Association of1932American Railroads, the National Association of Manufacturers, the1933National Milk Producers Federation, the National Retail Federation,1934NATSO, the Retail Industry Leaders Association, the Transportation1935Intermediaries Association, the U.S. Chamber of Commerce, the U.S.1936Dairy Export Council, and the World Shipping Council have all joined1937together in advocating for Federal intervention through the1938Safeguarding Our Supply Chains Act.1939    The legislation directs HSI, in conjunction with the Attorney1940General and the FBI, to establish a Federal task force to prevent and1941reduce organized crime throughout all stages of the supply chain--1942including production, transportation, freight brokerage, processing,1943storage, distribution, and retail--as well as detect, disrupt, and1944deter OTGs and individuals that are targeting all stages of the supply1945chain. The legislation also directs HSI to establish a coordination1946center to collect and analyze data related to fraud and theft at all1947stages of the supply chain and identify regions in the United States,1948modes of transportation, distribution networks, and retail stores that1949are experiencing high volumes of organized crime. The intelligence1950generated by the coordination center will inform the personnel and1951resource allocations of the task force to ensure a dynamic and1952efficient response to evolving criminal tactics.1953    This legislation was modeled after the Jaime Zapata Border1954Enforcement Security Task Force Act, which was signed into law by1955President Obama in 2012. This law established the Border Enforcement1956Security Task Force (BEST) within the Department of Homeland Security1957(DHS) and is a premier example of successful collaboration between1958federal, state, local, tribal, and foreign law enforcement agencies to1959execute coordinated activities in furtherance of national security1960objectives. The task force established by the Safeguarding Our Supply1961Chains Act mirrors the BEST's highly successful framework to similarly1962incentivize collaboration between law enforcement agencies. Because of1963the interstate nature of supply chain fraud and theft and its relation1964to organized conspiracy, the Federal government must take a leadership1965role in coordinating enforcement activities and connecting the dots.1966Moreover, given HSI's unique cross-border authorities and trade1967expertise, the FBI's role as the lead Federal agency in enforcing the1968Federal law on cargo theft (18 U.S.C. Sec. 659), and FMCSA's exclusive1969authority to challenge fraudulent broker licensing, it is imperative1970that the Federal government harmonize its disparate functions to1971address the gaps in our supply chain that are currently being1972exploited.1973    Congress should also consider opportunities to address supply chain1974fraud and theft through the appropriations process. The FY 20251975Homeland Security Appropriations bill as passed by the House of1976Representatives directs Homeland Security Investigations (HSI) to1977establish a Supply Chain Fraud and Theft Task Force and provides $21978million to fund the initiative. The FY 2025 Commerce, Justice, Science,1979and Related Agencies Appropriations bill as reported by the House1980Committee on Appropriations directs DOJ to allocate no less than $21981million for the purpose of prosecuting crimes involving cargo theft and1982instructs several United States Attorneys' Offices to assign at least1983one attorney to prioritize cargo theft prosecutions. The FY 20251984Transportation, Housing and Urban Development Appropriations bill as1985passed by the Senate Appropriations Committee also directs a1986coordinated effort from the USDOT, DOJ, DHS's Supply Chain and1987Resilience Center, and relevant stakeholders to confront the issue of1988cargo theft.1989    Additionally, we encourage this Committee to oversee and support1990the critical work already underway at the FMCSA to address registration1991fraud and facilitate a smooth transition to the newly modernized and1992enhanced FMCSA Registration System.1993    Passage of the Household Goods Shipping Consumer Protection Act and1994the Safeguarding Our Supply Chains Act, Congressional oversight of1995FMCSA's transition to the new system, and enactment of key1996appropriations provisions that direct funding and Federal attention to1997the growing threat of organized supply chain crime are vital to our1998Nation's economic security.1999In Conclusion:2000    Chairman Young, Ranking Member Peters and members of the2001subcommittee, thank you again for the opportunity to testify before you2002today on behalf of the American Trucking Associations. Supply chain2003fraud and cargo theft are imperiling the trucking and supply chain2004logistics industry. My companies, Tanager Logistics and Double Diamond2005Transport, have experienced these threats first-hand, and we have been2006forced to navigate a complex and often ineffective response from2007varying law enforcement agencies and Federal regulators. My peers in2008Texas, across the nation, and up and down the supply chain are2009confronting similar challenges. These challenges are sophisticated and2010are disrupting the supply chain, harming the economy, and ultimately,2011hitting the consumer.2012    It is imperative that action is taken at the federal, state, and2013local levels to confront and neutralize this growing threat. We need2014more cooperation and interagency information-sharing, as well as a more2015robust investigative and prosecutorial posture, to tackle these2016challenges head-on. Importantly, we need a commitment from Congress to2017provide the tools and resources necessary to facilitate that unified2018response.2019    The trucking and supply chain logistics industry stands ready to2020collaborate with every stakeholder committed to halting the rise of2021supply chain fraud and cargo theft, and we welcome the opportunity to2022work with this subcommittee, Congress, and the new Administration in2023that effort. Thank you for your attention and leadership in holding2024today's hearing. We look forward to a continued dialogue.20252026    Senator Young. Thank you, Mr. Blanchard. We will look2027forward to posing some questions. We are sorry about your2028troubles. You did a great job of personalizing those and making2029those real to us.2030    Our final witness, Lewie Pugh, is the Executive Vice2031President for the Owner-Operator Independent Drivers2032Association. Before joining OOIDA--well, that was close, right,2033Mr. Pugh?--Mr. Pugh was a truck owner-operator for nearly 232034years, and he earned the Million Miles Safe Drivers Award.2035    Mr. Pugh, you are recognized for five minutes, sir.20362037   STATEMENT OF LEWIE PUGH, EXECUTIVE VICE PRESIDENT, OWNER-2038            OPERATOR INDEPENDENT DRIVERS ASSOCIATION20392040    Mr. Pugh. Yes, Chairman Young, Ranking Member Peters, and2041members of the Subcommittee, I am Lewie Pugh, the Executive2042Vice President of the Owner-Operator Independent Drivers2043Association. I have over 30 years in the industry. Nearly 23 of2044those prior to working at OOIDA was being a small business2045trucker. And with those I accumulated about 2.5 million miles2046of safe driver. And prior to that I was a truck driver in the2047United States Army and still hold my CDL to this day.2048    OOIDA is the largest national trade association2049representing small business truckers and employee drivers. We2050have approximately 150,000 members, who cumulatively own about2051240,000 pieces of equipment, or operate.2052    OOIDA's mission is to promote and protect the interests of2053our members and any issues that impact their safety and2054success, which increasingly includes freight fraud. In2055trucking, freight fraud is so easy to commit, it does not even2056take a savvy or experienced criminal to pull it off.2057    As you can tell from this panel of professionals, everyone2058from shippers, motor carriers, brokers are vulnerable targets.2059Often, the perpetrators of these crimes are based2060internationally, far beyond the reach of the American2061enforcement agencies. While certainly these cases of physical2062theft are occurring within our industry, most of the problems2063small business truckers face involves being scammed by2064fraudsters or swindled by unscrupulous brokers.2065    There are several factors contributing to this recent2066explosion in freight fraud--weak freight rates, overcapacity,2067we have had increased competition leading to greater2068susceptibility among small trucking businesses. Advanced2069technology and lack of Federal oversight and enforcement has2070also created an environment where fraudulent actors can thrive.2071Unfortunately, small trucking businesses are both the most2072vulnerable to fraud and the least likely to be able to recover2073from it.2074    Most commonly, motor carriers are held responsible for the2075loss of the cargo due to fraud, with costs ranging from tens of2076thousands to hundreds of thousands of dollars per incident.2077Several OOIDA members have lost their entire business after2078falling prey to a single case of freight fraud. This is not a2079hyperbole. It only takes one scam to completely ruin a small2080trucking business.2081    Fraudulent activities include double-brokering, criminals2082posing as legitimate brokers, rerouting schemes, identity2083theft, purchase of authority by fraudsters, and more. Truckers2084are doing all they can to protect themselves, but they are2085limited in their capabilities. For example, an OOIDA member2086does not have the resources to identify most of the2087sophisticated scammers. They lack the authority to ensure2088brokers are complying with existing transparency regulations.2089While there are systems in place that can help combat fraud,2090the Federal Government is struggling to provide support to2091shippers, motor carriers, and brokers is needed.2092    The first step Congress must take to improve this condition2093is passing Senate Bill 337, which is bipartisan legislation2094introduced by Senators Fischer and Duckworth. This bill, which2095is supported by a wide variety of industry and stakeholders,2096gives the Federal Motor Carrier Administration the authority to2097level civil penalties against fraudsters. It also requires2098brokers to register with a physical address--this is something2099carriers have had to do for years--and it is a minor change2100that could have a major impact on protecting motor carriers.2101    Congress must also use its oversight to ensure existing2102programs can help prevent fraud or better prioritize. This2103includes improving FMCSA's National Consumer Complaint Data2104base, or NCCDB, which OOIDA has advocated for, for years.2105    Congress must also support regulatory efforts that are2106currently underway, such as insurance compliance with the2107broker bond requirements and creating a new registration2108system. Additionally, if FMCSA fails to produce a final rule2109that ensures compliance with existing broker transparency2110regulations, Congress must compel the agency to do so.2111    Since I began my testimony, a small business trucker has2112likely fallen prey to fraud that could jeopardize their entire2113business. That is how commonplace freight fraud is becoming in2114trucking.2115    We believe we have identified several critical steps2116Congress and FMCSA must take to weed out fraudulent actors, and2117look forward to working with these and answering your questions2118throughout the hearing. Thank you.2119    [The prepared statement of Mr. Pugh follows:]21202121      Prepared Statement of Lewie Pugh, Executive Vice President,2122             Owner-Operator Independent Drivers Association2123    Chairman Young, Ranking Member Peters, and members of the2124Subcommittee, my name is Lewie Pugh and I am the Executive Vice2125President of the Owner-Operator Independent Drivers Association2126(OOIDA). Prior to working at OOIDA, I was a small-business trucker for2127nearly 23 years with 2.5 million miles of safe driving. Before2128operating my own trucking business, I drove a truck during my service2129in the United States Army. I still proudly hold a Commercial Driver's2130License (CDL).2131                              About OOIDA2132    The Owner-Operator Independent Drivers Association (OOIDA) is the2133largest trade association representing small-business truckers and2134professional truck drivers. OOIDA has approximately 150,000 members2135located in all fifty states that collectively own and operate more than2136240,000 individual heavy-duty trucks. OOIDA's mission is to promote and2137protect the interests of our members on any issues that impact their2138economic well-being, working conditions, and the safe operation of2139commercial motor vehicles (CMVs) on our Nation's highways.2140    Almost all freight in the United States is carried by a truck at2141some point and over 70 percent is carried exclusively by truckers.2142Small trucking businesses, like those we represent, account for 962143percent of registered motor carriers in the United States, making them2144a key component of the Nation's supply chain. We are undoubtedly the2145safest and most diverse operators on our Nation's roads. Every region2146of our country and segment of our economy relies upon long-haul truck2147drivers. Our members are an integral part of the global supply chain2148and have a unique perspective on the many challenges our Nation faces2149in moving freight in the safest, most efficient manner.2150                              Introduction2151    Cargo theft and freight fraud are so incredibly easy to commit it2152doesn't even take a savvy or experienced criminal to pull it off.2153Everyone from shippers, receivers, motor carriers, and brokers are2154vulnerable targets. Too often, the perpetrators of these crimes are2155based internationally--predominantly Asia and Eastern Europe--far2156beyond the reach of American enforcement agencies. While there are2157certainly cases of physical theft occurring within our industry, most2158of the problems truckers face involves being scammed by fraudulent2159actors or swindled by unscrupulous brokers.2160    These illegal activities exploded in recent years, increasing by2161600 percent over the course of just 5 months between 2022 and 2023,\1\2162and have shown no signs of slowing. Estimates indicate these crimes2163cost our industry roughly $1 billion annually.