As the holiday season approaches, industry leaders are shining a spotlight on the growing problem of freight fraud, a costly issue impacting businesses and consumers alike.
The inaugural Freight Fraud Awareness Day, set for Tuesday, aims to rally the logistics community and policymakers to tackle this escalating threat.
Freight fraud schemes like double brokering and cargo theft are estimated to cost the industry between $500 million and $700 million annually, according to a group of advocates sponsoring the annual observance. The group consists of industry leaders at companies including Verified Carrier, Truckstop.com, GenLogs, FreightValidate and Freight Bites.
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“It’s not just that this brokerage or that carrier got screwed over — it’s a whole supply chain issue affecting all of us,” Andrey Drotenko, president of strategic relations at Verified Carrier, told FreightWaves. “We’re all paying for it, whether through higher prices or damaged reputations.”
The first half of 2024 saw a 49% surge in cargo thefts compared to the same period in 2023. Additionally, Cloudflare’s latest survey revealed a 400% rise in double-brokering complaints since 2022. In this scheme, criminals impersonate brokers, secure shipping contracts and reassign shipments, leading to lost goods and payment disputes.
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The fragmented nature of the logistics industry has made it challenging to tackle freight fraud. Criminals exploit gaps between jurisdictions, knowing that no single authority has the resources to address the problem comprehensively.
“Unless it’s a million-dollar heist, the FBI isn’t really on it,” Drotenko noted, highlighting the systemic shortcomings in enforcement.
Freight Fraud Awareness Day aims to change this by marshaling industry leaders, technology providers, insurance companies and policymakers in a united front against fraud.
The initiative also stresses the importance of open dialogue within the industry, where falling victim to freight fraud is often seen as embarrassing. Greater transparency and reporting could enhance data collection and improve coordination among stakeholders, fostering collaboration to combat fraud more effectively.
“Despite fraud and theft skyrocketing in recent years, it doesn’t have to be inevitable — like death and taxes,” Ryan Joyce, CEO of GenLogs, told FreightWaves. “It’s a solvable problem and GenLogs is committed to operating hand in hand with leading carrier-vetting platforms — like Highway, Carrier Assure and Verified Carrier — to provide ground truth data that keeps out bad actors so that the amazing honest carriers can flourish.”
Beyond raising awareness, organizers hope to empower agencies like the Federal Motor Carrier Safety Administration to take a more active role in combating fraud. Currently, the FMCSA can impose penalties for double brokering, but enforcement is limited by legal constraints.
“The unfortunate reality is that the bad actors in this industry have invested more time, money and effort into damaging it than we have into protecting it. That must change,” Dale Prax, founder and CEO of FreightValidate, told FreightWaves. “My hope for Freight Fraud Awareness Day is that it becomes a catalyst for action, not just awareness. Every day we face the threat of fraud, but this day should inspire us to come together and create real, lasting change.”
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The organizers also hope to extend the day into multiple awareness days in the future and add resources to the observance’s website to help supply chain participants reach out to local, state and federal political representatives to report concerns about freight fraud in the future and enhance efforts to fight it.
“Truckstop is proud to be a leader in the fight against freight fraud. As a leader, we recognize that collective efforts across technology, policy, advocacy, and law enforcement are the best way to make freight an unattractive industry for bad actors,” Sean Dehan, vice president of corporate strategy at Truckstop, told FreightWaves in an email.
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