Hey, everybody. Thanks for joining us for another episode of Banyan Technology’s Tire Tracks Podcast. I'm Patrick Escolas. With me I have a special guest today, Michael Caney of Highway. How are you doing, Michael?

I'm great, man. How are you? Good to see you.

Hey, good to see you, too. This is really our first time meeting. So, hey, you're the Chief Commercial Officer at Highway. That is the extent of what I know about you. Who are you? I always like to start, how did you get into this space, because logistics is a funny monster, how people come in, either they're born into it, or they find their way, or they got blindfolded, spun around, and thrown, and next thing you know, here they are and haven't looked back.

Yeah. I think it's probably the latter, the last thing you said. I definitely wasn't born into it. I'll tell you, man, I was in college and engaged. This is the way I started. And I needed a job. Like, okay. This woman's going to expect me to provide for, and so –

I was going to say, that's a double inspiration. I just had the loans, and that was enough. You’ve got that, plus the marriage already. Whoo.

I was engaged, and I knew wanted to go into some type of sales or commercial job. I grew up in a somewhat entrepreneurial family. I started applying for sales jobs. I get a phone call out of my college's resume book one day, and this woman is explaining to me truck brokerage. Patrick, I didn't understand. I was like, I don't understand. You just called somebody, and they came and picked it up, because I don't get it. But I went in for the interview, and they told me I can make a lot of money, and I was like, “Well, I'll try anything for a year.” And that was 20 years ago, bro.

You haven’t looked back since. I love the idea of, they're like – You're like, “I don't understand.” I just love the like, can you draw it for me? I imagine them just drawing a really simplified thing on a chalkboard, and you're like, “Well, you're paying me, though, right?” Yeah. I should have started with, “As long as you pay me, I'll figure it out.”

Well, when you're 22-years-old or whatever, and they tell you it's a sales job, I'm like, okay, so what does your best producer make? They told me, and I was like, “No, I don't give a shit what we're doing. Here we go. Sign me up. I’ll try it.”

You’re like, “No reason. I'm not that guy.” Exactly.

Yeah. Here I am, man. But the way I got to Highways, so I was an operator for 20 years.

Okay.

Anyone that's familiar with the freight brokerage space knows that non-competes are a thing, and you got to sit those out. I had just enough technology interest that I would – I'd go run technology businesses when I was waiting out non-competes. I had friends that ran technology companies, and so I'd go offer executive leadership. I did a year at FreightWaves and ran, so I go to market. I have a real passion – candidly, I love working with freight brokers more than I do shippers, and I love technology. I spent a long time dealing with vendors that, honestly, just kept failing me. I’d spent a lot of money, paid a lot of freight tech bills. When I had an opportunity to solve, help solve the fraud problem, and help my friends, like sell them something, represent a company that I believe in, and actually mean something, man, and that's how I ended up at Highway. I just fell in love with it, and fell in love with the CEO, and so, here I am.

That's awesome. I can speak to that feeling within the technology where, especially in the freight tech, say, five years ago, everybody had an answer to every little thin. They're like, “Yeah, we can solve it. Don't worry about how it is. Just start paying us.” No, that speaks truth. Now, one of the reasons, Michael, I wanted to have you on and talk to you is lately in the news, recently, we've got this 60-minute story on Guy Fieri and him getting a million dollars’ worth of tequila bottles taken in a double brokering scam.

Now, before we get into that with how Highway is, let's paint the – let's put the setting in place. In today, that's not a rare thing anymore. The double brokering, I've talked about it on a quite a few episodes, been talking about it for probably three years now. What is going on out there? If someone's, this is the first time they're getting in the industry, like 22-year-old you, and they've just got hired, and now they got to figure out what's going on in this world they've signed up for, what is double brokering, and why is it so rampant right now, from your perspective, or from Highway’s?

Yeah. I'll give you a couple of different ways to think about double brokering, and then maybe just fraud in general. To anybody listening, here's what, at Highway, we want you to understand is that fraud needs really three things to thrive. Number one is anonymity. Number two is – and you can put these in any order. Anonymity, urgency, and the prospect of gain. With freight, the prospect of gain is incredibly easy. You think about tequila and it's – I think from my see, and we'll get more into this story, but watching everybody feign over this, because it's Sammy Hagar and Guy Fieri, like I've been watching Tito's vodka gets stolen for three years. This is like, where have you been? This is not new.

If it wasn't the dog as the mascot. If it was a celebrity, it had gotten a lot more play earlier.

We geo-code liquor facilities in our app, so that we know that our high-risk facilities. Just right off the bat, wasn't a Highway customer, first of all. That's probably –

We'll get that out of the way. Bold letters. Yeah.

We'll get that out of the way. The person that got the stuff stolen, not my customer. Probably should be.

Yeah, should be now.

You need prospect of gain. You need anonymity and you need urgency, right? Tell me the better prospect of gain when you can go make a $100,000, $250,000, $300,000 grab, and nobody's going to punish you for it.

Right. Are you talking about –

You’re not going to get punished for it.

You're talking about on the side of the bad player here. I can make $250,000, $300,000 with no downside.

Yeah, and it’s so easy. Yeah. Especially in the northeast and different parts of the West Coast, where there are these bodegas everywhere. This is easy product to move. Whether you're hearing about tie pods, or liquor, or electronics, you know what I'm saying?

It's an in-demand commodity. Yeah. It's not something you got to sit on, or put together, or assemble, or you distribute in a strange way, or need a fence. It's really just handed off cash sales. Someone's going to give you money for it.

Yeah. The prospect of gain is there. Anonymity, that's where we came in is, is before Highway, it was really easy to hide and pretend to be a motor carrier. You got dispatch services running rampant. I mean, you've got foreign actors that are all over the US supply chain. Then, when you think about the urgency aspect, that's where a freight broker lives.

