Blythe Brumleve:
0:00
Grace Sharkey is back from FreightWaves, and we're going to talk about the state of cargo crime in a recent poll that we conducted on Twitter. Very scientific. It's on my personal Twitter account, cargo crime was the top result of the topics that people want to hear more about, and it's one of those topics that I think the industry can't get enough of right now. It was a big topic at the recent freight waves at three conference that you just attended, just I want to give a couple key facts before we kind of dive into it. And it's sort of the state of cargo crime overall. And so a couple of these key facts is that the economic impact is global losses amount to billions, billions annually in losses. It leads to higher insurance premiums and security costs. The next key fact is that it causes supply chain disruption, which, of course, all of us are very familiar with. And it causes delays and stock shortages, damages customer trust and brand reputation. And then the common types of cargo crime are theft from vehicles and facilities. The goods are actually stolen from the trucks and warehouses or ports. Another type of cargo crime is hijackings, where vehicles are forcibly taken over to steal the cargo. Then there's also fraudulent pickups, the use of fake documents or identities to illegally collect cargo. And then the cyber crime aspect, which is hacking logistics systems to manipulate the shipment information, little bit historical context, because why not? But in ancient times, bandits and pirates targeted trade routes to conduct their cargo crime activities. Then during the Industrial Revolution, there was a rising cargo theft with expanded railroads and shipping. And then in the 20th century, criminals have adapted to containerization and the globalization of trade using those different technology solutions. So Grace, you were just at F3 there was, I think highway took the number one overall spot, which they they help prevent types of freight fraud. So do you think that this was freight fraud or cargo crime? Do you think that that was sort of the, I guess the consistency of what makes up the top 25 in freight tech right now, or is it, you know, just cargo crime or freight fraud prevention is kind of coming into its own. Would you say
Grace Sharkey:
2:13
no, I think it's becoming more I think technology, in a way, has helped it
Unknown:
2:21
come almost surface a little bit more, right? Like realizing, okay, there's ways for us to to track these individuals, like the fact that not only are they using cyber security against us, now we can start to actually kind of track this stuff and speak up. I think that's part of it too. People are actually speaking up about these losses because they are high. I mean, I think it was in 2021 or 22 the average loss during these crimes is like over$200,000
Grace Sharkey:
2:51
so, I mean, that's depending on what insurance covers, like that could be a huge hit for participants in a supply chain as well, let alone just the loss of the shipper in particular. So I think we're just seeing more and more in these values getting higher and higher. Right? We see inflation. Inflation is going to mean that also the cargo is worth more, and it's just becoming a bigger deal. And what's interesting, I will say about like the highway, making that number one spot is like highways trying to get us back to a point where we can just start to book carriers and not be afraid of what could potentially happen. Right for them, I was speaking with, with Michael cainey at the event. It's like, he, I don't want to say he doesn't like the the the fraud aspect of how highway is presented, but for him, it's, it's like, the reason that highway exists is to move on from that conversation so the industry can get to a point where it's like these, these mishaps are not happiness frequently, because technology has vetted most of these, these, these losers out. If that makes sense, it's kind of like something that Amazon works on, right? Like making sure there's not these third party individual sellers who are selling crap or just fake goods. So can we improve so that every person who purchases something off Amazon does also have to check reviews to make sure the product is good as well? So I that gets me excited that it's it's that they're looking to kind of move past that discussion. But in general, we'll get into this too. I think that the 25 list shows just like issues that we're we're getting through as an industry as well this past year. That's That's fascinating. It's I actually want to be in the timing of this episode. Throw some some extra Thanksgiving stats your way. Shout out to cargo net, who came out with statistics for lost value during the week of Thanksgiving. So for them, this will be the Tuesday review of last year, Tuesday to the Monday after Thanksgiving. Last year, we had a total loss value of over $7.83 million in product with the average loss. Must be$159,000 biggest states to to experience that was California by a landslide, than Illinois and Texas, with over 174 theft reports, with food and beverage actually being the biggest commodity type than household goods and electronics. So this week is the this is the this could be the Christmas week for all those fraudsters throughout the next couple of days as well, going into next week too. And so for everyone out there booking stuff for over the weekend, clearly, make sure you're using good carriers, since this episode is coming out afterwards, same thing. Or the Christmas weeks, you want to make sure good, good carriers are moving that stuff, especially for moving things that potentially will be gifts or electronics, right? Like that stuff is going to be really, really keen to watch, make sure drivers are are parking in good places that aren't getting themselves into sketchy parking situations, and that stuff's getting delivered, okay, too, but it's definitely a problem, and it's it's not even just like a truck problem. We're seeing it in retail as well, with with shrinkage numbers like representing a lot of that loss, warehouse to warehouse, right? Just things being either lost or taken off pallets. So there's so many different ways that we're seeing this type of crime. Cyber security is another one, and I think that's a big part of it too. It's just becoming so like sophisticated in the avenues that that these fraudsters are taking, that we have to be creative as an industry to just also stop it.
