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Railroad Freight Scams - A New Breed of Pirates?
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Feb 24 2012, 12:56 PM ET
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Railroad bandits seem to be a quaint notion relegated to history books and silent films. But Zurich's intelligence reports that throughout Europe, shippers are increasingly falling victim to railroad pirates. Corporations sign on with what appears to be legitimate freight companies, only to have their cargo disappear without a trace. The schemes can be remarkably elaborate - involving multiple subcontractors and producing bogus insurance, transport and vehicle registration documents when they know authorities will require them.
What is more, the crimes are rarely reported, as shippers do not want to risk the public image costs to falling prey to such fraudsters.
Similar crimes are on the rise in Mexico, where theft from containers cost $7 million in 2011 - a 120 percent increase, according to the Mexican railroad authority and reported by FreightWatch International.
Zurich has found some common red flags associated with these crimes, which the insurer believes are run by a sophisticated gang in the European cases:
- Contact often initiates on legitimate online platforms where the haulage industry matches offer and demand for available loads.
- Initial contact and contract exchanges are conducted via email or cell phone. Email addresses are often generic - Gmail, Yahoo - opposed to business-specific.
- The shippers do not scrutinize the transport company's background.
- Incidences tend to coincide with peak times at warehouse and shipping centers.
To protect themselves against such crimes, Zurich suggests these steps:
- Carefully vet potential transport companies. Collect information on their history, references, ability to sub-contract to other transport firms.
- Run checks on vehicle plates and registration.
- Scrutinize new employees for criminal histories and past suspicious behavior.
- Prohibit new employees from transporting especially valuable cargo.
- Guard cargo info except when absolutely necessary.
Why are shippers so trusting of transport companies? Is there a solution to curbing railroad freight scams?
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