Freight fraud has become a real problem – here in the Midwest and beyond. One of the best ways to combat cargo scams and freight fraud is by working with a trusted Cleveland 3PL provider – one with a strong reputation and real-time supply chain transparency.

Cargo theft, identity theft, and unauthorized re-brokering (or double brokering) are all on the rise.

A recent survey reported by Transport Topics revealed a 20 percent increase in U.S. cargo thefts last year, amounting to fourth quarter losses in excess of $220 million. There was also a 400 percent increase in double-brokering complaints the second half of the year compared to the first.

What is Freight Fraud?

In most cases, freight fraud involves scammers tapping into load board technology, posing as legit carriers, and gaining access to loads with little suspicion until it’s too late.

Typically, freight brokers are responsible for facilitating shipments by matching freight loads that need to be picked up/delivered with truckers who are available to do the job. A double broker is someone who uses a phony identity to post an online bid for those loads. The shipper (who owns the freight) will pay that company. The scammer then re-posts the load in that or another online forum. A legitimate trucker or broker sees it and agrees to handle the shipping. By the time the original shipper and legitimate trucker/broker release what’s happened, the funds have already been diverted to the double-broker – who’s long-gone.

Among the greatest targets/weakest links according to DAT analytics:

• Major ports.
• Highway rest stops.
• Long distance deliveries.
• Weekend deliveries.
• Electronics, beverages/food, apparel, and pharmaceuticals.

Nearly 8 in 10 brokers surveyed had lost at least some time last year working to resolve fraud-related issues. More than 6 in 10 had a direct dip in productivity as a result, and nearly a quarter had to cope with some type of legal fall-out.

Is This a New Issue?

As Cleveland 3PL providers, we recognize that freight fraud isn’t an entirely new problem in the Midwest trucking industry. It’s been a nagging issue for decades.

However, the reason it’s grabbing headlines lately is because it’s snowballed over the last couple of years as the task of matching loads to trucks has migrated online – leading to steep competition for shipments and (unfortunately) less-than-thorough background checks on the companies doing business on these platforms.

These trucking network middlemen impersonators have gotten more tech savvy than ever, and it’s a serious issue that chips away at time, resources, money, and customer satisfaction.

Although double brokering violates federal law, enforcement tends to be less than robust.

How Can a Cleveland 3PL Minimize Freight Fraud?

Effectively tackling freight fraud and cargo scams involves more than a single-step solution. It requires brokers and carriers of freight shipments to have up-to-date, accurate information about a shipment’s status. You also need to know exactly who you’re working with – especially if you are transporting high-risk freight. Make sure you check the FMCSA licensing of any company you’re working with.

Working with a reputable Cleveland 3PL can go a long way toward securing your loads and ensuring they reach their destination without interference.

If you are looking to lower your risk of theft and fraud, we recommend:

• Entrusting high-risk freight solely to carriers with a solid reputation or that you’ve already worked with. If you’re transporting a high-value load, you probably don’t want to trust such high-risk freight to the cheapest, last-minute carrier you can find. You might pay a little more, but that’s better than the major losses you’ll suffer if a fly-by-night or fraudulent broker ghosts.
• Increasing carrier qualification standards. If you are consistently transporting high-value/high-risk loads or you’ve had issues in the past with double brokering, consider increasing your standards. Verify their insurance and make sure it’s adequate. Ask if they have real-time satellite tracking equipment so you have a shot at recovering stolen freight if it goes missing. Inquire about regular driver check calls. And while cargo theft can hit carriers of all sizes, you’re often better off with one that’s mid-sized or larger. They’ll be better equipped to help you navigate the claims process if there is a theft or fraud issue. Also consider one that’s older/more well-established. Newer carriers might be cheaper, but they haven’t yet established trust and a good reputation. That makes them a gamble.
• Keeping good records of your carriers. All too often, shady carriers will shed their old MC number and simply file for a new one to provide a clean slate. We call these “chameleon carriers.” You’ll be able to more easily spot them if you’re keeping good records of each carrier’s main contact name, phone number, business address, etc.
• Contract with a reputable 3PL. As a Cleveland 3PL, it’s standard practice for us to vet the carriers we work with. We also maintain adequate insurance coverage and invest in tools to improve transport transparency and cargo security.

For information on our Northeast Ohio 3PL services, Contact On Time Delivery & Warehouse by calling (440) 826-4630 or send us an email.

Additional Resources:

Growing Freight Fraud is Peeling Millions From the U.S. Shipping Market, April 26, 2023, By Liz Young, The Wall Street Journal

More Blog Entries:

What is a Freight Forwarder, and How Do I Know if I Need One? April 15, 2023, Cleveland 3PL Trucking Blog