Blythe Brumleve:
6:39
Is it something that, with a lot of these precautions, are you taking the same precautions this month or during the holidays as you are the rest of the year? Or is it because it is peak season and you're doing so much more volume that sometimes, you know, just human nature, you're kind of maybe skipping a few of those, I guess prevention strategies is that, is that maybe what's happening more of
Grace Sharkey:
7:06
I would say so. I mean, I think if you're, let's say you're, if you're moving truckloads throughout the year for Samsung, I mean, that would be the type of freight I would watch, probably with the same caution, every single year, just because, or every single day, because it is high value and things that people are going to love to take off a truck. But I think over the next couple of weeks, just knowing that we're going to see high volumes of foods and household goods moving around the country, it's something that people should be considering more of. And I think with that too is just clearly like the locations that drivers are maybe stopping at, is a big one. I would be more concerned with, you know, a truck stop in a weird part of town during this time of the year than than just in a random March date or something like that, right? So it does depend. I think if you're moving that high value stuff, you probably clearly should be focused on this all year round. But just knowing that you know it's it's like for it's a couple years ago, we lost a lot of power here in Lansing, Michigan, and for me, I wouldn't normally be nervous on not having power, but when I know that everyone around me knows that I probably have gifts underneath my tree, then I'm a little bit more concerned without having power. So I think it's just a little bit of that, right? It's like, okay, we know that stores are gonna be stocking up. We know that really good toys and things that are popular are gonna be coming to these stores. How do we get our hands on them?
Blythe Brumleve:
8:42
I Are you in freight sales with a book of business looking for a new home? Or perhaps you're a freight agent in need of a better partnership? These are the kinds of conversations we're exploring in our podcast interview series called The freight agent trenches, sponsored by SPI logistics. Now I can tell you all day that SPI is one of the most successful logistics firms in North America, who helps their agents with back office operations such as admin, finance it and sales. But I would much rather you hear it directly from SBI freight agents themselves. And what better way to do that than by listening to the experienced freight agents tell their stories behind the how and the why they joined SPI hit the freight agent link in our show notes to listen to these conversations, or if you're ready to make the jump, visit SPI three. Pl.com, and I would imagine, what does it? Can a TMS like a out of the box TMS help prevent freight fraud or some of these situations from happening. I know Thai software, you know, has integration partners with Highway, with, you know, a couple of other other vendors. But I'm curious as to what maybe like a a tech stack looks like for a mod. Brokerage to prevent as much as possible.