\2\ The full impact on2164our economy and the American people is difficult to assess, but it2165undoubtedly contributes to higher consumer prices, as shippers and2166receivers look to recoup their losses with remaining products.2167---------------------------------------------------------------------------2168    \1\ State of Fraud in the Industry, Transportation Intermediaries2169Association, 20242170    \2\ State of Fraud in the Industry, Transportation Intermediaries2171Association, 20242172---------------------------------------------------------------------------2173    There are several factors contributing to the recent rise in cargo2174theft and freight fraud. Weak freight rates and overcapacity in the2175trucking industry have increased competition, leading to greater2176susceptibility to fraud among motor carriers. Advanced technology,2177coupled with a lack of Federal oversight and enforcement of regulated2178entities in the freight industry, have created an environment where2179fraudulent actors can thrive with little fear of being caught or2180punished for their crimes.2181    Most small-business truckers--who aren't contracted with a larger2182motor carrier--acquire loads from brokers on platforms called load2183boards. As shippers have become less likely to work directly with small2184carriers, reliance on load boards has increased dramatically over the2185years among owner-operators. Unfortunately, these platforms have2186simultaneously become fertile ground for nefarious actors. While the2187operators of load boards regularly use data to restrict access to2188truckers they believe may be scammers, very little is being done to2189crack down on the pervasiveness of fraudulent and unscrupulous brokers.2190    Unfortunately, small trucking businesses are both the most2191vulnerable to fraud and the least likely to be able to recover from an2192incident. Most commonly, motor carriers are held responsible for the2193loss of cargo due to fraud, with costs ranging from tens-of-thousands2194to hundreds-of-thousands of dollars per incident. In fact, several2195OOIDA members have lost their entire business after falling prey to a2196single case of freight fraud. That's not hyperbole. While large2197carriers are better equipped to absorb the cost of fraud, it only takes2198a single occurrence to ruin a small trucking business.2199           Types of Cargo Theft and Freight Fraud in Trucking2200    OOIDA members who have been victimized by freight fraud are most2201often targeted by scammers posing as legitimate brokers. This practice2202occurs in two distinct ways. First, many small trucking businesses fall2203victim to `double brokering'. This is when criminals pose as motor2204carriers to acquire loads from brokers, then pose as brokers looking2205for truckers to complete hauls. When the freight is delivered, the2206legitimate broker issues a payment to the fraudulent actor, and the2207trucker who actually hauled the cargo is left high and dry. It is2208entirely possible brokers are unaware any fraudulent activity has2209occurred in these cases, but there are instances of fake motor carriers2210working closely with unscrupulous brokers to take advantage of small2211trucking businesses via double brokering.2212    The second type of scam involves the theft of a broker's identity2213to arrange the shipment of a load with a motor carrier. The trucker2214delivers the load and submits the appropriate paperwork to the fake2215broker, who then forwards the documents to the real broker, collects2216the payment, and disappears. Making matters worse for our members,2217small trucking businesses are also forced to absorb all the additional2218costs associated with moving the freight, including fuel, tolls,2219maintenance, and other expenses.2220    Some motor carriers have also fallen victim to reroute schemes.2221While hauling a fraudulently brokered load, the scammers contact the2222unknowing trucker with a new delivery address, often offering extra2223payment for covering the additional miles. Once delivered, the load is2224transferred to another truck and stolen, leaving the carrier2225responsible for the lost freight.2226    In other cases, a motor carrier's identity is stolen and used to2227secure a load from a broker. The fraudster then delivers the load to a2228warehouse, where it is transferred and stolen. The legitimate motor2229carrier, whose authority was compromised, is ultimately held liable for2230the value of the stolen load. And it's not particularly difficult to2231accomplish this type of scam. Every motor carrier is assigned a USDOT2232Number, which, along with addresses and phone numbers, can be easily2233viewed on FMCSA's website. As a result, it is incredibly easy to take2234that information, hijack the authority of a legitimate motor carrier,2235acquire loads, and receive payments. To make matters worse, fraudsters2236can also assess the safety records of motor carriers to choose victims2237that are most likely to be selected by brokers.2238    OOIDA recognizes motor carriers aren't the only victims of cargo2239theft and freight fraud. Several OOIDA members that also operate as2240brokers have been victimized by various scams as well. One member2241recently shared a story where they unknowingly hired a carrier whose2242identity had been stolen. The scammer made subtle changes, like2243altering a single letter in an e-mail address and providing a new phone2244number, to pose as a legitimate trucking business. Trusting the2245relationship, the broker assigned the load, only for the scammer to2246vanish with the freight--leaving the broker liable for the loss.2247    Our members also fall victim to nefarious actors offering large2248payments--anywhere from $2,000 to $40,000 depending on the age and2249safety record of the motor carrier--to sell their authority. Once the2250sale is complete, these bad actors masquerade as the original operator2251to fleece unsuspecting brokers who think they are working with a2252reputable and safe business.2253    When fraud is committed, brokers often attempt to hold our members2254responsible. While OOIDA supports calls to eliminate most transfers of2255authority as a productive means to combat fraud, there are exceptions2256that must be allowed. There are circumstances, such as the death or2257disability of the principal or sole proprietor of a motor carrier,2258where it would be appropriate for the spouse or child who has been2259involved in the business to assume control without having to file for2260new registration. These valid transfers must be preserved.2261             The Lack of Federal Oversight and Enforcement2262    In July 2024, the Federal Motor Carrier Safety Administration2263(FMCSA) issued a report on illegal broker activity in the trucking2264industry. Two key aspects of the report were extremely frustrating for2265stakeholders.2266    First, the agency indicated it lacked the data necessary to2267determine if fraudulent activity, including double brokering,2268negatively impacts highway safety. Small-business truckers operate on2269the slimmest of margins and being victimized by scammers comes at a2270high cost. This often forces them to reduce or delay maintenance and2271repair of their trucks, which unquestionably effects safety. This also2272ignores the likelihood that those illegally posing as legitimate motor2273carriers lack the training, licensing, and insurance to lawfully and2274safely operate a CMV. Unfortunately, with this position, FMCSA is2275unlikely to unilaterally take the necessary steps to fully combat fraud2276in the trucking industry.2277    Second, the agency lacks the statutory authority to2278administratively adjudicate and assess civil penalties for violations.2279This has routinely resulted in the referral of cases to the Department2280of Justice (DOJ). In our experience, DOJ lacks the training,2281experience, resources, and motivation to effectively handle these2282cases. At this point, our members are often told to contact their local2283law enforcement agencies, who also lack the capability to properly2284address these crimes. In the end, fraud complaints bounce from agency2285to agency without anyone taking responsibility.2286    Furthermore, FMCSA's National Consumer Complaint Database (NCCDB)2287has proven to be an ineffective tool for motor carriers to report2288unscrupulous brokers and cases of freight fraud. Typically, truckers do2289not receive a satisfactory response when they call the NCCDB hotline or2290submit their problem via the online portal--if they receive one at all.2291The lack of response from FMCSA discourages truckers from using the2292NCCDB to submit cases, which also contributes to a lack of2293understanding of the scope of the problem within the agency. FMCSA must2294increase their response level to motor carriers after a complaint is2295filed, but likely lacks the resources and proper authority to do so. We2296also believe something as simple as changing the name of the program to2297better reflect its purpose in trucking would improve its utilization.2298    Section 23016 of the Bipartisan Infrastructure Law required the2299Government Accountability Office (GAO) to examine the NCCDB and2300evaluate the effectiveness of efforts to consider and follow-up on2301complaints submitted to the database, the types of complaints, and2302awareness of the database. The GAO published their findings in2303September 2023 stating that, ``FMCSA has not designed sufficient2304controls to help ensure its policy for reviewing complaints related to2305motor carriers is followed.'' \3\ The report made 14 separate2306recommendations to FMCSA, including:2307---------------------------------------------------------------------------2308    \3\ GAO Report to Congressional Committees, ``Motor Carrier2309Operations: Improvements Needed to Federal System for Collecting and2310Addressing Complaints against Truck, Moving, and Bus Companies,''2311September 19, 2023, (GAO-23-105972, https://www.gao.gov/assets/d231059231272.pdf.23132314   Ensure FMCSA updates its complaint review guidance to define2315---------------------------------------------------------------------------2316        each category of complaint.23172318   Ensure the NCCDB website is consistently mobile-friendly.23192320   Ensure the website appropriately targets key audiences,2321        including by defining acronyms and technical terms, and2322        providing more detailed or relevant examples of complaints that2323        may be filed by truck and bus drivers.23242325   Develop an outreach plan for the website that aligns with2326        leading practices for outreach.23272328    FMCSA agreed with 13 of GAO's recommendations, but has indicated2329that the necessary changes will not be implemented until Fiscal Year23302026. To better understand and combat cargo theft and freight fraud, we2331believe the agency must expedite these updates and promote greater2332awareness of NCCDB among truckers.2333    In recent years, FMCSA has acknowledged that freight fraud is2334plaguing the industry and is working on various solutions that could2335potentially mitigate unscrupulous activity. We commend the agency for2336holding listening sessions, reviewing public comments, and hosting2337registration modernization stakeholder events. As a result of industry2338feedback, the agency has recently established a Registration Fraud Team2339to investigate fraudulently registered companies as well as cases where2340legitimate companies had their identities stolen. Furthermore, FMCSA is2341expected to begin rolling out a comprehensive, modernized registration2342system in phases beginning this year. We support the intent of these2343programs, but remain skeptical that they will achieve their objectives.2344    We are unclear if the Registration Fraud Team has the resources to2345properly conduct the amount of necessary investigations that would2346substantively root out fraudulent activity. As mentioned, we also know2347the agency lacks statutory authority to administratively adjudicate and2348assess civil penalties for freight fraud violations.2349    The long-awaited Federal Registration System is expected to include2350features such as identity verification software, new business2351verification processes, and information edit checks that can reduce2352fraud. However, these updates must be implemented in a user-friendly2353fashion that protects motor carriers' personal data and prioritizes2354cybersecurity best practices. These safeguards cannot be taken for2355granted considering the vulnerabilities of FMCSA's information2356technology systems.2357    Each year, FMCSA receives hundreds-of-millions of dollars for2358enforcement purposes, a large portion of which is devoted to ensuring2359compliance with regulations that have little to do with highway safety.2360While OOIDA is not in favor of increasing overall enforcement funding2361for FMCSA, we encourage Congress to repurpose many of these dollars--2362derived largely from user fees imposed on motor carriers--to reform2363NCCDB and other FMCSA programs in a manner that finally makes the2364agency a formidable and trusted ally for identifying and eradicating2365fraudulent actors.2366                   The Fight for Broker Transparency2367    Existing regulations (49 CFR 371.3) require brokers to keep records2368of transactions with motor carriers. Under Part 371.3, each party to a2369brokered transaction also has the right to review the record of the2370transaction. This allows our members to know precisely how much a2371shipper paid the broker and how much the broker then paid the motor2372carrier. These regulations also enable carriers to verify claims2373charged against them after they finish hauling a load. As motor2374carriers are increasingly victimized by freight fraud, unpaid claims,2375dubious charges, unpaid loads, double brokered loads, and load phishing2376schemes, the current lack of transparency has left them little to no2377means to defend themselves from fraud.2378    Unfortunately, brokers have a long history of circumventing2379transparency requirements in two ways:23802381  1.  