Okay.

When you think about a small carrier trying to find a backhaul, when you think about that Thursday afternoon load. Then bad actors know how to create urgency. They do things like phone flooding, and they shop the load boards. You have those three things, and fraud can exist anywhere those three things are true.

Okay. All right. In this case with, with the tequila, with Guy Fieri, does, does it being a Hagar-Fieri load have anything to do with what somebody is deciding here? Or is it just the fact that it's commoditized, it's easily to redistribute, and they don't have any fear of there being enough security on it to take a risk? Or, how does someone pick light? Is this someone picking a lane? Or are they picking this carry, this actual truck itself, and the cargo? Or is it just a coincidence that this is what goes?

Yeah. There's three things that they target. One is the lane, right? The origin destination. There's a network, right? A bad actor has a network that they're working on. Or it's a cross-stock warehouse, right? They're picking an OD pair. Another characteristic of an OD pair that they might – origin destination pair that they might select is one that just creates a lot of urgency, right? It's outbound Chicago, right? It's inbound Miami, right? It's one of those places that's –

Just inherently busy and needs to get done as quickly as possible. You're there for multiple weeks, and everybody knows it. Yeah.

They're picking a lane where they can. Then, the other thing that they're doing is they're looking at the commodity, right? I would tell you that, look, and we're not unique. All of us that are in this game we work with law enforcement and we help provide information. But this isn't like you or I get drunk one day and we’re like, “We should steal some cargo.” This is a sophisticated network of, you know what I mean, Patrick?

Yeah. I would just say, it's more Oceans 11 than a posse taking off the train that has a hole in it.

100%.

Okay.

A 100%. 100%. Yeah. I mean, Oceans – Yeah, if you want to think about that. Yeah, it's very much more Oceans 11 than brute force. You'll still see some brute force cargo theft, but this is very coordinated. There's black market buy orders out, right? There's somebody looking for a load of tequila. There's somebody looking for a load of Tito’s.

On their end, it's similar because it’s supply and demand. Somebody out there has demand, you have the resources and the network, and now you got to go find your shipment.

Yeah. Like, we're coming up in peak in Q4, right? I'm just going to tell you right now, if you are a freight broker or a shipper and you're moving Legos around, you need to watch your six. Because Legos are going to get stolen, right?

Are those a thing that are considered – If someone doesn't talk to you, is it historically someone who moves Legos worried about that? Or is that because Legos have become such a high-end target for Christmas that in the past few years, Legos are worth their weight in gold, or it's Christmas presents, always been something like that?

No. It's in the past few years. No, it's in the past few years, right? They're easy to move. People are going to buy Legos. They're going to buy them on eBay. They're going to buy them wherever you can find them.

Right.

Yeah. Retailers that were taking in Legos they had a run. Bad actors had a run on Legos. It’s either last year or year before last.

See, is that something that's publicized? Is that something that hit them? 

That's what I'm saying. The 60-minute stories, all the thing. Those of us that are in this business, we're like, where have you been?

What’s new. Right.

Yeah. This is not new. This is actually minor. I know it sounds like a big deal, but that's actually minor. I'll tell you the third thing, right? We're probably similar age. Remember when we were kids, people would put the Honeywell the security sign in their front yard to deter thieves?

Yes. I know, we had one, we had no service. It was literally just deterrence. That alarm and security did not work in our house since the third day.

Beware of dog. Those signs, right? Okay. So, the reason I bring up something so base is because ‘Beware of dogs,’ security sign in the yard. The other thing I'll tell you is people know where we are. If you are not a Highway customer, I'm just going to tell you right now, you're going to be targeted.

Got you.

You're an easier network to penetrate, right? It's no different than any cybercrime. You're a technology company, right?

Sure.

You guys probably have SOC2 designations. You're doing penetration testing, right? You probably have a CISO. It's just –

Yup. We got multiple people that an entire job, day in and day out, to figure out where we're vulnerable and how to close it up.

Yeah. Thieves do the same thing. They go out and they do penetration testing and they see, can I get a load? They'll try, they'll go pick up and deliver loads in a broker's network legitimately, just to see if they can get in.

Okay. See, that is not something I thought about. When their version of, let's say, casing a joint means actually possibly delivering loads back and forth and getting some trust within the network that they're trying to work in, or be a bad actor in.

Yeah, 100%. If you follow anything that we talk about, we talk about casing the neighborhood.

Yeah.

When we first started the company, fraud was a lot easier to catch than it is now, because it was so just out there.

Okay. As far as people weren't doing it, or it just was – it wasn't such a professional.

No. It was rampant. It was rampant, and it was professional. They weren't as sophisticated because they didn't have to be.

Okay.

Right. They'd go bi-legitimate. If you think about it, there was no carrier identity before Highway. There were disparate frameworks of a packet online over here, checking a website over here. There was no framework to say like, this is who a motor carrier is and then this is how they established their identity. There were random, disparate rules that didn't work in concert. If they've got 10 trucks and in business more than a year, and it just – we were making it up, Patrick. I mean, we were just making it up.

Yeah. I know that, because only in the past few years, where that became something more uniform, that you start hearing the same questions. Before it was, depending on where you were working and talking to, the questions of validity were different. How long you've been in business, or what's a certain code. Yeah. What changed? Is it because I assume the answer is going to have to do around COVID. Because that's where, at least, it seemed that we started getting a lot more reports, or it became a bigger word, the double brokering and the fraud than maybe it was before. Maybe it was in undertone hushes, or people when they get ransomware, don't want to talk about it as much. For whatever reason, it seems like this has been a much bigger, or maybe just a more highlighted, or scoped topic within the industry since COVID.

