Intelligent Freight: How Data Signals Protect Cargo | Episode 66

Hey, everybody. Welcome to Tired Tracks with Banyan Technology. My name is Matt. Today with me, I've got Keith Lewis. We're going to be talking a little bit about fraud and theft in the logistics world, how we can use some analytics, and some insights to help prevent that and how we can use those tools to make sure our freight's safe. Keith, thanks for joining today. How are you doing?

I'm good. Thanks for having us. We appreciate it.

Yeah, yeah. No, thanks for joining. Yeah. If you want to give a quick background for everyone tuning in, tell us a little bit about yourself.

I'm a retired special agent with the Georgia Bureau Investigation and Work Supply Chain Crime. Most of my career, I retired in 2011 and joined Verisk CargoNet. Prior to law enforcement, I spent about 20 years in supply chain. I worked in all the different verticals of the supply chain, asset, non-asset, brokerage, third-party warehousing and intermodal.

Wow, that's awesome. That's great. Diving right in to the conversation, your background really speaks to it. A lot has changed, I think in the last few years, really since the pandemic with how the freight industry has evolved and changed. How do you see fraud and crime and theft play into some of those changes? Have you seen a change in the last few years with that?

Yeah. It depends on the time period you're looking at. You could say, it's either up 1000%, or 1500%, depending on the time period of fraud versus traditional theft. We still have the traditional theft. That didn't go away. It's just we're dealing with more fraud. Fraud is probably upwards of between 40% and 45% of the total number now. We can and subject matter experts, I don't consider myself one, but subject matter experts in my vertical say that it's all connected to what we learned we could do and get away with during the COVID period.

Right. Yeah. No, totally makes sense. You definitely see people getting more creative, and especially through the COVID experience, where eyes weren't necessarily watching, I feel like as much as normal. People were just more focused getting through day to day. We talk about data analytics and how that can improve visibility across the board. What patterns, or abnormalities can data detect that human intuition might dismiss?

Well, the data drives everything. As a data company, the data tells us that the human error, you can have all the great systems in place. But at the end of the day, that final decision comes down to a human being pressing the button to move the load. It doesn't matter what vetting you have in place that the bad guy has bypassed, found the off-ramp of a life of not crime to a criminal enterprise. They get on that off-ramp and they figure out through – some people use the term trickery. I prefer deception. To get around the safeguards that we have in place.

With the emergence of artificial intelligence, that can make things really, really good and it all can take things really, really bad. Just like what we see with everything else is with the emergence of all these tools that we have, we make the supply chain more efficient and effective, but it also puts another tool on the tool belt of the bad guy.

Yes. Yeah. I did some schooling not that long ago. I was really interested in cybersecurity. That's one of the things that we really talked about. It's interesting to then apply that experience to my logistics background. That's exactly the case is you have these tools that you're like, “Wow, this is awesome. It's going to help me prevent it.” At the same time, the bad actors, the bad guys, they now have that same tool. They're figuring out how to reverse engineer it and then reapply it to do harm. It's dangerous.

One of the things we've done is we've turned everything over to AI. It's a generational thing. I come from the days of before computers and fax machines and to the day of where we live in today. We find it, it's the generations of folks like me, I'm suspicious of everything. Folks younger than I am, I've grown up with all this technology. They put their faith in trust in it. If it pops up on my computer screen, I've got to go with it and trust it. That's exactly what the criminal is banking on, trusting what they've put in front of you.

Yeah. Yeah, that's true. It's funny, because I sit in between generations of dairy nuts in my face, but I've learned to not trust it just as much. You talk about something really interesting, where it's in your face all the time. You start to hear words like alarm, fatigue, and stuff like that. For some people, like you said, they might trust that face value, but then you also have this other side of the coin where you're using AI and you're getting notifications. You cast such a large net with AI to get more notifications of suspicious activity, tracking events, whatever the case is. Do you see anything with alarm fatigue? How do you avoid that with the tools of AI? Do you see people just getting bombarded with alerts? If everything's priority, nothing is? Or is there a good way to filter out some of that noise?

The alarm, the alerts just become white noise.

Mm. Yeah.

It's like when I get the alarm on my phone for the tornado coming or –

Yeah. Right.