Many motor carriers sign contracts with brokers that waive Part2382        371.3 requirements. OOIDA discourages this, but the practice is2383        so prevalent that truckers often have no other choice if they2384        want to haul a brokered load. Even many of the most reputable2385        brokers use these clauses to avoid complying with the2386        requirement. Here is an example from one of the nation's2387        largest brokers: ``[Redacted] shall not be required to disclose2388        the amount of its broker's commission to Carrier, and Carrier2389        expressly waives its right to receive and review information,2390        including broker's commission information, pursuant to 49 CFR2391        Sec. 371.3.'' This flies in the face of Part 371.3. In effect,2392        brokers are exempting themselves from Federal regulations.23932394  2.  The few brokers who do provide transaction records usually put in2395        place hurdles they know will prevent a carrier from ever seeing2396        them. In fact, some only allow a carrier to access records at2397        the broker's office during normal business hours. Brokers know2398        this makes it virtually impossible for most carriers to access2399        records. Further, when a carrier tries to assert his/her right2400        to review this information, the broker is unlikely to contract2401        with them again. These tactics further undermine Part 371.3.24022403    Small-business truckers would never get away with blatantly and2404deliberately evading Federal regulations. Brokers must be held to the2405same standard. Unfortunately, rampant evasion is increasingly resulting2406in carriers assuming--fairly or not--that brokers have something to2407hide.2408    In order to protect against fraud and scams, we tell our members2409that they should closely examine documentation and verify that all2410information is legitimate. If brokers are allowed to continue waiving2411Federal regulations in contracts, it makes it difficult for carriers to2412determine who is adhering to the rules or who may be trying to scam2413them. In short, practices that undermine trust and transparency will2414make it harder to determine who is a bad actor.2415    In May 2020, OOIDA submitted a Petition for Rulemaking with FMCSA2416to ensure compliance with 371.3. The petition requested that brokers2417automatically provide an electronic copy of each transaction record2418within 48 hours after the contractual service has been completed and2419asked that brokers be prohibited from including any provision in their2420contracts that requires a carrier to waive their rights to access2421transaction records. Our rulemaking was granted by the FMCSA during the2422first Trump Administration.2423    During the Spring of 2020, while truckers protested in Washington,2424DC, about the overdue need for transparency, President Trump tweeted2425his support: ``I'm with TRUCKERS all the way. Thanks for the meeting at2426the White House with my representatives from the Administration. It is2427all going to work out well!'' And on Fox News, he exclaimed truckers2428are ``price gouged,'' referring to complaints that brokers may be2429tampering with the price transactions they set up between truck drivers2430and shippers.2431    Since the launch of the rulemaking in August 2020, OOIDA and its2432membership submitted thousands of comments to FMCSA, conducted meetings2433with regulators and lawmakers, and participated in public listening2434sessions supporting the push for transparency. These efforts culminated2435in the Biden Administration publishing a Notice of Proposed Rulemaking2436(NPRM) in November 2024, demonstrating that ensuring transparency has2437bipartisan appeal. The public comment period is scheduled to close on2438March 20, 2025.2439    Unfortunately, the NPRM did not include the two significant reforms2440we recommended. However, the proposal will help ensure that carriers2441finally have access to fundamental transactional documentation and2442restore a level playing field between carriers, shippers, and brokers.2443We have submitted separate comments detailing what FMCSA must do to2444strengthen the rulemaking, such as clarifying how they will enforce the2445rules and closing all loopholes that let brokers waive transparency2446rights. If supplemented properly, this rulemaking will contribute to a2447more ethical, fair, and efficient freight brokerage marketplace.2448    If FMCSA is unable to finalize a rule that fully prevents brokers2449from evading Federal transparency regulations, it is imperative that2450Congress compel the agency to do so.2451                     The Importance of Broker Bonds2452    All brokers and freight forwarders are required to maintain a bond2453to cover debts in cases where the broker doesn't pay for a carrier's2454services. These bonds are meant to ensure that a carrier is paid when a2455broker fails to provide compensation. In 2012, MAP-21 established2456financial security standards for brokers and freight forwarders,2457including a minimum security level of $75,000 and a requirement that a2458broker's authority be suspended as soon as their bond falls below this2459amount.2460    In too many instances, a broker will let multiple claims on the2461$75,000 bond accrue, forcing truckers to settle for a fraction of what2462they should be paid. In other words, a broker can continue to contract2463with motor carriers even if they have no intention of paying them. This2464loophole allows them to broker loads well past the point where they2465have any financial security in place to cover their debts.2466    FMCSA has unnecessarily delayed compliance with its 2023 final rule2467that would suspend the operating authority of a broker if their2468available financial security falls below $75,000. Originally scheduled2469for January 16, 2025, the agency has added an extra year to comply2470because the New Registration System is still not ready. OOIDA warned of2471potential delays and questioned if the system will be fully operational2472by January 2026, which in and of itself is an impediment to combating2473fraud. However, current and additional delays in compliance will allow2474unscrupulous brokers to continue stealing transportation services in2475excess of the bond amount. This is simply unacceptable, as freight2476fraud remains commonplace within the industry.2477                     Current Legislative Solutions2478    OOIDA, along with numerous other trucking industry stakeholders,2479strongly supports bipartisan legislation introduced by Senators Deb2480Fischer (R-NE) and Tammy Duckworth (D-IL) to combat freight fraud. S.2481337, the Household Goods Shipping Consumer Protection Act, would2482restore FMCSA's authority to impose civil penalties on unauthorized2483brokers, require physical addresses for brokers, compel the agency to2484analyze trends and commonalities among companies applying for shipping2485authority to identify potentially bad actors before they commit fraud,2486and allow states to use Federal funds to enforce consumer protection2487laws relating to freight movement. We encourage all Senators,2488especially members of this Subcommittee, to support this important2489legislation.2490                               Conclusion2491    Fraud is on the rise in trucking, as criminals have discovered many2492vulnerabilities within our industry. Stakeholders are doing all they2493can to protect themselves from criminals, but their capabilities are2494extremely limited. A small-business trucker lacks the resources to2495prevent scams originating overseas or the authority to ensure brokers2496comply with existing transparency regulations. There are systems and2497regulations in place that can help reverse the growing trend of fraud,2498but the Federal Government is struggling to provide the support2499shippers, motor carriers, and brokers need. We believe we have2500identified several critical steps Congress and the Trump Administration2501must take to improve our shared objective of weeding out fraudulent2502actors, and look forward to working on these issues with members of the2503Committee.25042505    Senator Young. Thank you, Mr. Pugh. You bring an important2506perspective to this hearing, and a sterling safe driver record.2507    Truckload freight, we know, is overwhelmingly the primary2508target of fraud. Ninety-eight percent of respondents identified2509truckload freight as the most vulnerable mode. This2510Subcommittee oversees the FMCSA, and I would like to better2511understand how bad actors are acquiring USDOT numbers, MC2512numbers, and other business identifiers to carry out their2513illicit schemes under the guise of legitimacy.2514    Mr. Blanchard, in your opening statement you described how2515a bad actor posed as Tanager Logistics to steal shipments, even2516added their counterfeit company to the FMCSA's Safety and2517Fitness Electronic Record, or SAFER, website to appear legit.2518Can you describe how bad actors are able to insert themselves2519so easily into the supply chain? Maybe elaborate on that,2520please.2521    Mr. Blanchard. Yes, Senator. They are able to do this now2522through a whole multitude of ways. We have experienced2523everything, from what I stated in my testimony, where they are2524spoofing our e-mails and otherwise representing themselves on2525behalf of our company. There are instances out there now where2526individuals are actually purchasing MC and DOT numbers on a2527black market. That is a major issue that we have to address,2528and the FMCSA must do a more efficient job, in our opinion, of2529ensuring that they go through those companies that are2530authorized to transport freight in the United States and remove2531those that are illegitimate.2532    Senator Young. Do you have any visibility into how these2533purchases, that you referenced, might occur? Is it the so-2534called dark web? Are there individual criminal agents who will2535visit people in person and make these transactions? Or do you2536know?2537    Mr. Blanchard. My understanding, Senator, is that this is2538occurring on various websites. So I do not know if it is2539necessarily happening on the dark web, but certainly they are2540on different platforms that are available on the internet.2541    Senator Young. I do not even know exactly what the dark web2542is. It is just this furtive thing, right, that we all hear2543about. For the record.2544    Do any of our other witnesses have any visibility into how2545those transactions are made?2546    Chief Johnson. Just one other point----2547    Senator Young. Yes, Chief.2548    Chief Johnson.--I might add to that is we have seen2549instances where companies that are going out of business, they2550actually auction off their number, similar to how they would2551auction off equipment that they are no longer using. So2552individuals could buy this number through a business2553liquidation process, and then they already have an established2554footprint, and then assume illicit operations under a previous2555legitimate. That is just one example that I have heard from the2556field.2557    Senator Young. That is an important contingency for us to2558keep in mind. Thank you.2559    Back to Mr. Blanchard, when you approached DOT about the2560fake Tanager Logistics company that was listed on the SAFER2561website, what did they say? It seems puzzling to me that they2562would not remove the fictitious one. What did they say?2563    Mr. Blanchard. When we reached out to the Federal Motor2564Carriers Safety Administration, Senator, they informed us that2565unless there is a third party or another group out there that2566is actively using our MC or DOT number that they did not have2567the ability to investigate any further into this other company2568that was representing us. The concern I had, Senator, with2569that, is that we provided them the information that we knew at2570the time. First is that the individual that was behind the2571other Tanager Logistics, from our investigation, was determined2572to be somebody from Africa. We also did some investigation,2573both internally and through our attorneys, that determined that2574the address that was listed on the SAFER website, that is2575provided by the FMCSA, was a residential address in Ohio of a2576woman that had no affiliation to Logistics whatsoever.2577    Senator Young. And you thought those overlap of facts2578looked suspicious.2579    Mr. Blanchard. Yes, sir. Yes we did, Senator.2580    Senator Young. I can understand that.2581    Mr. Blanchard. And to be fair to FMCSA, there are many2582instances in which you have companies with the same name that2583have operating authority in the United States. So certainly we2584are not here to interrupt that or ask the FMCSA to involve2585themselves. But if there are facts sufficient to provide them2586enough information that there is very likely an active fraud2587situation going on, we believe it would be very helpful for2588Congress