Yeah. COVID was a big thing. Going back to what I was saying before, when there was random disparate rules, the other thing that you had is because the risk, let me say it, how do I say it? The outcome, the negative consequence of double brokering, wasn't what it was today. There wasn't as much theft.

Okay.

Sometimes you would be working with a double broker, and you just let it go, because they did a real good job. That's the quiet part, and no one wants to say out loud. You got a guy. He's out in California. He would tend load the day for you.

A fifth of my stuff might disappear, but it's worth it, because the other four out of five shipments are done well? Okay.

I guess what I would say is back then, it didn't disappear, because they were just legitimate double brokers. You were just overpaying. You dealt with the risk exposure.

It used to be just a double markup, basically, or not knowing exactly who was handling your goods at the end of the line. But generally, things got to where they were supposed to.

Yeah. The primary exposure you had was twofold. One, service. Because you don't really know the underlying care and you're “relying,” even though you don’t want to. Relying on the double broker, right?

Your truck on the trucks. Yeah.

Then, if there is a cargo or a liability claim, you didn't contract with the underlying motor carrier. That's still a risk. There's still service risk. There's still liability risk. All that's true. Then, in COVID, you could be a double broker and make a ton of money. When you're charging four or five bucks a mile, you can be a “legit double broker.” Then, when rates go down, what do you do? Well, you just steal it.

Yeah.

The business model just pivoted. Like, “Okay, well, we can't make any more money being a double broker. We'll just pivot to stealing it.” What they did was they bought and held a bunch of MC numbers. I go out and I just start MCs and I just – I hold 20 MCs, and we fix that. Where am I skating to? All of these vectors that were fairly easy for a bad actor to enter into, we kept collapsing them. Now, that's why you have to get to what we call load level compliance. That's where they're operate – they're bad actors that are operating legitimate, waiting to break bad.

Okay.

Now, what they're doing is they're operating MCs legitimately for six, seven months at a time. They're actually picking up and delivering, getting to know your network. And so, you have to watch for pattern changes that suggest they're about to do something bad.

Are those pattern changes obvious enough? Is that something that highway monitors these ones that could be a possible wolf in sheep's clothing within the double brokering? Or is it changed? What do those patterns look like?

Yeah. This is where like, they're going to listen to this. They're going to download this and see if I'm going to say anything. There's things that are just out of the –

Good point. I didn’t even think about that.

I'm really not trying to be like, but it's true. They're going to download this. They're going to listen to it. What I would say is like, they're good, man. They're really, really good.

Well, is that a natural response to cleaning up the easy ways to do fraud, as you've created a standard uniform, a level of engagement that has to be met before someone's going to think you're justifiable?

Yeah. Here's what I'll tell you from a pattern perspective, if you're a broker or if you're a technology provider and you want to help a broker, they are moving more to social engineering to try to get into the communication channel, to try to get outside of an easily detectable pattern. You got to be really careful in your comms channels. Are you being socially engineered? Are they trying to just get access to data? Are they just trying to get a pickup number? That's why we talk a lot about secure document delivery now. That's where we see them moving to, is to your comms channels.

Is that something, is that what happened here? Again, like we talked about, what happened to the bottles of tequila isn't anything new, but we're using it as a good window, or lens, for this discussion. Is that human engineering, or hacking a part of it went into this? Or, do we even know what specifically, how, how they went about these bad actors to take these bottles in this case?

Yeah. On this particular case, I'm not privy to the details. But typically, it comes down – There's a thing we say at Highway now, which fraud is a choice. One of the popular things you'll see right now are –

I say, no fraud. That's my choice.

Yeah. But we'll talk about how it comes down to choices. One of the things that's popular right now is for something to happen after that, and they get reported. Then some hero with a new toy comes out and looks backwards and says, “Oh, we knew, or we would have known.”

Thank you, Captain Hindsight.

Thank you. Well, that's awesome.

Yeah. Shouldn't put that orphanage so close to the nuclear radiator. Yeah, exactly.

Yeah. Yeah. In most cases, we knew, too. It's not like, okay, great.

It was somebody made a decision, risk versus reward, versus speed at the time. Hey, I don't know, but we got to get this thing moving. Okay.

It was hedgy. It was like, well, maybe they got talked into something. Sometimes, Patrick, when you're thinking about fraud and risk, it's like your own credit report. The difference between a 640 and a 720, they're probably going to pay. I don't know. No, it's true. It’s true. Sometimes you’re just like, okay.

I can see it.

It's a little risky. There's a little noise, but is it signal? What do I do?

Right.

On your bottled water loads, man, go nuts for donuts. Take risk.

Right. Just like anything that you’re moving.

Yeah. Typically, they're looking for to engineer something in the urgency, something around the urgency of a commodity, something around the urgency of service. They're just looking to exploit a gap in a manual process. Like I said, they didn't show up and try to get this load today. They've been talking to you for months.

That is something I did not consider for a lot of the double brokering that I've had conversations about. There's all of this out there, and you've talked to a good detail of how they're hitting it and how they've gotten better. How does somebody make that choice to not allow fraud, as you talked about? How do you detect some of these early signs, or how do you put some basic steps in place to at least, as I like to – the low-hanging fruit, those ones that would be easy to walk into, but easy to spot if you saw it. You see the misspelling in the email address from the spam email, or you see that the link goes to some other website. What are the early signs? Because you said, these actors sometimes are doing legitimate shipments.

Yeah. I would say the first, when you talk, when you think about, oh, man, there's so many – you bring up a good one, like the freight. The reason we built the email tool, there's a company called Freightbull, Freightbull Logistics, or Freightbull. They changed the I to an L, or the L to an I, something, right? They changed one letter. You didn't know. You're talking to them in your inbox, it looks freightbull.com, they changed one thing. That was our response, like, “Oh, my gosh. This is what they're doing now.” So, we wrote a tool.

