Summary: The New York Times wrote an interesting piece on how a shipment of rare Kit Kat bars were hijacked by a scammer who fraudulently claimed to handle port logistics and offered very competitive pricing. Shippers should:
- be aware of who you contract with
- minimize risk
- take precautions to ensure cargo reaches the final destination.
Bottom line – you tend to get what you pay for.
WOW – let’s start with I had NO IDEA that Kit Kat bars could be ‘rare’. For Business and Supply Chain professionals, particularly those who handle specialty cargoes, the bigger picture is deeper in the story.
The story behind a “not so sweet deal”
A specialty importer of Japanese treats contracts a container of rare Kit Kats to be shipped from Japan to the USA. Upon arrival to the west coast, the container was shipped to a warehouse in CA, a temporary storage facility. The importer made arrangements for a non-asset broker to hire a trucking company to move the cargo by truck to New Jersey. The shipment, however, never reached the destination in NJ.
The non-asset broker made trucking arrangements with a scammer who only moved the freight from one warehouse in CA to another warehouse in CA, hoping to be paid for a cross country shipment. Once the broker figured out he was being scammed, and located the cargo, the broker used a second trucker to move the cargo from CA to NJ, only to be scammed a second time! Meanwhile, the load of kit kat bars sit in a storage facility, of no use to anyone.
What is the difference between Asset-based Trucking Companies and Non-Asset Truck Brokers?
A “Non-asset broker” is a company who ‘owns no assets’ (IE: trucks), and instead contracts with one of the many thousands of smaller companies who do own trucks. Larger brokers will have contracts written and signed with the companies they work with and use a vetting process for each and every asset based trucking company. Smaller brokers may not have contracts or a vetting process. Smaller brokers often offer lower pricing or shorter time frames making them an attractive, but riskier options.
Non-asset brokers make money on the gap between what a company will pay for shipping a load and what a trucking company will charge for the same load. This is compared to asset-based trucking companies who own trucks and make money on the difference between the cost of operations and the revenue generated from what a shipper is willing to pay.
Risk Management
This whole story, as crazy as it is, underlines the importance of knowing who you are dealing with. One way to reduce the risk is to work with an asset-based trucking company. In that case, the shipper is working with only one entity – the folks who own the trucks.
There are some other basic supply chain principles and procedures that would have helped the players in the story:
- Contract with the cold storage warehouse provider in advance of shipment arrival on the west coast
- Consider shipping the container from Asia directly to an east coast port
- do not unload the cargo when it arrives, but ship it directly to NJ using intermodal transportation – where the ocean container is placed on a train for the cross country move
- Ask your trucking provider what sort of tracking and updates do they provide for material in transit?
Moral of the story
This really boils down to knowing your vendor partners:
- Take the time to understand your vendor partner’s business process and how they manage risk.
- Understand that ‘cheaper’ is not always (actually, rarely), better.
You usually get what you pay for, so be careful not to step over dollars to pick up pennies!
References
- How to Hijack a Quarter of a Million Dollars in Rare Japanese Kit Kats – The New York Times(Please note that you will need a NYT account to read the article)
- Have a Break, Have 55,000 Kit Kats? How $250,000 in Chocolate Wafers Mysteriously Disappeared
Jim Matcham is an independent supply chain and international trade consultant. If you would like further information, or help with your specific challenge, please reach out through our contact form or call .