to direct them to do so.2589    Senator Young. I want to get to my colleagues' questions2590momentarily, but let me just sort of get to where I hope we end2591up with many of these lines of inquiry, which is what should2592Congress consider to ensure FMCSA is equipped to root out2593rampant fraud, better support of legitimate motor carriers and2594brokers? You listed off a number of things, but maybe you could2595connect what we have just discussed to a solution or two.2596    Mr. Blanchard. Yes, Senator. And what is, in my opinion,2597very important is to provide the directive and resources as2598needed to the FMCSA in order to increase their cyber2599capabilities. One issue that we have seen constantly is that2600they are falling further and further behind the sophistication2601of these criminal organizations. We have even had an instance2602in which our profile with FMCSA was hacked, and somebody2603changed our address and phone number in an attempt to engage in2604another fraud that, fortunately, we had stayed on top of to2605prevent.2606    But FMCSA needs to be the group that quarterbacks a unified2607Federal group of agencies and law enforcement groups in order2608to address these issues, in order to create a database and a2609repository of data so that it can be coordinated appropriately2610amongst not only Federal law enforcement but state law2611enforcement, and also increasing that cybersecurity that they2612have to prevent these kinds of things from happening.2613    Senator Young. That strikes me as reasonable and bipartisan2614and something even Senator Peters and I can work together on. I2615am just kidding, Senator Peters. We are actually really good2616friends, believe it or not.2617    Would any of you like to add to Mr. Blanchard's suggestion2618about what we can do to address these situations? I know you2619offer recommendations in your statements, but a situation like2620Mr. Blanchard's, do any of you have additional thoughts about2621how we can address that, and equip FMCSA to be more helpful, or2622other authorities?2623    Chief Johnson. I think the question of venue is2624particularly important.2625    Senator Young. Yes, Chief.2626    Chief Johnson. As an individual who has focused on2627providing services to victims for the better part of 30 years,2628it is really disappointing to me to sit with esteemed2629colleagues that have really been victimized and had no way to2630have resolution.2631    Senator Young. Yes.2632    Chief Johnson. A lot of that is happening because of the2633venue of where the offense is happening, and because this2634freight is inherently mobile, crime scene identification, venue2635where the offense takes place is difficult, at times, to2636establish. So expanding venue to also include the location2637where the business resides could help strengthen communications2638within the criminal justice community, both local, state, and2639Federal, to help businesses more effectively report challenges2640that they have, to bring those grievances forward to the court.2641    Senator Young. Right. There is clearly not a lot of clarity2642when every law enforcement entity--FBI, locals--are pointing to2643someone else. So that is our job. We have to help clarify and2644facilitate interstate commerce.2645    OK. Senator Peters.2646    Senator Peters. Thank you. Thank you, Mr. Chairman. And2647just as an example of how we are friends and we work together,2648the Chairman has taken many of my questions, and I am not mad2649at him at all.2650    [Laughter.]2651    Senator Peters. I think it just shows that we are like one2652mind, you know, minds that think alike.2653    Senator Young. That is right. Midwestern.2654    Senator Peters. Midwestern common sense. For the record,2655Midwest common sense, right?2656    Senator Young. Agreed.2657    Senator Peters. Mr. Pugh, in your written testimony you2658described how the burden posed by cargo theft can really2659threaten safety, generally, across the board. Would you want to2660talk a little bit more about that, how this is a safety issue2661in addition to a fraud and theft problem?2662    Mr. Pugh. Yes, this is a huge safety issue for truckers, in2663small business and all, because if they are not getting paid,2664they haul loads, they still have to pay for fuel, they still2665have to pay for maintenance, and these types of things. So if2666they haul a load for X amount of dollars and they have all2667these expenses--and trucking is a very slim profit margin2668business, very slim profits--so when something like this they2669get beat out of, you know, $3,000 to $4,000, and they are2670planning to use these for maintenance repairs and stuff like2671that, it puts an owner-operator or a small business guy like I2672was, into a point where you have to start deciding, can I stay2673in business, am I able to keep my truck to meet the safety2674regulations.2675    And the long and short of it is that it can get so bad that2676they will end up having to close their business and sell your2677truck. And the realized safety aspect of this is, most small2678business owner-operators have 20-some years' experience or2679more. So you are taking a well-trained, experienced trucker off2680the highway, which is the people we should be keeping, not2681losing.2682    Senator Peters. Yes, great. Thank you.2683    Mr. Howell, I think we can all agree that we continue to2684face affordability crisis in this country, and cargo theft2685obviously is a direct harm to those who have invested in those2686goods. And when they are stolen, the loss is very clear. But2687perhaps you could describe to this Committee how cargo theft2688also contributes to increases in prices, really across the2689board. This is a problem that really everybody in our country2690faces, and maybe give us some quantification of that. But2691everybody in our country should be concerned about this2692problem. Is that accurate?2693    Mr. Howell. Yes. Thank you, Ranking Member Peters. At2694Academy Sports and Outdoor we pride ourselves in being a value2695retailer, so we are really always focused on how everything we2696do affects the individual consumer and those families that are2697buying our products.2698    When it comes to cargo theft, the number one concern we2699have is (a), it is a rapidly growing issue. Over the last 22700years it has really accelerated. You have heard numbers quoted2701by other, 40, 50 percent. We are seeing similar numbers. I2702think second to that, the second most concerning issue is we2703have actually never recovered any of the cargo that has been2704stolen. I can speak to in the last year. And to the best of our2705knowledge, nobody has ever been apprehended or caught in any of2706the incidents we have been involved with. So it is a growing2707issue.2708    So to your point, it is driving costs throughout the entire2709supply chain. So as part of my job, we have got to find more2710sophisticated partners that can try to manage this freight more2711effectively. We are tending to move off of brokers and onto2712more asset-based carriers, as we call them. That way, we know2713the individual driver. We know the equipment that is actually2714picking up. It does not always prevent the crime.2715    We also have to handle double-handling. We have to manage2716sometimes double transportation on our own network, to recover2717when products are stolen.2718    So obviously all of these costs add up to the supply chain.2719You heard my colleague at the OOIDA. They are handling freight2720they never get paid for. There is a lot of cost, I am sure,2721with the transportation teams and trying to fight for their own2722identity. All that ends up rolling it to us as we have to move2723freight. Our costs are getting higher.2724    Considering it is relatively new, I cannot tell you exactly2725how much is going directly to pricing, but if this continues at2726the rate it is going, absolutely, those costs will have to2727borne in future price increases.2728    Senator Peters. Yes. Thank you. Chief Johnson, in cases of2729inbound shipment, cargo by passes the port of entry inspection2730and travels closer to its final destination before undergoing2731required inspection by Customs and Border Protection. I am the2732Ranking Member of Homeland Security, overseeing Customs and2733Border Protection, and I am very interested in how we can make2734sure that they are dealing with some of these challenges.2735    Your testimony mentions the additional harm that is2736inflicted when cargo theft occurs prior to the CBP inspection.2737So if you could please, for the Committee, detail specific and2738additional risks associated with theft of inbound shipments and2739what actions do you believe that Customs and Border Protection2740could take in order to work with the supply chain to reduce2741this type of crime.2742    Chief Johnson. Thank you, Senator, for that question. First2743and foremost, when you are talking about CBP inspections, it is2744important to also think about Homeland Security Investigations2745as the investigative authority beyond just the inspection2746process. So whether the inbound shipment is cleared at the port2747or it is cleared at a location closer to destination, once an2748inbound shipment is attacked and that seal is broken, we really2749have three risks. Number one is we know what was declared in2750that load, but there has not been an inspection process. So2751just from a shipment integrity perspective, that is a point to2752reflect on.2753    Two, having greater engagement from HSI in the2754investigative process, whenever there is an inbound shipment2755seal breach. So presently the regulatory functions kick in,2756where the shipper is responsible for any regulatory fines2757because that shipment arrived at the facility without its2758bonded seal. But there is no complementary criminal2759investigation from the Federal Government on what happened in2760that process.2761    So the shipper is ultimately victimized twice. One, their2762product is stolen while it is being shipped, and then second,2763they are facing an administrative process to have those2764regulatory fines reviewed. Presently, CBP has shared that they2765cannot consider waiving those regulatory fees until after the2766citations have been issued and then the victim responds in an2767administrative process.2768    So there is really a lot to unpack in the complexity of2769those inbound shipments, but we know that there is a fair2770amount of cargo proceeds that are currently under bond that are2771being targeted by these transnational organizations.2772    Senator Peters. Great. Thank you. That is something I would2773love to work with you on, to try to unpack that more and figure2774out how we can do things better. I appreciate that.2775    Thank you, Mr. Chairman.2776    Senator Young. Well, thank you, Senator Peters.2777    Senator Fischer.27782779                STATEMENT OF HON. DEB FISCHER,2780                   U.S. SENATOR FROM NEBRASKA27812782    Senator Fischer. Thank you, Mr. Chairman. Thank you, Mr.2783Pugh and Mr. Blanchard, for referencing my bill. I appreciate2784you doing that. I appreciate the support for the bill. I think2785it is extremely important that we get that to move. It is the2786Household Goods Shipping Consumer Protection Act that I have2787introduced with Senator Duckworth. And as you know, it would2788allow the FMCSA to impose those civil penalties against the2789unauthorized brokers, and it would require companies in the2790household goods sector to establish a principal place of2791business to prohibit that fraudulent companies from skirting2792those existing regulations.2793    I would like to thank you also for bringing up suggestions2794on what else we can do to be able to combat this. It is eye-2795opening the amount of money, harm to companies, but also to2796consumers, when we add all this together. So thank you for2797that.2798    Chief Johnson, in your testimony you referenced2799jurisdictional concerns that often arise when investigating2800cargo theft crimes. And I believe it is particularly important2801that local and state law enforcement agencies have the support2802of the Federal Government when dealing with crimes that pertain2803to interstate commerce.2804    In your experience, what is the relationship like between2805law enforcement and agencies like the FBI and the HSI when2806investigating cargo theft that crosses state lines?2807    Chief Johnson. Ma'am, the short answer is they are good2808relationships. The challenge is not necessarily with the2809relationships but the capacity of organizations to be able to2810balance or juggle the myriad of threats that they are faced2811with. Cargo theft, historically, has not risen to the same2812level of attention as maybe some other competing interests have2813for these Federal entities.2814    Also, it is important to understand how those agencies2815prioritize the work within their AOR or area of responsibility,2816and that is largely a local decision, by local executive2817leaderships for those agencies involved, absent some sort of2818national direction coming out of headquarters or the Attorney2819General's Office.2820    I think for this topic, national direction, either2821authorized by Congress for the task force that we have2822mentioned previously, or prosecutorial direction coming out of2823the Attorney General's Office, directing all of the United2824States attorneys to prioritize this issue and focus resources2825on effective prosecutions will aid in the assistance of2826bringing these cases forward.2827    Senator Fischer. Thank you. You know, Mr. Blanchard, you2828spoke about your frustration in trying to just bring it to the2829attention of authorities--Federal, state, I assume local, as2830well, that you were trying to work with. And when you mentioned2831some of your suggestions, I know