No amount of diligence can guarantee protection against cargo theft or double brokering, but you can minimize your risk by carefully screening the carriers with which you do business. A few extra minutes spent validating a carrier can help you avoid damage to your reputation and the huge financial costs cargo theft and double brokering can cause.
The following facts were taken from the CargoNet 2010 United States Cargo Theft Report:
- There was a significant increase in cargo thefts from 2009 to 2010.
- Locations containing a major port are prime targets for cargo theft activity.
- Highway rest stops are frequently high-risk areas.
- The highest occurrence of cargo theft occurred in California, followed by Texas and New Jersey.
- Instances of cargo theft correlate with the economic climate, income levels and unemployment.
- Long-distance cargo deliveries, those greater than 450 miles, are more vulnerable to cargo theft.
- There are significantly more thefts on weekends than during the week.
In 2010, three commodities accounted for 40 percent of the cargo thefts: electronics, 17 percent; beverages and foodstuffs, 13 percent; and apparel and accessories, 10 percent.
Although not the most frequently stolen, the biggest dollar-value losses were in pharmaceuticals.
Not all loads carry equal risk. Be extra vigilant when you’re dealing with a high-risk commodity such as electronics that can be fenced easily. Also pay special attention to loads left unattended over the weekend; these are at higher risk.
Award high-risk loads to reputable carriers you’ve worked with before, even if it costs a little more. With new carriers, exercise a probationary period of six months or more during which you measure their performance and reliability before awarding them high-risk freight.
In addition to higher levels of insurance, adopt a higher standard for any carrier you qualify for high-risk freight. For example, a carrier that uses satellite tracking equipment on its vehicles is in better position to find a stolen trailer before the freight disappears. Increase the frequency of check calls so you’re in regular contact with the driver.
Also consider the carrier’s ability to manage the claims process. Although theft occurs from carriers of all sizes, larger and more established carriers tend to be more capable of handling claims than smaller carriers.
Most new carriers are legitimate businesses, but you increase your risk when you use a carrier with new authority (Motor Carrier, or MC/MX, numbers beginning with “7”). It’s also difficult to get an accurate financial picture of a new carrier. If you choose to use a carrier in business for less than six months, collect and check at least three business references.
It isn’t unusual for carriers with less-than-desirable business practices or safety records to deliberately ditch their old authority and start with a clean slate under a new MC number. The Federal Motor Carrier Safety Administration calls these “chameleon” carriers.
One way to identify a chameleon carrier is to compare its contact name, phone number and address with companies you have done business with in the past. If you keep good records, you can sometimes spot these reincarnations. You also can subscribe to a service that provides this kind of capability across all Department of Transportation-certified carriers.
Chameleon carriers frequently have two or three prior MC numbers located at the same address. If these inactive MC numbers show a history of involuntary revocations, this could be a sign of financial instability.
Cargo thieves may pretend to represent a legitimate carrier as a way to gain your trust. It’s vital you verify the person you’re dealing with is a bona fide representative of the carrier.
If the carrier makes initial contact with you, look at its caller ID. If necessary, verify its authenticity with a return phone call to the phone number listed by the FMCSA, and ask to speak with your contact by name so you know he or she works there.
With today’s computer technology, it’s easy to doctor an insurance certificate that looks legitimate. Some thieves will even provide you with the phone number of their insurance agent for verification purposes. This phone number inevitably belongs to an accomplice. You should never accept an insurance certificate from a carrier. Always insist on a certificate directly from the insurance agent. Check that the agent’s phone/fax number actually belongs to an insurance agent by using a reverse phone lookup. Never accept confirmation of coverage from someone on a cell phone, because you have no idea who you’re talking to.
One of the ways to avoid double brokering is to talk to the driver. Ask him directly for the name and number on the side of the truck and verify he’s employed by the carrier you hired.
Some carriers will give freight to drivers that are supposedly “leased on” but in fact are driving under their own authority and insurance. If this is the case, you may be grossly underprotected.
If you have a good relationship with the shipper, request that they check the name and number of the carrier before loading. If you tell the carrier you intend to do this, you can flush out anyone intending to rebroker the load.
Michele Greene is group product manager for Transcore Freight Solutions’ CarrierWatch service. This commentary was adapted from the TransCore white paper “Don’t Be a Victim: Cargo theft, identity theft, and unauthorized rebrokering are on the rise. How can you protect yourself and your business?”