Episode 15: Freight Fraud Red Flags with Rob Carpenter

Rob Carpenter on spotting freight fraud red flags and cargo theft

[00:00:00] John Howland: So you’ve been communicating with the same dispatcher all morning long. Then 20 minutes before the pickup time, they email you, telling you that there’s a change and give you a different driver, phone number, and truck. Red flag, yellow flag, green flag?

[00:00:14] Rob Carpenter: I’d say it’s a red flag, but we could possibly turn it into a green flag. If it’s got 13 different sets of plates tied to it in the past 60 days, then we’re going to turn this into a permanent red flag and we’re not going to ship the load.

[00:00:27] John Howland: Hello and welcome to Behind the Freight. We have our special monthly guest, Mr. Avery Vise, who is the Chief Trucking Analyst for FTR Intelligence and really our guru and analyst. I’m going to ask him a few questions.

We’ll fly through this, and then we’ll get you guys updated on what the market is doing. So welcome, Avery.

[00:00:48] Avery Vise: It’s good to be with you, John.

[00:00:49] John Howland: All right, we’re going to keep this short and sweet. Describe the freight market from last month using only one word.

[00:00:57] Avery Vise: Hmm. I would have to say resilient. There’s been a lot of challenges. Obviously, diesel prices surging to record levels could have wrecked a lot of things, and it didn’t. So I’m going to go with resilient.

[00:01:08] John Howland: Nice. Love the adjective. And outside of the fuel stuff, what else? What else makes it resilient?

[00:01:14] Avery Vise: You know, if you look at where spot rates went, especially in dry van, not so much in refrigerated and not at all in flatbed, when you have the mid-year peak, which occurs every year, you have the middle-of-the-year peak going into July 4th, and dry van did not keep pace with what you would have expected.

Now, of course, rates were up extraordinarily high versus the year before, but if you just sort of seasonally expect where that would have gone, it sort of weakened. But then over the last month, it has come back. Like I said, it didn’t really hit refrigerated that hard.

Dry van had softened quite a bit, though, and it came back in terms of rates. And so that’s really the main focus. Flatbed really showed no signs of softening other than seasonal volume decline. But other than that, flatbed has just continued to run in a pretty seasonal pattern at extraordinarily high levels versus last year.

[00:02:13] John Howland: Awesome. So what is one number either from last month or last quarter, that maybe you shared with us or maybe you didn’t, that you tell a carrier to ignore?

[00:02:24] Avery Vise: One specific number for everybody is going to be difficult. I’ll have to apologize here because I don’t have it off the top of my head for flatbed, but let’s look at dry van and refrigerated. The number for dry van I would ignore is $3.10.

The number for refrigerated I would ignore is $3.70. And those numbers, as I just kind of alluded to, were the peak numbers back in late June, early July. And the reason I say that carriers should ignore that is we’re not going to get back to that anytime soon. Maybe around Thanksgiving. Certainly, by the end of the year, we should exceed that.

But carriers should not be disappointed that they’re not getting the actual rate levels that they got in late June, early July. The market has continued to be pretty seasonal, which is a little surprising given what’s going on with diesel prices.

But just, you know, sort of live with it. As long as you are not losing ground relative to fuel costs, for example, I think things are fine.

[00:03:19] John Howland: Great. And so we’re obviously entering pumpkin season, October, November, time to get that turkey. But what would you say: are you optimistic or pessimistic when it comes, really, for the rest of October and into the turn of November? I mean, what are your thoughts about the industry then?

[00:03:39] Avery Vise: So I’m definitely not pessimistic. I think the question is optimistic versus confident. Optimistic being more of a, “I think things are going to work out and I certainly hope they do,” whereas confident is like, “they’re absolutely going to.”

I’m somewhere between confident and optimistic. And what I mean by that is there’s really very little that could tank the market at this point. There’s not any excess capacity anywhere in the truck freight market, so the idea that we’re going to have some kind of collapse, no, not going to happen.

The only thing that keeps me from being confident is the potential that we could have a third wave of diesel price increases that take us beyond where the current record is at, you know, $3.52 a gallon, $3.53 a gallon. I don’t think that is going to happen. You know, diesel prices have come down recently.