What I would say is the list is so long, and that is not just me being the sales. But the list is so long, you can't keep up with it. It changes. When it comes to your phone system, when it comes to your inbox, you need to just let us, or somebody, protect you with a tool. We have a tool that lives in the inbox and looks for those anomalies.

Okay.

It looks for a change in domain. Because the carrier's already registered with us, we know the channels they communicate from. We look for patterns outside of that. We're going to just alert you to that. The thing I will tell you, Andy Smith at Circle said this last week on LinkedIn, 300,000 loads and not one stolen and not one double brokered, since moving with Highway. Because there's some people are like, oh, there's one gentleman that likes to say, “Well, Highway customers get their load sold.” Well, okay. You can be a Highway customer and not adopt. You can be a Highway customer and turn off the tool in your inbox. You can be a Highway customer and ignore a big red alert that we flash in front of you.

Okay. Yeah.

Just sending me a check every month.

Isn’t going to do it.

You see what I'm saying, Patrick, right?

Yeah.

The thing, if you look at Circle and what they do, it is a cultural thing at Circle Logistics.

Okay.

My customers that are the best at preventing fraud, there is a Highway product owner inside of that company, and like, that's what they do. They train their people, and they talk about what the alerts mean. They are dedicated. It is a culture.

It would have to be, because it's an ongoing battle. Because even as we talk about this right now, the tools that were use for one thing are going to be upgraded, and the tools to defend it, the same way, or even the processes. Within that, and you talk about some of these tools, with the email inbox and that Highway has, AI being what it is and everywhere, I assume it's on both sides of the board. How is that making someone – your job at Highway harder? How is it making their job as the bad actor easier? Then, also, I'm sure you'll answer this, too, but how is it helping us stop them both from a Highway side and possibly, someone just knowing some of the signs?

What I would say is it's early. A lot of that I can't answer, because AI is one of those things that nobody did it six months ago, and all of a sudden, everybody does it.

Yeah. That’s very true.

Companies that can keep their site live, now they're AI experts. Like, okay. I was at a dinner a couple of years ago with my friend, Chad Olson from ABRL. Then somebody's sitting there describing their AI, whatever. He goes, “I think you're talking about machine learning, and you may just actually be talking about business analytics. That's 10-years-old. You're not talking about AI.” Sometimes, I just wonder what people are talking about. Okay. Back to the more important thing. AI has, in what we’ve seen –

I like that call out.

From what we've seen, man, it's got so much potential. I use it every day. I engage with a large language model every day. Our senior developer, an engineer that's been with us since the beginning of the company, he says he has this phrase. He's like, AIs are just good at learning to speak English. They're just reading mass corpus of text and – I know it's more than that. I'm a stupid sales guy. All the computer people can throw that.

That's the low-hanging fruit. You don't have to have all these prompts and all of this different fed information when they can do that right off the shelf, so to say.

Yeah. The thing that – it saves me tons of time and the applications. We use it very strategically in parts of Highway. The key decisions it's not making decisions yet. It's making decisions around, it's looking and reading insurance policies for us, and servicing. It's doing very basic stuff that saves time and effort. Sometimes on Reddit, like look at Chito, Highway's AI. I'm like, I don't know what you're talking about. Cause that wasn't AI. That was a SQL query that said you were bad, because it was so painfully obvious. The scariest thing about AI, Patrick, is that AI is now being used to call carriers and redirect loads. To call carriers and the person –

And the voice is that good.

Yeah. The scariest thing to me is when somebody takes a podcast and uses my voice to go call somebody and say they’re me.

That's not even something I've thought about.

I mean, I have vendors pitching me every day like, “We'll just make it sound like you.”

Oh, man.

Look, I had a go-to market vendor do a demo of me a couple of weeks ago and show me, and like, “Hey, we can just make it look like you. We actually make it look like you.” She showed me a demo of herself. I interacted with this, and it was responding as if I was talking to her. Now, there's a disclaimer in aboveboard companies that you're dealing with an AI agent. But in a criminal element, they're not going to tell you.

I would just say, the people who are taking your loads, or committing fraud, are not the aboveboard people that are going to tell you.

I heard a story last week where a broker and carrier were arguing with each other. It was just two different AI, agentic AI.

No.

It was like the broker's agentic AI and the carrier's agentic AI. You got robots. It's like Terminator. Machines are coming. We're going to blacken the sky. We need Neo.

We're just going to be caught in the middle. Yeah. When the AI is that good and they could call and sound like somebody that I know, how does Highway put in steps? Is it just the dual authentication of it, the more I have to look at my phone and tap a number? How careful can somebody be, and how in-depth can these bad actors, processes, and different tools get?

Yeah. The thing that I would offer you to you is just, think about the way that you interact with security protocols every day as a consumer. Before Highway, it was harder to get into your Netflix account than it was to steal a load. Think about –

That’s a statement.

Think about, Patrick, you go to a hotel and you sign into the TV at the Marriott. It's going to ask you, it's going to send you a code. You're going to have to look at your phone, because they know that when you hold your Apple device, you have gone through a biometric validation. It's going to tell you that this isn't a part of your family thing. You're going to have to say it's tip. You can do all of that in less than 60 seconds.

Right. Done it.

But you probably did six or seven steps, and there are things happening in the background to be sure that someone's not stealing your Netflix account.

Okay.

I'm going to tell you, less was done on Guy Fieri's tequila.

