Double Brokering seems to finally be getting the attention it deserves, with the topic being discussed across multiple news outlets. But everyone is looking for the golden “get out of jail free card” that will magically allow them to either avoid the situation all together or be able to walk away scot free if it happens to them. You guessed it, this isn’t the game Monopoly, this is a real, serious issue that is becoming more prevalent and deserving of the attention it has been receiving.
Double Brokering is the Illegal act of a broker or carrier transferring a load they were awarded to another broker or carrier for fulfillment without shipper’s knowledge or consent. Consent is the key. It has become more common due to several factors, but often it comes down to a competitive market with slim margins and constantly changing market rates. Some carriers or brokers bite off more than they can chew and accept loads they can’t fulfill. Sometimes, in order to protect the business, they accept the load knowing they can’t fulfill the request because they don’t want to have to admit to the customer (shipper) they can’t fulfill their demand and risk losing future business.
Double Brokering has risks for even innocent parties. Unfortunately, there are bad actors that will take the money and run while leaving the carrier unpaid and the shipper in a bad situation. Many times the shipper will have to pay the carrier that handled the delivery after already paying the broker that ‘dined and dashed’. Other risks that must be considered is denial of insurance claims, blacklisting, and getting bad reviews that will lead to loss of business. Even cancelation of FMCSA Authority could be a consequence. Even so, with the spotlight on double brokering, the lack of enforcement by the authorities is a real problem.
The big question is how to avoid it. For one, relationships matter so stick with those you trust.
- Trust your gut.
- If the rate is too good, make sure you understand why.
- Run background checks and read reviews.
- Using companies like Saferwatch and MyCarrierPackets Assure Advantage can assist you in your carrier vetting and monitoring.
- Review all load paperwork very closely and look for anything out of the ordinary.
- Lean on your partners such as factoring companies to help with background checks.
- Use technology such as DigCargo to provide clear visibility and communication on who is handling the load, all on a trusted platform.
Freight can be covered faster, loads can be found easier, communication is automatic, and no base is left uncovered. That’s why we are continuing to build DigCargo, to provide the best possible digital solution to freight transactions. As always, feel free to reach out and if you move freight then we would love to help make your business be the best it can be. Contact us today for a demo or for more information!