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How and Why Carriers Avoid Double Brokering

How and Why Carriers Avoid Double Brokering | The Road

If a freight broker tenders a load to one carrier, and that carrier turns around and assigns the load to another carrier, that is called double brokering. Even if the first carrier has brokerage authority, it’s not okay to tender the load to another carrier without the original broker’s consent.

Additionally, when the first carrier does NOT have brokerage authority, it’s never okay to tender the load to another carrier, whether or not the broker permits it.

What does not count as double brokering?

What does not count as double brokering?| The Road

Co-brokering: A freight broker is legally permitted to assign a load to another broker. Brokers will sometimes do this when they need access to another broker’s expertise or other resources, and the shipper doesn’t forbid it. Good brokers will be very careful about their choice of co-brokering partners.

While co-brokered loads are not illegal, some carriers prefer to avoid them. Carriers may worry that those loads won’t pay as well, and/or it will be difficult to maintain clear lines of communication with the broker who’s actually responsible for the load. Also, if the original broker did not conduct adequate due diligence, the co-broker could turn out to be a scam artist.

Running under another carrier’s authority: As a carrier, you’re permitted to assign a brokered load to an owner-operator who operates under your authority. You’re still responsible for the load, just as if you hauled it on one of your own trucks.

Potential risks to carriers

Potential risks to carriers| The Road

If you’re the carrier who actually hauls a double brokered load, you might not get paid. If you’re late for an appointment, the cargo is damaged, or the receiver refuses the load, you may have a hard time contacting the original broker. Remember, that broker is still responsible for the cargo, but he may not even know you exist. Some carriers in this situation have successfully filed against a broker’s bond or appealed to the shipper for payment, but it’s not a sure thing.

How to avoid double-brokering

How to avoid double-brokering| The Road

Check credit scores. To get a better idea of the broker’s business reputation, you can check the company’s score and days-to-pay in your load board.

Verify contact info. Be sure the person on the other end of the phone is legit. Cargo thieves and identity thieves will sometimes pretend to represent a reputable broker or carrier, as a way to gain your trust. Check caller ID, and compare that number to the broker’s phone listing on the FMCSA web site, or look at a reliable, third-party site such as the DAT Directory. If the phone number on caller ID doesn’t match, hang up and call back, using the phone number listed by the FMCSA, and then ask for your new contact by name. If the actual broker can’t verify the person’s identity, don’t accept the load.

Build relationships. When you’ve had a successful interaction with a professional broker or agent, be sure to save that person’s contact info. Then look for opportunities to work together again.

Carriers weigh in

Carriers weigh in| The Road

DAT polled its load board customers, to ask how they avoid double brokering. While most prefer doing business with brokers they trust, they also have multiple strategies for vetting unfamiliar load providers.

Here were the responses, from 230 carriers and owner-operators:

The most popular solution (30%) was to “only work with brokers I know and trust.” When working with an unfamiliar broker, 27% of the respondents “check the credit score and days-to-pay” in the load board.

Many carriers (15%) also verify brokers’ credentials by checking their contact information and authority against FMCSA records, either on the government web site or in a reliable third-party site such as the DAT Directory. Another 3% will check DAT Company Reviews, to see how other carriers rated the broker.

Others (12%) will press the broker or agent for details about the load, to be sure that person is a knowledgeable, competent professional and is not impersonating a freight broker.

Some (4%) of the experienced carriers and owner-operators also “trust [their] instincts” to avoid double brokering scams. Last, but not least, a handful (3%) of respondents commented that they deploy all or most of the tactics mentioned in the poll.

Final thoughts

Final thoughts| The Road

Double brokering is often problematic for both shippers and carriers. Be sure to know what qualifies as double brokering so as to avoid accidentally entering into a double brokering agreement in the future. Additionally, maintaining strong relationships with your carriers creates a trusting bond and lessens the chances of double brokering mishaps.

DAT Solutions is the world’s largest freight marketplace and information provider. DAT Solutions provides data on trends, including a monthly spot market freight index and weekly Trendlines updates. For more information, visit the DAT Solutions website.

Comments

John Jacobson

Good article. We actually spend a fair amount of time in new hire training covering this subject. It would be enlightening to see results from DAT on how the 3PL community responds to the same question in a survey.

7.5.17

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