There’s been some moves to shore up the supply of diesel, which is really the issue, but it could happen. There’s still the possibility of another escalation in the Middle East, and certainly there’s going to be more demand for the distillate product that also goes into home heating oil.

So I’m very optimistic that that’s not going to happen. I’m not a hundred percent confident that it won’t.

[00:04:49] John Howland: I’ll take it. That’s good news for me. So good. All right, then, last question for you, Mr. Vise, is what advice then do you have for the carriers rolling into Q4?

[00:05:01] Avery Vise: The biggest advice I have of all is don’t lose your nerve. As I said, there’s a chance that diesel prices will continue to go up, but I think the reality is that what goes up will come down at some point. While the same is true for spot rates, I don’t see them coming down as quickly as fuel prices do.

So, yeah, there’s going to be a cash flow problem potentially if we have another surge. Obviously, some carriers will not be able to weather that, but if at all you can get through the next couple of months, you should be golden to stick around well into next year.

I mean, we’re obviously going to have some seasonal strength in spot rates. So hunker down, save as much fuel as possible and, you know, eliminate as many empty miles as you can justify and just, you know, hunker down and get through it.

If that even becomes an issue, if spot rates stay where they are or get higher and diesel prices are stable to lower, it probably won’t even be an issue.

[00:05:59] John Howland: I love it. All right, great advice. Well, really appreciate you being on. Thank you for our monthly update here on Behind the Freight. Avery, I really appreciate you. You are the wizard. And, yeah, thank you, thank you for this context. And then we will see you in a month, sir.

[00:06:16] Avery Vise: All right, looking forward to it, John.

[00:06:20] John Howland: I’m John Howland, and today we’re talking about one of the fastest ways, whether you’re a broker, shipper, or carrier in this industry, that you can lose money. And it is, in my opinion, one of the biggest buzzwords in this entire industry, and that is fraud.

Now, I’m lucky enough to have Mr. Rob Carpenter, who has spent over 25 years in this industry doing various things like driving as a truck driver. He brokered, he owned his own fleet, and ran safety and compliance.

He’s also a private investigator, I like to say, where he founded a company called Tea Technologies, where he’s working to uncover the risk behind carrier data. So, welcome, Rob.

[00:07:00] Rob Carpenter: Yeah, thanks for having me.

[00:07:02] John Howland: Yeah. It’s funny, Rob was a few minutes late to start. I hear you were on CNN or doing some bit for CNN. There’s a lot of cool stuff that you’re doing and working on. So I appreciate you cutting some time out for us to chat about this.

[00:07:15] Rob Carpenter: Yeah, no, I’m glad to be here.

[00:07:16] John Howland: Cool. So you’ve driven trucks, you brokered freight, owned fleets, obviously doing a lot of different things, investigating crashes, those sorts of things. What are you seeing in trucking right now that worries you the most?

[00:07:28] Rob Carpenter: Well, I think you’ve got two big issues that should worry everybody. One, you’ve got the people that are already in the industry that have kind of bled into the industry that are a problem. But then you also have the front door that’s still really wide open, even with MOTUS.

I mean, I think MOTUS, eventually, when it airs itself out and we actually can use it as good as we want to use it, and where it can facilitate what it was going to facilitate, I think we’ll have a good thing. But for right now, we’ve still got largely a wide-open front door, but we’ve also got a room full of bad people already.

So you’ve got two issues. It’s battling who’s here and dealing with what’s already here, and then also battling and trying to keep out any more from coming in. So that, I think, is the scariest part, that it’s ever-evolving and it’s ever-refilling itself.

[00:08:14] John Howland: Yeah, totally agree. Yeah, MOTUS in its current status, obviously, is getting better and better. But when that transition from FMCSA was happening, I feel like we all were crossing our fingers and saying, “All right, let’s go, let’s go, hurry up.”

But yeah, cool. So I know, pretty unusual, you had a front-row seat. You were on 60 Minutes doing a lot of really cool stuff for that TV program.

I heard that you spent several months, and I think they had what, six, seven hours worth of footage in which they had to kind of chop down and put into a segment that they could do on 60 Minutes.