Mr. Pugh wanted to chime in,2832so I will let you chime in now, on what needs to be done. And I2833do not think it is just throwing more money at being able to2834have more enforcement out there, necessarily. I think it is2835also to be able to put some teeth in what we need to do here,2836and just have more awareness.2837    But anyone on the panel, but we will start with you.2838    Mr. Blanchard. I would be happy to start, Senator, and2839again, thank you for your support of our industry and your2840introduction of the Household Goods Shipping Consumer2841Protection Act. I think that is certainly a great first step.2842    As I have come to understand, Senator, is currently, to2843piggyback off of Chief Johnson, the current threshold that is2844established by the United States Sentencing Commission for the2845DOJ to interdict in cargo theft cases requires the instance to2846be at least $1.5 million in losses. The average loss in a cargo2847case is around $200,000 today. So, therefore, to reach that2848threshold of $1.5 million is going to require law enforcement2849agencies to be directed to look into the continual criminal2850activity of these organizations, to meet that threshold, or for2851Congress to otherwise change that and create a new directive in2852order for them to start pursuing these through a unified task2853force, which is something that we have included in the2854Safeguarding our Supply Chains Act, which has not been filed,2855but certainly would appreciate any member of this Committee to2856review that bill, and the willingness to author that would be2857fantastic.2858    Senator Fischer. We will review it.2859    Mr. Blanchard. Yes, and that would provide the coordination2860between agencies and law enforcement.2861    And I think really, Senator, this begins with the FMCSA,2862and to further elaborate on Senator Young's question earlier,2863in terms of the FMCSA, we have to start with them. I think, to2864your point, Senator Fischer, throwing money at the problem I2865would agree is not the solution. I think first we need Congress2866to direct FMCSA on the things that need to occur and the2867coordination necessary to address this very issue that we are2868dealing with. They need to be able to distinguish between2869fraudulent businesses and legitimate businesses.2870    DOT needs enhanced cyber capabilities and real-time fraud2871detection tools and greater interagency collaboration with law2872enforcement to identify these frauds. FMCSA needs to be2873directed to remove fraudulent companies from the SAFER website.2874We rely on that heavily in order to vet companies that we work2875with. FMCSA needs to explicitly authorize to withhold2876registration from applicants who fail to provide verifications.2877    Also, Congress, we believe, should conduct rigorous2878oversight of FMCSA's transition to a single USDOT number, which2879we believe they are going to do in the future, or are2880considering doing, without placing undue burden on legitimate2881carriers. And DOT should expeditiously implement the 132882recommendations issued by the Government Accountability Office2883to strengthen FMCSA's National Consumer Complaint Data base.2884    So those are things we believe that Congress could do2885without the necessity of additional funding, in order to2886provide the coordinated effort necessary for law enforcement,2887because we simply do not have the tools, Senator, to be able to2888do the reverse IP searches, to break through the cyberspace in2889order to find who is spoofing our e-mails. I have a very2890sophisticated IT director, and he is great, but only law2891enforcement agencies have that capability.2892    Senator Fischer. Thank you. Mr. Chairman, can I ask for Mr.2893Pugh to be able to respond, as well?2894    Senator Young. Please, yes.2895    Senator Fischer. Since both you and Senator Peters went2896over time.2897    Senator Young. You are correct. Go ahead.2898    Senator Fischer. And thank you for your support on OOIDA,2899as well.2900    Mr. Pugh. I thank you, Senator Fischer, and you and Senator2901Duckworth on your bill. We very much appreciate that and are2902glad you are trying to do something different and to help these2903things. It will pay dividends if we can get it across the2904finish line.2905    A couple of things is this whole National Consumer2906Complaint Data base, it seems FMCSA needs to be directed more2907to do something with that. From our experience, and with our2908members, and we tell members to send these complaints, plus2909many other complaints that happen to them in trucking, it seems2910like this is where all complaints go to die at FMCSA. Usually2911they hear nothing back, or if they get anything it is just,2912``Hey, thanks for letting us know.''2913    Also, you know, we have said for a long time it would2914probably be helpful to have a different name. Most of our small2915business people and truckers, they do not even realize that2916this is a place for them to go file a complaint. National2917Consumer Complaint Data base--who would think that is a2918trucking complaint hotline? So that would be helpful.2919    We feel FMCSA probably has enough funds to do some2920investigating on this. It is just to reallocate where they are2921putting it, because they continually say that there is not a2922safety effect to this, so that is why they do not have to do2923anything with this. But we know there is, because it is putting2924people out of business, it is causing people not to go maintain2925their equipment. So there is definitely a safety thing here.2926Plus who knows what happens to a trucker, if something happens2927at gunpoint, or something like that.2928    And I would agree with my colleague here. FMCSA is the2929first line of defense on this, 100 percent. They have all this2930information. They have everybody's registrations and all that.2931    And finally I would say, FMCSA needs to step back and take2932a long look at making the barrier of entry into being a motor2933carrier or a broker much harder, much stricter. We pretty much2934let people file for insurance, pay for it. We do not know who2935these people are. We have no idea if they even know what they2936are doing. And maybe 12 to 18 months later we audit them.2937    Senator Young. Thank you. Thank you so much, Mr. Pugh. All2938these concrete and actionable recommendations have been very2939helpful, and I know to all of us up here.2940    Mr. Lujan.29412942               STATEMENT OF HON. BEN RAY LUJAN,2943                  U.S. SENATOR FROM NEW MEXICO29442945    Senator Lujan. Thank you very much, Mr. Chairman. Chief2946Johnson, my state is home to a number of land ports, including2947Santa Teresa Port of Entry, which is a multimodal transit hub2948that has been a major site of economic growth in recent years.2949At Santa Teresa we are experiencing trucking thefts on the2950Mexico side of the border, meaning the materials and products2951businesses and consumers are waiting for never make it into the2952United States.2953    Chief Johnson, yes or no, do you believe it is important2954for the U.S. law enforcement to coordinate with Mexican law2955enforcement?2956    Chief Johnson. Absolutely.2957    Senator Lujan. The Department of Homeland Security has2958estimated that cargo theft accounts for up to $35 billion in2959losses annually. These thefts impact our truckers and2960railroads, agricultural producers, businesses big and small.2961They also impact consumer prices, which are currently on the2962rise.2963    Mr. Howell, yes or no, when the entire industry experiences2964regular thefts of merchandise, does it affect the prices that2965consumers see on the shelves?2966    Mr. Howell. Senator, yes, it eventually will.2967    Senator Lujan. Chief Johnson, you noted the following in2968your testimony, quote, ``State level police and prosecution2969efforts are challenged by a tremendous number of competing2970priorities for resources such as addressing the fentanyl2971epidemic and violent crime in the community. This focus has2972either directly or indirectly impacted effective property crime2973enforcement efforts. Criminals have exploited this2974vulnerability.''2975    Do you believe law enforcement needs more resources or less2976resources to address the full slate of challenges in our2977community?2978    Chief Johnson. Well certainly local law enforcement needs2979more resources directed toward this issue, and as we look at2980the three offender profiles, certainly the transnational2981organized crime has got the greatest Federal nexus. But when2982you drop down to the criminal street gang profile and the2983criminal opportunist, those are most directly targeted by local2984law enforcement efforts and state charges, and certainly having2985the capacity in communities to be able to address cargo theft-2986related crimes at a local level with state charges would be2987tremendously complementary to the Federal response that has2988been discussed today.2989    Senator Lujan. So Chief Johnson, having fewer law2990enforcement officers could make this worse? Having fewer law2991enforcement officers at the local level could make this worse?2992    Chief Johnson. Absolutely. Currently, IACP has experienced2993and reported on just a national challenge in recruitment and2994retention in policing. Surveying our members, we believe that2995across the Nation many agencies are experiencing a 10 to 152996percent vacancy rate in terms of positions that they have2997available but are unfilled. And we need to aggressively, as a2998complete society, focus on improving the opportunity to recruit2999and retain police offices into the profession, to strengthen3000the safety and security of our communities.3001    Senator Lujan. I appreciate that thorough response.3002    Last week, before the Senate passed its budget resolution,3003I introduced an amendment to provide increased resources for3004local law enforcement through initiatives such as the Cops3005Hiring Program. I was surprised when only one of my Republican3006colleagues voted for it. This is a bipartisan area that we3007should be working together, to make sure that there is more3008resource available to ensure that we are able to hire, secure,3009keep, and recruit all the folks that we need. So I appreciate3010that response.3011    Mr. Blanchard, advanced technology is one of our strongest3012tools in the fight against drug trafficking, which is why I3013have long advocated for a 100 percent screening, using3014nonintrusive inspection technologies at the southern border.3015Yes or no, do you believe we should implement NII technology at3016our land ports of entry?3017    Mr. Blanchard. Yes, sir, I do.3018    Senator Lujan. Reports indicate that fentanyl precursor3019chemicals are being smuggled through the United States3020transportation networks, as well, including through cargo and3021rail, before making their way to Mexico for fentanyl3022production. Yes or no, would implementing comprehensive3023screening of all cargo, both entering and exiting the United3024States, enhance our ability to detect and disrupt this supply3025chain?3026    Mr. Blanchard. Senator, we do not do much cross-border3027freight, but certainly we have always, as an industry, been3028very supportive of more inspections, so long that it is not3029overburdensome. And I think, without question, the new3030technology and the technologies that you have mentioned provide3031increased efficiency with advanced throughput on those3032inspections.3033    So I personally--I certainly would not feel comfortable3034speaking on behalf of my entire industry--but myself, and on3035behalf of my company, we would welcome that. We want to get the3036bad actors out of our industry, and I think any advanced3037technologies that would provide assistance to law enforcement3038in that effort, I would be very supportive of.3039    Senator Lujan. I appreciate that response. Acknowledging3040the importance of technology that is not going to slow down3041commerce, but it is going to let us get 100 percent view of3042what is leaving the country with some of these precursor3043chemicals that are rolling through the United States and then3044going to Mexico, or the bad stuff that is coming in.3045    I am always surprised with the very low number of passenger3046vehicles that are actually screened entering the United States,3047and reports coming out of the Department of Homeland Security3048suggest that 90 percent of the fentanyl that is being found in3049the United States is coming through the southern border in3050passenger vehicles, driven by Americans. We have got to stop3051this stuff, and the only way we are going to be able to stop it3052if we can see what is in those vehicles, but make sure that3053people can also move so we are not hindering commerce.3054    Mr. Blanchard, one final question. The importance of the3055work that is needed to ensure that we are keeping an eye on the3056bad folks and that there is actually something being done when3057it comes to the Federal staff, experts, things of that nature,3058to be able to implement the law, to hold people accountable, to3059prosecute, things of that nature, will that require more staff3060or less staff?3061    Mr. Blanchard. At this time, Senator, I am not in a3062position to know whether we would need more or less staff, and3063let me explain why I say that. The reason I do not know if3064there is sufficient law enforcement as we sit here today is3065because there has not been any directive by Congress to assign3066agencies to look into these cargo thefts and cargo fraud3067issues.3068    So I am of the personal belief, Senator, that first we3069really need Congress to direct these agencies to start3070investigating these. That is why we have the Safeguarding our3071Supply Chains Act, to direct these agencies to work in3072coordination, to begin