Fighting Fraud in Logistics & Transportation

It's tough to succeed in the logistics and transportation industry, especially with long-distance routes.


A highly competitive market and low profit margins push companies to be proactive and quickly make decisions to stay ahead.


Considering that there's little room for error in such an environment, fraud can pose a significant, or even existential, threat. For example, in 2016, a logistician was arrested for embezzling nearly $2 million over a three-year period.


Smaller and midsize companies are under threat as well. On average, midsize companies lose around $150k a year to fraud.


Fighting Fraud in Logistics & Transportation


There are many different types of fraud, such as:

  • Random selection: It can be harmful for a manager to choose a single provider for an essential service. It is far better to have multiple suppliers competing for your orders to ensure the lowest cost and an uncorrupted selection process.
  • Rates: There are limited opportunities for kickbacks when carriers are paying market rates. You should control the rates you pay as much as possible, since overpaying on higher rates can cause unnecessary damage to your budget.
  • Cargo theft. Scammers sometimes pose as freight forwarders with discounted rates, then seemingly disappear as soon as they obtain your shipment.
  • Fraudulent products. Food supply is one of the most vulnerable areas for fraud. Take the fishing industry isas an example. Professionals claim that one in five fish tested from among a batch of 25,000 were mislabeled. Pawning cheaper fish off as more expensive varieties is a dishonest but common practice. Delivering protected species from restricted waters is another abuse in this industry.
  • Fake invoicing. A significant amount of fraudulent activity in shipping and logistics relates to billing. An executive manager can create an invoice for goods or services never rendered, allowing them to cover up embezzled funds.
  • Fake customer accounts. A manager can create a fake customer account, which would enable them to generate fake orders and delivery records.
  • Fake employee accounts. Another type of fraud occurs when managers create fake employee accounts and issue paychecks to those identities. A search of employees' information may show that an employee's bank account number is the same as one of your managers. This, of course, is a sign that the employee doesn't exist.


Solutions: Manual or automation?


The best anti-fraud control measure is to proactively monitor your company's data for compliance and transparency by highlighting deviations from established standards.


Instead of doing this on your own, partner with developers of intelligent software to help you identify weaknesses and safeguard your company assets.


Flexible algorithms inbuilt in such solutions can significantly strengthen your operations by closing vulnerabilities and identifying efficiencies in your core processes. Investing in intelligent software is also an investment in growth and stability.


By using advanced software solutions, you can receive analytical reports that flag suspicious activity, whether deliberate or intentional.


More than a half of entrepreneurs marked a significant reduction in fraudulent losses as soon as they started actively monitoring their operations.




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