With the fraud apocalypse still burning bright, maybe as many as 18% of all loads hauled in the U.S. somehow are double brokered, according to the Overhaul cargo protection firm. Overhaul's thus jumped into the carrier vetting business with its FraudWatch system, likely coming soon to a guard shack near you.
"Freight fraud has become a significant problem, with 98% of surveyed logistics companies identifying it as a critical vulnerability, and U.S. transportation companies reportedly losing millions yearly," the company wrote in announcing FraudWatch. "On average, the financial impact per company exceeds $402,000 annually."
FraudWatch, Overhaul added, is "a powerful new solution designed to expose bad actors, protect shipments, and empower shippers and logistics providers to stay one step ahead of fraud." Those "logistics providers," you might have guessed, would be brokers or 3PLs.
FraudWatch takes a multi-pronged approach to carrier vetting and theft prevention. First, it uses "AI-enabled scoring" of carriers using data "built from millions of shipments," which, the company said, "uncovers fraud indicators, from compliance gaps to sudden risk spikes."
Using tech to rate all carriers registered with FMCSA has led to some harsh results for carriers before. Owner-operators surveyed by Overdrive last year held a low opinion of "carrier vetting" systems, and horror stories about companies misunderstanding the industry or hosting negative or biased reviews of carriers abound.
But Overhaul Executive Vice President Ron Greene said FraudWatch comes to the vetting world with "a lot more insider knowledge or sophistication" than competitors. Like Highway or Carrier Assure or Carrier411, FraudWatch itself does not "make any hard decisions on the carrier usage," and simply flags what the system sees as "higher risk carriers to encourage additional scrutiny."
Will your next load get denied by a broker citing FraudWatch, flagging you for having too few inspections or too new of an authority?
[Related: FMCSA, police investigate double broker's odd inspections history]
Greene stressed that FraudWatch does look at inspections data but also the "historical performance" of a carrier, and that they have plenty of real-world experience to avoid falsely flagging good carriers. Overhaul, the FraudWatch parent company, has tracked hundreds of thousands of high value shipments for hundreds of shippers and 3PLs.
"The technology platform allows us to sync up and get live data from the truck," said Greene. "Either through onboard tech or a device on the truck embedded in cargo. We get a lot of data coming from trucks as they move down the road, like location, temperature, [trailer] door-open alerts."
Additionally, Overhaul maintains what Greene calls a "bad-actors list" of known entities involved in fraud and theft in the past. Though this information is often provided by brokers, Greene said it wasn't totally subjective. To make it on that blacklist, there needs to be a "confirmed theft event or a confirmed fraudulent activity," he said.
Furthermore, when Overhaul finds a bad carrier, they "do research and try to do research if [the ownership has] other MCs" or associated authorities. With the MC number trade laundering "clean" MC's to bad actors, this represents a crucial step. Yet Greene acknowledged that there's "no silver bullet" for proactively identifying a bad carrier and brokers. Instead, the flagging of carriers is only one layer to FraudWatch's approach.
The next step, critically, is making sure the right carrier makes it to the gate.
Layering technology within physical security
This is the part of FraudWatch's process owner-operators could be most likely to notice.
"Think of this in layers of security," said Greene. "We make sure there's a validated driver in the point of pickup and we're also validating carriers with our rules of engagement."
FraudWatch requires shipper security personnel to check the driver's license and make sure the numbers on the door match the carrier who booked the load.
"The names have to match, and our recommendation is not to load anybody with paper numbers," Greene said. If a truck shows up with such DOT/MC numbers, "they should be turned away immediately."
Overhaul specializes in tracking and providing security assitence for high-value cargo, so drivers picking up from one of their shipper clients get briefed on security protocols before departure. Truckers are "forced to read and acknowledge the requirements" for any load, said Greene. "Typically it’s on the tablet in the possession of a security guard or dock worker, dock supervisor," that can show, in multiple languages, the rules of engagement for the haul. "The driver departure interview is a critical layer of security to ensure the driver understands and agrees to the security protocol for the load. A five-minute conversation with the driver, a few check boxes, and they agree to the terms for the load."
Greene added that 80% of cargo theft "happens within 200 miles of the origin, so our rules of engagement with our clients and with the carriers are when you pick up the load you have enough DOT hours to get four hours down the road empty with an empty bladder and a full tank," said Greene. The specific instructions, of course, will differ load to load.
Once the load hits the road, Overhaul's onboard trackers send back "real-time data every four minutes," he said. If something goes wrong -- a temperature drop, unauthorized pickups, signs of double brokering, a door opens when it shouldn't -- alerts go out across the system.
"Double brokering is rampant in the industry," said Greene. "Our number is that 18% of full truckloads are double brokered in this country." FraudWatch's gate protocols hope to help put a significant dent in that number. "All these things layered together provide a very robust solution" to cargo theft.
[Related: Brokers' new 'carrier vetting' craze bad for trucking, carriers say]
The company's "Law Enforcement Connect Team" fosters and maintains "direct relationships with law enforcement agencies and includes former cargo theft task force leaders," said Greene. The connections allow the company to "provide real-time intelligence and support when theft or fraud occurs. Law enforcement personnel are also trained on Overhaul’s technology, increasing the likelihood of swift recovery and effective intervention."
The company routinely briefs its clients and the press on known cargo theft rings.
Essentially FraudWatch layers carrier vetting with security protocols and real-world tech solutions to go a bit beyond simply stamping a letter grade on carriers. As of right now, carriers can't see their "report card" on FraudWatch's system, but Greene said the company plans to create a portal for carriers to speak with them directly and perhaps correct some items on their record if anything goes wrong.
Greene hoped FraudWatch could be an opportunity for good carriers to prove themselves, measuring trucking companies on "adherence to security protocol," he said.. "Do they not stop in the red zone or not have stops that weren’t planned? Do they deviate from a logical route? Did they not adhere to the plan or park where they weren't supposed to?"
Ultimately, it's big shippers with valuable, sometimes high paying cargo that use Overhaul -- having a clean bill of health with FraudWatch could line a carrier up for good business. Truckers with good scores int e system may be "able to negotiate better rates or get on better paying loads," said Greene.
Does that sound true? With brokers focused on security now more than ever, is this the new selling point for loading your truck? Has any owner-operator here gained access to better freight or rates by playing the carrier vetting game and winning? Get in touch with [email protected] with any comments.