to investigate these claims, so that we3073can start prosecuting and convicting these bad actors out3074there. Because currently, from what we can tell, they are going3075essentially without any recourse whatsoever into these criminal3076activities.3077    So I certainly believe we should start there, but I think3078it would be very logical that as we begin that process, that3079the gravity of the situation and the severity of what we are3080experiencing in the industry likely would require some3081additional resources for some of these Federal law enforcement3082agencies in order to be able to tackle this issue.3083    Senator Lujan. I appreciate that, and Mr. Chairman, I3084appreciate your acknowledgement of many of the ideas that have3085been shared today alone, in addition to the research staff has3086done in this space. This is something that Congress needs to3087get done, and we can work together on this. Whether we are3088looking at just domestic transport or we are looking at3089international crossings, as well, we have to do better in this3090space. So I very much appreciate this hearing that you3091scheduled, and I thank all the panelists for being here today.3092    Senator Young. Thank you for your questions, Senator. I3093agree, this panel has been outstanding.3094    You know, I would like to read into the record some just3095compelling staff work that I think needs to be read into the3096record, related to international organized crime and the nexus3097they have with this very challenge that we are discussing in3098this hearing.3099    Law enforcement investigations have found international3100criminal organizations have strong ties to Eastern Europe and3101South Asia. For years, large-scale theft rings have been linked3102to Armenian gangs who use a mixture of straight and strategic3103cargo theft to steal freight.3104    One stakeholder reported their load was stolen by an3105Armenian gang operating in California and then resold to a3106Colombia crime ring. Additionally, reports indicate an3107organized crime ring from India, referred to as the Singe3108Syndicate, is operating in both the U.S. and Canada, all using3109the name Singe. In 2023, Canadian officials conducted an3110investigation dubbed ``Project Big Rig,'' that disrupted the3111operations of this crime ring by arresting 15 individuals3112running a major cargo theft ring. Canadian authorities3113recovered over $9 million in stolen goods. It goes on and on.3114They have a presence in Ohio.3115    Investigators have also found ties to the Mexican cartels3116in cargo theft rings. On January 13 of this year, over $440,0003117worth of Nike shoes were stolen off of a BNSF train whose3118airbrakes were cut as it traveled on tracks north of Phoenix,3119Arizona. Federal officials have linked this activity to a3120cartel operating out of Sinaloa. Eleven men were arrested. Nine3121of the men were in the United States illegally, and the other3122six are residents of Sinaloa. BNSF reported that these tactics3123of cutting brakes and forcing trains to slow down have3124increased over the past two years.3125    So I just find that connection compelling. Sometimes I like3126to connect the work that we do in this Committee or, in3127particular, subcommittees or committees with some of the3128conversations we have in other committees. This is very much3129linked to border security, in various ways.3130    I would also note that my colleague's emphasis on resources3131is important, and in many cases correct.3132    I would say if we are going to look holistically at this3133challenge we should also look at the limitation we have on3134Federal judges, so that if you do identify bad actors, you need3135to be able to get into court over a reasonable period of time3136and not wait years and years and years to have your case heard.3137Otherwise, the law is of little effect.3138    So we have got some work to do. The JUDGES Act, it is3139neither here nor there, but it was vetoed, for those who are3140checking your recent record, by our last President in the final3141days of his administration, for what seemed to be purely3142partisan and vindictive reasons.3143    Are there any additional connections to international3144cartels that our witnesses feel like we should be making, or3145any reflections you have on that issue that you would like to3146get on the record? I will ask Chief Johnson.3147    Chief Johnson. Thank you, sir, for the opportunity, and I3148would like to compliment staff's research that was read into3149the record, with one additional point of clarify. I would like3150to thank the men and women of the BNSF police force that are on3151the front lines every day, challenging these bad actors. And3152those arrests that you referenced were the result of their hard3153work and connecting Federal authorities to their3154investigations. So I am very proud of the work that they are3155doing to protect the U.S. supply chain and also our customers'3156goods and services.3157    The concept of transnational organized crime I think has3158been well covered. The Mexican national nexus for rail freight3159is the strongest Eastern European, certain Armenian in the3160trucking industry, very pronounced. And having the ability to3161have a federally directed task force with the United States3162Attorney's Office is the only way that we are going to be able3163to peer into those organized networks and dismantle the command3164and control that is taking place, because the cops in the3165field, they can keep arresting the bad actors every day. Until3166we take out the command and control elements of these3167organizations, this crime threat is going to persist.3168    Senator Young. Mr. Blanchard.3169    Mr. Blanchard. Senator Young, to expand upon Chief3170Johnson's comments, and again, I would reiterate I thank your3171staff and the rest of the Senators' staff on the diligent3172research they did. There are things that you just stated into3173the record that I was not even aware of.3174    But one thing I wanted to bring to this Committee's3175attention is that because these actors, these organized3176criminal groups, are acting with impunity, because there is no3177real law enforcement effort to stop them, I would feel certain3178that this is a crime that is occurring. Cargo theft is3179something that is generating a tremendous amount of revenue for3180these criminal organizations, that are then, in turn, engaging3181in other criminal activity.3182    So I think it is important to make that point, because this3183seems to me to be a money-maker for these bad actors that I am3184sure are engaging in it. If they are engaging in cargo theft,3185they are certainly engaging in other criminal activity that is3186impacting our communities.3187    Senator Young. Right. This is probably one of many streams3188of revenue for these criminal elements. Point well taken. Mr.3189Pugh.3190    Mr. Pugh. Yes. My staff takes a lot of these calls from our3191members calling. With 150,000 members, we get calls weekly on3192this. And we have seen, and we are sure that some of these3193folks are from other countries, like I said, stretching on our3194border, some domestic. We had a lot of people in the beginning3195that were in a certain area of Southern California, kind of3196north of L.A. There are a couple of counties there that this3197was being traced back to. And since then we have found and3198uncovered where these bad actors, like there will be 8 or 10 of3199them using the same address. They shut down, and they come3200right back with another address, the same address with another.3201So I am sure this is being, like I said, both foreign and3202domestic.3203    Senator Young. Well, we have come to the end. We have3204covered a lot of ground. I would welcome any additional3205submissions or points that you wanted to make. You could submit3206those to the Committee in writing. We can keep the record open3207for a short period of time to accommodate any of that.3208    But my hope is that we will take your recommendations and3209see where we can come to some measure of consensus, and then3210act on those recommendation. That can sometimes be challenging3211up here. But I would agree with Senator Peters. This is one of3212these issues that lends itself to common sense and action right3213now, and the American people deserve that.3214    Senators will have until the close of business on Thursday,3215March 6, to submit questions for the record. And the witnesses,3216I am informed by our very diligent and competent staff, have3217until the end of the day on Thursday, March 20, to respond to3218those questions for the record.3219    This concludes today's hearing. The Committee stands3220adjourned.3221    [Whereupon, at 11:36 a.m., the hearing was adjourned.]32223223                            A P P E N D I X32243225      Prepared Statement of Hon. Ted Cruz, U.S. Senator from Texas3226    Good morning. Thank you, Chairman Young and Ranking Member Peters.3227And I'd like to welcome each of our witnesses.3228    The hearing today is an opportunity to shine a light and raise3229awareness on a growing issue impacting commercial supply chains: cargo3230theft.3231    Cargo theft, particularly strategic theft, is disrupting every3232segment of the supply chain--from ports and railyards to brokers and3233trucking--and ultimately raising prices for American consumers.3234    It is a problem that costs companies billions of dollars each year3235and harms the security of supply chains, especially in vital markets3236like baby formula, medicines, perishable foods, and semiconductors.3237    Criminals are monitoring freight routes, using insider information,3238posing as legitimate freight companies and using fake identities to3239steal millions of goods each year in the U.S.3240    Strategic cargo theft skyrocketed since COVID-19 with a 27 percent3241surge in incidents. The FBI now estimates between $15 and $30 billion3242in annual losses to the U.S. economy.3243    My state of Texas is one of the biggest targets for cargo theft3244because of its proximity to the border. Our state saw a 39 percent3245surge in theft in 2024 with criminal enterprises increasing their3246tactics to attack all vulnerable points along the supply chain.3247    I've heard how these international criminal organizations will use3248the Federal Aviation Administration's publicly accessible drone3249database to track police drones that help with surveillance protection3250and wait to rob freight trains when drones move elsewhere.3251    It is modern day stagecoach robbery with sophisticated criminals3252using technology to avoid detection to hit high value targets. Many3253times, the victims do not realize they have been scammed for weeks or3254even months later until an audit report shows an incomplete or partial3255delivery. Victims range from major retail chains to mom-and-pop3256businesses that lose customers when products are not delivered on time3257or available on the store shelves.3258    For instance, a boutique tequila company lost two truckloads of3259product because of a double brokering scam during the holiday season.3260It happened before the busiest time of the year, and they were forced3261to lay off employees when they didn't have any product to sell.3262    These gangs run like an enterprise venture, setting up fake call3263centers and warehouses, forging billing documents, operating stolen3264trucks and using registered USDOT motor carrier numbers to wreak havoc3265across the supply chain.3266    It is such a widespread issue that insurance companies have3267dedicated staff to investigate cargo theft and attempt to recover at3268least some of their stolen goods and losses. Some police departments3269have dedicated units where detectives only work on cargo theft.3270    Perhaps most surprisingly, these aren't just random thugs operating3271independently. These criminals are connected to highly organized crime3272networks in Armenia, Colombia, India, and Mexico. Police detectives all3273over the country have found that many of these criminals are exploiting3274our weak immigration system by coming into this country illegally or3275overstaying their visas. Just last month, a large group of illegal3276aliens with ties to the Sinaloa cartel stole millions in Nike sneakers3277from a BNSF train in the Mojave Desert.3278    The Biden administration's open border and soft-on-crime policies3279led to a lack of prosecution and enforcement in states like California,3280where criminals are arrested and released with nothing more than a slap3281on the wrist. As you will hear today, one criminal was arrested four3282times in the same day--for crimes that are costing American businesses3283more than $200,000 per theft.3284    Cargo theft may not be widely known by the public, but it's the3285public who pays the price as the cost of theft is passed down to store3286shelves, reflecting the huge economic losses incurred by the freight3287industry.3288    I look forward to hearing from our witnesses today, and to working3289with Subcommittee Chairman Young, Subcommittee Ranking Member Peters,3290and Ranking Member Cantwell as we work to address industry concerns and3291protect our supply chains.3292    Thank you.3293                                 ______32943295      Response to Written Questions Submitted by Hon. Ted Cruz to3296                           Chief Will Johnson3297    Question 1. The U.S. Attorney General in the District of Arizona3298charged eleven defendants, including ten illegally in the U.S., for3299cutting the airbrakes of a train moving 70 miles per hour to steal half3300a million dollars' worth of Nike sneakers. These individuals were3301Mexican citizens with ties to the Sinaloa Cartel. What has law3302enforcement uncovered regarding transnational organized crime when3303investigating cargo theft?3304    