Over the first half of 2024, cargo theft rose by 49% in the freight industry, reflecting the intensity of the freight fraud problem. The challenge has resulted in financial and reputational damages for many businesses, with some losing millions of dollars to theft. Experts believe that fraudsters are increasingly sophisticated and continue to find innovative ways to compromise efficiency and drain valuable resources.
However, with creative solutions, EKA continues to prove that even in the face of overwhelming freight fraud plaguing the industry, stakeholders can remain protected through powerful technology solutions designed with brokers, carriers, and shippers in mind. Addressing the cargo theft problem will be vital for shippers and carriers wishing to maintain a resilient and secure supply chain.
This article explores the rise of freight fraud, its risks, and the steps companies can take to stay ahead of these threats.
Freight fraud is not a new phenomenon. It has been around for quite some time, and carriers, for the most part, were able to maintain or navigate the problem successfully. However, in recent times, the problem has escalated to alarming levels, severely impacting carriers — even industry frontrunners. This has led to a significant rise in insurance premiums and left affected parties increasingly vulnerable to substantial financial losses and operational disruptions.
The State of Fraud in the Industry 2024 report published by the Transportation Intermediaries Association (TIA) highlighted the following: 98% of respondents identify truckload freight as the primary target of fraud, and the average gross cost of fraud reported by respondents was $402,344.47, with an approximate per-load cost of $40,760.17.
Three key types of fraud have become particularly concerning:
This is a type of freight fraud where perpetrators submit false claims for shipments that never existed. They can successfully do this by exploiting gaps in documentation or communication, making it difficult for companies to verify the legitimacy of each shipment.
This happens when a broker re-brokers the load without the shipper's prior knowledge, resulting in confusion, delayed deliveries, and financial losses. Sometimes, the second broker completely abandons the shipment and absconds with the money, leaving the shipper and the original broker to bear the financial impact.
This type of fraud is bold as fraudsters pose as carriers or brokers, tricking shippers into handing over their shipments and valuable goods and then absconding with the shipments. The fraudsters can manage this by impersonating trusted partners and bypassing security measures, making it difficult to detect fraud until it’s too late.
Dealing with an issue such as freight fraud all boils down to finances. Financial resources are always expended, whether it is an increase in insurance premiums, reputational damages that impact business and sales, actual loss of goods and resources, or money spent on damage control.
Fraud also creates inefficiencies within the supply chain, driving up operational costs as carriers are compelled to invest more time and resources into building infrastructures that prevent these attacks. Additionally, companies must allocate funds to train their personnel on how to identify and manage potential fraudulent activity.
More carriers and stakeholders in the logistics industry are turning to advanced logistics tech solutions in the face of overwhelming freight fraud. They play a crucial role in detecting and preventing fraud. Take real-time data analytics, for example, which enables more businesses to monitor supply chain activities and identify suspicious patterns before they become full-blown fraud cases.
Leveraging these tech solutions is seen by many experts as a proactive approach that can significantly reduce the potential of a carrier falling victim to freight fraud. Ultimately, it reduces the potential for financial loss and operational disruption.
EKA, a leader in freight management technology, offers solutions designed to help freight brokers, carriers, and shippers combat freight fraud effectively. Our solution leverages industry expertise and vital collaborations to unify all your transportation management needs under a robust platform. Shippers, brokers, and carriers enjoy frictionless management and operational excellence when everything operates instantaneously from the same TMS and ecosystem.
We solve all your problems through integration that allows the following:
EKA tech enhances your ability to track shipments accurately and continuously, ensuring anomalies are detected quickly. This lets your business react faster to potential fraud, keeping its operations secure.
EKA's Freight Broker TMS has been equipped with verification features to ensure or confirm identities and legitimacy before they are engaged. This enhances your ability to minimize the risk of fraudulent activity in your business.
EKA leverages powerful analytics to provide data-driven insights, helping your business flag suspicious behaviors and potentially prevent fraud before it escalates.
Schedule a demo today.
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