The Cargo Theft Playbook: Essential tips to prevent freight loss

Jason Cannon:
CCJ's 10 44 is brought to you by Chevron Delo, heavy duty diesel engine oil. Now, there's even more reasons to choose Delo.

Matt Cole:
Cargo theft and freight fraud are skyrocketing. Here's some ways fleets can combat that trend.

Jason Cannon:
You're watching CCJ's 10 44, a weekly episode that brings you the latest trucking industry news and updates from the editors of CCJ. Don't forget to subscribe and hit the bell for notifications so you'll never miss an installment of 10 44. Hey everybody, welcome back. I'm Jason Cannon and my co-host is Matt Cole. Anybody keeping up with the trends and trucking over the last couple of years? There's no doubt that you've been aware that cargo theft and freight fraud has gone up during that time. So much that F-M-C-S-A and Congress are both eyeing ways to slow down the trend.

Matt Cole:
While the government does what it can to stem the tide of cargo theft fleets, shippers and brokers are left to figure it out. In the meantime, joining us this week is Frank Matzo, CEO of freight brokerage and retail consolidation company Fusion Transport to talk about a, so-called Cargo Theft Playbook. He's working to develop.

Frank Matarazzo:
So the cargo theft over the last couple of years has been a major, major issue. Anybody operating in this space is certainly aware of what's going on. I don't think there's any way you're insulated from it. It's a major issue. I think the major trend that I'm seeing is not necessarily, or I guess the major concern that I'm seeing is not necessarily what I'll call the low level smash and grab type of theft. That is certainly happening, but that is not what I'll say keeps me up at night. What keeps me up at night is more of the identity theft tied to transportation where a thief or bad actor of one kind or another isn't impersonating a real carrier. You believe that you're transacting business with that carrier and come to find out you tender them a load. They have a truck show up to actually perform the pickup and then they just disappear. That's obviously more concerning because it's entire load or loads lost with very little recourse and very little that you can do to be made whole or make your customer whole. So that is, I think, the biggest issue right now by far, and I don't think it's been really controlled at all for the last couple of years. I think it's still pretty much running rampant.

Jason Cannon:
Frank says he believes the increased trucking has seen in cargo theft has a lot to do with the economy as a whole.

Frank Matarazzo:
I think part of this has to be tied to macroeconomic environment, like what is going on in the country right now, and unfortunately what I think is happening is it's tough for people to make ends meet right now, and they're willing to take on more risks, substantially more risk to try to make ends meet. That's a really tough way of looking at this, but I don't have another reason for pointing to what's going on and saying, this is the worst it's ever been to me. That means that people just don't care and they're not concerned with the consequences of grand larceny is what it's, they're just not concerned. So to me, it's a risk reward type conversation. Am I willing to go risk jail time if I'm caught doing this? And I think what the called the criminals are saying is the risk of getting caught is somewhat low and the reward is pretty high. So I'm going to go, I'm going to do this. I think that's the unfortunate reality.

Matt Cole:
As mentioned before, F-M-C-S-A is in the process of revamping its registration system to hopefully stamp out fraud and Congress has introduced legislation aimed at addressing cargo theft. But will it help?

Frank Matarazzo:
Absolutely. I think there's a couple core areas or core groups that could address a lot of what's going on. F-M-C-S-A, the insurance companies. Let's dig into that a bit, right? A lot of times the F-M-C-S-A or the operating authority of the carrier is either brand new or just not vetted. So you can start a carrier, you can start a trucking company and tie it to any location you want, right? You just say, this is my address and you'll get approved for operating authority. There's very little scrutiny that goes on or follow up to say like, okay, is this actually a registered address for the company? What happens at this address? Has anyone gone to the address and looked and say, yes, this is an actual operation? So there's just very little checks and balances that go on when you set up a mortar carrier. The buying and selling of operating authorities also a major issue.

It's very hard to track how long the carrier has been operating under the actual authority with the same ownership. Very difficult to see who the actual owner is or registered or who registered the authority. So it's just very loosey goosey. If you'll and it needs to be buttoned up or else you're going to have this mask of just deception that is currently going on. Again, you have an issue with the carrier. It's very hard to figure out who is this, where are they based, who owns it, who's responsible for it, and there's no consequence to it. So I can start a carrier today, I can tie it to a BS address somewhere and be operating in very short order, go out and go on a load board, secure a load of freight, disappear with it, and very little consequence if any. So major pump insurance side, if you're a motor carrier, you're insuring a truck, a driver.