Answer. Generally speaking, law enforcement is dealing with three3305suspect profiles when attacking incidents of cargo theft: opportunist3306burglars, loosely organized criminal street gangs, and transnational3307organized crime. Multiple types of transnational organized crime groups3308attack the U.S. supply chain in different areas. Mexican nationals from3309the state of Sinaloa are being paid to sabotage rail safety systems to3310stop trains and are stealing products while the trains are in transit3311in proximity to the U.S. southern border. These groups are also3312attacking cargo loads at truck stops and other locations where truckers3313pause their route for food, fuel or rest. Law enforcement has tracked3314these suspects from rail and truck stops and back to urban areas where3315these organizations sell their stolen goods.3316    Other transnational criminal organizations include Eastern European3317and Southern Eastern Asian crime syndicates targeting the trucking3318industry and logistics centers in strategic theft operations. Strategic3319theft occurs when criminal suspects attempt to steal loads through3320fraud or deception. Law enforcement is aware of these groups and is3321aggressively working with in both the state and Federal prosecution3322systems to arrest offenders, but greater Federal coordination and3323support is required to dismantle the command and control elements of3324these operations.33253326    Question 2. How have state and local governments' soft-on-crime3327policies hindered the enforcement and prosecution of repeat offenders?3328    Answer. Prosecuting cargo theft cases is difficult due to the3329challenging nature of these crimes. Victim identification, the3330aggregation of total harm of the offense, changes to local and state3331venues for prosecution, and artificial jurisdictional boundaries of3332Federal U.S. Attorney Offices create an environment where the system3333isn't responding to the crime threat with the unified level of urgency3334necessary to address the threat. A coordinated Federal approach that3335leverages a whole of government solution is required to change the3336current dynamics of this problem.3337                                 ______33383339   Response to Written Questions Submitted by Hon. Amy Klobuchar to3340                           Chief Will Johnson3341    Food Shipment Break-Ins. As you discussed, food shippers are often3342collateral damage in cargo theft. In search of high-value retail goods3343like TVs and electronics, criminals accidentally break into food3344shipments. One dairy protein export company in Minnesota has reported3345an average of one to three break-ins per month in containers of dry3346milk powder. When this happens, shippers must bear the cost of3347returning the container and disposing of the compromised food product.33483349    Question 1. What can be done to ensure the safety and security of3350food products containers moving by rail?3351    Answer. Rail companies focus significant resources on safety and3352security. Rail police agencies have deployed police officers to protect3353customer freight, work with local, state, and Federal law enforcement3354departments to prevent crime and aggressively arrest offenders.3355Additionally, rail companies have deployed technology such as drones,3356surveillance cameras with AI power analytical functionality, and asset3357trackers to recover stolen goods. Food Shippers are encouraged to adopt3358additional security measures similar to other at-risk commodities, such3359as security bolt seals, additional locks applied to containers, and3360upper container braided steel ``figure eight'' locks. Food shippers can3361also increase the written notices on either the outside of the3362container or on a rear ``barrier wall'' near the container doors that3363indicate the load is a food shipment.33643365    Question 2. What improvements can be made to cargo break-in3366reporting to ensure that these criminals are apprehended and3367prosecuted?3368    Answer. Written testimony offered a possible solution that includes3369encouraging private-sector collaboration between organizations and law3370enforcement. Several possible action items include developing a portal3371for direct reporting to overcome the present fragmented reporting3372process. Additionally, offering victims (businesses) the opportunity to3373maintain anonymity in the reporting process may encourage greater3374participation in the business community.33753376    Retail Crime. Each year, retail theft results in more than $1003377billion in losses. These crimes can force stores to close, and place3378workers and customers in danger. That's why I cosponsor Senator3379Grassley's bipartisan Combating Organized Retail Crime Act to establish3380a coordinated multi-agency response to tackle this issue.33813382    Question 3. You mentioned that stolen cargo is often combined with3383proceeds from organized retail crime. How are cargo and retail theft3384operations related, and what kind of Federal response is needed to3385counter this issue?3386    Answer. The tactics between organized cargo theft and organized3387retail theft are very different. The similarities between the two have3388been the nexus of how criminals ``fence'' or sell stolen properties.3389During the execution of police search warrants, law enforcement has3390discovered stolen cargo theft and stolen retail products at the same3391location. This suggests that some fences are engaged in distributing3392stolen goods regardless of how the product was obtained.3393    There is certainly a need for law enforcement to focus on both3394types of crime. Reviewing the Combating Organized Retail Crime Act3395there are certainly favorable actions that would benefit policing and3396prosecution responses to this challenge. The bill currently does not3397cover all the complexities of organized cargo theft, which is why3398complementary bipartisan legislation focused specifically on that issue3399was introduced in Congress last year (see H.R. 8834 from Congressmen3400David Valadao (R-CA) and Brad Schneider (D-Il)).34013402    Law Enforcement Resources. As a former County Attorney, I know how3403important Federal support is for state and local law enforcement3404agencies. That is why I have long championed the COPS program to help3405departments hire more officers and have fought to maintain funding for3406the Byrne JAG program, which helps law enforcement agencies buy the3407equipment they need.34083409    Question 4. Do you agree that we need to be doing more to support3410our law enforcement by providing them the resources they need?3411    Answer. Yes3412                                 ______34133414      Response to Written Questions Submitted by Hon. Ted Cruz to3415                             Robert Howell3416    Question 1. With reports of losses exceeding $400,000 per company3417on average, what does this level of financial strain mean for3418businesses?3419    Answer. Cargo theft impacts a variety of stakeholders and without3420proper mitigation could eventually result in higher costs for3421customers, retailers, and suppliers.34223423    Question 2. Are there specific types of merchandise or locations3424that are most frequently targeted for cargo theft?3425    Answer. We experience cargo theft most frequently when trucks3426carrying products such as fashion footwear are in transit from the3427point of origin, on the East or West Coast, to our distribution centers3428which are located in Texas, Tennessee, and Georgia.3429                                 ______34303431      Response to Written Questions Submitted by Hon. Ted Cruz to3432                             Adam Blanchard3433    Question 1. You mentioned in your testimony that organized theft3434groups and transnational criminal organizations are exploiting3435transportation networks because such targets are considered low-risk3436and high-reward. How are these schemes growing without triggering a3437response from law enforcement or the U.S. Department of Transportation?3438    Answer. Thank you for the question, Chairman Cruz. There are3439several reasons why law enforcement response has not kept pace with the3440increasing frequency and sophistication of cargo thefts. First and3441foremost, cargo theft typically involves multiple jurisdictions and3442criminals crossing state lines, so reporting is a challenge for both3443industry and law enforcement. Motor carriers and brokers may not know3444the correct jurisdiction to which the crime should be reported because3445they may not know where or when exactly the theft took place. There are3446also situations when victims may reach out to law enforcement to report3447a crime and seek assistance for cases of fraud or theft, but rather3448than assistance, they are met with confusion and dismissiveness. Often,3449when trucking companies attempt to file a report with local and state3450law enforcement agencies, they are told to file a claim with their3451insurance company instead. This happens usually because local and state3452law enforcement officers often do not have the necessary training to3453recognize that cargo theft is not simply a property crime.3454Alternatively, law enforcement officers will note jurisdictional issues3455given the interstate nature of the crime and direct motor carriers to3456report elsewhere.3457    While 18 U.S.C. Sec. 659 is the Federal law establishing the3458ability to prosecute cargo theft, the authority to enforce this law is3459split between various Federal agencies; the FBI is the lead Federal3460agency responsible for enforcing the Federal law on cargo theft, but3461Homeland Security Investigations (HSI) enforces this statute when there3462is a transnational nexus. Additionally, the Federal Motor Carrier3463Safety Administration (FMCSA) has authority to challenge fraudulent3464broker licensing, and the Federal Maritime Commission (FMC) has the3465authority to determine whether ocean or non-vessel common carriers,3466marine terminals have engaged in unreasonable receiving, handling,3467storing or delivery practices. A major challenge with law enforcement3468more generally is that they are stretched too thinly, and even if they3469are made aware of the theft, they may not have the necessary resources3470to consistently enforce 18 U.S.C. Sec. 659.3471    There is also the matter of meeting the prosecutorial threshold set3472by the United States Sentencing Commission. In order for DOJ to even3473consider prosecuting a cargo theft case, the value of the goods stolen3474must total at least $1.5 million. This threshold can be met in two3475ways: either a single theft incident totals at least $1.5 million in3476losses, or multiple related theft incidents (potentially targeting3477multiple victims) total at least $1.5 million in losses. Given that the3478estimated average value per theft in 2024 was $202,364,37 it is3479imperative that state and local law enforcement better track incidents3480of cargo theft because most single incidents do not reach the monetary3481threshold to warrant Federal involvement. When dots are connected, DOJ3482can become involved, thieves can be prosecuted, and victims can receive3483justice. If law enforcement identifies a link (i.e., a single OTG3484stealing multiple trailers) DOJ will have the green light to utilize3485more resources and dedicate more manpower to bringing these criminals3486to justice. Ultimately, more prosecutions will serve as a deterrent,3487and hefty sentences will hopefully make potential offenders aware of3488the consequences of their actions.3489    One of the major reasons why it can be difficult for law3490enforcement agencies to connect individual theft cases is because of3491inconsistencies in the statutory definitions of cargo theft across3492jurisdictions i.e., the statutes defining and criminalizing cargo theft3493are different for each state. These differences create confusion and3494make it difficult for investigators and prosecutors to connect the dots3495necessary to warrant a Federal cargo theft charge. Overall,3496jurisdictional and definitional confusion leads to ineffective3497enforcement of applicable cargo theft laws, and the absence of criminal3498investigations emboldens criminals to continue their illegal3499activities.35003501    Question 2. Despite industry calls for stronger enforcement,3502fraudulent actors continue to exploit loopholes in regulations. What3503are the most critical gaps in Federal oversight that need immediate3504attention?3505    Answer. Thank you for the question, Chairman Cruz. The biggest gap3506in Federal oversight is the lack of coordination among federal, state,3507and law enforcement agencies. Many law enforcement agencies acknowledge3508that cargo theft is a growing and dangerous problem, but no agency has3509dedicated the resources necessary to consistently enforce 18 U.S.C.3510Sec. 659 and applicable state laws. Organized theft groups all over the3511world know that the United States' federal, state, and local law3512enforcement agencies do not have the resources to stop them nor the3513interest to pursue sweeping investigations.3514    It is crucial that Federal law enforcement take the lead on3515combatting cargo theft due to the interstate (and at times3516international) nature of the crime, as well as its relation to3517organized conspiracy. Without clear direction and prioritization from3518the Federal government, cargo thieves will continue to exploit the gaps3519in enforcement and further destabilize the supply chain.3520                                 ______35213522    Response to Written Question Submitted by Hon. Amy Klobuchar to3523                             Adam Blanchard3524    Workforce Training. A resilient supply chain relies on a strong3525workforce. We need to focus on training workers for in-demand jobs3526where we continue to see