Export Compliance: Vetting Carriers and Avoiding Freight Broker Scams

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Annik 0:00
Surprise, simply trade listeners every Sunday, we’re gonna spice things up with a shot of adrenaline pumping news. We know you come to simply trade for top notch education and insider knowledge, straight from trade professionals. But let’s face it, the world never stops spinning, and things happen every week that affect our daily lives. So we’re bringing you the biggest stories in the trade world served up fresh and hot with a side of entertainment from your favorite host, Andy and Lalo. I’m Annick, and I’ll be moderating this news show. So let’s get it all started. You

Hi our trade friends. We are back with another podcast episode of a news roundup this week. We have some fun topics for you guys that I picked from our social media on LinkedIn, we usually post them, and so we have some fun stuff to discuss. I’m your moderator, Annick, and I’m here with Lalo and Andy, and we’re excited to get in some hopefully no trouble. So let’s get it started. So this first article I had picked out was Russia fuels us prosecutor hiring for tough to find export cases. I had to read that title twice because I was like, wait, what? So basically, it’s talking about everything that’s going on with Russia, and so they’re hiring us prosecutors to kind of figure out if what’s happening in the exporting industry

Andy 1:47
well, and right off the bat, I mean, we’ve talked about this on some things, and this is just make sure that you are vetting the parties that you’re doing business with and finding out if you are selling goods, selling goods to folks in Russia, or that are from Russia. You better check out to see what’s going on. And because, you know us, goods are not to be, you know, winding up in Russia on some of these things and whatnot with the sanctions so the they’ve expanded the sanction list to include more of the oligarchs and and folks. So that just means people that are on that list and companies that they’re associated with. You better do your due diligence and make sure that you’re vetting that through the denied parties, restricted party screening, and those kinds of things,

Lalo 2:45
right? And what I saw was I was part of the article. One of the things that I read that stood out for me was that they’re getting the government gets a little bit of a they mentioned something about having corporate buy in, you know, basically, why are corporations not buying into this? And so that, that, that part stood out for me only because, you know, we’re training company, and that the buy in is that, you know, you train your people. And so I suppose. I guess the takeaway here, for on my part, will be, you know, even though it is a hassle to have to It’s hard enough to export now or import, but in this case, we’re talking about exports, it’s hard enough to keep up with that and the demands and and the terms and how are you going to satisfy your customer, abroad, etc, you know. Now you need to worry about who you’re selling to, not only who you’re selling to, but where or how are they going to use that product, right? So, so you need to figure out how they’re going to use it and, or if your customer is actually selling it to somebody else, you know, and so you You’re responsible for that as well.

Annik 4:06
Well, how easy is it to, like, do such a black listing, blacklisted export, I guess, or, you know, when there’s sanctions, like, how, how easy it is to actually kind of go against that and just go through with the thing, take their money, and no one catches it ever like, was that easier before these us prosecutors were hired? Or will that now be harder? Or what? What’s the deal?

Andy 4:32
Well, well, I know your your scenario of what you’re doing in international business. So as you’re conducting business transactions internationally. It doesn’t matter. You could be dealing with somebody in Canada and yet they then have connections to somebody in Russia or whatever. In this particular case, here’s what is going is that you’re you should be setting up things again to vet your vendors, vet your clients.

Annik 4:59
Yeah. So the next one we have is reports of double brokering increases. So what it says is double brokering when a carrier accepts a load and then illegally re brokers it to another carrier, is on the rise, so costing brokers and carriers millions of dollars and hurting legitimate businesses. So how can people protect themselves from these scams, from the double brokering scams? Or, how does, how does this even so, how does this even come at hand? I know, obviously compliance, we always talk about compliance is a huge thing. And like, that’s how you definitely know what you’re doing, and you can kind of catch those things. But like, I mean, how can you get away with that, or kind of protect yourself from those?

Lalo 5:48
Well, I think for the most part, is not necessarily a scam, per se. It’s, it’s more like just business practices that people do. You know, it’s kind of like you hire this guy to paint your house, and he’ll go and hire somebody else to do the painting, even though he’s not doing the painting only because he’s busy with other work, you know what I mean. So that’s what these guys are doing, or these companies are doing. They hire a company, can hire a carrier to carry your stuff from point A to point B, that carrier will turn around and hire another carrier to do it because they’re busy doing other stuff for one and secondly, that second that second carrier may or may not be fully registered or fully compliant and so, but nobody knows that he’s the one that’s carrying it, because they think it’s the original guy that’s carrying it.

