Convoy develops fraud detection system for forwarders

As cargo theft continues to increase alongside the sophistication of technology and criminal organizations, more companies are looking internally to address supply chain weak points. Seattle-based digital freight network provider Convoy last week launched its proprietary fraud detection system for forwarders, a system Convoy has used on a trial basis since January. The company reduced theft and double-brokering in its network to less than 0.001% in the second quarter of 2023, according to a blog post by Convoy’s Eric Libby , head of performance, compliance and trust. The program’s machine learning-based technology has been tested with hundreds of customers and shows a 90% reduction in thefts and double-brokering, even as overall cargo thefts increased 57% year over year in Q2 2023, according to CargoNet , a cargo theft prevention and recovery network. Double-brokering, which is illegal, occurs when a hired freight broker gives a shipment to a another freight broker without the knowledge or consent of the cargo’s owner. Cargo theft losses accounted for $223 million in 2022 , CargoNet reported. [caption id="attachment_57138099" align="alignright" width="364"] (Photo/Convoy)[/caption] As of Sept. 7, Convoy customers using the software had experienced no theft, Libby said in the blog post. Addressing industry shortcomings “The success is evident in that we’ve been able to reduce theft by 90% at a time the industry as a whole has seen it grow by over 40%,” Convoy spokesperson Sam Hallock told Air Cargo Next . “Additionally, we’ve received feedback from our customers and others that this program is a fresh approach based on data and technology.” Hallock said Convoy’s system was developed to address challenges current fraud detection systems don’t, including : Over-reliance on onboarding; Failure to identify fraud networks; Insufficient driver data; and Impartial assessments. The core of the system relies on ML technology, which continuously adapts to verify the trustworthiness of each carrier picking up and transporting shipments, Libby said in the blog post. “The solution mitigates theft by adding multiple layers beyond how traditional methods vet carriers, leaning strongly on behavioral analysis to understand the risk of working with a specific carrier,” Hallock said. “This analysis is always on, looking for significant changes to carrier behavior as well as connections to entities determined to be high risk. By adding depth to its vetting processes, Convoy can be confident that carriers it works with will deliver shipments on time and in full.” During the onboarding process, Convoy’s network members are evaluated for attributes “typically associated with double-brokering, behavior in accessing and navigating Convoy portals and other attempts to mask their identity,” Libby stated. As a carrier books shipments, Convoy’s system evaluates the carrier’s schedule for practicality. “If deemed infeasible or high risk, loads are automatically removed from the carrier,” Libby said in the post. A crucial difference in Convoy’s vetting technique compared with other risk management solutions is that it does not discriminate against new or small freight forwarders, which might otherwise raise flags in fraud detection programs , Hallock said. “The proper vetting of carriers is a longlasting challenge and has become even more difficult as technology has allowed bad actors to become more sophisticated,” she said. “Convoy believes its use of technology in response allows us to vet carriers beyond just publicly available information and into strong behavioral analysis. By being able to peel the onion over and over, we can proactively uncover fraud risks that traditional methods cannot protect against.” Convoy does not charge its members to use the new feature, Hallock said. The system was developed in partnership with CargoNet, Central Analysis Bureau , Persona and others, Hallock said. The clock is ticking! It is your last chance to join Air Cargo Next for its second annual Air Cargo Tech Summit on Sept. 18-19 in Brussels, sponsored by Unisys and Brussels Airport and featuring a fireside chat with Brian Hodges, managing director, American Airlines Cargo. For more details and to register, click here .

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