So what’s the best story, and/or are there things that they left out of the piece that they actually published out that you wish was in there? I mean, what was that story about, if you could tell the audience, as well as if there’s any little thing they could have put in there, what would that have been?

[00:09:05] Rob Carpenter: Yeah, so you’re right. I mean, it went on for a long time. I mean, some days you wouldn’t hear anything; some months you wouldn’t hear anything; some weeks you wouldn’t hear anything.

But then you periodically would hear different things based on what the needs were from CBS and 60 Minutes.

I liked Bill Whitaker. You know, one of the things with Bill Whitaker is he’s got a way to sit you down and say, “Look, we’re best friends. We’re going to sit here and we’re basically going to have a conversation as friends together.”

And, you know, I think sometimes sitting with somebody like Bill Whitaker, who’s interviewed everybody from different presidents down to people like me or Prince Harry or whoever, it can be kind of intimidating.

But I think just having a guy who can actually sit down and have just a Rob versus Bill friendly conversation, it makes all the difference in the world. But we did seven hours with that, and then probably did two hours in the truck. So just tagalong, ride-along videographers and photographers.

In the end, it ended up being like a five-minute interview, so that was disheartening.

[00:09:59] John Howland: What, only five? Dang it.

[00:10:02] Avery Vise: All right.

[00:10:02] Rob Carpenter: Yeah, it was a huge amount of stuff.

[00:10:04] John Howland: That’s funny.

[00:10:05] Rob Carpenter: We started at like 8 in the morning. We ended sometime after lunch, and then we went and drove for probably at least an hour or two.

But I think one of the biggest pieces, none of that mattered that it got cut out. I think the big piece that got cut out that mattered to me was you can actually trace the investigation that we did with them on my website. You don’t even have to sign up for it; you can just go look at it.

There’s a Super Ego page that actually breaks down the entire Super Ego network and who they’re connected to, where they’re connected, how they’re connected, and ultimately the cases that are being litigated through different courts, both in federal and state courts across the United States on that network.

But one of the bigger pieces of that that you can actually see is the GenLogs pieces that we put together where we actually show you Danny Sanchez’s truck that he’s driving for 12 months.

And we show you the GenLogs photos between transitions to show you the plate never changed, the VIN never changed, the ELD and the driver never changed. The only thing that really changed is that marking.

And for people who don’t understand what a chameleon carrier is, I think those photos kind of just tell the whole story.

[00:11:12] John Howland: Yeah, that’s cool. Has there ever been, obviously, when you’re doing some investigation, those sorts of things, have there ever been a moment where you’re looking into it and you’re like, “Holy smokes, this is actually a way bigger problem than I was expecting to get into here”?

[00:11:26] Rob Carpenter: Well, I try not to get into the political side of it, but I’ll tell you this. One of the things that has crept up over the past, I would say three years, was the kicking off of political action committees by the bad actors in our industry.

So what we started to see is the worst actors in our industry started associations and political action committees that were donating anywhere from four figures to seven figures and creating these political action committees.

And then when you looked at who’s funding the political action committee, it’s all the other bad actors, right? $50,000 checks, $100,000 checks, and then the next thing you know, they’re holding $10,000-a-plate dinners at, let’s just say, executive-level government officials’ property, right?

So we start to see this and it’s like, well, we’re trying to weed out the bad parts of our industry at this level, at the frontline level, the driver level, and trying to keep these guys off the highway to create safer highways.

But then the people who are employing the bad actors are actually over here starting political action committees to actually produce sway with the government that’s supposed to be enforcing them.

Now, I know because I work with FMCSA on the daily. They buy my system, they use my system for their investigation. So in turn, I usually spend a lot of time with FMCSA and their special investigations team. So I know what’s happening. I know they’re doing all they can do to stop it.

But that’s kind of the enforcement level, right? That’s at the agency level. Beyond that, it gets more difficult.

[00:12:56] John Howland: I am blown away right now. Damn, that’s crazy. So with that, what you just said, do you try, like you said, just kind of, “Oh, I should probably just creep away from this,” or do you get excited about it? It’s like, “Let’s jump in FMCSA and see if we can make a change here.”