You can't just put a truck on the road and not have insurance. So to me, the insurance companies also have somewhat of a burden here of who is this motor carrier that I'm insuring? Are they real or how long have they been around? If there's a theft claim and it's to an MC number, I feel like they also have some responsibility in identifying like, this person owns this company. They set up this authority and they insured this driver. So let's go figure out. Figure out what just happened here. Again, a lot of the times when there is a large theft, the majority of the problem is just figuring out who has it, who just showed up at my building and took my freight. Even if you have the driver's license, the registration of the truck, it's still very, very difficult to get down to the person responsible for the issue.

Jason Cannon:
There are numerous things fleets can do to guard themselves against the cargo theft and fraud that we've been talking about. Frank shares some tips afterward from 10 44 sponsor Chevron lubricants.

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Frank Matarazzo:
So I think the biggest risk towards an actual trucking company is somebody taking your information and transacting as you, right? I'm a BC trucking company. Somebody says that they're my company and they go out and they take a load from X, Y, Z, and they disappear. Now somebody's calling me looking for their freight, and I didn't handle business with them. So they're kind of the victim of the identity theft, though. They're not the necessarily victim of stolen cargo. So I think that is the biggest risk for a trucking company. The only thing I can say is you should really try to protect your carrier packet information as much as you can. I don't know how you'd even do that. I mean, it's part of regular business, but I guess it's knowing your business partner a little bit before you circulate your internal information information. There is some software you can use, like we use Carrier 4 1 1 and RMIS and my carrier packets.

All those have good registration processes you go through to make sure you're dealing with the party you believe you are. They don't deter 100% of the issues going on. They certainly help. So I think that's where carriers just need to be cognizant. I think the major victims here are the third parties, like the brokers that are trying to secure transportation from carriers. They're the ones that are really getting left, holding the bag and the shipper who has hired the broker. It's really that side that I thinks bearing majority of the brunt in this issue. You can track your cargo inside a truck, put the GPS trackers on it. It's only going to tell you you got a problem, and then you have the issue of like, okay, I have a problem. I have to stop everything I'm doing and go deal with this problem and hope I can get somebody to respond to the problem wherever it is in the United States.

So it's good to have, but you already, your burdens are burned. You got to go try to fix them now, and that is very, very difficult to do. Again, let's say you're shipping from a lot of this happens in Southern California, from southern California going somewhere across the United States. You're going to notice your issue probably somewhere within the first a hundred miles, and good luck finding somebody in southern California, Arizona, Nevada to respond to you like that. There's so many issues going on in these jurisdictions. It's good luck. I think that's really the issue here. I love the aspect of GPS tracking. I think you can perform some really cool stuff. I'm not sure it's the end all for solving this issue.

Matt Cole:
Well, there's only so much that carriers can do. Frank says the biggest difference can be made at shippers facilities.

Frank Matarazzo:I really believe that a lot of this can be mitigated at the warehouse, at the shipping warehouse. If the broker, I'm assuming that there's a broker intermediary here, but let's just say there is a shipping party that's shipping from a warehouse, a broker, maybe their shipping warehouse is a third party, not the end customer, right? So you can have three or four different parties involved in this transaction. The warehouse really needs to work with the broker or the intermediary to say, here's who I expect to show up, meaning this carrier with this authority, with this insurance, with this driver. If that doesn't happen, it needs to be flagged immediately. Most of the time, what I see happening is a broker books, a BC carrier and an X, Y, Z carrier shows up for that pickup, different carrier, different authority under some other triple lease agreement or some other weird theoretical arrangement, which needs to be shut down immediately.

To me, that is you just lost control, right? There's you hired somebody, a truck to perform work, and that's not the truck that's there. Regardless of whether it's an owner operator or what's happening, the authority, the insurance, the driver information, all need to tie out or else to us, that is a no load, absolutely no load. If just that is followed, I think a lot of this stops. I think a lot of it does. Does it deter 100% of it? No, but it gives you a lot of information. You now know who the truck was registered to, the driver's license of the driver, the fin number of the truck, you know everything. Now, if you tie that in with the GPS tracking and one other step that we're in touch with our local police departments because we have a warehouse in Southern California, they recommended a driver's license scanner to put in our building.

