As we kick off the new year, the headache of load-board frauds is still hanging around the logistics scene. Despite all the changes and progress, fraud keeps messing with load-board transactions. This blog post dives into the messy world of load-board fraud, talking about the problems it brings and how we can tackle them. So, buckle up for the ride as we navigate through the ups and downs of dealing with fraud while the demand drops and interest rates rise.
Logistics is often the forgotten hero of global trade while quietly keeping the economy moving smoothly.
Not only is the efficient movement of goods from the point of origin to the point of consumption essential for world trade but also for sustained economic development.
Developing enhanced trade logistics infrastructure, such as roads, ports, railways, airports, and warehousing facilities, is very important for growing the trucking and freight industry while fostering sustainable and well-balanced economic growth across all country regions.
Shippers, carriers, and freight brokerages all operate together in the trucking industry, but a silent adversary has emerged—load board fraud.
This blog post delves into the ever-evolving logistics landscape, exploring the rise of freight brokerages, the challenges posed by load board fraud, and how to prevent and deal with it.
Logistics landscape
Let us explore the current dynamics in the shipping industry, where a decline in ocean freight orders is causing issues for trucks and trains, as well as for the people sending and driving them.
People are spending more on experiences like travel and eating out, so buying things is taking a back seat. This change means less non-essential items are being made and shipped.
On top of that, the cost of diesel, which powers a lot of these vehicles, has dropped by about half from last year. The slowdown, along with cheaper fuel, is highlighting how tough things are for the companies that move our goods around, especially freight brokerages.
Before we get into what is happening right now, let us take a quick look at how the players in this industry have changed over time.
Trucking deregulation and the evolution of freight brokerages
Trucking deregulation in 1980 triggered the rise of freight brokerages. The Motor Carrier Act dismantled restrictions, creating a competitive landscape by freeing carriers from the Interstate Commerce Commission's control.
Lower shipping rates and backhaul freight opportunities emerged, and freight brokerages became crucial in supporting trucking fleets.
Fast forward to 2023, and these brokerages have become major players, handling over 20% of all trucking freight.
Technological advancements and a customer-focused approach propelled them forward, reshaping the freight cycle and securing top spots in shippers' routing guides.
The quality of freight they manage has significantly improved, making them indispensable for shippers seeking reliable carriers. However, progress comes with its shadows. Some tech-savvy operators exploit vulnerabilities in trucking networks, causing losses, totaling hundreds of millions annually. Load board fraud is a real concern, especially for those not in the know.
Frauds in the freight market
In load board transactions, two prominent types of fraud are double brokering and load phishing.
Double brokering has been a longstanding issue, while the latter, load phishing, is a more recent concern.
Double brokering
Load boards serve as a platform where brokers publicly post available transport jobs and legitimate trucking companies identify suitable loads.
The actual transaction occurs outside the platform, involving negotiation, a rate confirmation sheet, and shipment details.
In double brokering, a fraudulent "carrier" on the load board, not an actual trucking company, agrees to terms and brokers the load to a legitimate carrier.
The original broker pays the illegitimate carrier, leading to a profit for the fraudster who never compensates the legitimate carrier.
The legitimate carrier, unpaid, may seek payment from the fraudulent broker, who evades payment, leaving the broker at risk of paying twice.
Cargo theft is an added threat since the original broker is unaware of the actual carrier, making the cargo susceptible to theft if redirected by the fraudulent broker.
This scenario may prompt legal or collection actions for the carrier seeking payment.
Load phishing
A newer form of load board fraud, load phishing, focuses on cargo theft. In this scheme, a broker posts a load on a board along with an email address.
Fraudsters pose as carriers, engaging in negotiations and securing the load. These deceptive actors use legitimate trucking companies' information but have no actual association with them.
Despite seemingly legitimate emails, these fraudsters disappear after the load is picked up, resulting in cargo theft.
Understanding and mitigating these fraudulent practices is crucial for maintaining the logistics industry's integrity and security of load-board transactions.
Preventing and dealing with freight fraud is crucial for a smooth shipping process. Here are some easy-to-follow tips:
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Thorough Carrier Approval: Screen carriers rigorously before engaging with them.
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Verification Protocols: Double-check information to ensure accuracy.
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Legitimacy Checks for 3PLs: Research and validate the legitimacy of third-party logistics providers.
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ID Verification: Use a driver's license scanner and ask for two forms of identification from drivers.
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In-Transit Security Guidelines: Share security guidelines with carriers, outlining specific requirements during transportation.
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Vigilance at Rest Areas: Advise carriers to stay vigilant, especially within the first 80 – 160 kilometres from pick-up.
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Layover Load Caution: Pay extra attention to loads requiring layovers, as they may be more susceptible to theft.
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Beware of Low-Cost Offers: Be cautious with carriers offering significantly lower rates than industry standards.
In case of potential cargo theft:
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Identify Red Flags: Look out for warning signs like missed delivery appointments or repeated breakdown excuses.
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Contact Claims Department: Address concerns promptly by reaching out to the claims representative or relevant department.
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Determine Control: Understand who controls the load to devise an effective resolution strategy.
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Gather Information: Collect crucial details about the cargo, including ownership, value, and last known location.
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Set a Deadline: Establish a reasonable deadline for delivery before involving the police.
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Notify Authorities: Contact the local police department with necessary information, retracting the report if the cargo is delivered within the deadline.
Remember, the primary goal is the safe delivery of the cargo.
The industry must stay alert and carefully examine transactions and situations to fight fraud, while dealing with both declining demand and increasing interest rates.
