Executives in all segments of fresh produce continue to grapple with changes in the industry, including more frequent extreme weather events, high prices impacting suppliers and consumers, an evolving labor pool, and the integration of artificial intelligence, among other trends. Here’s what they’re thinking at the start of 2025 and a look at the months ahead.
Fraud on the Rise
The transportation and logistics industry has seen a big uptick in fraud in the last two years.
A Transportation Intermediaries Association (TIA) member survey released in September 2024 found an average annual fraud cost of more than $402,344 per company and $40,760 per load. Shockingly, cargo theft saw a 600 percent increase from November 2022 to March 2023.
“Fraud has impacted brokers, especially small ones,” comments Travis McLeod, director of operations for Jear Logistics, LLC BB #:280402 in Daniel Island, SC. “If you have a $150,000 or $200,000 load stolen, that’s a lot.”
Produce was the eighth most popular commodity for fraud, with 5 percent of respondents experiencing incidents, according to the TIA survey (frozen and refrigerated foods ranked fourth and dry food sixth).
Rob Goldstein, CEO, and Christina Sanchez, manager of risk and compliance, at Genpro, Inc. BB #:134068 in Rutherford, NJ, point out that the food industry has seen a dramatic increase.
During the pandemic, food and beverages became one of the most targeted commodities for theft and remain so today. They believe the contributing factors behind the increase include technology (especially in cases of identity theft), gaps in supply chain security, and the difficulty of enforcement.
Of eight common types of fraud in the industry, unlawful brokerage scams were the most frequent, cited by 43 percent of respondents. Goldstein and Sanchez say that while “highway robbery” at truck stops remains a top worry, strategic thefts by deception are on the rise.
“The game is constantly evolving and you have to evolve your practices to combat it,” says McLeod, noting the norm used to be a fictitious pickup, where a purported company took the small advance but disappeared before picking up the load. Now, the tendency is more often for the fraudster to pick up the load, then disappear. A variation is for the load to be picked up, some pallets removed, then delivered with no one being the wiser.
Fred Plotsky, president of Kenosha, WI-based Cool Runnings, Ltd., BB #:125423 recently came across an example of fraud. He received a call saying a truck in Florida, where his company doesn’t operate, checked in as Cool Runnings and picked up a load. The truck, which had no identification, then disappeared. “This is the first time I’ve seen this in 38 years,” he says.
Fraud is difficult to remedy and prevent, but the sooner a problem is discovered, the better. Jear Logistics combats the issue through a proprietary system paired with a third-party solution called Highway. The company also requires drivers to upload photos of themselves to an app called Trucker Tools.
“Our verification process works well,” shares McLeod. “A year ago we stepped up by bringing the responsibility for vetting and decisioning from the sales department back to the carrier department. As fraud becomes more rampant, we now have a small group focusing intensively on the problem, and they can pivot more quickly.”
Genpro actively reviews and revises its compliance requirements. In 2024, the company switched to a more advanced carrier onboarding and monitoring service, Goldstein and Sanchez report. The company also trains team members on the latest fraud schemes. Training includes simulated phishing campaigns and encourages associates to go with their gut when things don’t feel right.
Goldstein and Sanchez point out that local authorities are less likely to prioritize these kinds of crimes, despite the millions of dollars and multiple victims involved, than a violent theft involving physical harm or a known organized crime ring.
“Calling the police isn’t much help,” agrees McLeod. “But, since the industry is working together, the federal authorities know there’s a big group with the same issues, and there’s more traction through federal authorities to do something about it.”
Fortunately, not all transportation companies have been impacted by fraud. “Our fraud or theft is next to nonexistent,” points out Marshall Kipp, president and CEO of Visalia, CA-based Advanced Transportation Services BB #:120506.
“Industrywide, it’s a very large issue, and as a whole, I think the industry is doing its best to combat it. It’s always in the back of your mind; however, with great carrier partners who we know and have seen their equipment, it’s not something I lose sleep over.”
This is an excerpt from the cover feature of the January/February 2025 issue of Produce Blueprints magazine. To read the whole issue, click here: https://www.producebluebook.com/#january-february-2025-produce-blueprints/1/