Then the authentication needed to get Netflix up at the hotel –

To watch a movie. When you think about what we do, there's nothing new under the sun. All right. I think Solomon wrote that. This has been done. This is done in banking. This is done in healthcare. We just think about what are the security protocols that are very low friction, but that already exist that don't just let a robot call in and impersonate you? The answer that I'll give you, getting specific, is there are points in any type of transaction where you catch a flag and you introduce a piece of friction to see if it can pass. That doesn't mean you make it hard or slow, because we just walked through with Netflix, that whole thing, you can do it laying in a hotel bed in less than 60 seconds.

Yeah.

You can do the same thing. You can do the same with carriers and brokers. You can do the same thing with transactions. That's why we built a freight exchange, so that you could have participants that are showing up in there. They're validating who they are. You have to be willing to adopt those things. That's the key piece.

Is that something that you, as Highway, have run into a lot is the resistance to change, or the resistance to more steps in a process that, for some, hasn't changed in so many years? Or is there something else?

It's the fear of the unknown.

Wait. Wouldn't the fear of unknown push you to do different things? Because isn't the unknown the fraud?

Well, so the unknown. Yeah. People buy for three reasons. One is fear of loss. The weakest is prospective gain, right? Fear of loss is the biggest reason that people will buy. But there's still a calculated like, okay, I've stopped it enough. If I go a step further, am I going to lose the carrier base, or will they go somewhere else? Brokers are operating – It's never been harder to be a freight broker or a carrier. It’s never been harder. Carriers are operating in an environment where they're getting constantly targeted by bad actors trying to impersonate them. Brokers are spending more money on risk and compliance than they ever have. They're under constant threat of either somebody taking their freight away to the next guy making a sales call, or constant rate reductions from shippers. There's this fear of like, how disruptive will this be?

Mm-hmm. Is this is going to ruin my relationship? Is this is going to make, yeah, people pull their hair out? Yeah. I mean, employees quitting in today's age is tough because you're probably not fully staffed to begin with.

Yeah. I mean, what if I lose a carrier? There's so much uncertainty that is fearful. And so, it takes us time.

Okay.

If you introduce too much at a time, it's just hard. Then, I mean, I've got to tell you, sometimes in some businesses, it's mob rule, right? If you introduce something and all of a sudden, everybody on the brokerage floor is upset, or it moves their cheese around too much, it's just the headache of noise that some brokers choose not to. Like I said, fraud is a choice.

Who listening to this, that, like we said, the article is nothing new, or the 60 minutes is nothing new. Who listening to this that has been either against it, or hasn't looked into it, what do you say to them? Because I know that what I've heard is, if not yet, when is it going to happen to you? From that ROI perspective, isn't there more to gain from being proactive than waiting till it happens and get burned, and then go and try to do something?

Yeah. I would say the biggest change I think that needs to happen in freight brokerages is the proper adoption of product owners. If you think about –

I would just say, when you say product owners, I define that a little more for someone that might not be as corporate lingo.

Yeah. I didn't really understand what this was until I got into technology, right? Because growing up in freight brokers, there was no product owner. It was just like the VP of ops managed this part of the TMS, and then the finance guy managed. No product was ever actually adopted correctly, because there was no one sitting in a product seat thinking, “I'm the go-between the business and the technology company to make sure that this is right.” I understand things like a user story. I am a freight broker. The basics of software development. We just put it on somebody else's plate.

You got to think in a freight brokerage, it's incentive alignment. It's really difficult to give the keys to the store to the guy who's incentivized to move the most amount of freight for the least amount of money.

Right. Because you'll have a handful of ones and everything will be moved, but you know that you should have had at least a few hundred in there. Okay.

You're asking him to take a calculated risk. I'll give you a perfect example. I can't review red lines from customers. Cause I'll just be like, “Yeah, that's great. Sign them all.” Right, Patrick?

Yeah. I'm a salesperson, too. I got ink. Please, don't look at this too hard. Let's just move forward, and we'll figure it out. Yeah.

Luckily, our CEO was –

It’s a great example.

- works in controlled environments. First day, he's like, I was like, “Just send that to me for review.” He called me and he's like, “Hey, man. I love you. I trust you, but I'm not going to put you in that position.” I'm like, I really appreciate that.

Michael, you're going to find a way to say yes to all of this. We need someone who's got no on the brain and we can tell him it's okay. Yeah.

But the person that manages risk for us actually has a background of business development. He's very good at helping me think through business decisions and putting it and go, “Hey, if we take this, here's what we get. What's the size of the contract? What's our history with this customer?” He's very good at helping me think through things. We actually go faster than if we signed up for a whole bunch of risk that came back to bite us. Okay. Why am I saying that? If you're a broker, like someone needs to own the risk management side of your house, and unfortunately, the role has evolved to be bigger than Joe or Sally that used to do the carrier packets.

Right. This isn’t just one person going over the documents and telling Jim, “Hey, you might have loaded this up before you confirmed that these guys were legit. Give him a call and let's see what's going on.”

When you think about technology, right? We've got, I don't know, approaching 1,300, 1,400 customers now. When we do a release, it's not guaranteed that every single – somebody has to be responsible for looking at the releases. I can't come around the brokerage for you. Someone in your company has to eat and sleep and breathe, making sure that you are on the leading edge of protecting the business.

Or else, the person you're going to want to get up to speed is probably two days, two weeks behind when something is actually going down.

I can't tell you how many customers I have where this rolls into the CFO.

Because he doesn't have enough going on.

Exactly, right? Or, it rolls into the VP of ops, who's also managing the floor, and also has reps walking up to his desk, asking him why they can't load a truck. I mean, can you imagine how hard that is?

You talked about incentive. Someone at ops might literally be incentivized to negate, or neglect that part of his operation, because he needs to move more, or get more product moving, or get more shipments. Whereas, if you're thinking of the risk management, you may have to stop, or slow down, and make sure that you're making the right choices. Same with the CFO at a certain point, too. It might be about, let's get the gains and we'll figure out what goes, so you do. How does someone do some risk management, without just finding boogeymen and ghosts around every corner? How do you find the solution that makes sense and not just act on and live in fear the whole time?