Grace Sharkey:
10:04
I would say a lot of the bigger players, larger volume participants, I've heard, are using pretty much everything they can get their hands on, because they all do stuff a little bit differently, right? Like, I think highway is a little bit more of kind of almost sort of like a background check of who you're using today, almost like, for me, like highway, feels a little bit more like a a credit check, if that makes sense, right
Blythe Brumleve:
10:32
into their VIN number, I believe, right, yes, yeah. So it's
Grace Sharkey:
10:35
like, more of like, the history this establishment behind the company you're using, where, like an offering, like verified carrier friends over there, right? That one is almost more of, like a of, like a plaid for, like banking services, right? It's like verifying that yes that account is yours, or yes that VIN number and that driver are are together, right? So I think with that being said, people are kind of are being creative on how they're using the different products based on what they're good at doing and and what they're showcasing as well. I would say, for the smaller players, clearly highway, I think would be a good one for them to look into. But I also just think, in general, how you're training individuals. Like, if you're a really small brokerage, you're like, I can't afford any of these tools. I mean, I get it the market's been where it's but at like, if you're using carrier 411, and just creating really good operations that are being held to a standard, there's ways that you can, of course, I think better protect your your freight as well, right? So before you're if you're onboarding new carrier, are you calling the insurance company and making sure that insurance is active? That's something this technology could do in a second, but it's also something that takes a couple of minutes, that, again, probably is worth the risk seeing that you're a small brokerage and probably can't take $150,000 loss that potentially isn't covered, right? So just being like aware of what is in your system, what what information is there, verifying that also, like at this you can easily humans, right? We can watch for more spam emails. When you're getting truck lists over, are you checking to see if it says it's universal truckload, that the email isn't like, USA dot universal truckload.com, or something like that, right? Like, a little off to where you're like, okay, is this the person I think I'm talking to? So I think even for the smaller players out there, it's not so much of like having to invest in this technology today. But what are you doing, just in your operations to create a culture that's looking to mitigate more fraud within your your four walls as well, right? So I would say you're right. Most team s at least have integrations into these systems, or are working on some really great integrations with some of those legacy providers, but worst case, on a human level, I think there's discussions that should be happening across the board at a brokerage of any size, just because that, at the end of the day, that human element, I think, is huge, right? Like being able to see some of these, see those issues, and say, You know what, maybe, maybe I shouldn't buy my CEO 15 gift cards. And, I mean, he doesn't want, maybe that email looks a little suspicious. Yeah, exactly. Oh, I haven't heard from Craig fuller ever via text message, but now he wants me to to buy him 30 gift cards from Home Depot. Like, well, maybe I'll, I'll ask. I'll call, like, a quick phone call before I do that, but I
Blythe Brumleve:
13:42
remember I so I I've worked at a couple different brokerages, and so one that I worked at right before I started up Brumleve brands, I was in charge of carrier relations, and I was taught by a broker on how to do it. I never asked any of these questions. It was them just sending me what the carrier information was. I checked carrier 411, just to make sure that they had a profile on there, and if they had a profile on there, they were immediately added to the system. Like there were no checks and balances that were being done. Frankly, because I did not know that I had to do all of these things, I'm pretty sure it was probably just a broker trying to, you know, get their carrier approved as as soon as possible, and didn't want to train me on what, you know, the fraud that maybe looked like. But I think that that was maybe also a different time, you know, this, I'm talking like six or seven years ago, so this is definitely a while ago, and I don't think any of these tools really existed, or even, you know, fraud, to this extent existed. So it's, I think it's a good example of how this industry has evolved so rapidly because of how criminals have evolved so rapidly, and that they are using these digital systems. And I, when I say digital systems, I mean, you know. A fake website, a fake email address, or not even like fake email addresses, but there's there was one, like fake news site that was created to look exactly like the Guardian's website, except when they made the website, it was like the you of spelling out Guardian was the Latin version of a spelling out Guardian, and so you wouldn't catch it if you didn't know that, that it had the little you know symbol on the top of it. And so it was built to look exactly