How Marine Cargo Fraud Slips Through The Cracks

Every year, millions of tons of cargo move through U.S. ports. While most shipments reach their destinations safely, marine cargo fraud quietly costs insurers and businesses billions annually. In fact, U.S. cargo theft losses are estimated between $15 billion and $30 billion each year.

For claims adjusters and investigation teams, marine cargo claims pose a unique challenge. Often, marine cargo fraud doesn’t happen on the water, it happens in the paperwork.

What is Marine Cargo Insurance?

Marine cargo insurance covers goods traveling by ship, from raw materials overseas to finished products headed to U.S. distribution centers. It protects importers, exporters, and logistics providers from loss, theft, or damage during transit.

According to the National Insurance Crime Bureau, reported cargo thefts jumped 27% in 2024, with another 22% increase expected by the end of 2025, leading to an estimated $35 billion in annual losses.

Common Marine Cargo Fraud Schemes

Fraudsters exploit the complexities of international shipping and multi-layered supply chains to create plausible, but false, claims. Here are the most common schemes:

1. Fake Loss at Sea or Transit

Claimants report that shipments were lost due to storms, piracy, or container mishandling. In reality, the goods were never loaded or were diverted and sold elsewhere, often hidden behind doctored shipping documents and tracking data.

2. Overstated or Phantom Goods

Claimants inflate the weight, quantity, or value of a shipment using false invoices and fabricated paperwork. For instance, a business may claim 1,000 TVs were lost when only 500 were shipped.

3. Inside Jobs and Misrouting

Employees or partners with port or warehouse access might offload freight or reroute shipments. They then cover it up by forging paperwork, making the theft look like it happened during transit by unknown thieves.

Real World Example

In early 2025, U.S. authorities indicted nine individuals, including logistics executives, warehouse owners, and truck drivers, over a $200 million smuggling scheme that funneled counterfeit and illegal goods into the U.S. via the Los Angeles-Long Beach port complex.

Here’s how the scam worked:

• Containers flagged for customs inspections were taken off-site to private warehouses
• Illegal goods were unloaded, then containers were refilled with filler cargo to trick inspectors
• Officials seized $130 million in contraband, including fake shoes, bags, watches, and perfume, during the investigation

This wasn’t a loss at sea, it was an inside job using fraudulent seals and paperwork. Investigators relied on port surveillance, shipping documents, and forensic customs inspections to uncover the plot.

Red Flags in Marine Cargo Claims

For claims adjusters and investigation teams, spotting these early warning signs can save time and money- and stop fraudulent claims before they derail the process.

Discrepancies Between the Bills of Lading (BOLs) and Customs Documents

Mistakes or mismatches between documents like BOLs, invoices, and customs filings are a huge red flag. These inconsistencies often signal manipulated or falsified paperwork.

GPS or Tracking Inconsistencies

When GPS logs show a container never left the origin port, or the reported location doesn’t match the paperwork, it suggests something fishy is going on.

Unusually High Declared Value

Claiming inflated values (well above typical market prices) is a classic way to boost fraud payouts. It’s suspicious if the numbers suddenly jump in one claim.

Delay in Loss Reporting

Legitimate claims are usually filed promptly. A late report, especially one that conveniently bypasses tracking or customs checks, is a strong warning sign.

Unreachable or Evasive Shipping Partners

Fraudsters often avoid contact or change their stories. If brokers, carriers, or warehouse workers are hard to reach or give vague answers, proceed with caution.

Prior Claim History

A history of odd or repeated cargo-related claims increases the chance that fraud is occurring again. Trends matter, even across different shipments.

Marine Cargo Fraud might seem niche, but its impact is widespread. For claims teams, understanding these schemes sharpens investigative skills across all claim types. From checking GPS data to verifying shipping documents, the tools used in cargo investigations are just as effective in spotting fraud elsewhere. The stronger your toolkit, the harder it is for fraud to slip through.

Ready to outsmart cargo fraud? Let’s get to work. 

Check out our sources:

Federal Bureau of Investigation. “Cargo Theft: A Hidden Epidemic.” FBI, 21 July 2006, https://archives.fbi.gov/archives/news/stories/2006/july/cargo_theft072106.

Insurance Information Institute. “Facts + Statistics: Insurance Fraud.” III.org, https://www.iii.org/fact-statistic/facts-and-statistics-insurance-fraud.

National Insurance Crime Bureau. NICB Reports Sharp Rise in Cargo Theft Activity. NICB, 2024. www.nicb.org.