As the freight forwarding industry is gradually becoming one of the most lucrative sectors globally, the instances of fraudulent activities in the shipping and freight sector are steadily increasing. Since the pandemic, freight forwarding companies have been relying more on online interactions rather than face-to-face meetings which has made it difficult to ascertain the legitimacy of some of the operations.
Moreover, the boom in the number of online financial transactions has made financial fraud a key issue in this industry. Fraudsters these days are impersonating freight forwarding companies not only to divert payments to their accounts but even for hijacking expensive cargo. Apart from causing considerable financial losses, a freight scam could also disrupt customer service as well as the reputation of independent freight forwarders like you.
Tips for freight forwarding companies to avoid a scam
Don’t fall for incredibly low rates
There are times when a fraudster impersonates renowned logistics companies and offers an incredibly low rate that might sound very attractive. Once the shipment has been sent, the forwarder needs to issue the Bill of Lading without which you won’t be able to receive your cargo. In this type of fraud once the cargo is packed and shipped you will be told to pay a hefty amount of money for several issues to take possession of the shipment.
Therefore, as an independent freight forwarder, you should be careful not to fall for incredibly low freight charges. You need to do thorough research and gather a range of quotations from freight forwarding companies to get an idea of the approximate freight rate for your cargo.
Double-check the websites
Even though fake websites might include blogs, videos, and even testimonials, chances are high that the scammer makes a few mistakes in the logo or the spelling. Most importantly, cloned websites are not updated usually. Therefore if you see that the blog of the website has not been updated for more than 4 months then chances are high that the site is duplicate.
Additionally, you have to check for consistency of the freight forwarding company’s website. Try to find the pictures of the team including photos of the CEO, management team, etc. A website with only stock photos is most likely spurious. Also, make sure to check out the domain name of the website. For example, if their website URL has a free hosting name such as .wix, .hubspot, .homestead, etc then consider the site as fake and stop all interactions immediately.
Know the Incoterms 2020
As an independent freight forwarder, you must familiarize yourself with the latest version of the Incoterms i.e., Incoterms Rules 2020. A vast majority of freight forwarding fraud happens because the forwarders are not up to date with the Incoterms rule for a particular transaction. Having proper knowledge and understanding of Incoterms 2020 will allow you to make sure that your international cargo movements can proceed smoothly without any risks.
Verify the authenticity of your partner
Before sealing a deal and making your payment, you need to make sure that the forwarding company you are partnering with is renowned and legal. As a Conqueror member, you don’t need to worry about the authenticity of your network partners since all of them have undergone a strict screening process before being admitted to the network. However, you need to be more careful when you partner with unknown agents from outside the network. Make sure to conduct in-depth research about the company before engaging in any financial transactions with them.
Be careful while doing business for the first time with an unknown partner
If you are partnering with a freight forwarder for the first time about whom you don’t have much information, then you need to take certain precautions. For instance, if are sending the shipment overseas and agreed on cash payment after the delivery then make sure not to issue a Telex Release or a Sea Waybill before receiving the payment. The best course of action in such a scenario is to issue the Original B/L and release it only after you receive the payment. Never issue a Telex Release or an OBL based on the proof of payment from an unknown or unverified forwarder since chances run high that the proof might turn out to be fake. Never take any action unless you receive the payment in your account.
Ask about hidden charges
Whenever you are negotiating prices with a freight forwarder make sure to ask about any hidden charges. You need to ensure that the forwarder doesn’t ask for any extra charge when the shipment reaches its destination.
Rely more on in-person meetings and phone/video calls rather than messages and emails
In case the freight forwarding company you’re hiring is from your city try to have an in-person meeting with them. Ask for paper or electronic brochures to check the credibility of the company being hired. Almost all legitimate freight forwarders have paper or e-brochures where they talk about their experiences and services. Before making any payment make sure to call the person and double-check the bank details.
In conclusion, it needs to be said that the logistics industry needs to rely on vetted freight forwarders who are part of one of the best freight forwarders’ networks. Conqueror Freight Network handpicks its members based on their business volume, creditworthiness, reputation, financial solvency, and several other factors. Additionally, the finances of the applicants are checked by Dun and Bradstreet- a third party auditor. When doing business with Conqueror members the possibility of getting scammed is practically nil. This is because we conduct a thorough background check of all the applicants before selecting them as members. This ensures that none of our members or even their clients fall prey to a scam.