[00:13:11] Rob Carpenter: So we have. If I find something, I send it to different people at FMCSA. Usually it’s either Derek Barrs directly or someone on his team where we say, “Hey, let’s take a look at this deeper and see what we have here.” You know, I’m not the only one that’s doing this.

A lot of people from the public sector have been brought in to help FMCSA and agencies. They’re taking advantage of my system, and they’re using Steve Bryan’s Blue Wire, and they’re using GenLogs and Ryan Joyce’s system, and they’re using all of these tools from the private sector to help them solve their problems.

So they’re listening to all of us. And I think that’s helped them a lot. I mean, I know just in talking with Derek Barrs, the first part of the year when we first started using this system, it was like, “Hey, we had 40 investigations that might have been 70 or 80% there.”

“We just needed that last 30 or 20% and we got it. And we closed 50 investigations.” And that’s quick, right?

[00:14:05] John Howland: It’s awesome.

[00:14:06] Rob Carpenter: And then one of the things that you start to see is when they start using this system, the systems that are actually really honing in on the issues and actually giving it to them front and center, they’re actually able to shut down a lot of these entities in real time.

I mean, we built predictive models that say this 32 supposed-truck network, that’s actually 7,000 trucks instead of 32 claimed trucks. We can build predictive models off that network and that equipment to say, “We know this equipment is moving here.” These are shelf entities that are just kind of waiting in the wind to move equipment to.

And as soon as they reincarnate and move the equipment, we’ve already predicted where they’re going to go next in a lot of cases. So they’re shutting them down a lot of times in real time. The problem is, FMCSA systems weren’t designed for investigation.

They were really designed for storage. So before they started using these private sector systems, they were really working with a storage system and having to really do the hard work to actually root this stuff out at a very manual pace.

[00:15:08] John Howland: Damn. I’m sitting here just listening to you and blown away. It’s awesome.

[00:15:14] Rob Carpenter: It’s a lot.

[00:15:15] John Howland: Yeah, it’s a lot. It’s awesome. All right, well, I’m going to do a little transition and we’re going to do something a little fun. I’m going to call this Red Flag, Green Flag, Yellow Flag. Okay, so I’m going to give you a couple of different scenarios.

So for different brokers, carriers, shippers out there, I’m going to again kind of throw some scenarios. You tell me what the color is and explain why, okay? All right, so scenario one, we’ll call this “The Last-Minute Switch.” Okay, so you’ve been communicating with the same dispatcher all morning long.

Then 20 minutes before the pickup time, they email you telling you that there’s a change and give you a different driver, phone number, and truck. Red flag, yellow flag, green flag?

[00:15:56] Rob Carpenter: I’d say it’s a red flag, but we could possibly turn it into a green flag. I mean, for me, I’m going to call the dispatcher back that I was working with, and then I’m going to look up FMCSA’s Record of Contact, contact them directly through that information, and make sure we’re on the up and up.

And then if you’re using the right system, you can put in this VIN and plate on the new truck that was swapped to say, “Where has this VIN and plate been used before?”

And a lot of times, as soon as you run that, if you’ve got a good system that’s actually crossing it over and looking at the convergence factors to say, “Hey, don’t use this VIN. It’s got 13 different sets of plates tied to it in the past 60 days,” then we’re going to turn this into a permanent red flag and we’re not going to ship the load.

[00:16:35] John Howland: Awesome. All right, scenario two: “The Bargain Carrier.” Okay, so you’re really struggling. You’re trying to get a load covered. It’s a very difficult lane, and most carriers are quoting basically the same rate or within a relative margin.

But one of them comes in significantly cheaper and says, “Hey, I can do this right now. Let’s go.” Red flag, green flag, yellow flag?

[00:16:59] Rob Carpenter: I’m going to lean red. But I mean, I’ll say this because as somebody who’s been a carrier, a driver, and a broker, there’s times where I’ve called on a load and said, “Hey, look, I’m just trying to get back to the house, right?”

So I think there’s places where this could certainly happen, where you’re going to get this bottom-dollar, “just cover my fuel to get home” rate, because I’m tired of being out on the road for four weeks and I’m just wanting to get my fuel covered to get home.