shortages, like truck driving. I recently3527introduced the bipartisan Freedom to Invest in Tomorrow's Workforce Act3528with Senator Marshall to expand tax-advantaged savings plans so they3529can be used for skills training, certifications, and credentials--3530including commercial drivers licenses.35313532    Question. How can we address the shortage of truck drivers and3533build a strong supply chain workforce?3534    Answer. Thank you for the question, Senator Klobuchar. And thank3535you for your leadership in introducing the Freedom to Invest in3536Tomorrow's Workforce Act. I, along with the American Trucking3537Associations, strongly support this legislation and believe all3538solutions should be on the table to recruit the next generation of3539talent to the skilled trades. The skilled trades are critical to the3540continuity of our supply chains and economy, and jobs in trucking offer3541family-sustaining salaries and great benefits. Moreover, the trucking3542industry will need to hire over 1 million drivers over the next 103543years to replace an aging workforce and meet growing demand. Americans3544should be able to leverage existing financial resources to pursue3545careers in whatever areas suit their unique needs and ambitions, and3546that should include both the skilled trades and traditional 4-year3547college degrees.3548    In addition to expanding 529 account eligibility to allow3549individuals to pay for training programs and certifications required3550for employment in the skilled trades, we encourage you and your3551colleagues to consider expanding Pell Grant eligibility as well. The3552Bipartisan Workforce Pell Act would enable individuals to utilize Pell3553Grants to pay for truck driver training programs, and I, along with the3554American Trucking Associations, strongly support that legislation. A3555similar bill with significant bipartisan support, the JOBS Act, is a3556step in the right direction, but it would exclude students from using3557Pell for programs at for-profit institutions. Since most truck driver3558training schools are for-profit, this bill is not as beneficial for3559prospective truck drivers as the Bipartisan Workforce Pell Act.3560    Another bill that would help the trucking industry address the3561persistent truck driver shortage is the LICENSE Act, which was3562introduced by Senators Lummis and Kelly and falls within the Senate3563Commerce Committee's jurisdiction. The LICENSE Act makes permanent3564several successful COVID-era testing flexibilities; specifically, the3565legislation would codify two Federal Motor Carrier Safety3566Administration (FMCSA) waivers to streamline the commercial driver's3567license (CDL) testing process while maintaining Federal safety3568standards.3569    The first waiver allows state or third-party CDL test examiners3570qualified to administer the skills driving test to also administer the3571written knowledge test. The CDL knowledge test is well-suited to be3572outsourced to third-party entities given its objective nature and3573format of questions (i.e., primarily consisting of multiple choice or3574matching type questions) and thus the ability to consistently and3575reliably train and deploy knowledge examiners.3576    The second waiver allows states to conduct CDL driving skills tests3577for applicants regardless of where that driver obtained prior CDL3578training, with the goal of providing more flexibility for applicants.3579This common-sense update acknowledges the interjurisdictional nature of3580the trucking industry and the practical needs of applicants who live3581near state borders or face long testing delays. Importantly, all CDL3582applicants must complete minimum training standards under FMCSA's3583entry-level driver training (ELDT) before completing skills testing3584regardless of their training state. FMCSA's ELDT requires all states to3585meet or exceed Federal training standards, ensuring only qualified3586drivers receive a CDL and relevant endorsements, and that all new CMV3587operators are held to a shared understanding of the applicable rules3588and regulations that apply to CDL holders. The LICENSE Act builds on3589the past successes of these COVID-era waivers and is a prime example of3590how Congress can advance regulatory relief without compromising safety.3591                                 ______35923593   Response to Written Questions Submitted by Hon. Ben Ray Lujan to3594                             Adam Blanchard3595    According to the Truck Safety Coalition, New Mexico has the second3596highest rate of fatal truck crashes per 100,000 population in the3597country. I have been working with my colleagues on this Committee to3598put an end to all preventable deaths on our roadways, including by3599eliminating drunk driving and equipping vehicles with commonsense3600technology and tools to prevent deadly crashes.3601    Mr. Blanchard, you note a few different kinds of cargo theft in3602your testimony. In the case of `hijacking' and `fictitious pickups,'3603drivers who do not have the proper licensure or paperwork steal the3604full truck of freight and operate on our roadways.3605    I have concerns that this introduces safety issues, because these3606rogue drivers are not held to hours-of-service requirements, are not3607held to drug and alcohol testing standards, and often may not even be3608licensed to drive a commercial vehicle.36093610    Question 1. Mr. Blanchard, do you believe that rogue drivers who3611are participating in cargo theft present a safety risk on our roadways?3612    Answer. Thank you for the question, Senator Lujan. Yes, rogue3613drivers who are intentionally engaging in cargo theft present a safety3614risk on our roadways. Illegitimate carriers often operate unsafe3615vehicles, hire unqualified and uncredentialed drivers, and avoid3616regulatory oversight altogether. In some instances, these bad actors3617also engage in fraudulent insurance practices, further compromising the3618safety and integrity of USDOT's registration system and industry norms.3619Criminals use stolen or unethically purchased numbers to facilitate3620illegal activities beyond cargo theft, including human trafficking and3621the transportation of illicit substances and goods. Thus, the impact of3622this fraud extends far beyond the trucking industry itself, threatening3623the U.S. marketplace, public safety, and national security.3624    Notably, when fraudsters and cargo thieves use existing USDOT and3625MC numbers to carry out their illicit schemes under the guise of3626legitimacy, they will specifically seek out the USDOT and MC numbers of3627companies that have strong safety records and established operational3628histories to both appear more credible and evade the scrutiny of law3629enforcement and regulatory bodies. By acquiring the business3630identifiers of companies with strong safety records, fraudsters can3631avoid certain routine compliance checks and bypass certain vetting3632processes that would otherwise expose them.36333634    Question 2. Mr. Blanchard, can you give a little more detail on how3635these fraudulent actors are getting their trucks to steal loads--are3636they buying them legitimately, or are they also stealing the fleet they3637use to commit these crimes?3638    Answer. Thank you for the question, Senator Lujan. Fraudsters can3639steal freight in a variety of ways, and some ways involve seemingly3640legitimate business transactions, and some ways would be considered3641more overt theft.3642    Fraudsters who play the long game will start out legitimately and3643build relationships with business partners over the span of weeks or3644months. Once they have established themselves as a credible business3645partner, they will begin pilfering freight. By taking only small3646amounts of freight at a time, thieves are able to avoid detection for3647much longer and pocket hundreds or even thousands of dollars of3648merchandise without much effort or risk. Often, business partners do3649not become aware of pilfering schemes until months later, and by that3650point, there is no way to recover the missing freight. Once business3651partners become aware of the ongoing fraud and theft, the bad actors3652will shutter their companies and go dark. It is nearly impossible for3653the business community to track these individuals once they go dark,3654and neither law enforcement nor regulatory agencies have effective3655means of identifying these bad actors and pursuing justice once this3656happens.3657    In other cases, fraudsters will steal loads without ever setting3658foot in the United States. This is typically accomplished through3659double brokering fraud. A double brokering scam can take various forms3660in the trucking and logistics industry. Sometimes, the criminals pose3661as either legitimate brokers or motor carriers (i.e., owning trucks,3662trailers, equipment, or drivers), or both, but they, of course, have no3663intention of moving the freight to the destination requested by the3664shipper. Instead, the criminals steal cargo by subcontracting the work3665to unwitting carriers who transport the freight to a different delivery3666point than the location specified by the shipper. The criminals do this3667by either convincing the legitimate carrier to deliver to a different3668destination or changing the bill of lading. Often, criminals engaged in3669double brokering fraud are not located in the U.S. and conduct their3670crimes through cyber means without ever physically touching the3671freight. It is also common for criminals to steal the identity of an3672existing broker or motor carrier by creating and using website domain3673names and business names that are very similar to the existing business3674information of real companies. For example, a real trucking company3675might use the website domain ABCMotorCarrier.com, and the criminal may3676create a fraudulent company with a slightly different website domain3677such as ABCMotorCarrierLLC.com. There are multiple victims with double3678brokering scams: the owner of the double-brokered freight, the motor3679carrier that unknowingly delivered the freight for the criminal and3680won't receive payment for their service, and the legitimate broker3681whose operations and integrity are undermined by fraudulent actors.3682    The more overt theft schemes are typically considered straight3683theft, which is the most common form of theft and has been around for3684as long as trucks have been delivering freight. Straight theft refers3685to thieves physically stealing cargo from a shipment. Thieves typically3686target products that can be sold quickly on the market, and this type3687of theft can be very profitable.3688                                 ______36893690   Response to Written Questions Submitted by Hon. Ben Ray Lujan to3691                               Lewie Pugh3692    Mr. Pugh, you mentioned in your testimony the importance of3693improving FMCSA's National Consumer Complaint Database.36943695    Question 1. Can you elaborate on how FMCSA could improve this3696program?3697    Answer. The first, and we believe easiest, step that FMCSA should3698take is renaming the National Consumer Complaint Database (NCCDB) to3699better reflect its value to the trucking industry and professional3700drivers. The name of the system doesn't imply in any way that it should3701be used by truckers to report possible safety violations or incidents3702of freight fraud.3703    Aside from this commonsense improvement, FMCSA should fully and3704promptly implement the recommendations from GAO's congressionally-3705mandated report on the program and its deficiencies.37063707    Question 2. You noted that FMCSA often does not respond at all to3708complaints filed in this system. Can you elaborate on how implementing3709GAO's recommendation to make filed complaints public could help improve3710safety?3711    Answer. In general, GAO's report and recommendations paint a3712picture of a system that is not well-organized with insufficient3713internal tracking and controls to monitor a complaint's status. For3714one, GAO found that FMCSA is not using its existing capabilities to run3715reports on the status of safety complaints, which GAO says may limit3716the agency's ability to review and respond to concerns submitted by our3717members. As a result, the report found that, ``as of August 2022, FMCSA3718had not documented the status for 35 percent of the 75,000 complaints3719submitted from January 2017 through December 2021.'' Recommendation 83720would address this by ensuring that FMCSA is reviewing reports on the3721status of complaints.3722    Recommendation 6 would also help FMCSA provide drivers updates on3723their cases by ensuring that the agency's internal processes document3724key determinations in complaint case files. As mentioned during3725testimony, drivers commonly report not hearing any developments in3726their cases from FMCSA and are typically unable to receive updates on3727the status of their complaints. If FMCSA improves their internal3728controls to address this, drivers' confidence in the program should3729increase dramatically.3730    Taken together, these and the other GAO recommendations would3731provide better feedback to drivers on the status and final3732determinations of their case. This would in turn give drivers more3733faith that their complaints are actually being taken seriously and3734that, if warranted, penalties or other corrective measures are being3735taken. Right now, many drivers see NCCDB as largely a waste of time; if3736FMCSA can show they are working on complaints, then more drivers will3737be encouraged to report safety issues. Furthermore, the program could3738become a resource for FMCSA to better understand and address3739problematic behaviors in trucking, including emerging and evolving3740safety concerns.37413742                                  [all]