Fraudsters unfortunately lurk throughout the logistics industry, looking for opportunities to skim money off of shippers via tricks like double brokering, fuel card scams, shipment misdirection, or even outright theft of freight.
Shaker Logistics has seen all kinds of fraud and has trained our team to detect and avoid it, saving our customers valuable time and money. Let’s take a look at the ways shippers may be at risk of being scammed and how a trusted 3PL can help shippers avoid logistics fraud.
The Cost of Freight Fraud
With stricter legislation and more advanced vetting protocols, the industry is taking a proactive approach to dealing with freight fraud. But even with safeguards in place, fraud is still a looming threat to shippers, 3PLs, and carriers alike.
Freight fraud comes in many forms, with criminals adopting more sophisticated methods all the time. Scammers looking to make a buck often use tactics like identity theft and invoice fraud to pose as legitimate carriers or 3PLs, gaining access to payment and load information. Shippers and inexperienced 3PLs may unwittingly let a scammer into their network, where the scammer can leech tens of thousands of dollars from the company.
One of the most common freight scams is double brokering, which occurs when a carrier transfers the load they’ve promised to haul to an unsuspecting 3PL or carrier – without the shipper’s knowledge or consent – acting as an illegal second broker. The “double broker” then pockets the difference between the rate the initial 3PL charged them and the lower rate paid to the second carrier. In some cases, the “double broker” doesn’t pay the second carrier at all and disappears, leaving the shipper on the hook to make the duped carrier whole.
Truckload freight is especially vulnerable to another common scam, cargo theft. Fraudsters exploiting industry processes purchase MC numbers online and impersonate carriers that have a pre-established client network. This false credibility allows cargo thieves to gain shippers’ trust to move a load for them. Then, they pick up the freight and hold it for ransom or sell it on the black market.
The aftermath of freight fraud is a mess for all parties involved. Legitimate carriers “hired” by the double broker often refuse to move the load without upfront payment, causing shippers to go back to the drawing board and potentially miss delivery deadlines. The immediate financial impact can be devastating, with companies who are victims of supply chain fraud reporting average losses of over $400,000 in a year, according to the Transportation Intermediaries Association. On a larger scale, shippers who have missed delivery dates or lost products due to freight scams are at risk of losing important clients and business contracts.
While the financial consequences of freight fraud are staggering, the loss of trust is the most damaging result. These scams are the main contributing factor to the stereotypes and mistrust in the supply chain industry. When a fraud incident occurs, the reputations of all parties are at risk: 3PLs who don’t vet their network lose credibility with shippers; carriers whose MC numbers were fraudulently used have marred records; and shippers can lose the trust of clients who rely on their products.
On the Front Line Against Fraud
Shippers who arrange their own transportation are the most vulnerable to freight fraud, as they don’t have the time, resources, or experience required to investigate and manage the carriers they use thoroughly. At Shaker, we are invested in the success of our customers, so we take fraud seriously. Our carrier services department specializes in vetting and monitoring carriers, so our customers have access to a nationwide network of reliable and compliant capacity. Many of our associates have already earned, or are working toward, the Certified Transportation Broker designation given by the TIA. This process includes extensive study and passing an exam that tests knowledge of freight scams and how to identify them.
Chris Launsbach, a Carrier Sales Manager at Shaker, oversees carrier monitoring and ensures that our network matches our customers’ needs. After years of working with carriers and combating fraud, Chris has this advice for shippers:
“In a world where fraud is on the rise, having a trusted 3PL like Shaker Logistics is your first line of defense. Our rigorous carrier vetting process ensures only reliable, properly insured, and compliant carriers move your freight—protecting your business from double brokering, cargo theft, and bad actors. We don’t just find a truck; we find the right truck, every time.”
When a 3PL is entrusted with a shipper’s freight, they are responsible for the safety and security of that cargo from the point of pickup to the point of delivery. To make sure that only legitimate carriers move our customers’ freight, Shaker’s team applies our decades of knowledge daily, enhanced with the use of AI software, to create a strict carrier vetting process. Here’s what we consider when making sure a carrier is legitimate, compliant, and up to our high service standards:
- FMCSA Compliance: The Federal Motor Carrier Safety Administration (FMCSA) is the federal agency overseeing safety and compliance of commercial vehicles and provides carrier scores that reflect a carrier’s performance history.
- CSA Scores: Our transportation management software automatically retrieves Compliance, Safety, and Accountability (CSA) scores for each carrier we consider partnering with. These scores are updated monthly by the FMCSA and pull data from roadside inspections, crash reports, and investigation results. CSA scores include information on unsafe driving, hours-of-service compliance, vehicle maintenance, the driver’s use of controlled substances and alcohol, and driver fitness.
- Information Validation: Our carrier services team has several methods to verify and cross-check carrier identity and insurance. We require carriers to submit a driver’s license, connect with customer references to confirm the carrier’s good standing, verify their insurance with a representative, and check their MC numbers against government databases.
- Ongoing Monitoring: We periodically put carriers through a re-approval process to make sure they’re still up to our standards and that they’re still operating legally.
Once a carrier is approved to enter Shaker’s network, we consider them to be our partners. Our team focuses on building relationships with our carriers to foster loyalty and transparency, ensuring we have carriers we trust to handle even the most valuable freight. Many of these relationships with proven, reliable carriers are long-lasting, with some of our carrier partners working with us for the better part of a decade. We even have one carrier who sends homemade cookies to our office during the holidays.
“The relationships we build with our carrier partners aren’t just for fraud prevention, but they’re a critical part of our elevated service,” Chris said. “If a shipper needs to get something delivered on short notice, or we need to make quick recovery pickup, we have partners who will send a truck to help us out whenever we need it. That way our customers’ freight gets to its destination safely and on time.”
Freight fraud has expensive consequences. Avoid the scams and let Shaker Logistics take care of your transportation needs. Request a quote today!