- the missing person alert, or whatever, you turn it off, right? Because it becomes an annoyance sometimes. Folks may have the perception that if I listen to everything they put in front of me is don't do this and don't do that, I'd never get anything done. What we've seen is, what we used to see is on Friday, that was our biggest day for thefts in the old days.

Interesting.

Now, what we're seeing now is every day is Friday.

That's interesting.

Because of what I just said, the white noise, every day is Friday. Every day is an alarm. Every day is the sky's falling. You just become numb to everything. It's business as usual. We've got to get the supply chain moving.

Right. Yeah. Totally. Yeah. It's funny. I come from the operation side in the carrier world originally. What you said rings true. Everything's a priority. It all becomes noise. It gets hard to prioritize certain things. It's definitely difficult when you talk about every day is Friday. I remember for me, I worked on the outbound side and for us, Mondays were a heavy day. I remember making the same drink, every day is just Monday now. It's just a lot all the time. Go back to some of the data and analytics. How does the analytic visibility actually change the math on risk and recovery?

The analytics tell us that obviously, it tells us where the red areas on the map, it's called the heat map. The analytics we provide tells the story. If you dig into the analytics, you'll figure out really quick that the Southern California areas is a hotspot. It will tell you the day of the week, the time of the day. It'll tell you the commodity and the data will tell you, not only tell you maybe electronics is the number one commodity out there.

Interesting.

But what type of electronic is the number one commodity? If you're using the data, if you're using the data for preemptive intelligence on preventing cargo theft, you can see the trends. A few years ago, energy drinks was the trend.

Interesting.

In certain areas of the country were the big area, the Southwest area of Phoenix, suburbs were the number one hotspot for those thefts. Some get it, and some don't. If you watch the data and it tells the story of, hey, they're stealing pistachios in California right now. Those of us in the pistachio business, this is a true story in 2016, really need to button down and sure up our supply chain. Some do, some don't. Some get our intelligence. Not everybody's a client, so a lot of people don't know. We're membership based. If you're not getting our data to know that in Waddell, Arizona, the number one place now for copper theft is Waddell, Arizona.

Interesting.

If you're in the metals business, that's something that's very important that you need to know. If you're not paying attention to the data, it's going to go right past you and you're going to wind up being a victim and saying, “Why me?”

That's a great example, because coming from the shipping world, from a carrier perspective, you're trained to look at certain items as more high value than others. You touched on electronics are always high value. Anything in the medical world is. But pistachios, just it wasn't on my list. But that's a great point is if you don't have that data, you wouldn't know that. Expanding on that a little bit, do you see certain industries over others where they think like, “Oh, our freight's safe. No one cares about what we're shipping.” Or does that happen often, where you guys are talking to these people and you're like, “No, it's everybody. Everybody could be a target”?

Yeah, every day there's something new. I'd say, if you're in the low value food, you're shipping a commodity, a food type commodity, which is obviously food is the number one stolen item, and you're shipping something that may be low value, and we don't need to put covert telematics on it, or team drivers, or an escort, you're just kidding yourself. Because the bad guys are good at a couple things. One is they know our business better than we do. Number two, their graded return on investment. They understand the market. Because you can only sell so many – I always say this, you can only sell so many macadamia nuts in the macadamia nut store. Once –

Right.

Once everybody has a brand-new virtual reality headset in every one of their child's bedrooms, you're not going to buy any more for a few years. Then the bad guys realize that and they'll shift, right? They'll shift to energy drinks. They'll shift the copper. They'll shift to canned food. The bad guys are very good. I don't know if they're smart, or they just say, “Well, this is getting hot now, we better switch over to something else,” or they really understand the market. You just never know until you get that bad guy in the interview room and you get them talking to know why they were thinking what they were thinking. But they're very good at shifting around. There's no consistent commodity that a group will target. They'll target one for a while, and then they'll move on to something else and then keep moving.

It's like day traders of the stock. It's fascinating. You've got these organizations, or groups out there that are just watching trends possibly on what to steal next. Fascinating.

It's safe for going to Vegas, because even if you bet on black every time, sooner or later, you're going to run out of money when you keep losing. This is safer to keep moving commodity to commodity.

Yeah, fascinating. As we're talking about clients that might not adapt this and those that do and the different industries that can be impacted, which is all of them. What do you think the biggest barrier is for shippers, carriers to get onboard and adapt this? Do you think it's the technology adaptation? Is it data sharing, like you said earlier, like the fear of some of that data being there? Or is it just a mindset thing of, “Yeah, that's not my concern right now. I'm looking at something else”?

