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Fraud, Theft and Abuse in the Supply Chain …
This is what an owner of a brokerage thought after one of his company’s loads got stolen – a $700,000 truck load of cargo. From there, everything went downhill.
They ended up throwing in the towel because they were entering into a world of hurt with their insurance company and with access to capital with their banker.
This company was not a mom-and-pop brokerage; it had revenues of over $60 million and that’s nothing to sneeze at.
Listen, there may be an untold number of stories regarding cargo theft, ghost companies, double-brokering, brokers not paying carriers, fraudulent carriers and on and on.
This message is not meant to detail all of such occurrences in this industry. The point here is that these abuses, fraudulent activities, etc., are real and it’s something about which no one is really coming up with good solutions for.
That means YOU have to be in charge of all this.
Often times, when companies have problems, influences outside of the company get blamed. Yet shouldn’t the owners take some responsibility and assume some degree of accountability?
We here at Atex don’t pretend to have total solutions; but we do offer “best practices” for clients. It’s a start.
FMCSA is tasked with the responsibility of providing a “green light”, “red light” on carrier selection and credit agencies help identify bad-paying brokers and shippers. But FMCSA is far from providing clear guidance.
The courts have said that brokers should use “reasonable care” in carrier selection yet they did not define this term – and understandably so.
FMCSA is currently revising the Safety Measurement System (SMS), but I wonder if it will bring any more light to this subject.
Keep this in mind as you enter the freight broker industry – it’s imperative that you keep up to date on these issues. If you’re focused only on “margins”, you could see your margins dwindling or evaporate if you were to get hit with something really big and bad.
Here’s a final comment that is related to this message: if you are a freight broker, do not broker loads to Landstar truckers. This is a topic for another day.
WAIT! As I was finishing up here, one of my clients called and said his load got double-brokered. He said the guy was yelling at him for the money. My client refused (good move, Caleb) and the errant carrier threatened to call my client’s bond holder (good luck).
I’m working with my client on this and will provide the name and DOT# of this carrier after the dust settles which shouldn’t be long.