Even wondered what is meant by double brokering? As capacity changes and some carriers become desperate, they may try to double broker shipments to a cheaper carrier and keep the profit. Or they decide to double broker the shipment at any price to another carrier, pocket all the shipper/broker’s money and shut down the business. Often the broker or shipper will not find out about double brokering until there's an issue with the freight or the payment. Let’s talk about how to prevent it from happening and how to handle it when it does.
What is Double Brokering?
There are many types of double brokering, and it can be done to all kinds of freight. The most common type is when a broker or shipper hires a full truckload carrier with a specific MC number, but an entirely different carrier with a different MC number transports the shipment without the customer’s knowledge or approval.
The Difference Between Double Brokering and Co-Brokering
Double brokering and co-brokering are two concepts that are closely associated with the brokerage industry. The main difference between co-brokering and double brokering lies in the way the transaction is handled. Double brokering occurs when a broker accepts a load from a shipper but then assigns the shipment to another carrier without the shipper's knowledge or consent. This unethical practice can lead to significant problems, such as the original carrier not receiving payment or the shipper not receiving their goods on time. On the other hand, co-brokering is a legitimate practice where two or more brokers collaborate to move a shipment. In this arrangement, each broker has their own respective relationship with the shipper and the carrier. This provides transparency and ensures that all parties involved are aware of each other's roles and responsibilities. Co-brokering is a more ethical and efficient way of conducting business as it promotes trust and accountability within the freight brokerage industry.
Why Do Carriers Double Broker?
There are a couple of reasons why carriers double broker. But the most common one in this market is that the carrier is tight on cash and, therefore, either hires another carrier at any price and just keeps the broker or shipper's money, or the carrier hires another carrier at a cheaper price (a carrier that probably wouldn't pass many customers' vetting processes) and keeps the profit. The latter option is a common scam that goes on in southern California. That scam is driven by “carriers” with no actual equipment that establish a company for a few months, pretend it is a carrier, double broker all the shipments and then shut the company down when they get caught and start a new company doing the same thing again.
Is Double Brokering Illegal?
Whether or not double brokering is illegal depends on the specific laws of the jurisdiction in which it occurs. In some jurisdictions, the practice of double brokering is explicitly prohibited by law, while in others it is not specifically addressed. Even in jurisdictions where double brokering is not explicitly prohibited, it may still be considered a violation of other laws, such as antitrust laws or unfair competition laws. In the United States, double brokering is specifically prohibited by the Federal Motor Carrier Safety Administration (FMCSA).
If you are considering using a broker to transport your goods, it is important to be aware of the potential risks associated with double brokering schemes. You should also make sure that the broker you are using is reputable and has a good track record. If you suspect double brokering is taking place, contact the appropriate law enforcement agencies, such as the FMCSA.
How to Avoid Double Brokering?
By using Carrier Assure, it is easy to avoid those carriers that may engage in double brokering. By avoiding hiring those carriers with an F score (and often the carriers with D scores as well - look for the RED Business Stability box), you can significantly reduce the risk of falling victim to double brokering scams. Carrier Assure uses data analytics to provide informative guidance on how a carrier will perform by analyzing past data. If a carrier has an F score, it may be best to avoid the carrier, or, after completing your normal vetting process, tender an easy, low-value, short hauls shipment to get some experience with the carrier before giving it a more complicated shipment.
Within this industry, it's critical to be hypervigilant and read into what's happening with your brokers and carriers. Being attentive to red flags, building solid relationships, strictly vetting the carrier, knowing your capacity, and staying in constant communication with drivers will allow you to see when double brokering is happening and stop it before any issues occur.
Pro tip: Tell the carrier that upon pick-up, the customer will confirm the MC and DOT information and call the broker or shipper.
Why Avoid It?
Because double brokering happens all the time, some may ask, but what’s the big deal? These are just some of the main reasons double brokering is such an issue at the end of the day:
- No insurance coverage if something happens to the cargo
- Shipment could get stolen
- Broker’s customers become angry when involved in double brokering problems
- The chances of problems occurring increase significantly
- Major delays and service problems usually occur
Double Brokering Red Flags
- When the carrier has a score of an F on Carrier Assure.
- When the carrier has 0 inspections and less than 3 months of authority
- When you’re speaking with a dispatch company, not the carrier
- When the carrier is in Glendale California or has an 818-area code
- Not providing truck driver information like names and phone numbers.
- You call the insurance broker and find out the carrier only has 1 truck, and it doesn’t match the VIN you have on file
- Quick pay and fuel advance. It’s not always bad, but companies must watch out if their carrier is doing it all the time.
- When there is a problem, and the carrier says it was caused by their “owner-operator” which is code work for double-brokering.
How to Report Double Brokering?
If you come across double brokering in the freight industry, it is essential to report it to the proper authorities. To report double brokering, gather all relevant information, such as the names and contact details of the brokers and shippers involved, and any documentation or evidence of the double brokering. Contact the Federal Motor Carrier Safety Administration (FMCSA) or your state transportation authority to file a complaint and provide them with the necessary information to investigate the situation further.
Reporting carriers for double brokering and other problems is crucial to ensure transparency and accountability in the freight industry. Carrier Assure offers a user-friendly solution for addressing these concerns. This platform not only enables you to report issues when they arise but also empowers other users to do the same. By providing a centralized hub for reporting, Carrier Assure plays a vital role in promoting ethical practices and safeguarding the integrity of freight brokerage and transportation, benefiting the industry as a whole.
Avoiding double brokering is critical to providing quality services for customers. But it’s not just on the carrier; it becomes a broker issue when they’re not thorough in vetting and keeping track of their customers’ shipments. In the current market, service to shipped customers is a top priority, which is why every broker is making significant efforts to avoid double brokering.
Are you tired of experiencing double brokering despite all your efforts to avoid the red flags and vet the carriers? We have an easy solution. Try Carrier Assure for free for 30 days! Register for an account on our website and after you login, click on the upgrade button and follow the steps to upgrade your account. When you see the price, use the promo code 30 DAYSFREE. If you have any questions, we are here to help at any time, you can email sales@carrierassure.com.