Yeah. Some of it is you're going to take acceptable risks, right?

There's no certains. There's no guarantees in life. Yup.

You're going to have a load or two stolen here. Depending on, you know, somebody asked me today, what's the acceptable amount of fraud? I'm like, well, no fraud's acceptable. You're good, but you're going to have that. Cargo theft's not going away. CargoNet has been in business a long time for a reason. Cargo theft is not going to go away. You're going to have it, and that's unfortunate. The biggest thing is you can put your risk in a matrix, and you can be consistent and disciplined in your decision-making. You can do things like, say, never again, are we going to send a rate confirmation over an unsecured email.

Sure.

You’re just not going to attach a PDF to a document and hope it gets to the right place with all the pickup information on it for the tequila. We're just going to not do that. That's a pretty easy thing to get by.

I would just say that seems like a good guideline and process to start with.

You would think. I got 1,300 customers. I got 600 customers that protect their loads and only 250 that protect their rate confirmation. Call me. I'll fix it. I can tell you right now, if you send your rate confirmations in an email with a PDF attached, your loads are going to get stolen. Full stop. There isn't a camera you can hang up on any highway in America going to stop a bad actor from operating in someone's inbox and trying to steal documents.

The alternative with secure, how much harder is it to –

It’s easy.

Yeah, I was going to say, it's –

Here's how it's easy. When you logged into this Zoom, you were probably already logged in, because there was a token sitting there with your Gmail or your Microsoft account, and you didn't even know.

Yeah, Lord knows – I don't know the password to any of these things.

Because you opened your computer and took a picture of your face. It was like, that's you. Again, nothing new under the sun. This is all the technology we use. For a valid carrier, when they get a rate confirmation, they're going to hit the yellow sign-in with Highway button, just like you experienced with Google, or any other social login.

Right.

If a bad actor is in the inbox, they can't get through because they're not going to provide, they're not going to pass the identity challenge. The inbox can be compromised, and the rate confirmation can still be secure.

Okay.

Because it happens every day, where we tell carriers, “Hey, your inbox has been compromised.” Because we see the pattern in someone trying to – You see what I'm saying, Patrick?

Yeah, I do.

You've got to put these layers in, and good carriers love it, because they know they're getting a real rate confirmation. Because small carriers have gotten doctored rate confirmations and hauled things that they never got paid for.

And gotten burned bad. Yeah. That's going to hurt the smaller ones. I mean, it hurts everybody. But when you're smaller and you're fighting for each load to get your bit of margin up, then when you're eating full loads, they aren't real and not getting paid for. That's another thing here on the – We've talked a little bit on the – with the Guy Fieri. That's the shipper side. On the carrier side itself, how much – Is this killing some of the small carriers?

Yeah, it is.

Yeah.

Yeah. Part of the problem, so you asked it, where your bad actors go? They go where digital hygiene is the poorest.

Yup. If you don't have the –

Where is digital hygiene the poorest? I'm not trying to make uncontested shots, but I just know, I know what we're good at. Digital hygiene is poor at a company that a broker that doesn't use Highway. Digital hygiene is poor in a small motor carrier. Where digital hygiene, look low fences, right? Patrick, think about, am I going to climb a high fence with barbed wire?

Or am I going to jump over the one that’s two over there? Yeah.

Yeah. They go where low fences are. That's the thing. If you're a small carrier, do your diligence. Don't click phishing links. Look, I'm just going to say this. DAT is not asking you to reset your password in an email. There's things I don't love about DAT, but they're not that bad. If you're a carrier, don't click that. That's not DAT. They didn't do that. They didn't ask you for that.

Yeah. Unless you're at the site and it doesn't let you in, don't change anything. Don't click anywhere new. Yeah.

Oh, even still you're going to get an email from them that says – There's going to be multiple things that happen that aren't – We need your credentials.

It's like getting the medical bill. They'll tell you enough times to let you know it's real.

Yes.

Yeah. If something were –

The same way, like the IRS doesn't call you. They don't call you. They don't call you.

No. No, they don't.

Highway DAT truck stop. We're not sending you – we're not sending you any emails asking you for your password. We're just not doing it.

Oh. Yeah. I mean, it's a little hard for me to believe I've grown up in tech, and then coming to logistics and specifically with logistics tech. Is that still a predominantly successful way that people are getting it?

Number one vector. The two biggest vectors in freight fraud today is the compromised inbox and the “Sold MC.” Because the Sold MC is a tough pattern to detect. Then compromised –

Because on the front, everything's legitimate. They've got the verification and what, it just gone to a new –

No, no. Because it's not a real sale, right? We call it the Sold MC, because the prior motor carrier will claim he or she sold their MC number. In my opinion, they should have criminal liability, too. Because when you take somebody, your passwords and your email addresses, and you meet them in a McDonald's parking lot and get $5,000 in cash, he didn't sell your MC.

He didn't. There's no way you thought that was a legitimate purchase from her sale. Yeah.

When someone shows up in a private Facebook or Reddit group and wants to buy MC numbers, and this is not the way we do M&A in the real world.

No, no.

But the point is, one of the vectors is they ask for tokens and they'll say, “Hey, we're going to, in part of buying your business, we've got to go log in.” When you start getting tokens on your cellphone, give us the token, share the code with us. That's a vector. You got to just watch for the technology patterns, because the seller wants their 5 or 10 grand, or $25,000 in some cases. That's one of those, like, who's going to go stick them? They're just going to claim it, “Oh, I didn't know. I just thought I was selling my business.”