Annik 6:49
And that’s what they were saying. Yeah, that’s what they were saying. But they were also saying that things get, you know, things get lost, or because nothing happens if it, if it all goes right, but if it goes wrong, which they were saying, there’s lots of money that’s at cost here. You know, lots of goes wrong, and they’re saying that it hasn’t really been investigated since 2012 that they have found a lot of cases, but nothing has been like deeply investigated. So I’m wondering, why are they not investigating this? Like, there’s millions of dollars at stake with these kind of things. Like, why is this not talked about deep, deeper or, you know,

Andy 7:26
but those companies that are on top of their, in this case, their transportation as well as, then, you know, from an in compliance, if you’re crossing the border and all that here, here’s something that comes into play. It’s the sourcing, the transportation slash logistics, and the complaint, import, export compliance. If they are working together, then you also need to look at your accounts payable, because that’s where these invoices are going to come into play. And there are certain things that check out. If there’s a question, you throw that one to the side, and you process what you can and then you go from there, here’s, here’s what comes into play. You have your list of approved vendors, and if a invoice comes in for somebody else is like, Well, no, wait a minute, where did that come from? And you hold it up. You don’t just rubber stamp this stuff, and that’s where it comes into play, and you’ve got to check things out. Another thing is, especially when it comes to where they’re saying they may be, let’s say, driving across the border or whatever like that, you need to be using your ACE reports to make sure somebody’s not tendering entries on your behalf, for for other things, as well as, in other words, here’s a broker. You my broker is ABC Company, and now here’s XYZ brokerage company, and I’m talking customs broker. Where’d that come from? Also, if there are, if you’re, especially if you’re a carrier, but if there are, you’re getting bills for in bond transfers, or it’s and Teenies and things of that nature on a truck and it’s hitting your bond or or your EIN numbers being listed, and things of that nature. That’s another way to to look at it. And the red flag goes up and say, What’s going on here? So things like that need to come into play. Doing it piecemeal. It looks like, well, it’s not going to be an exorbitant amount. They don’t want to bring attention to it. Oh, it’s only $50 it’s only $200 or whatever the case may be. And you get enough of those. And once they get one going, then they’ll throw in a few more. So all of a sudden, oh, this must be a carrier that has not been added to the list. If in doubt, check it out. Is what I always say,

Lalo 9:43
exactly, yeah. And it kind of goes back to, kind of goes back also, to one of the previous articles we had, I don’t know if it was last week or the week before, on cargo theft. It makes it a lot easier to steal your stuff, because you don’t know who’s carrying your stuff. You know. Well, actually, you think you know who’s carrying your stuff, but they’re not, you know. So anyway, but, but, yeah, just that. I throw that in at the tail end. So, but, like Andy said, Just vetting everybody and having someone within your department that is very, I don’t want to use the word I want to use, but a very diligent on, on checking everything, you know, the carriers or brokers, etc. So anyway, so

Annik 10:30
yeah, I guess the whole industry even is a full like, you have to pay attention to every little detail, or you’re kind of screwed at the end of the day. Yeah, well, our last article is a little more sunny, I would say on the sunny side, though. I don’t think Idaho is very sunny, but so in Idaho, they’re helping small businesses, basically exporting globally, which is very nice. So the article says that they’re the State Department of Commerce, helps businesses reach new markets, and they’re having these, um, sort of, I don’t even know, I don’t know what they call them in here, they just call, like, meetings, and it’s for local businesses, and it’s basically encouraging them to export. And they have made this is crazy. Nearly 90% of Idaho’s 3.8 billion worth of exports come from small businesses. So all this is kind of for small businesses. And I think it’s a great thing. I think it’s something that I don’t know more futuristic, or that could really bring up small businesses and healthy small business owners, business owners. So there’s a few questions that I have towards that. Is this something other states could be doing, especially helping small businesses grow like I know where I well, where we’re from LA los from there too. There’s a lots of small businesses and, okay, El Paso is not, I’m not sure about export, but I guess to Mexico and stuff, it’s a good would be a good deal. So is this something that other states could be doing or helping small businesses do? Or where would this lead? Or what do you guys think about that?

