Digital freight network Convoy announced Thursday it has built a proprietary real-time transportation fraud detection system using machine learning and carrier behavioral data and cargo theft solutions providers to discover potential transportation deception and crime.
In line with the corporate’s cargo theft prevention partner, CargoNet, cargo theft has increased over 57% yr over yr (y/y) in Q2 2023, trailer theft has increased 17% y/y in Q2 together with a rise in double brokering schemes. There was over $223 million in cargo loss in 2022 alone.
In response, Convoy compliance executives have been working closely since January with development teams and its shipper customers to construct a multistep system to combat cargo crime.
In an interview with FreightWaves, Convoy’s head of performance, compliance and trust, Eric Libby, explained that the corporate has adopted recent technology throughout its freight tendering and execution process to catch the ways carrier and noncarrier scammers commit fraud.
A risk assessment is performed during onboarding, flagging teams to any past fraudulent activity or connection to fraud. Carriers that come back as high-risk are blocked from bidding on loads until legitimacy may be proven.
If a load is assigned to an approved carrier and any anomalies occur throughout transit, the operations teams are notified of that activity. Cargo sensors and GPS tracking can detect anomalies reminiscent of unloading at unexpected locations and driving out of the intended lanes.
In regard to double brokering, currently becoming an increasingly attractive scam, Convoy’s recent system uses app behavior data and available fleet data to find out whether it is possible for the said truck to deliver the load and can alert operations of risk.
Why go the proprietary route?
As fraud continues to realize traction, compliance providers have showcased their efforts to assist mitigate these problems for transportation providers.
Nonetheless, Convoy found it necessary to tackle the responsibility for its carriers and shipper customers alike, as scams develop into more sophisticated.
“We elected to construct this ourselves. There are many options on the market available on the market, but we see this as a threat that’s changing day by day,” said Ryan Gist, associate general counsel at Convoy. “We have to be in command of the entire levers so if we see a brand new behavior, we’re capable of go in and quickly change our model and account for that behavior in seconds. We should not counting on another person to try this for us.”
Libby also spoke on ways in which current providers weigh certain data points so heavily that it could potentially exclude reliable carrier partners.
“We attempt to take a carrier-centric approach to observing carrier behavior and data,” he said. “There are lots of false positives that come from providers. For instance, saying you don’t have inspections means you’re bad. Inspections aren’t all the time within the carrier’s control. Now we have also heard some commentary in regards to the Department of Transportation not accommodating carriers anymore. They was more open to you showing as much as a weigh station and getting inspections, but a carrier shouldn’t have to try this either to prove their behavior.”
Gist added that those false positives are unsatisfactory for shippers.
“This creates an issue for shippers because they’re lulled right into a false sense of security with a heuristic characteristic and so they think that they’re protected. As a substitute, you will have banned 1,000 carriers out of your network and have only caught one bad actor and missed out on 10 other bad actors, creating an even bigger problem,” he explained.
The information is working
While Convoy does still utilize data, it has found that its recent fraud detection software has develop into increasingly effective at proactively flagging bad actors before the corporate even onboards them.
“In Q1 there have been two carriers, which we’ll seek advice from as Carrier A and Carrier B, that were reported to the industry for cargo theft,” said Libby. “We fed their data into our model and over the following few months, we found 24 carriers that were closely related to each A and B. One in every of those recent 24 carriers was Carrier C.”
Libby went on to elucidate that in August, a brand new carrier, Carrier D, was flagged for being closely related to Carrier C and was blocked from onboarding onto the app. Convoy went on to present Carrier D the chance to prove its legitimacy. During that process, Carrier D sent a photograph of its truck that was clearly photoshopped onto Carrier C’s truck.
![](https://www.freightwaves.com/wp-content/uploads/2023/09/06/Fraud-Network-Graphing-600x338.png)
“They digitally altered the name and it confirmed to us our system was working appropriately to catch these bad actors in real time. We reported this carrier to law enforcement to stop this fraud from happening again and discovered that previously two weeks, Carrier D had been reported for stealing not less than 10 shipments in Southern California into the hundreds of thousands of dollars of lost cargo.”
While the system is working to eradicate these carriers from the industry, each leaders acknowledged that criminals will proceed to learn recent tactics.
“Now we have created a considerable 12-to-18-month road map with additional modeling techniques to stop these situations from happening,” said Libby. “We look ahead to attending to artificial intelligence and seeing how that might help call out different fraudulent changes because the technology is seeing it occur.”
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