Jason Decker of brokerage General Transportation and carrier ART Trucking, based in Van Buren, Arkansas, gave a talk at the Mid-America Trucking Show on ways carriers and brokers can work together to combat what he called "one of the biggest issues we have going on right now, causing heartache and headache for everyone." Namely, double brokering and other fraud in spot freight transactions, dragging down rates through misrepresentation/skimming and in some cases outright theft.
Decker introduced a carrier/broker-lookup application for Android devices (iPhone on the way in just a couple weeks, he said) called Trucking 101 that he hopes individual carriers might use to effect. It's also available via the "Load Check" functionality at the Trucking 101 website.
Decker outlined various flavors of fraud and scams out there, most of which Overdrive has detailed in prior coverage. Those include the fuel-advance scam, related broker and carrier impersonation/identity theft schemes, the same aimed at actual cargo theft, and the rings of FMCSA-registered carriers and brokers with authority working together to double-broker freight just to skim various amounts out of the load, with no intention of actually moving freight and in too many cases no one any the wiser.
The various rings doing all of this "are running a good scam," Decker said, "and they know they are. ... A lot of individuals and companies [in trucking] don't understand it."
Follow the links above for more. In addition, there's another that might rear its head when one of the double-brokering entities is at the end of its rope, whether cut off by the big load boards or otherwise exposed in some way. Decker called it "getting ghosted by the broker" you were dealing with on a load, never paid. "I’ve swallowed that pill a few times" as a carrier, he said.
[Related: Broker Reforms: A 'hit it and move on' scam, and more loopholes]
Overdrive called it the "hit it and move on" scam in our early-2020 in-depth series on broker-nonpayment issues. It invariably results in a broker running up claims on its bond to the point that the required bond's canceled and the company loses its authority. In those cases, the crooks are no longer invested in preserving their authority (or never were to begin with) and simply tender loads to carriers with no intention to pay, hiding their tracks in various ways.
Red flags? We've covered some of these before, too.
- Promises of unrealistic rates meant to entice a carrier to accept the freight, as noted in this early-year story about one such case. Scammers "post a load on a lane that should pay $4,500, say," under current conditions, Decker offered as a hypothetical. The freight's not especially difficult (not permitted or coming with a bevy of uncommon requirements). They'll offer that load at a rate much greater than the lane's average, he added.
- Companies named on the freight bills don't match what you know about the load. "Say you booked a load with Hunter Transportation," Decker said, yet "the bill says General. That’s another big red flag." While shippers and receivers "don’t always put the name on the bill," reaching out directly to the shipper or receiver in cases where multiple brokers' names are associated with the load can clarify things.
Related advice, detailed in our past coverage of transportation attorney Hank Seaton's "Supply Chain Protocol," highlights the need for all parties in a freight transaction to work together to beat back double-brokering and issues of fraud. Decker went on in his talk to emphasize the simple, obvious value of strong relationships with ethical brokers to proactively avoid these kinds of scenarios to begin with. And Seaton advises that brokers, shippers and carriers insist the carrier's name is on the freight bill, via contract addenda. Then insist that the consignee, at delivery, double-check the bill against the truck and driver who arrive to deliver the freight. That simple practice of including the carrier's name on bills of lading has been set aside for a variety of reasons, most having to do with the speed at which spot market transactions have to occur these days in the rush to compete, to book, to deliver.
Brokers, carriers, shippers all have become "sloppy," in Seaton's view, in the mad dash to move, which I've written before.
[Related: Fight double-brokering fraud: Prevention, ways to elevate enforcement]
Factoring companies, if you use them, can be a great resource for gut checks, too. "If your factoring company has a credit check" service, said Decker, "see if they've had issues with the broker." If they won't factor a load from the broker, odds are you work with that broker at your peril.
Decker noted the Trucking 101 app could be its own "gut check" on a broker, giving carriers a quick and easy way to gather a broker's contact information on file with the FMCSA and quickly get in touch with the home office, useful in particular when a scam artist is impersonating a legitimate broker simply to make away with a fuel advance or the entire payment associated with load.
"Being proactive is so much better than being reactive," Decker said. He felt that a lot of brokers are "doing a great job of being proactive" about vetting carriers, while "carriers have limited resources" designed exclusively for them. Also at MATS, owner-operator Deron Salmon offered his own version of a quick-lookup tool, the Truck'N "Truck Networking" smartphone app, out now and available with a 14-day free trial ($19.99 monthly or $199.99 annually thereafter). That app also gives trucking users the capability to write and post reviews, detailing their experiences with brokers.