I'll take your last option there. I'll say, it's the mindset. This is a team sport. If there's one thing that I emphasize all the time is we have to work together as a team. This is the typical scenario. The logistics provider comes into the shipper and says, “Yeah, I want to be your single source provider. I want you to only exclusively use us, and this is why. We have the best vetting. We have the best trucks. We have the best drivers. We use the best broker boards. We have the best AI technology vetting. We've got everything.” The shipper says, “Okay, I trust you. I've hired a professional.”

You send a truck in, you said you're the professional. You said you had everything done before the truck gets here. You said when the truck shows up, all I have to do is put the freight on the truck and it's going to get delivered on time, intact, and damage-free. Then it doesn't. I guess, where I'm going with this is the shipper has got to get on the same team as the carrier. Logistic provider realize that there's no silver bullet here. They’ve got to work together and the shippers. I put a lot of this back on. I think there's some pain getting ready to head there based on if you've watched the news lately, but on shippers, on being more vigilant on who they're giving loads to.

Yes. Yeah.

License verification. Does the truck match what they gave me on the read confirmation? Is there a license plate on the truck? Did I take a picture of the VIN? Did I take a picture of the driver? Did I take a picture of the driver's license? Does the trailer number match the trailer that they gave me that was supposed to show up? These things are the little things and don't cost any money to implement. We've got to get on the same page here and work together as a team, or we're going to consistently see these numbers going up and up every year. What I fear is that this way of life is the new norm, and this is just now become a cost of doing business just like we accept organized retail crime.

Yeah. Yeah. That's super fascinating. Like you said, it's really in the details. Because again, I remember working on a doc and managing a doc, and little details, like validating the trailer number. Sure, I was handling more so internal moves between locations. But still, those little details, just validating the number, like I remember asking a guy like, “Hey, do you validate the seal number and the trailer number?” He’s like, “No. It's the same driver I had yesterday.” It's like, okay, but those details matter down the line, especially if something does happen, you start investigating it. Those details matter, like you said, like people being on the same page with that. I've seen plenty of drivers who brush off the information as well as like, I've seen drivers who was like, “Did you put the seal on?” “Yeah, I put the seal on,” and they don't check themselves. It's going, yeah, that's awesome. I could put the seal on terribly. You don't know that. Yeah, those little details make a big difference.

Yeah. The seal is a big thing, but the seal is not security. That's just integrity. That means the door wasn't open. Seals can be reached. Seals can be duplicated. Door hasp can be altered. There's more to it than just – I know what you're saying. I have a war story about seals. It goes along with what you said is, driver leaves the dock and goes to the security guard leaving the place and I'm there doing an audit. This is back in my law enforcement days. I'm there doing an audit as a favor for a friend. The security guard walks to the back of the trailer. The driver closes the door and she hands the bill lady and the seal of the driver and the driver leaves. I asked her, why didn’t you put the seal on? She said, “Well, he's got other pickups. He'll put it on later.” We should all be concerned about that type of procedure, right?

Yeah.

That's not what we're supposed to be doing. That's a training issue. That gets back to it's a team sport. It's education and working together. And verification, validation. Those are the things that are going to solve our problems.

I agree. Now, totally see that. How do you see real-time risk data evolving together over the next three to five years?

Well, I think people are going to start paying more attention about what we put out. Because we're putting out something at 11.00 in the morning on a suspicious something, or someone used this identity, or someone did this. I think folks that get our alerts and get our notifications are going to have to start looking at that real time. Now, okay, I'll look at them at the end of the week and we'll go through the list. Then we'll block these carriers from picking up. Now, it's lightning, right? You have the same driver, the same company in the same town. We send an alert out at 11.00 and at 2.00 in the afternoon, the same driver, same truck, everything is picking up another load to seal.

We do have a lot of customers that do do that, look at it real time. But I think that's going to become more of the standard, versus I'm going to get to it end of the week. We'll evaluate these and we'll make a decision on who we're going to not load, or whatever. I was just on a call with someone talking about, I had one where the same driver and the same truck in the same city picked up six loads in one day, installed them all. Every one of them. Same driver, same truck fraudulently used trickery, hocus pocus and picked up six loads all on the same day.

