What is cargo theft and freight fraud?

Cargo theft is the physical taking of goods in transit, while freight fraud is the use of deception to obtain goods or money. Cargo theft and freight fraud are serious crimes that can result in significant financial losses for businesses.

What are the most common types of cargo theft and freight fraud?

The most common types of cargo theft include hijacking, theft from unattended trailers, and insider theft. The most common types of freight fraud include bill of lading fraud, insurance fraud, and false pretenses.

What are the costs of cargo theft and freight fraud?

Cargo theft and freight fraud can result in significant financial losses for businesses. In addition to the value of the stolen cargo, businesses may also incur costs for replacement cargo, investigative costs, legal costs, and increased insurance premiums.

What are some proven strategies for combatting cargo theft and freight fraud?

There are a number of proven strategies that businesses can use to combat cargo theft and freight fraud, including screening drivers, tracking shipments, securing trailers, using high-security seals, training employees, and reporting suspicious activity.

What are some additional resources for preventing cargo theft and freight fraud?

There are a number of additional resources available to businesses that are interested in preventing cargo theft and freight fraud, including the Federal Motor Carrier Safety Administration (FMCSA), the National Cargo Theft Prevention Council (NCTPC), and CargoNet.

shipping scams Archives - Trinity Logistics, a Burris Logistics Company

In recent years, the transportation industry has seen a concerning rise in cargo theft and fraud, and the culprits behind it are becoming increasingly sophisticated with their tactics. According to Land Line, cargo theft increased by 49 percent in the first quarter of 2020, with an average cargo loss value exceeding $105,000 per incident. In a recent report in July 2023 by CargoNet, it was found that supply chain risk events increased 57 percent year-over-year (YoY), accounting for 44 million in stolen shipments in quarter two of the calendar year.

With such alarming statistics, it’s essential to be proactive against cargo theft and freight fraud. So that you can be fully prepared, here are some of the most common methods used by criminals in cargo theft and fraud, along with proven strategies to prevent these issues from happening in the first place.

Common Cargo Theft and Fraud Scenarios

Dealing with cargo theft or fraud when shipping freight is far from ideal. It’s even more frustrating when you realize there are many ways for individuals to commit those crimes.

1. Identity Theft

Identity theft is currently one of the top methods scammers use to carry out fraudulent activities in the transportation industry. Scammers will impersonate legitimate trucking companies by using their stolen identities. Once they’ve acquired a stolen identity, scammers have several ways in which they use it. Some will pose as the trucking companies, show up to pick up the freight, and then disappear with the cargo. Others will request fuel advances, take the money, and vanish. Then you have others that will take it a step further and double broker.

2. Double Brokering

Double brokering is the unethical practice when a shipper or broker books a carrier for a shipment, and the carrier then brokers or tenders the shipment to a third party without the shipper’s or broker’s knowledge or approval. Double brokering not only raises liability concerns, such as a potential lack of insurance or approved contract with the actual carrier handling your freight, but it also results in a loss of control. If double brokering occurs, it can lead to billing and liability issues for you as the shipper or the freight broker.

3. Hook-Up-And-Go

This method of theft is precisely what it sounds like. Thieves connect tractors to trailers and simply drive away with them. These incidents typically occur at truck stops or drop yards when drivers are distracted. Although this method is less common today thanks to advanced technology and tracking systems in trailers, it’s still crucial to remain vigilant.

Combatting Cargo Theft and Fraud

When it comes to combating cargo theft and fraud, it can be challenging to know where to start. While securing trustworthy carriers is a solid initial step, several proven methods can help prevent fraud.

1. Communicate with the Drivers

Truck drivers are your first line of defense against cargo theft. Whenever possible, ensure that the drivers you work with have undergone proper screening to minimize the risk of fraud. It’s also important to keep your driver relationships informed about any cargo theft activities so they can stay vigilant against potential threats. Keep them aware of any hijacking hotspots and encourage them to report any suspicious incidents promptly. Additionally, if you employ drivers, ensure that they have received adequate training.

2. Verify Employment

Before finalizing any arrangements, always verify that the person you’re talking to is authorized from the logistics company they claim to work for. Use the Federal Motor Carrier Safety Administration (FMCSA) website to obtain the company’s contact information and speak to them directly to confirm their identity. If the company has no knowledge of the individual, it’s a red flag, and you’ve successfully avoided a potential scam.

3. Check Truck Identification

Legally, every motor carrier must display their company name and USDOT or MC number on the side of their truck, found on the door of the cab. If the name on the side of the truck doesn’t match the name of the company you’ve hired or that your freight broker has arranged on your behalf, it should raise immediate concerns with your dock workers. We strongly recommend implementing a procedure that requires your loaders to inspect the door and confirm a match. If there’s any discrepancy, the truck shouldn’t be loaded until the issue is resolved.

4. Leverage Technology

Technology can be a powerful ally when it comes to combatting cargo theft and fraud. GPS tracking can help locate a stolen vehicle, while geofencing applications can notify you if your freight deviates from its intended route. Making use of these kinds of technology can significantly reduce the risk of any cargo theft.

“Recently, Trinity Logistics had the opportunity to attend TIA’s Policy Forum in Washington, D.C. where we met with some of our elected state officials and staff,” said Kristin Deno, Director of Operational Risk. “We discussed the spike in fraud and impacts of cargo theft to the economy, which is estimated to have a cost of 800 million per year. Ultimately, these unsightly costs trickle down to the consumer, increasing the cost of goods for all. Because many double brokered or stolen loads begin with fake identity, verifying that you are communicating with the entity you think you are, is crucial. Newly created web domains and email addresses are being used to impersonate established carriers and even shipper businesses.”