Yeah. You bring up the criminal negligence or liability on that. Again, back to this lens of the Guy Fieri tequila shipment. What happens? Does somebody take a fall for this? And is anything going to happen? Is this a big enough story that maybe there's more legislature or government enforcement? I mean, what happens other than, sure, I love that Highway is doing all these things. It sounds like if you're not using Highway, use them. If you are using Highway, make sure you're actually doing it right, because it's not good just to have the name or the sign in front of the yard. You got to actually have the system on. Is it all going to be? Is it up to companies like Highway and brokers being smarter? Or is there some point where we have police in for other crimes that will come and stop things? I guess, it is reactive there, too, but where could the future – where could this be better? Where could it be better handled?

You asked me before the show. Is like, anything off limits? I don’t know. You might ask me about my politics, but here we go. When you have –

That's why I ask. I always find a way to do it.

I don't know. When you have elected officials, they want to prosecute things that give them a name. What gives people a name right now, depending on what side of the aisle you're on, it's immigration. It's fentanyl. It's drugs. If you are a local prosecutor, what's going to give you a name? It's probably –

Yeah, it’s not the double brokering. It's not the transportation fraud.

It has to be big enough. There's all these talks about task forces. This FBI task force. These are real.

I hear that a lot. Yeah.

These are real. Early, when we talked to them, they're like, well, this is an FBI because if, because if they're all being controlled overseas and Pakistan and Moldova, then that's Homeland. You've got an argument in the federal government about who's going to go get them.

Right.

Then the other thing too, is it has to be a big enough bust. Federally, no one cares about Guy’s tequila. They don't care.

Right.  The amount of hours and spend of, in order to find that would be well above the amount of the product stolen. Yup.

They have to have a big precedent-setting bust. They've got to pull it all the way. It's got to be big. Look, they're working on it.

Sure.

But until they can put that together, I got a couple thousand people. I got to get their stuff to stop being stolen.

Right. It's not like the logistics industry closes or slows down because we're waiting on something around the corner that may never come. It's things still have to move. Things still need to get where they're getting. People are still; it's their livelihood to move those things.

Yeah. The person that's better at understanding the regulatory side, my friend, Dale Prax, he operates in the same space with me a little bit differently. He's really focused on the regulatory front door. He talks to the administration way more than I do. I think they have a desire to, this current administration. I think that the motoring public needs to understand two things. They're paying for this. The cost of insurance for a trucking company, the cost of insurance for a brokerage, shippers are not absorbing this. You are paying for it at the grocery store, and it doesn't get discussed enough. It's the thing the motoring public needs to understand is you're at risk. Your life is at risk, because of the bad actors that are allowed to operate in the United States. These are not safe people. These are not – these carriers. These no name given on the driver's license.

These are people that are going to run over you. They're spoofing their ELDs. We see it in the data all the time. There's groups that for a couple of hundred bucks, they’ll reset your ELD and they'll give you a new white label device. Patrick, the point is it is not safe. We are allowing people to operate on the public roads that do not care about safety. They do not care.

Not just in the way where I like to be, like having a lead foot. No. We're talking about actually dangerous for everyone that's on it, left and right.

Yeah. They don't have a conscience, right? What does that do to the driver that has been doing this five, 10, 20 years that does care about safety, that does do his pre-trip inspection, that's walking around and looking at his tires, that's checking his brakes, right? It makes it harder on him to operate because we're now regulating to the least common denominator. That guy can't make money because we've regulated into the point where we don't trust him anymore, because we've allowed terrible people to operate on our roadways. 

When you put it that way, and we've got bad actors and not wanting to legislate to the lowest common denominator and even then, the legislature may or may not come depending on a big enough task force to get into the public eye, where does that leave the logistics industry? Are we going to see more of these stories, and hopefully, big enough that they – Is it a good thing that we have Guy Fieri and Van Hagar attached to a load theft to bring some scrutiny to it?

Yeah, it's great. Because, I guess, it took some branding from the Diners, Drive-Ins and Dives. By the way, I love that show.

That diners drive-ins, and where did my truck go? Yeah, exactly.

Yeah. Yeah, it's great. It's great. We got some branding on cargo theft. I'm so excited.

Yeah.

On that 60 minutes piece was my buddy Keith Lewis, who's been beating this drum for years.

Yeah. No one they talked to would be like, “Yeah. Yesterday I woke up and decided this was a topic.” No. I would assume that anybody's been at this has been at this for a long time.

Yeah. I think, to answer your question more succinctly, I'm a Reaganite, right? The scariest words in the English language are, I'm from the government and I'm here to help. Private enterprise can do this. It could be done, right? But we've got to make a decision about the standards we're willing to adopt. Now, we are doing our level best to create an environment. It's our freight exchange, where a motor carrier shows up and a freight broker shows up, and they're playing by a set of rules.

Okay.

We've done this in banking. Banking fraud isn't gone. People are still trying to do it. If you look at, like – Banking has solved this to a large part.

I was actually going to bring that up, because you brought up health care and finance before. Clearly, if there's bad actors in any industry, it's going to be in all industries. Maybe they just don't have the Van Hagar lost tequila, like we have in this case to bring attention to it. Yeah, to your point, people have got to be attacking the financial industry left and right. That's where legitimately the money is.

It's constant, right? We saw that coming out of savings and loan crisis. We saw that coming out of when you look at where did Stripe and Plaid come from, right? That was born from the financial crisis, right? It was born for a greater need for identity and transparency. This is a solvable problem. It's a solvable problem without –

That's great to hear.

- abdicating ourselves to a surveillance state. This is a solvable problem. Look, and here's what I would tell you, Patrick. I am convinced the problem will be solved. I think it will be solved and, therefore, consolidated to those brokers most willing to adopt standards. I think you're going to see a lot of freight consolidate out of an away from brokers that don't want to adopt certain standards.

