The recent Microsoft outage underscores the vulnerability of our digital infrastructure, significantly impacting industries like air cargo and shipping. As the industry continues to move toward more technological advancements, the occurrence of data breaches should be something shippers incorporate into their contingency plans. This recent situation highlights the importance for shippers to be proactive rather than reactive in managing logistics operations, data integrity, and preventing fraud. Leveraging the expertise of freight audit, analytics, and payment (FAP) companies is one of the ways shippers are able to maintain stability and security in these challenging times.
During major disruptions, such as breaches of data, fraudulent charges can easily slip through as companies manage the chaos. Advanced analytics and machine learning algorithms are some of the many solutions a FAP company can provide shippers to prevent fraud. These tools identify patterns indicative of fraudulent activities, such as unusual billing practices or irregular shipment routes. Sudden spikes in charges or unexplained changes in carrier performance can be red flags. With the ability to quickly detect and respond to potentially fraudulent activities, shippers can leverage these tools to stay ahead of potential threats and address them proactively.
A noteworthy case involving a top recognized FAP company detected a $10K spike in return services for a global eyewear manufacturer. This anomaly was the first indication of an organized fraud scheme. Bad actors manipulated return shipments, resulting in over $1M in fraudulent activity and triggering an FBI investigation. Early detection by the FAP company could have limited the fraud to $10,000. This example illustrates the importance of early detection systems in preventing large-scale fraud.
Another risk that is present is the tampering of data or unauthorized charges. Access to real-time visibility makes it difficult for fraudulent activities to go unnoticed and ensures shippers have reliable data to prevent and maintain control over their logistics operations. For example, a FAP company’s real-time visibility solution tracks all parcel shipments, normalizes tens of thousands of exceptions, and categorizes them into controllable versus uncontrollable exceptions. This categorization helps identify responsible parties and suggested actions, ensuring shipments arrive on time and mitigating potential fraud.
A case study involving a Fortune 100 high-tech company further illustrates the importance of real-time visibility. A company needed better visibility to gain more proactive control over their shipments. They turned to the aforementioned FAP company to provide real-time visibility on all parcel shipments, allowing them to manage exceptions and stay ahead of issues proactively. The solutions provided by the FAP company enabled logistics professionals to determine which shipments needed micro-management to ensure on-time delivery and provided the necessary data to track and monitor all activities, reducing exceptions and effectively managing those that occurred.
Freight analytics is vital for data-driven decision-making. By analyzing historical and real-time data, shippers can make informed decisions about shipping methods, carrier selection, and route optimization, leading to cost savings and improved efficiency. Establishing key performance indicators (KPIs) through freight analytics helps evaluate supply chain performance, identify areas for improvement, and monitor logistics efficiency over time. Proactive data analysis allows shippers to optimize their operations and mitigate risks before they escalate.
Significant disruptions like the recent Microsoft outage increase fraud risks for shippers. Implementing robust systems and leveraging the expertise of FAP companies is essential for maintaining stability and security. These firms enhance verification processes, real-time visibility, data integrity, anomaly detection, and network optimization. By managing these aspects proactively, shippers can safeguard their operations and finances against fraud, ensuring resilience during major crises.
Hannah Testani is CEO, Intelligent Audit.
This article originally appeared in the September/October, 2024 issue of PARCEL.
