3 Ways to Look for Red Flags in a Brokerage

There are a lot of benefits to working with brokers, but you could risk your time, money and resources by booking loads with brokerages who might be fraudulent, unreliable or inefficient. We’ve put together a few ways you can set yourself up for success.

1. Check the Broker’s Credentials

The Federal Motor Carrier Safety Administration’s website search tool is a great resource for identifying any major risk factors. As you look over the broker’s information, try to answer the following questions:

  • Is the broker’s license valid?
  • Do they have current insurance?
  • Are they registered with the Unified Carrier Registration (UCR) Program?
  • Do they have an active surety bond?

If you can answer “yes” to these questions, the brokerage is most likely in compliance with state and federal regulations, and both legally and financially operational without major cause for concern.

Additionally, you can use a credit service to find credit information on brokers and shippers, including their standard days-to-pay data, authority status, MC/DOT numbers, and other important metrics. Tools like Credit in RTS Pro, an exclusive web and mobile app from RTS, allow you to quickly view the information you need to make the decision on whether you want to work with a specific broker or not.

2. Evaluate Their Process

As a carrier, you know brokers are your lifeline for finding and getting freight from point A to point B successfully. If their process for setup, quotes, booking, payment, etc. is slow or complicated, you might find yourself stuck in the middle of a potentially risky situation.

So, if you’re in the early stages of working with a brokerage, what should you watch for?

  • Communication. Are they easy to contact? When you speak with someone, are they kind, professional, and understanding? Are they clear about expectations before, during, and after load booking and completion? Communication is perhaps the most important part of logistics. If a broker is difficult to speak with, or unclear about expectations, there is a higher chance for miscommunication resulting in load setbacks, payment delays and more.
  • Booking Loads. Are their rates fair and competitive with market rates? Do they provide options for shipment and safety tracking? Are they transparent about lanes, modes and logistics? Booking the load is an important part of the interaction but can be the most complicated part of the process, so look for brokers that make it easy and efficient.
  • Paperwork & Payment. What are the net terms? Do they reimburse lumpers? Are you expected to mail original paperwork for each load, or do they accept scanned paperwork? Do they provide easy invoicing options?
  • Finances. Perhaps the most important part of brokering a load is the financial aspect. If they expect shipper payment in 30 days (or less), but do not offer payment for 45 days (or more), it might be a red flag that they are not financially secure. If they are willing to reimburse lumpers, offer quick pay options for carriers and provide easy invoicing, you can likely trust they will pay on time and make the accounting process smooth.

3. Trust Your Instinct

Overall, the best thing to do is to trust your instinct as you begin working with a broker. If you feel that something isn’t right during the communication and booking process, you are probably right. You know your company better than anyone else, and it is important to be your own advocate to protect your business.

If you’re looking for a reliable brokerage to work with, our partner Ryan Transportation offers over 35 years of outstanding service. Ryan Transportation provides shippers and carriers unmatched benefits and access to a suite of transportation services.