Fraud is rampant across the transportation space. While shippers and logistics companies are becoming more aware of threats, fraud risks come in so many different flavors that it can feel impossible for legitimate companies to keep up with the activities of bad actors. This is especially true during the ongoing freight recession, where depressed shipping rates create opportunities for double brokering as carriers are more desperate to find loads to haul at the promise of higher rates.
Cargo theft increased 57% between 2022 and 2023, according to CargoNet. At the same time, TransUnion reported that shipping fraud in general climbed 780% between 2021 and 2022. It is difficult to accurately quantify other types of prevalent fraud — like hacking and other cyberattacks — with existing data, but multiple companies have been temporarily shut down due to ransomware attacks in recent years.
There has been an increased effort to educate transportation companies about the prevalence of fraudulent activities over the past couple years. As a result, most people are aware of the risks of common threats like double brokering and trailer theft. Other types of fraud, however, are also on the rise.
Mike Hane, director of product marketing, transportation management at Descartes, has seen a spike in carrier fraud and cyberattacks. In particularly insidious scenarios, these two threats can be combined. For example, bad actors can hack a legitimate carrier’s or broker’s load board access and pose as them in order to steal the freight payment or the actual freight.
Jeffrey Tucker testified about this growing fraud problem before the U.S. House Transportation and Infrastructure Committee on behalf of the Transportation Intermediaries Association (TIA) in January. FreightWaves’ John Gallagher reported on the hearing.
“There’s a surge of malicious actors engaging in illegal activity, registering with FMCSA as carriers and perpetrating fraud, theft and holding freight hostage in situations without any legal consequences,” Tucker said during the hearing.
Tucker’s testimony hinged on TIA’s belief that the Federal Motor Carrier Safety Administration is not taking appropriate action to stop carrier fraud — whether the fraudulent activity involves bad actors posing as carriers or real carriers behaving badly. In contrast, Gallagher reported on new FMCSA regulations introduced late last year to help prevent broker fraud. Additionally, the FMCSA recently announced that a new registration fraud team will be created specifically to deal with rampant fraud in the trucking industry, assisting victims of registration fraud and identifying measures to help prevent it.
Most of the fraud that transportation companies deal with today is rooted in technology — whether it involves hacking, location spoofing or other forms of dishonest communication.
“Technology is enabling other new kinds of fraud including location spoofing to switch a trailer onto a railcar, or to make off-route stops. While these represent a small fraction of the total freight volume, some people are trying to game the system,” Hane said.
Modern fraud risks demand modern solutions. While it may seem counterintuitive to counter tech-related fraud threats with more technology, it is the only effective way to do so. It is necessary for good actors to utilize the best solutions and methodologies in order to spot bad actors quickly and stop them in their tracks.
Descartes is committed to helping its clients do just that with the introduction of MacroPoint FraudGuard. This solution is designed to help brokers and shippers identify fraudulent activities related to carrier information, load tracking and shipment status before it’s too late.
Descartes MacroPoint FraudGuard evaluates billions of data points related to freight location and shipment status in order to flag potential carrier fraud. When potential fraud is detected, the solution also helps users navigate necessary carrier interactions, increasing the probability of a favorable outcome.
“Descartes MacroPoint is a multimodal visibility platform designed to help freight brokers, 3PLs and shippers gain better visibility to their freight operations and shipments,” according to a recent Descartes press release. “The platform allows for increased control and management of the supply chain — with more efficient and high-quality data to improve communication and decision-making.”
Improving shipment visibility and stopping fraud in its tracks is crucial for brokers and shippers to build trust in the current freight environment. Challenging market conditions combine with growing consumer expectations surrounding tracking and delivery times to create a high-pressure environment for brokers and shippers. Underperforming is not an option.
“Delivery performance matters more than ever,” said Chris Jones, executive vice president of industry and services at Descartes. “People are planning their businesses based on the way they think shipments are going to move. Not knowing what is happening definitely impacts performance.”
Tracking and visibility do not only benefit brokers and shippers. While some carriers have been hesitant to embrace visibility technologies, these solutions also benefit them by creating a more robust sense of trust in the industry, accelerating the invoicing and payment process, and providing them the insights they need to make their own operations more efficient.
“Visibility requires trust between supply chain partners,” Jones said. “It allows businesses to streamline operations, remove waste, and improves the ability for carriers to maximize their assets.”
Trust is the antidote to the fraud epidemic. Creating trusted relationships through transparency, visibility and verified information is the best way for every member of the supply chain to stay safe in today’s transportation environment.
Click here to learn more about Descartes MacroPoint FraudGuard.