Andy 12:24
Well, I can tell you that almost all the states do have things like this, and it’s what it is, is that you have the US Commercial Services, which is the Fed level that is very active, usually with Chambers of Commerce in different regions. And you’re right, small businesses are really big on exporting goods and stimulating trade and all that. That’s one of the things I used to do, is travel around the world, helping American businesses to stimulate trade with other companies internationally. But that said, it’s definitely a positive. If your area is not involved in some of those kinds of things, then you need to be looking to your chamber, and I bet asking the question, because it’s just one of those things most people may not be aware

Annik 13:18
of. What I do thought I did think about this one is, as your business grows, meaning you want to go global. That’s what the whole goal is. Here I was thinking, I mean, there’s a lots of compliance issues and new paperwork and all that comes right? So what can they do? I mean, we’re always going back to compliance. But guys, this is just the foundation of it. All. You know, you have to go to kindergarten before you go to, I don’t know another school. So Lala, I wanted to ask you, where do these businesses, where can they begin if they start to go global, like, what? What should they start with,

Lalo 14:00
right? Well, aside from the obvious, is to take training from us. But obviously, when they take training from us, they are already in the process of exporting. You still need to do a lot of setup, and when they do that, what I’ve seen that have been very helpful. And like Andy said, at the local level or regional level, there’s a SBA that can try to help you, the Small Business Administration. There’s also groups like, like within the deck, which are called the district Export Council. Council, yeah, Council, they tend to help you. But in connection to what we’re talking about, you know, you as a business need to reach out, because sometimes you just don’t know that these exist. If

Andy 14:48
you’re looking at expanding in there, internationally, or taking advantage of that, we’ve, we’ve done a couple of podcasts, go back and you can look at that again for a little bit more detail that we go in. And cover that and some of the things you need to do. But again, that’s one that it should be a collaborative effort of you know, your executive leadership should be looking at things, your marketing, your your sourcing, again, your transportation, your compliance and all of that, and work collectively and collaboratively with, again, the US, commercial service, the different efforts and and again, there should be, and could be, even from a tax accounting and and accounting departments, areas where you could take advantage of maybe some programs that will avoid taxes and and get some grants and all that to move that forward. Hopefully it’ll create some jobs for you too.

Annik 15:46
Yeah, and I think if people are struggling with that, especially as small businesses, I’m I’m talking about small business here because I know bigger corporation, they probably got it more together. Um, that community is probably the most important part, just asking other businesses, or getting connected with a compliance company, getting connected, you know, with all these different people that you said, and that’s also what we’re basing off, a lot of things that we’re trying to create a community for International Trade Professionals, actually, which we just want people To connect with each other, be more free about what they’re struggling with, see if other people have the same problems. Kind of answer their problems, talk to other experts that can maybe answer their questions. And I don’t want to advertise on here too much right now, but it’s just something to think about and it I think it could help. I mean, anywhere right we have in school, we have those kind of communities, and it’s just something that can help anyone. So okay, these were the three articles. I think they were pretty good coverage. Just

Andy 16:53
gonna say one of the things I mentioned it earlier on the on our first article. But I mean, this is a hot button right now, and it would be well worth it, if you especially it would appears to be that the person that was leaking the government documents is only 2122 years old. And any of your folks, it’d be worth it to go back through again. It seems to be innocent that they didn’t think it would be that big of a deal. You got to re emphasize to your workforce to cover your policies regarding how to handle your company information and things of that nature. And if you are a DOD you know, vendor, Department of Defense, vendor or whatever, you better make sure you’re really locked down even more so on things. It’d be well worth it

Annik 17:41
this week, one of those days was national beer day, and there was an article which disclosed that in the five years since section 232, terrorists on aluminum, aluminum were imposed, the American Beverage industry has paid more than 1.89 3 billion in taxes. So that is a humongous amount of taxes, I would say, for all the beer drinkers. Or Yeah.

Andy 18:11
So it’s, it’s a 1.9 billion added tariffs there. So that’s, yeah, it’s increased the the rate on on foreign beer, which

Annik 18:23
probably makes it more expensive, right? Which would make it more expensive, basically,

Lalo 18:27
oh yeah, that’s what we pay more for.

Annik 18:32
Well, let’s, let’s skip to tequila, then, just kidding,

Lalo 18:37
that comes in bottles.

Annik 18:40
That’s all I have to say to that. That’s my little fact. I didn’t find any great facts this week, but, I mean, this is a good one, right? This will do so Okay, we are finished with our Roundup, which was very exciting. Thank you, Andy, thank you, Lalo, as always, like, subscribe, comment, give us tips and follow us. Thank you for listening, and we will talk to you next week again. Bye.