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Dive Brief:
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Landstar System saw elevated insurance and claim costs in Q1 due to cargo theft, carrier imposter scams and increased severity of trucking accidents, which it plans to tackle through the use of AI, according to a May 13 earnings call.
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In Q1 2025, insurance and claims costs were $39.9 million versus $26.3 million in Q1 2024. Insurance and claims costs were 9.3% of business capacity owner or independent owner-operator revenue in the quarter, compared to 5.8% in the year-ago quarter, according to CFO Jim Todd.
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Near the end of the quarter, the company discovered it fell victim to a fraud incident that impacted its international freight forwarding operations. The inception of the fraud dates back to 2019 and is isolated through a single satellite agent office, CEO Frank Lonegro said.
Dive Insight:
With the rise in cargo theft and fraud impacting the industry, Landstar System is “investing significantly” to combat the issues, Matt Miller, VP and chief safety and operations officer, said on the call.
Landstar created a fraud department and continues to add people with subject matter expertise. It’s also investing in technology and AI, through vendors and internally.
“We’ve stood up various vendors that are helping us attack on really all fronts, whether it’s people, education or technology. But this is an area where [you’ve] got to remain vigilant and you’re really always playing defense here,” Miller said on the call.
Lonegro added that as Landstar deploys the technology, it will be able to catch fraud and theft in advance.
Landstar’s fraud incident pushed back the transportation company’s report of its first quarter earnings, which was originally set for April 29, according to an 8-K filing.
Landstar is not alone in experiencing the rise in cargo theft cases. “It’s an industry phenomenon, not just a Landstar phenomenon,” Lonegro said.
Trucking, railroad and shipper representatives have been outspoken about the rise of cargo theft affecting U.S. supply chains during Congressional hearings and letters to Congress.
While cargo theft has been on the rise over the past few years, it has now become almost endemic, said Janelle Griffith, North American logistics practice leader for Marsh, an insurance broker and risk management company.
“It is top of mind for everyone. It is the first thing that everyone talks about when it comes to risk in the supply chain and specifically when it comes to 3PL’s and shippers because it's affecting everybody,” Griffith told Trucking Dive in an interview back in April. “It's affecting the first party shipper. It's affecting the third party logistics entities and everyone is essentially suffering as a result of it,” she said.