I mean, that makes sense. At a certain point, you want to take less chances. As an industry, if you're moving that way, then as a carrier or broker, you need to prove to people that you are putting the steps in place, and they have less chance of going through something like this when dealing with them. Then, I assume, there's a cost associated with that, like anything. But compared to the cost of lost goods, lost trust from somebody expecting you to get shipments from A to B, it's got to be worth it, I would assume. Just like, why we pay for insurance, why you get health care, and everything like that.

Yeah. We're starting to see businesses grow, right? Some customers are like, “Wait a minute. I actually get more business now, because I use Highway. Shippers trust me more.”

You've got a better grade on that checklist now.

Yeah. I had some carriers a couple of years ago. Because look, we ask a lot of carriers. We do. We ask them to live in a transparent fashion, and no one's asked them ever to live in before. We take that really seriously. We're governed, right? We're NIST compliant. We have a SOC2. We have all this, you know what is it? PIT, whatever it’s called.

Certifications, yeah. Protecting all of that. Yeah.

Yeah. We have to live out all that, right?

For sure.

Early, when carriers didn't understand the gravity of the situation, because small carriers are operating in their own world. They're pissed off at me. I go to insurance conferences and they're like, “Oh, man.” Then, there's a group of dudes that run – There are three different carriers, but they're friends and they run together. I see them at conferences, and I see them coming toward me at a conference a couple of months ago. I think, “Oh, man. They're coming for me again.” Because I spent collectively three hours with these dudes at a conference explaining this to them. I see them coming across the room, Patrick. I'm like, “Oh, man. What do they have for me?” They all thanked me.

They were like, “Hey, man. We were really hard on you when we saw you last year, because we didn't understand. Now, we actually get more business because of the way we show up in the highway. Brokers are actually reaching out to us to give us more business now.” I immediately had this like, huh. A, they're not going to beat me up. B, it's like okay, it's finally starting to work. We're finally getting back to some business fundamentals and away from the drunkenness that was COVID.

Yeah, because that lingered for a while, the wild, wild west feel of that, the follow-up of COVID, of hey, we made all these profits. Let's go after it, and let's see how we can do it again, or figure it out. We've got all these people willing to move things who were trying to make money in COVID, trying to figure out how they're going to keep that carrier alive, or keep that brokerage alive after that golden goose was there.

Yeah. One of the things to think about post-COVID too is you'll see old dogs like me sounding off on LinkedIn about relationships, and especially guys that are agents, or that run their own small business, and everything's about relationships, and if you're just smart enough, and that's true for that guy. It's true for that small business. The hundreds and thousands of people that were hired in COVID, that were not taught to freight broker the way I was taught to broker, they literally have no concept of that. I see it every day.

This is confessional.

That we hire armies of employees that do not think that way. Just because they weren't, they didn't come up in that, right? Patrick, think about it.

Yeah, you can't count on that relationship. You can't count on the relationship being as important to everyone at your brokerage, or everyone doing it as it might be to someone you like said an OG who knows that when you shake hands with someone looking across the table, you know how it's going to be, because that's not the world anymore.

Yeah, it sounds good in the comments, and it gets a lot of likes, and it's fun. But practically, it's a great, great. I'm glad you're having fun in the comments section. Meanwhile, there's companies that hired hundreds of young professionals that don't have a box for what we're trying to explain to them. But Gen Z, right? They're great at adopting technology.

I was just going to say, technology becomes the new relationship.

They want to go fast, they do want to be thoughtful. It is a thoughtful generation.

They'll press the buttons to get Netflix on the TV. They'll do the authentication.

They understand it, right? If you can put an elegant solution in place, they will adopt it. Just screaming about what it was like to walk to school in the snow with your sister on your back it doesn't do anything but make the comments section happy. You know what I'm saying, Patrick?

Yeah. No. I think that's a great point to where we'll – I'll get a last shot from you to end this conversation. But yeah, the world is continuously changing. Logistics is built on that chain, has profited from it, and needs to continue to learn how to grow, because it's not the same way. It's not people in notebooks who are making calls to the same people they've been using for the past 20 years. It's, like you said, it's people who got hired during COVID who have never touched logistics in their lives, using software that didn't exist more than five years ago, and moving probably more goods than a lot of the other times they were before. What's with all of this? As we talked about, we've now have a big headline that actually brings attention to double brokering. As Michael, as Highway, what's your message in a succinct, bullet point way, as we're walking out of this, to anyone that saw this headline, or thinks it's maybe scary, or how do I stop this from happening to me? What do you have to say? Use my platform.

Yeah. Thank you. It all starts with carrier identity, is a tagline that we released three years ago and today. We've got a successive product journey that starts with identity. It goes to load level compliance, and it ends in our trusted freight exchange. The exchange doesn't work without identity. It all starts with identity. Only Highway has the unique blend of the digital and physical footprint to be able to tell you what carrier’s capability, who they are, in some cases, their intent if it's about to break bad. You cannot neglect identity. Cannot.

Michael, thank you so much. Anyone still listening, or watching, like he just said there, it's not just the technology, it's not just the human element. It's the process, the culture, and like you said, the decision. Are you going to be – is fraud going to happen? If you want that answer to be no, if that's the answer you're putting to it, I think you need to go talk to Highway, whether that's Michael directly, or Mike. Michael, what's a good website, or place they could go?

Yeah, highway.com.

There we go.

Somebody talk to talk to. There’s army of people just waiting to talk to you.

There you go. This has been Patrick Escolas with another Banyan Technology’s Tire Tracks Podcast. Make sure to give a like, follow, subscribe, whatever the kids say nowadays. But hey, thanks for listening. Thanks for watching. We'll be back to you with the next one. Thanks, Mike.

Thanks, Patrick.