The introduction of tech-enabled solutions has made the transportation industry more efficient and effective at moving and tracking freight. However, the widespread adoption of digital solutions has also created opportunities for scammers across the supply chain.
Challenging economic conditions have only escalated fraudulent activities as criminals continue to find ways to exploit vulnerabilities. In fact, CargoNet’s third quarter 2023 report shows an increase across all types of cargo theft, including outsized growth in strategic cargo theft events like double-brokering shipment misdirection attacks.
“We caution the industry that throughout this year, strategic cargo theft rings have picked up activity around holiday periods,” CargoNet reported in a recent press release. “We also caution that strategic cargo theft groups continue to pioneer new methods of strategic cargo theft that seek to evade common compliance practices used by logistics brokers.”
Technology Creates More Sophisticated Theft Tactics
When discussing cargo fraud, straight theft – when cargo is stolen physically from a carrier – often dominates the conversation. While this type of fraud is still a problem, more modern strategies, including strategic theft and cyber attacks, also pose a serious threat to transportation companies.
“Across the board, fraud is exceptionally high across all channels,” Truckstop CEO Kendra Tucker said. “There are literally thousands of fraudulent actors that we have helped to take out. The types of fraud continue to evolve, disrupting the security of the industry.”
These newer types of fraud flourish in an increasingly digital and connected freight world. Technology is now woven into the fabric of the industry – helping brokers, carriers, shippers, and the supply chain increase automation and improve transparency to get more done faster.
However, the rapid acceleration of supply chain technologies has created multiple touchpoints scammers can access. And the lack of standardized security regulations only makes it easier and more tempting for criminals.
The First Line of Defense
Combatting fraud isn’t easy, but trusted collaboration is the key to protecting the supply chain from the growing number of bad actors. When brokers and carriers commit to building relationships based on trust and transparency, it becomes more difficult for fraudsters to exploit either party, creating a trusted and reliable network that is continuously alert.
There are several ways that players across the industry can promote collaboration, both among their peers and with outside sources like law enforcement.
For brokers, prioritizing communication and transparency is one of the best ways to reduce fraud risks. That commitment must extend to its shipper customers, carrier partners, broker peers, and law enforcement agencies like the FBI.
Implementing non-negotiable security practices can also prevent fraud and keep cargo safe. Utilizing the Truckstop RMIS Carrier Onboarding and Monitoring helps spot and stop suspicious activity by automating carrier onboarding and monitoring. With RMIS, brokers can vet carriers thoroughly and track performance, mitigating the ongoing risk of carrier fraud that continues to plague the industry. Through Truckstop’s exclusive partnership with Carrier Assure, users can even assess a carrier’s daily performance, alerting them to potential issues early.
Load boards can take the initiative to protect the industry by putting tools in place to verify the identity of brokers and carriers. Using advanced identity verification and validation with the help of multi-factor authentication confirms people are who they say they are before doing business. Load boards must also employ regulations that will help continuously monitor behaviors and adjust based on evolving fraud schemes.
Carriers play an important role in keeping the industry safe. They must also do their due diligence in vetting brokers. Confirming the legitimacy of a haul, especially when the rates seem too good to be true, can help uncover more nefarious activities. Reporting suspicious behavior or cargo theft crime is critical to help organizations like the FBI uncover major theft organizations and advocate for more government action to secure the freight industry.
Building a Trusted Network is Key
Ongoing freight market fraud has eroded trust between all parties, creating an environment of suspicion that, ironically, leaves companies even more vulnerable to bad actors. But when each player moves to create a safer supply chain, it builds trust for every load being hauled.
“Trust between carriers and brokers increases efficiency and confidence in the transportation industry,” Tucker said. “Increased broker transparency creates a secure, reliable supply chain where everyone benefits.”
All members of the supply chain must commit to building communities of trust in order for the initiative to succeed at the largest scale. This requires collaborative effort at every turn and a willingness to embrace tools designed to protect against fraud in today’s digital world.