So to validate this driver's license is actually real. If you tie all those pieces together, you have a pretty good vetting process on the ground, and it's all very, very basic stuff. The other thing I tell our guys in our warehouse to do is go out and look at the truck. Go look at the DOT number on the side of that truck, make sure there's no red flags that are coming up. You're hiring a guy to go across country. You shouldn't be picking up in a day cab, basic, basic things. Check out the trailer. Look at what condition is this trailer in? Is it rented? We've had guys come in with rented trailers with temporary plates. To me, that's kind of a red flag. Why are you pulling a rented trailer that you just picked up from somewhere down the street? That could be a bit of an issue. We look at all of these things and we determine, is this okay? Are we comfortable with this risk level? And if there are too many of these red flags come up, it's a no load.

Jason Cannon:
Frank's been working on a cargo theft playbook that can be used across the freight transportation industry, which includes essentially a checklist that if followed, would help prevent most of the theft seen today.

Frank Matarazzo:
So what I have been talking about is a very simple type of playbook. A lot of things that we mentioned today that shippers warehouse providers can check and just say, these things, check out, and it should mean that I'm okay to release this driver, and it's the basics that we just talked about. Unfortunately, a lot of shippers, warehouses don't know all of these things or don't know where to get all this information. You ask them about F-M-C-S-A registration. They're like, what is that? Right? They have no way to know how long a motor carrier has been in service or how long ownership of the MC number has been with a particular party, or how do I check the registration? Or can I call the broker of record the insurance broker on the certificate and make sure that this driver and this tractor are part of the policy?

There's all things like that that should be done that most people don't even know. Have no idea how to do recommendations for driver's license scanners, right? I got a recommendation directly from the police department said, this is a good one to use. So just listing out all of these items, kind of like a checklist to say, if you implement these, you'll have a drastic reduction in the total amount of cargo theft and claims that you experience. That playbook doesn't exist today. We're kind piecing it together as we learn different things. We're doing GPS tracking, right? We are using several different GPS trackers just as a way to figure out is what I believe happening with my freight actually happening. A big thing is I seal a trailer and it magically delivers with the seal intact, but I know the trailer was opened. How did that happen?

So we've seen all sorts of odd instances where hinges, the bolt hinges are taken off the door or the actual outside hinges are taken off, total doors removed, all sorts of very, very odd fraudulent activity go on. So one of those things is when you inspect a trailer, I prefer not to load a trailer that has external hinges with bolts on the outside because that tells me right away somebody with a power drill can just take off those bolts and those doors are off very, very quickly. So those are items that we flag, again, onsite. That should be part of a master playbook that says, Hey, these are red flags. You should look for these when your truck is up, and if they're there, you should ask, absolutely. Ask questions about why that is the condition it's in. A lot of this stuff we're still figuring out.

What I've started to do is communicate with other third parties in the industry to provide more insight, right? It's like when you have a problem, you start to learn about why didn't I catch this at this step? So I don't have a ton of those, but collectively, there's a lot of information out there. So what I'm trying to do is work with a bunch of third parties, additional parties that have a vested interest here, and piece this all together into what I would call best practice. It's touched because you have a lot of different, pretty slick technologies that can be implemented. You have a lot of different ways people are going about vetting, so you kind want to make a recommendation for what you believe is the best. It takes time to really whittle all this stuff down, for sure. GPS tracking by itself is a monster of options. There's a lot out there, some very, very good and slick. Others maybe a little bit aged. There's GPS technology, there's cell technology. There's all different kinds of technology you can use. We've gone as far as looking at Apple air tags, like what kind of information are we pulling off an air tag if we put in a trailer? So there's a lot to work through. Our playbook is certainly not done yet. Hopefully, we'll have it done this year and be able to push it out there, but we're working on it.

Jason Cannon:
That's it for this week's 10-44. You can read more on ccj digital.com. While you're there, sign up for our newsletter and stay up to date on the latest in trucking industry news and trends. If you have any questions or feedback, please let us know in the comments below. Don't forget to subscribe and hit the bell for notifications so you can catch us again next week.