To your point about looking at them at the end of the week, the first thing I think of is I feel like shippers and even carriers are just using this data as normal carrier score carding. When really, it needs to be treated separately. I feel like, based on what you said, I see it's like, “Yeah, I'll figure out what my weights were at the end of the week and a bunch of carrier if I have to.” It's like, no, this is real time happening. If you're getting these alerts, probably look at them.

A big problem is is the decision maker is not generally who, myself and others in my industry are dealing with. Your decision makers are your ones making the decision who to give the load to and who not to give it to. They're not looking at the data. That's a big problem we have. They're the ones that really need to start looking at the data, because they're making decisions. The folks that I'm dealing with that are getting our data are the cleanup on out nine folks. They're the ones getting – You see where I'm going here? They're the ones getting it after the load’s stolen. Then they're going back to, “Hey, you shouldn't have loaded this carrier.” “Well, nobody told us.”

Right. Right.

I think what you're going to need to see is more of an enterprise type of communication on. I worked for a truckload carrier years ago. You'd walk through the office through the truckload carrier. Great carrier, national, just unbelievably good company. Every dispatch group, little group for that set of drivers had cameras everywhere. This is back in the day, and all they had on was the weather channel, so they could watch the weather where their region of trucks was running. I think we need that camera system, that big TV monitor system in the office where the load planners are, where the folks that are making decision on who they're going to load, where those alerts are popping up, and there's real-time instant information when they can look up and see this just happened. I can't load this person.

Yeah. No, that's fascinating. I love that perspective. What's some advice that you'd give to three 3PLs and shippers who are still relying on post-incident reporting, versus actual prevention?

I would say, trust no one. Verify everything, right? Trust no one.

Yes.

For example, we put out a truck stop report on truck stops that are high in theft. It's not the truck stop’s fault. It's the bad guys’ fault. We can't blame the truck stops, first and foremost, because it's like a bank. You can't blame the bank for getting robbed. That's where the money is, right?

Right, right.

That's the quote from Willie Sutton. Why do you rob banks? Well, that's where the money is. You have to start looking at where the bad guys are and where the bad guys are targeting. We have a client, we have more than one client now that takes our truck stop report and puts it in their system if one of their trucks stop there. It sends an alarm. We've got to do that on the other side with the fraud, that if we type that MC number, DOT number in the system, it's an automatic red flag. It goes to a supervisor, and a supervisor comes over and says, “Why are you entering this? They're on our do not use list.”

We're so busy moving freight that we don't stop and look at – If you're going to buy a house and move into a neighborhood, would you want to look and see what the violent crime is in that neighborhood before you moved in? Of course.

Yeah.

Of course, you would. But we've got to start doing that with, with our commodities. We do more vetting at the local drugstore when you go in to buy a bottle of wine. There's more vetting done there to verify that person is of age, and that's the right person to buy a bottle of wine than you do when you give away a million-dollar loaded electronics.

Yeah. Well, it goes exactly back to what you said earlier. That's the whole teamwork side of it is –

Absolutely.

There's such a mindset of once this commodity leaves my dock, I don't need to necessarily think about it, until it gets to the destination, or it doesn't get to the destination. You see that all the time is like, and I've even heard shippers say this of just, yeah, once it leaves the dock, that's what my report – the person on the doc, that's what their reporting cares about is I can check off on my manifest that left the dock and then that's it. They don't verify, they don't check, and then people are shocked that something happened.

Oh, that doesn't sound like a good teamwork to me. I've done my job. I don't care what fails. I've done my job. I've done a perfect job. I ship the load. That's the mindset we have to get away from.

Yeah. No, agree. Totally agree. Hey, well, we're wrapping up here. Really appreciate your time. If people wanted to learn a little bit more about what you do and your company, where can they find you at?

Cargotheft@cargonet.com, or they can call us to report a theft at 888-595-2638.

Awesome. Well, hey, thanks so much for joining. Thanks everyone for listening in. Thanks for being a part of Banyan Tire Tracks. Like and subscribe, help us get those fun, analytic numbers up, so we stay in front of you, just like some of these alerts from the CargoNet team will stay in front of their shippers and their customers. Thank you so much, everybody. Have a great day.

Thank you.