But then on the other side, it could also be one of these double-broker cargo theft setups. So, you know, I’m going to be checking authority age, recent changes to contact information, insurance, whether you can actually show the truck, and how long that truck has been on the road. So I’ll do some digging.

[00:17:39] John Howland: Great. All right, scenario three: Everything looks right, well, almost. The carrier has an active DOT number. Insurance appears to be solid and current. The basic information checks out, but the phone number and email you’re communicating with don’t quite match what you expected.

Red flag, green flag, yellow flag, man?

[00:18:00] Rob Carpenter: I’m going to say red flag on most of these. I think sometimes the question goes back to, like, is the DOT number alone enough, right? And I think identity theft and cloning that we’ve seen go on in the industry, that’s where I would go with that. I’d start trying to verify the identity of this carrier.

[00:18:14] John Howland: All right, and then so we will do one more. So scenario four, and we’ll call this one “The Urgent Payment Change.” So a carrier you’ve worked with before suddenly asks you to send payment to a different account and says it needs to happen today. This one’s a no-brainer for me, but I’m going to ask you: Red flag, green flag, yellow flag?

[00:18:37] Rob Carpenter: No, I’m going to red-flag this one. I think urgency is the tell on that one.

[00:18:40] John Howland: Yeah, and so when a scenario like that happens, I mean, what should a broker do in that case? What would the safest thing to do be?

[00:18:49] Rob Carpenter: I’m going to call the known contact that we have on file or that the FMCSA might have on file and then get some kind of written verified confirmation. But urgency is the big tell on that one, I think.

[00:18:59] John Howland: Yeah, agreed. So thank you for participating. That was fun. I will say common theme here is if there’s something that feels or seems a little bit fishy, it might be fishy and it could very well be fishy. So look into it. It’s always a red flag. But do your due diligence to make it a green flag and ensure you’re kind of mitigating that fraud, that’s kind of what my takeaway there was with you.

[00:19:21] Rob Carpenter: Yeah, fraudsters are looking better all the time. I mean, sometimes they wear Versace shoes, but,

[00:19:28] John Howland: Yeah, we have an entire security department here at Truckstop.com as well. And it is wild, some of the stories we get back about what people are doing. And our CEO, Scott Moscrip, our founder, is looking to create a movie called Grand Theft Cargo about cargo theft, and it’s starting to get some legs and he’s got actors lined up and stuff.

[00:19:49] Rob Carpenter: So anyways, we built a system called Load Verify. We built this a year ago and we don’t market any of this stuff because I don’t really care if I sell it, tech is not my business, right? I’m one of those, like, if you build it, people will come and if they want it, they can buy.

But we have a liquor client on the expert witness side for litigation and they’ve had three loads of liquor stolen, let’s just say, in the past two quarters right out of Austin, Texas. And this at the time was a year ago. So my question is like, why do you keep giving the freaking freight to these people?

First of all, you’ve got an inside problem, right? But the second part of this is like, why do you keep giving the freight to these people that show up? Every single one of them was a cloned carrier. And it’s like after the first one, I can see where you were ignorant before that.

Now you realize that carriers’ identities are being stolen. There are clone trucks out there, I mean, they’re even buying brand new trucks in some cases, especially at the border, and running over fake FedEx and fake UPS trucks. So it’s an issue. And then once you realize it’s an issue, you still don’t really move to improve it.

So we created this Load Verify system that is a cryptographic chain of custody, right? So every load that started to leave this manufacturer, the driver had to get facial recognition and ID verification. And then we validated the VIN and the plate against 9 million records.

So you validate all this, you take photos in the app of everything, and then it tracks you end-to-end, origin to destination, right? You get to the destination, any stops along the trip get flagged and it interrupts the cryptographic chain and tells you, “Hey, they stopped at lat/longitude X, Y, Z and they were there for 19 and a half minutes.”

But when you get there, then you have to revalidate: Is the seal the same? Is the driver the same? Is the license plate and the VIN number the same? So we immediately killed all of their theft.

And it’s not to say that nobody tried, it’s just to say that we completely eliminated their issue. And I think one of the biggest problems in the industry is the same thing that we have with chameleon carriers. You’ve got an identity issue that is also a disclosure issue that ultimately ends up being an accountability issue.

So that’s the industry in a nutshell basically, right now.

