As ACD members and stakeholders know, the work the chemical distribution industry does to safely and efficiently transport chemical products is critical to countless sectors, including the manufacturing, healthcare, agriculture, and defense industries. Due to the role the chemical distribution industry has in our supply chain, providing the essential products Americans rely on, we are increasingly targeted by bad actors, requiring us to remain more vigilant than ever before.
In recent months, ACD members have experienced an uptick in fraudulent activity and reported incidents of individuals trying to access company data or acquire the hazardous materials they handle. Fraud in the chemical industry presents many financial and security challenges and takes various forms, with counterfeit products, documentation fraud, theft and diversion, financial fraud, and environmental compliance fraud being the most common.
In the past year, theft and diversion have been at the forefront of these challenges. In 2024, theft activity reached unprecedented levels across the U.S., with reported incidents at least 12% higher than the total for 2023, according to data from CargoNet.
In January, ACD members reported that they were contacted by suspicious individuals requesting chlorine products and demanding the locations of their distribution centers. This raised alarms among businesses to further safeguard their products, customer information, and supply chain operations. Cybercriminals have become increasingly skilled at impersonating legitimate companies to purchase chemical products, often using the newest technologies, including artificial intelligence. According to data from ACD Strategic Partner USI, theft through “deceptive acts” is up 700% in some areas of the U.S. In the first quarter of 2024, a record 925 cargo thefts occurred, resulting in more than $150 million total losses.
The loss of the Chemical Facility Anti-Terrorism Standards (CFATS) program has also compounded threats – both physical and cyber – to the chemical industry. CFATS provided critical safeguards to prevent terrorists from accessing chemical products. The program encouraged collaboration among chemical facilities, the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, and local law enforcement to protect against the latest and evolving threats to our industry. Since Congress failed to reauthorize the program after nearly two decades of bipartisan support, facilities have been left to manage evolving physical and cyber threats on their own.
Given the increasing trends in fraud and the loss of critical security programs, we are working with our members to ensure the chemical distribution industry remains vigilant and aware of current and emerging threats. ACD supports our members through our strategic partnership with USI, which provides insurance offerings against product theft by deception. Click here to learn more. And, to ensure you’re staying up to date on the latest developments, please look out for special email alerts from ACD as well as items in our weekly NewsBrief e-newsletter.
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