Freight Fraud: Where to find safe loads
Freight theft is up 71% year over year according to data from Verisk. It’s no secret either. Most everyone in logistics feels the effect or has been the victim of freight fraud themselves. Even at Convoy, there were incidents of freight theft over some of our shipper’s freight and despite being pretty far removed from the incidents at the time, I could feel its impacts in my org. It’s important to address some big questions when approaching the topic of freight fraud. What are the main kinds of freight fraud, who are the primary bad actors allegedly associated with these incidents, and is there anything that can be done to stop it?
No matter the type of freight fraud, one thing that they have in common is they occur with new or unknown relationships, in fact, it’s a consistent story you’ll hear across the industry. One of our customers reports that they get hit with a double broker or freight theft usually about once per year because of their usage of the public marketplaces, in their case DAT. These marketplaces are useful because of the breadth of freight that can be won there but the inherent risk is that fraudsters are hiding in there as well with very little way to be detected.
FreightCaviar just reported on this topic and showed that it’s not just the value lost in each load, but also the cost of insurance. On average insurance costs have risen 8%-12% directly as the result of the increase in freight theft but for companies impacted by freight theft directly, they see rate increases from 20%-30% instead. This will disproportionately affect smaller carriers but the risk will still hurt larger carriers too at a time where margins are slim and every dollar counts to keeping the wheels moving.
Instead of taking risks on the public load boards, one strategy carriers will take is relying on customer-direct spot freight. With a direct customer, that same risk doesn’t exist because you already have a relationship with who’s providing your freight. You still have to go win it but instead of spending time looking up how old the Motor Carrier number is, you can get straight to bidding.
Despite this, one of the biggest challenges with customer direct spot freight, is how fragmented it is. Every customer creates their own spot board through their TMS provider, or posts on their in-house load board, or in some cases, will just email you those loads. This keeps a lot of companies away from spot freight because it’s inconvenient and time consuming. That’s what we’re solving for at Manifold. Our technology connects all of your sources of customer direct spot freight into a single spot so that you can avoid the fraud risk of public boards and start bidding smarter.