The increased demand for transportation of goods, in conjunction with heightened shipping rates, has made it harder for cargo companies and freight forwarders looking to keep up with demands to stay ahead of the curve.
This pressure has given rise to a practice known as double-brokering. This is the unauthorized transfer of cargo from one broker to another without the consent or knowledge of the shipper. It leads to late deliveries and damaged goods—and cargo theft or scams.
In this article, we’ll go through the possible red flags you need to watch out for to avoid scams, how they usually play out, and how you can prevent them. Here are three main ways that would-be thieves pull off cargo theft:
1. Deceptively Good Rates
Rates rising or falling way below the market average could signify fraud or plans to commit cargo theft. Thieves posing as brokers take on loads, then repost them at attractive rates to lure in unsuspecting carriers.
Once it’s time to pay, the thieves will go dark and leave the carrier out to dry. They’ll change their business address to something untraceable, and likely have cut off all phone communication, too. Cargo theft can remain undiscovered for a long time, giving thieves plenty of time to cover their tracks before it’s found.
Ultimately, if a rate seems too good to be true, it probably is.
2. Bill Of Lading Loopholes
One way to avoid cargo theft due to a double-brokering scheme is to ensure your company’s name is listed on the Bill of Lading—and that a thief isn’t!
In the shipping industry, a Bill of Lading is a legal document that serves as a contract between the shipper, consignee, and carrier which indicates the kind of cargo being transported, where they’re from, and where they’re going. This is only issued after the vessel leaves its loading port and the customer has provided all the necessary details.
However, some thieves will assume a stolen identity or pose as an authority figure (like a broker) to get their name on the bill. If they appear to be a legitimate broker, they’ll most likely pass all the usual security checks. Ensure your business name is on the bill so you never lose control of your cargo. Make sure you recognize the other names, too!
3. Posing As Legitimate Brokers
If you’re running on a tight schedule and need to transport cargo as quickly as possible, you might be tempted to cut some corners. However, shortcuts make life easier for thieves and scammers looking to pull off cargo theft.
Make sure you verify the broker's details before signing an agreement. Take a step back and find another broker or carrier if the other party isn't registered or has missing information.
But with that being said, we know thieves can steal information and pretend to be a legitimate company that’s listed on the CCMTA. So how can you be sure that you’re transacting with a trustworthy broker?
You have to trust your process. If you doubt anything at all, don’t hesitate to call the number listed in the website’s directory and verify the information. If the company says it has never heard of the person you’re transacting with, find another broker.
Tips to Avoid Cargo Theft
Being diligent when entering into an agreement or transacting with others is a rule that everyone should remember, regardless of their industry. This mitigates the chances of cargo theft and protects your transportation business against other scams.
Here are three general pieces of advice to take to avoid the risks of double-brokering.
1. Only Work With Vetted Brokers
Ask your potential partner how they choose the carriers to cover their load or how they avoid double-brokering. You should also ask for references from their previous customers. Additionally, make sure you ask what safety and compliance protocols they have in place. Lastly, inquire about their insurance coverage, to ensure you are fully protected.
2. Always Use A Trusted Load Board
Avoid public load boards since these aren’t generated in real time. Instead, use a platform that has an integrated load board with real-time updates. This will ensure that you get the best and most accurate information about available loads. Additionally, you can use the platform to track your loads and automate billing to further avoid truck cargo theft.
3. Trust Your Gut
If at any point you feel as if you’re starting to doubt the legitimacy of a broker or carrier, stop the transaction. Trust your intuition and take extra precautions. Do your research and read reviews from other customers to make sure the broker or carrier is reputable. Additionally, look for any red flags such as hidden fees or a lack of customer support. If anything seems suspicious, don't proceed with the transaction.
Trust KASE Insurance To Protect You From Cargo Theft
Truck cargo theft is serious business. Scammers and would-be thieves will go to astronomical lengths to make a dollar at your expense. As a shipper, knowing how to spot the red flags of double-brokering will help you avoid disaster.
Partnering with an insurance provider that offers comprehensive insurance policies is the best way to protect yourself from cargo theft. KASE Insurance is a top commercial insurance brokerage based in Ontario that specializes in providing our clients with personalized insurance solutions.
If you’re looking for the best cargo and transportation insurance in the GTA, contact us today!