[00:21:56] John Howland: Yeah, I know being a tech company here at Truckstop, we are trying to build out solutions to help with that entire lifecycle as well.

It’s a very interesting, complex, and difficult thing because I feel like when you go and you build stuff, they just get smarter and smarter and smarter with how the fraudsters do stuff, and it’s quite wild.

But my hypothesis is whoever is picking up that load from, you know, that distribution center wherever, right, if you make them take a selfie and take their picture, that may deter a fraudster at that time because now you’re getting their picture and things like that. But I mean, who the heck knows? More to come.

But okay, so actually we got a message, we received a question for you, which is awesome, so a listener sent us a comment. And the question or comment is: “Watch out for the scamming because fuel is too high to go so far for nothing.” Is this a fair warning given fuel prices being higher? Is this a relevant comment?

What are your thoughts? “Watch out for the scamming because fuel is so high to go so far for nothing.”

[00:23:03] Rob Carpenter: I don’t know that it has a bearing on the scams. If anything, I think it would draw it down. But I do know that anytime fuel rises, fuel theft is more of the issue, and that includes reefer fuel, et cetera. So anything you’ve got to put fuel in is going to be, you know, exposed to theft.

So that’s something that we had talked about earlier in the week. So I’d say you definitely have scammers out there, but I would say that it probably actually helps cut down on the scamming a little bit.

[00:23:28] John Howland: Yeah, maybe. I think what the listener may be referring to is if somebody’s coming in, maybe this is related to the very low rate. Like you get a low rate back from a carrier and you’re like, “Well, that can’t pay for, ” Maybe that’s what it’s related to. But it’s good advice.

[00:23:43] Rob Carpenter: Yeah.

[00:23:44] John Howland: Thank you. All right, so this is the funnest part, at least for me, and it’s what I call the lightning round.

So I’m going to just kind of spit fire you a couple of questions, and then the goal is to ask you them, kind of throw you off a little bit, but you’ve got to give an answer quick and then explain why in 30 seconds or less. Okay?

I’m going to throw you off with this first one: If animals could drive trucks and you were an animal and you jumped behind one of these big 18-wheelers, which animal would you be and why?

[00:24:09] Rob Carpenter: Oh, man. Dude, I don’t know.

[00:24:11] Rob Carpenter: First thing.

[00:24:12] John Howland: Go. What is it?

[00:24:13] Rob Carpenter: Dude, I was thinking mongoose first. Cause they’re mean and they’re still light, so they’re not taking up a bunch of weight like grizzly bears, but they’re still mean enough.

[00:24:21] John Howland: That’s a, I mean, obviously the first time that answer has been given. I actually love that answer.

[00:24:25] Rob Carpenter: That’s great.

[00:24:26] John Howland: Okay, cool. So you’ve been in this industry, obviously, for 25-plus years. If you could eliminate one vulnerability that makes trucking so attractive to fraudsters, what would you eliminate or what would you fix?

[00:24:40] Rob Carpenter: It’s multifaceted. So you’ve got one, the identity issue. But that actually is part of the self-declaration, self-certification issue. Every problem with our industry is based off self-declaration, self-certification. “I am who I say I am, because that’s what I said.”

[00:24:56] John Howland: Good. Last lightning question, and then I’ll let you go. Rob, who is someone in trucking that you believe is doing great work that more people should follow, besides Mr. Rob Carpenter?

[00:25:05] Rob Carpenter: Rob Carpenter, you want to pull the Trump thing like I’m the best that ever was! But I will say Derek Barrs. Working with multiple administrators and acting administrators, there’ve been some really good ones in the industry that have really good ideas, but they just didn’t have the support to be able to pull it off.

Or they couldn’t pull it off because, from a personal perspective, maybe they didn’t have the time or couldn’t find the time. But Derek Barrs runs on a never-ending calendar and he’s constantly focusing, and what he can’t focus on, he’s delegating to the right people to focus on. So I’d say Derek for sure.

[00:25:40] John Howland: Awesome. Well, that is it for me. Rob, I really appreciate you being on the show. I’m John. That’s all we got for Behind the Freight today. Appreciate everyone listening or watching. Have a good one.

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