7 ways to avoid common freight and shipping fraud

Being aware of freight forwarding fraud is important - but taking action to avoid becoming a victim is business-critical.…

The benefits of international shipping by sea are well-documented. Last year, maritime trade volumes reached around 11.1 billion tonnes, although this was lower than previous years due to the Covid-19 pandemic.

But as maritime continues to be one of the more attractive, from an environmental standpoint, and popular methods of shipping, there have been many instances where the shipping & logistics industry has found itself at the mercy of fraudsters. This has been particularly concerning when there has been a critical need for the shipment of crucial personal protective equipment supplies to combat the spread of the coronavirus.

Fraud during the pandemic

The Covid-19 pandemic created an environment that plays into the hands of scammers and fraudsters as fewer face-to-face interactions make it harder to verify the legitimacy of some operations. And with the growth of online shopping, particularly during national lockdowns as consumers turned online in increasing numbers, there are much greater volumes of goods being transported, making it a key issue for the shipping & logistics industry.

Scammers are increasingly impersonating well-regarded shipping freight companies and websites or setting up a new company to divert payments and intercept valuable cargo.

What can a shipping freight scam do to my business?

There are several ways that a shipping freight scam can impact your business: it can cost you considerable time, money, and resources to recover. It can also disrupt your other customers’ service supply chains as gaps in inventory are restocked.

What can I do to prevent a shipping freight scam?

At SeaRates, we know being aware of shipping freight forwarding scams and online shipping fraud is the first step to avoiding falling victim. Taking the time to choose the right ocean freight forwarder not only makes good business sense, but is essential when scams are so prevalent.

7 tips for avoiding a shipping freight scam

1. Be rate savvy

Competitive pricing is great, but a scammer posing as an ocean freight forwarder may be trying to lure you in with an extremely reduced rate. Do your research by gathering a range of quotes from other freight forwarders to get an idea of what a shipment typically costs. It is all very well trying to save money at the outset, but if it means that your goods never make it to their intended destination, your company could be out of pocket.

2. Familiarise yourself with Incoterms 2020

The latest version of the International Chamber of Commerce’s international rules and regulations coordinating the practice of cross-border cargo shipments, Incoterms 2020, came into effect on 1 January 2020. Knowing and understanding Incoterms will help to ensure that procurement, sales, and other international trade transactions proceed without any undue risks.

3. Withholding the Bill of Lading

SeaRates has previously written about the importance of the Bill of Lading. Scammers posing as ocean freight forwarders will typically not issue a Bill of Lading. Instead, they might assert that this was never released to them. Without this, the shipment will not be able to make it to its intended destination and you may well hear from your customer asking when they can expect their goods to arrive.

4. Use recommendations

Customer reviews and testimonials can be helpful when it comes to finding a reliable ocean freight forwarder. Another way to find an established freight forwarder is through custom broker associations or port authorities. They should be able to provide recommendations, or in the case of an association, a list of member freight forwarding companies or freight brokers.

5. Request a meeting

Meeting a representative from an ocean freight forwarder can help to verify the legitimacy of the company and allay any concerns. Or it may well confirm those concerns, in which case, you know to take your business elsewhere. If face-to-face meetings are not an option, then request a video call with a representative from the freight forwarder. If they come across as reluctant to speak or show their face in communications, this might ring alarm bells.

6. Verify what you think you know

One approach commonly used by fraudsters is to create a website that, to all intents and purposes, looks like that of a well-known freight forwarding company. But a closer review is likely to throw up some clues. Check particularly for inaccuracies such as the company name being misspelt. Other common red flags include the domain name or URL appearing as unusual or not as anticipated.

Before agreeing on anything or committing to any transactions, take the time to verify the company’s authenticity. This can be done by:

  • Contacting the relevant industry association or a national registry of companies.
  • Checking the validity of any contact or location details the company provides on its website.
  • Requesting a freight forwarding company’s shipping and billing addresses and then checking them out.

7. Make your plan

Following the tips above should help you find the right freight forwarder and avoid any scams along the way. Recognise that while fraud is on the rise and a risk to be aware of, most freight forwarders are not out to scam you. A trusted supplier should be able to demonstrate their track record in freight forwarding. If they can’t, you will want to know why.

Having the right tools for the job

But with responsibility for the delivery of goods in many circumstances falling on the seller – under FCA Incoterms, DDP Incoterms, CIF Incoterms and CIP Incoterms – it’s essential that your cargo arrives where it’s supposed to.

By putting in place the right measures, you will reduce the chances of your cargo falling into the wrong hands and having knock-on effects for your business, such as falling down the FBA index.

At SeaRates, we have a range of services that can help prevent your business from falling victim to fraud. For example, we can also make sure that you have the right certification services. Many of our freight forwarders have close ties with authorities allowing them to certify a range of products in the shortest possible time: reducing costs and the time for customs clearance. Furthermore, we can offer optional cargo insurance covering a range of different risks to your cargo once it leaves your warehouse.

As a trusted community marketplace and logistics innovations specialist, SeaRates.com can make sure you have the right tools for the job. And by using our universal currency converter, we can give you an instant, up-to-date quote in 168 currencies.

It doesn’t matter if your customers import toys from China or import from India, at SeaRates we have a growing range of tools that can make sure that the Bill of Lading matches up with the goods received.

SeaRates tools

Logistics Explorer

The SeaRates Logistics Explorer is a unique online quotation module for transport and logistics companies who want to increase their sales using their own site and get online bookings from customers. The Logistics Explorer allows your customers to book online at any time of day for a freight quote. It can help turn enquiries into bookings and increase sales.

Container Tracking

The SeaRates Container Tracking tool works on any desktop or mobile device and gives you one container tracking wherever your goods are in the world. Using data from the Automatic Identification System (AIS) to identify and locate ocean shipping objects through digital data exchange, allowing us to determine the exact berthing time, whether your customers import from US or import from Vietnam.

Load Calculator

With the SeaRates Load Calculator stuffing for loads of diverse sizes has never been so easy. Square and round objects are shown in our 3D models loaded inside containers or trucks. With tools such as the Load Calculator, we can make sure that EXW shipping customers don’t get any nasty surprises. We can take project cargo, full container load or less container load: whatever your need, we will have a solution for you.

Part of a bigger family

As part of the DP World corporate family since launching in 2020, SeaRates.com has the experience and technology to brings cargo movement management online and make it a more efficient process for our customers. We can also aggregate rates from thousands of logistics providers and independent freight forwarders under the Digital Freight Alliance, overseen by DP World.

So, before you get a freight quote, make sure you talk to SeaRates.com first. We may be able to help you avoid expensive demurrage fees and ensure all your logistics shipping needs are met.

Our team understands the importance of having a trusted and reliable service provider, so request a quote now, to begin building safe and secure freight forwarding relationships today.

Lilia Khovrak is a professional content manager from Odessa, Ukraine. Loves life by the sea. Dreams to see Paris and eat a croissant on the thresholds of Notre Dame de Paris. Hates to read meaningless articles.