like the Guardian, and even in the domain name, the email address. And so these fraudsters are getting very sophisticated. So if you're not closely paying attention, if it's happening, you know, in this area of the world, it only makes sense that it's going to happen. You know, to to your area of the world, meaning your business, how you operate it. And for a lot of these, I guess, slower to adopt technology industries, which I would put freight in in that regard, I would put construction in that regard, where they're trying to adopt new technology, especially over the last five years, but it is still very much an older industry, like a legacy industry. And so for a lot of folks, it's tough for them to evolve. It's tough for them to change, but you're going to have to it's, it's, it's the the way that business goes. You have to evolve, especially in the digital world we live in well. And
Grace Sharkey:
16:26
I think there's a special that Oprah did on AI a couple, maybe a month or two ago. And one big thing I took from that, that I felt like related to this industry, is like, especially when it comes to AI tools and things of that nature. AI is, like, one of those technologies, one of the only technologies that have come to fruition or have become mainstream, but have, like beat beats the consumer to regulation. So, like, the government hasn't been able to regulate the technology as as quickly as it's becoming popular, right? And I think we kind of see that in freight as well, where it's like this, this fraud has happened so quickly through the technology that we're using that now we're seeing the FMCSA kind of respond to the to all of this, these issues after the fact, which makes it really messy and almost slower to to resolve some of this crime, compared to being maybe responsive to the site cyber security issues right, like, for instance, like you before, you could Use a online address right to to register your truck. Now I clearly that was never thought about any more digital world, but now we're seeing them say, you know, you have to come on site. It has to be a physical location in order to register for us. So they're being a little bit reactive to it, which clearly isn't helping it. But again, I don't think anyone would have expected to see technology almost explode at the percentage point that it did right Excel up to the point that we're at now. So it's going to be interesting to watch. I think, clearly, I don't, I don't think we're going to go into 25 and people ignore the freight fraud type of or freight mitigation technology that's out there. But in general, I think something we'll talk about too is like, I just think we're going to see a lot of action between tech companies, maybe merging together who have similar goals, but could, could work better provide a better experience for users, if together instead of apart. So I remember
Blythe Brumleve:
18:45
on a I think we did an episode about a year ago on covering cargo crime, and at that time, a lot of food goods and drinks were being stolen, and that was what was being targeted by these criminal organizations, and it was making it really, really tough for, you know, prosecutors or investigators to find out who was conducting this, because for those commodities in particular, the the evidence is gone and it's they drink it or they eat it. And so it just goes like that, where, like, I think it was an order of pistachios, where it was, like, a million dollars it may be more than that of pistachios that were stolen, and you can never track that down, because there is no like specific bar code, whereas something like electronics or, you know, I think it's all on this list. So electronics, pharmaceuticals, apparel and other consumer goods are high risk items, but they also have a high, a higher recovery than, say, some of these, like perishable items. So I thought that that was interesting, too. And then I think it's not a US problem yet, or it's not happening in the US system yet, but there was one company that I was talking to specifically about this. And. And they have, like, insurance monitoring. And they, I think they're, I believe they're global. And so in the South America, they, I was asking, what's the difference between, like, cargo crime in the US versus cargo crime in other countries? And he mentioned that in Brazil, that for a lot of these fraud activities that happen. These kids are being targeted in like, middle and high school, and so they're being recruited at such a young age that, hey, we're gonna, we're gonna, you know, give you some money. We, you know, they they start becoming friends with them, or making them feel like they're friends with them in middle school and in high school. And so then that way, they've kind of coaxed them into this friendly relationship, and then they pay for them to start working in logistics, working at ports, and then that's their in and then that's how they get into these different bigger organizations, is that they almost like are recruiting or hiring spies from a very young age. And that's how they get into the system in Brazil, versus in the US, where it's much more just highly targeted locations such as the port, such as, I think we've all working in freight. We've all seen those that footage of, you know, the trains coming out from the Port