Double brokering is a hot topic in the shipping and transportation industry because of how often it happens and how big of an impact it can have on the affected parties. If you’re a carrier, it’s important to know about double brokering and how to avoid it to protect your business.
What is double brokering?
Double brokering is when a load from a shipper or Freight Broker A is accepted by Freight Broker B who then passes it on to a carrier as Freight Broker B’s own load. Usually this is done with the intention by Freight Broker B to increase their own profits or steal the carrier’s pay. In this scenario Freight Broker B accepts the load for a higher amount than they intend to pay the carrier, thus pocketing the difference. Or, they never intend to pay the carrier at all and keep the full amount paid to them by the initial shipper or broker.
What is the difference between double brokering and co-brokering?
The main difference between double brokering and co-brokering is consent by all parties involved. Co-brokering is the legal practice of multiple brokers working in tandem with the original shipper to facilitate transport with a carrier. In a co-brokering scenario, the brokers, shipper and carrier are all aware of the partnership and any commission made off the load is split among the brokers in a fair and agreed-upon manner.
Whereas in double brokering, there are parties who are unaware of the logistics of the load and cannot consent to payment distributions or other important aspects of the load. This forces additional liabilities on both the broker(s) and the carrier involved. As of 2013, double brokering is illegal.
What are the risks of hauling a double brokered load?
As a carrier, you assume the most risk out of anyone involved in a double brokering scam. If you accept and haul a double brokered load, you could experience any or all of the following:
- Denial of insurance claims if there is loss or damage to the load
- Lack of payment
- Extreme delay in payment
- Cancellation of FMCSA authority or blacklisting of your company if you’re deemed involved
How can I avoid double brokering?
While there is no sure way to completely avoid double brokering, there are steps you can take to protect yourself and your business from being negatively impacted by this popular scam.
- Establish relationships with reputable brokers. When you work on building relationships with brokers, you develop trust with them and vice versa. The more you work with a broker and haul successful loads, get paid on time, etc. the more comfortable you’ll feel continuing to haul with them.
- Check the broker’s information. Always look for the broker’s registry on FMCSA to make sure they’re in good standing. You should also call the brokerage directly and verify the load information with them if anything seems off about the details.
- Watch for unusually high or low rates. Rates that fall well outside of market averages signify larger problems with the load and could be indicative of false intention to pay.
- Thoroughly review the rate confirmation and load instructions. When you receive the rate confirmation, make sure to watch for predatory instructions such as checking in under a different carrier’s name, emailing the proof of delivery to a non-brokerage address or altering the load documents in any way.
It’s always a good practice to watch for red flags in any brokerage you work with, but especially for double brokering.
If you’re looking for a reputable brokerage to partner with, RTS customers receive exclusive access to free credit information on 70,000+ brokers and shippers across the nation through the RTS Pro mobile app. RTS customers can also access freight through the exclusive Ryan Transportation load board which can be found in RTS Pro.