The new Trucking 101 app is a free tool with more limited functionality at present, but can be a quick way to make contact with any brokerage's main office number to verify that who you're dealing with is just who they say they are. One thing it's not, yet: A lookup that will reflect current authority status. We used it to query the MC number of a brokerage who late last year was seen engaged in double-brokering, connected to carrier entities who plied load boards for freight. Loads booked by those carriers then "magically" reappeared on the board being offered by the brokerage in question. Not long after this activity was noticed by a different small broker last year, the offending broker and carriers involved lost their authority, in January this year.
The lost authority isn't reflected in Trucking 101 in its current form, but Decker told me today his in-house developers had found a way to get it in there and to expect updates to the Android app and the website in that regard in the next several days. (He's also got plans to build out resources for owner-operators there and elsewhere as a means of further giving back to the industry. His plan is to keep Trucking 101's tools entirely free. As he said during his talk -- this is an expense for us, not part of the revenue-generating operation.)
As was emphasized by FMCSA in last week's reporting on issues of some third-party authority lookup tools, it's always a great idea to double-check authority via the FMCSA's Safer system's "Company Snapshot" lookup for the latest. Bookmark that page in your phone and/or laptop's browser for quick reference.
[Related: Hey brokers, Holland Logistics is in fact an authorized trucking company]
Anne Reinke, about three years into her leadership of the Transportation Intermediaries Association, recently said that double brokering has become the No. 1 "issue we hear about from our membership." The TIA developed a red-flags list of their own for brokers to recognize the registered carriers in our midst that are set up simply to double-broker loads with not-always-obviously affiliated broker entities. Some of the list includes things carriers can apply to their interactions with brokers, including unrealistic rate offers and "discrepancies in emails or use of @gmail or other email accounts," according to the text of the TIA white paper that features the red-flags list.
Also: Brokers who use a "virtual office space to register" in a state where they don't reside, or with a very short history of having authority. Reinke admitted that, unfortunately, this advice as a recommendation to brokers "discriminates against folks who are new with active authority," yet carriers can also apply this to brokerages.
In our 2020 analysis of more than 8,000 short-lived brokers over the previous five-year period, those brokers were shown to have been in business on average just 14.5 months before their authority was revoked.
Just as many brokers may refuse to do business with an owner-op with a short authority history and/or no inspections in the federal system, truckers might use that 14.5-month period as another kind of gut check/rule of thumb for a broker's time in business as a way to avoid potential nonpayment, or involvement in fraudulent double-brokering schemes themselves. (The revoked broker I mentioned earlier was itself authorized for not much longer than that -- 17.5 months -- for instance.)
Bookmark this page, too, to FMCSA's Licensing and Insurance system to vet time in business for any broker. Tap the menu at the top right of the page, and choose "Carrier Search," then search for the broker entity by its MC or DOT number. From there, tap/click on the HTML button under "view details" on the right, then the "Authority History" text link along the bottom. It's cumbersome, I know, particularly given FMCSA's system isn't mobile-optimized, but do it a few times and you'll get used to it.
As broker/small fleet owner Jon Asiala has written in these pages, though, there's really no substitute to truly knowing who you're doing business with in a climate like the present, with fraud running rampant and demand for freight movement softened considerably.
Decker emphasizes all such proactive measures in the current climate. "It will take everyone" in trucking working together to combat double brokering, he said at MATS. "It's a cancer, and the only cure is all of us coming together. It will take you all being out there and active and doing due diligence" on everyone you're working with. "Be proactive. If we as carriers don’t do this, these scammers are going to be able to continue to prey on us. It will put the small carriers out of business, some of the best people in the world working their tails off."
The son of a onetime owner-operator who grew the business through the 1980s/'90s before he got involved early this century, Decker then ended the main portion of his talk with a recognition of the importance of the smallest of small carriers all around. "Without the owner-operators, the small carriers, we’re in a world of hurt."
[Related: FMCSA/DOT getting serious about double brokering?]
Find more information about how to recognize double-brokering schemes, file on a broker's bond and much more in the Overdrive/ATBS-coproduced "Partners in Business" manual for new and established owner-operators, a comprehensive guide to running a small trucking business. Click here to download the brand-new 2023 edition of the Partners in Business manual free of charge.
from Overdrive https://ift.tt/1dzm5Wg
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