of LA or the Port of Long Beach, and you know, the trains are so slow moving, or they just kind of stay there, and you can willingly just walk up and, you know, unlock a cart on a train. I think that's the right phrase for it. I don't know what the right phrase is, but you guys know what I'm talking about. Yeah, great car. Yes, yes, a car, not a cart, but they'll just open it up, and there's all these boxes just thrown everywhere, just people just opening it up and opening up people's packages and taking what they want and so that that's a little bit of, I guess, of a cultural difference is that it's much more targeted in specific areas like warehouses and ports, versus in Brazil, what they've seen in their data is that they're almost recruiting people at a very young age. And, you know, I don't want to say seducing them, maybe like molding them in a way that they're going to eventually work for them. Grooming now, grooming them, yeah, grooming them for when they do go work for these bigger logistics companies that they already have an in. And so I just find all of this, like endlessly fascinating about not just the fraud prevention, but what are you monitoring that's going on in different countries and how that's different, like Mexican drivers, for example, they are told, like, don't drive at night and don't pull over on the side of the road. Like you you make sure you are fueled up and ready to go whenever you have your shipment, and you do not stop, you do not pull over, you keep going. And so that's another difference of, like, a different area of the world, and how they're trying to combat it, or they're trying to prevent it from happening. And so just, it's overall interesting. And so anything else you think is important to bring up about cargo crime,
Grace Sharkey:
22:59
I just, I think, well, clearly, you know, we started a new newsletter here at freight waves on it, so you guys can check that out. If you go to freight waves.com click on newsletters. You'll see fraud watch on there as well. And I'll, I'll share a link with you Blythe for that. But it's, it's, if we put out an article on it, it, it goes bonkers. It's, what's on everyone's mind. And I think it's because it's just so it's so broad, right, on what exactly that fraud is. I mean, it can be anything from poor business decisions, right? It can be anything from that to stealing cargo to retail fraud. And so I think because it's just so many avenues and ways of committing the crime, again, that kind of goes towards why it's going to be so hard to stop too. And I think another part of it too is just like we, everyone who's been in the industry knows the checks and balances that would need to be done in order to fully stop it. And with that, is also a lengthy discussion on, you know, how operations need to change, and how, much, almost like, companies need to be booking shipments in a different manner. So with that big of a change issue needed in order to stop it, or at least, you know, halt it where it's at. I think that's why it's such a talk of the town, because people just not only how do we fix it, but like, where are these problems? Where's my risk? And how do we as an entity, prepare ourselves for that risk as well?
Blythe Brumleve:
24:35
All great points before we close out the topic, I wanted to bring this image up on the screen. What happened in India where meth seized from a Mirena, means boat cost more than the aircraft carrier Vikrant. It was built at a cost of $2.49 billion so the meth that they seized from this shipment was worth more than the carrier that it. Built with and we're talking about street value here for the drug, not necessarily. There's a debate going on in the Reddit comments. First one is the first comment they said, Damn, that's a lot of missing teeth, but referring to the enormous amount of meth that was caught on this boat. I mean, if you're just listening to the show it, what would you say? 123448, I'm bad at math, but I would say probably, like 100 looks like cement bags full of meth, which is a lot of it's a lot of myth. But there was a debate going on in the comments about, you know, what are we placed these values of, and that when cargo crime happens like this, are we attributing value of the wholesale value, or are we attributing the retail value? So there's a little bit, I think, of game and ship going on with police departments and things
Grace Sharkey:
25:52
like that. And meth is different, because it's like, you're not gonna someone steals your math, you know. You're not gonna report that to the police, you know. But I it's funny. You bring that up because most insurance companies don't cover the product value right after the selling, the selling value, right? They'll for them, it's how much does it cost to actually make as a unit? It's not that's out your marketing. So I used to get into that argument all the time, especially like moving a lot of steel and things like that. If that, if I ever got wet, you know, it's, they'd always want, well, I was going to sell it for this, so that's our loss. It's like, no, that's, it's not what you're selling it for. It's for what it's actually valued at at that moment, in terms of just, like a being a product. So yeah, sometimes you're going to even lose that margin too, which makes the loss even more happy.