*Kristin Deno, Doug Potvin, and Greg Massey of Trinity Logistics attend TIA’s Policy Forum in Washington D.C.*

Trust Trinity Logistics to Safeguard Your Shipments

Taking a proactive stance in fighting cargo theft and freight fraud is essential to ensure the safety of your shipments.

However, handling this task on your own can be burdensome. By partnering with a reliable 3PL like Trinity Logistics, you can save valuable time that would otherwise be spent on vetting carriers.

At Trinity, we meticulously verify all carrier relationships that we work with, not just during the initial setup, but for every shipment. Additionally, our strong relationships built with trusted carriers can further strengthen your confidence that your freight will arrive safe. Our Carrier Compliance and Carrier Development Teams are testaments to our focus on carrier verification and relationship building. We also offer cutting-edge tracking technology upon request, so you’ll know exactly where your freight is located at every step of the way.

Further, we take cases of cargo theft or fraud seriously. Situations where carriers are caught engaging in double brokering or identity theft are researched and offenders may be immediately placed on our Do-Not-Load (DNL) list.

Now, we understand that no matter what you do, things still sometimes happen. Even so, we’re proud to share that less than one percent of all shipments coordinated with Trinity Logistics end up in a claim. When that does happen, we’re just as prepared to tackle it. We have a Cargo Claims Department at the ready to assist you in navigating issues that may arise from your shipment with an average rate of 60 days in resolving cargo claims.

If the possibility of cargo theft and freight fraud is keeping you up at night, then consider working with Trinity Logistics so you can gain peace of mind over your freight shipments.

I want to know more about Trinity’s logistics services.

Shipping scams have increased exponentially in the past few years. Is your Freight Agent business taking all the steps needed to prevent them?

As a Freight Agent, your days are busy servicing your customer and carrier relationships and managing shipments. The last thing you need on your plate is a scam artist wreaking havoc and getting your business (or one of your relationships) into trouble.

Common Types of Shipping Scams

Double-Brokering

Double-brokering is a sticky mess that Freight Agents should aim to avoid. The double-brokering of shipments has been in the industry for many years. As a refresher, double-brokering is when a carrier accepts a shipment under the pretense that it will be moving on their assets, and then gives that shipment to another carrier to move the freight. Often what happens is the carrier that double-brokered the shipment gets paid, either by the broker or the shipper, but has no intention of paying the carrier that physically provided the transportation service.

Carrier Identity Theft

More recently, we have seen carrier identity theft become more commonplace. This is when a scam artist assumes the identity of a reputable motor carrier with the intent of stealing the freight or getting advances of cash but with no desire to deliver the freight to its intended destination.

Best Practices for Preventing Shipping Scams

Preventing shipping scams from interrupting your Freight Agent business starts with your initial conversations with a carrier. One must be cautious and use a little bit of super sleuthing when negotiating rates and booking available shipments.

Here are some best-demonstrated practices to help you sniff out a potential shipping scam:

Check the DOT AND MC Number

Carriers with the intent to do things fraudulently will attempt to purchase an MC number that is less than seven digits long. Currently, most new carriers registering are seeing MC numbers that start with 14 or 15 and are seven digits in length.

Here’s an example of viewing an MC number of Safer Company Snapshot. As you can see, Trinity’s MC number is only 6 digits long, whereas newer registered companies have seven-digit long MC numbers since the FMCSA last made an update in 2018.

By checking the age of the DOT number and MC number, you could see a possible red flag if the DOT number is relatively new, but the MC number is one that was originally issued several years ago.

Is the Person Booking the Load Using the Mute Button Frequently?

This is a possible red flag to be aware of. Often, this happens with shipping scam artists because they have other people in the “office” attempting to “sell” the shipment to another carrier and they don’t want you to overhear.

Immediately Accepts the Rate

Negotiating a rate with a carrier is pretty much expected. If a carrier just blindly accepts the rate as is, that could be a possible red flag. Shipping scam artists don’t care what the rate is because they are intending to re-sell it to another carrier.

Always Check the Registered Phone Number

Does the phone number match what is listed through Federal Motor Carrier Safety Administration (FMCSA)? You can quickly check a carrier’s profile via SAFER Company Snapshot. If it doesn’t match, that’s a possible red flag. Call the FMCSA registered phone number and verify the number you were talking to works for them before you finalize any details with the shipment.

Carrier’s Communication is Odd

Does the carrier try to rush you off the phone when booking the load? Is their communication only done via email? Do they provide you with the phone number of the actual driver or try to avoid giving that information? These all can be red flags.

Shipment Updates are Not Consistent

Do the updates they give not match what you’re hearing from the shipper? If they claim the truck is on-site, but the shipper states otherwise, another possible red flag that this could be the work of a scam artist.

Can You Get Ahold of the Driver?

Speaking of the driver, does the driver actually answer their phone? Does the driver agree to tracking via many of the tracking apps that are commonplace in the industry now?

Don’t Let Your Freight Agent Business Fall for Any Shipping Scams

Taking the extra few minutes to fully vet the carrier you look to entrust your customer’s shipment with will help you avoid a potential situation that could cost you and your company thousands if not tens of thousands of dollars. If your gut says something seems a little bit shady, or too good to be true, it usually is right, and best to move on to the next carrier you’re considering.

You Can Trust Trinity’s Carrier Relationships

Here at Trinity, we work hard to proactively avoid shipping scams affecting our business, which includes your Freight Agent business, too. We make sure to consistently verify who we are working with and build strong, solid relationships, as well as offer state-of-the-art tracking technology, so you know where your customer’s freight is every step of the way.

With our People-Centric Team and technology at the ready to support your business, you can spend less time on back-end tasks like initial carrier vetting, and more time focused on growing your customer and carrier relationships, and ultimately, your revenue.