Blythe Brumleve:
26:44
Brokering success demands a battle ready strategy. Thai TMS equips freight brokers with the ultimate battle station for conquering a tough market. With Thai brokers gain access to a comprehensive platform where raid intelligence and quote history converge on a single screen. It's not just a page, it's a strategic command center designed to help brokers win. Thai equips your team with all of the data they need to negotiate with confidence and allows them to communicate directly with carriers and customers from a simple control base, revolutionize the way your brokers perform by giving them a competitive advantage with Ty TMS. For more info, go to Tai software.com, backslash battle stations, and we also have a link for you in the show notes to sign up for a demo. I just I still wonder why we cannot put like an apple tag equivalent into pallets like, wouldn't this solve a lot of issues?
Grace Sharkey:
27:44
I think, well, one would they find the apple tag? I think is a big one at some point, it would solve a lot of issues. I mean, it's, it's
Blythe Brumleve:
27:54
visibility issues too. Yeah,
Grace Sharkey:
27:57
I think I would. I would assume it's probably a little bit of just, like time and then, like, just, you know, hopefully there are trackers and things like that. I think there are, I mean, I just wrote about a tive tracker that helped FBI with a special case. So I think there are tracking providers that could help with this. But I think another part of the problem is they're just so sophisticated that they know and maybe to even look for those, or sense those out right. So that could possibly be one. But a lot of this too is like on the retail side, like just, you know, someone grabbing boxes off a pallet, so kind of stuff like that where you might not even a tag, might not help you with it. It's, it's kind of that, like in between stage that's not helpful or more difficult to put your finger on. So again, that's, that's a cool part about all this is, like, there's multiple ways it's going to happen. I mean, they could even be something as small as, like, you take a load and the carrier says, Hey, I need a fuel advance in order to go pick up, and you send a fuel advance, and then they never pick up, right? Like that. The Apple tax not going to save you on that one. So it's just, it's so there are situations I think tech like that could help it, and I would hope that most of those companies are using some type of tracker. But I think there's also an element of like within the booking process, within even the paperwork that's coming through, that that adds that little spicy element to it. Yeah,
Blythe Brumleve:
29:30
I think it's definitely something that it's very like, dependent on the type of commodity. If it's a bunch you're shipping alone, a bunch of flat screen televisions, then you're probably going to invest in a lot of different Apple tags, but to, I guess, to point to our earlier conversation that you know those typically have serial numbers. They have bar codes on them, so they're if they are stolen, there's a high, a higher likelihood that they could be tracked back, versus like a drink shipment, where an apple tag is just probably not worth it. It to add that kind of tracking functionality or that kind of visibility into your shipment. So there's a lot of things that play and hopefully, the combination of prevention monitoring and then insurance in case shit does happen, I think, is probably going to be what the the business case or the tech stack looks like in I don't even know if that's necessarily tech, but it's like tech plus human involvement. Yeah,
Grace Sharkey:
30:27
you know someone you probably should invite on the show, Andrew Smith from circle logistics that he was a part of my my second newsletter. I watched him speak on how he was using both carrier, sure and happy robot to eliminate those calls from even coming into the business and tracking those individuals and figuring out who to do not use within their system. And he gave us a really detailed account of not only how the technology works, but how he's implemented it with his employees to make sure that, because you know you could have certain checks and balances within the day, if your employees are going to go around him, it's like pretty much useless. So just creative and interesting incentives to make sure the technology is being used correctly and then executing those those plans purposefully, like has really worked for him. So maybe someone you could have on the show too to discuss it. But I think it's a lot more than just, like you bought highway now it's fixed, but it's it's a problem. I again, I think we go into this next year and we still are having issues with it as well.
Blythe Brumleve:
31:41
Yeah, you probably, I mean, given the historical, you know, perspective, we're always going to be facing this, criminals are always going to be evolving, and it's just a game of like playing catch up with each other, yeah? And I think that that's probably is, is never going to go away. Ah,
