Double brokering is, unfortunately, not a new practice within the transportation industry. Recently though, brokers and shippers have seen a resurgence in this illegal activity and its effecting their bottom line.
What is Double Brokering?
There are a few versions of fraud that are described as double brokering, but the most common way to describe the situation is when a carrier books a load with a broker, then proceeds to re-broker it - or “double broker” it - to another carrier without the broker or shipper’s knowledge. Not only is it illegal, but it can also result in significant costs and mistrust among all parties involved. While all cases aren’t necessarily acted on with ill-intent - a carrier may have over-extended themselves and need help delivering on their contract - most are fraudulent in nature.
How much is Double Brokering costing the industry?
According to the Transportation Intermediary Association, It has been reported that the Glendale gang, one fraudulent group based out of Glendale, California, has double-brokered more than $300 million dollars in freight value alone. According to a recent FreightWaves article, double brokering is affecting upward of $500 million to $700 million in freight across the US.
Additional costs associated with double brokering can be significant. For shippers, it can mean a loss of control over their freight, resulting in delays, damaged goods, and increased liability. In addition, double brokering can lead to increased transportation costs, as brokers may add extra fees to cover their own profit margins. For carriers, double brokering can lead to increased competition, lower rates, and increased liability, as they may be held responsible for any damage or loss of goods during transport.
5 solutions to avoid double brokering
Work with partners you have a relationship with
Strengthen relationships with existing carriers
Build a base of trusted new carriers
Stop posting across multiple load boards
Check for compliance
Work with partners you have a relationship with
One way to avoid double brokering is for carriers and brokers to establish direct contractual relationships with one another. By doing so, carriers and brokers can ensure that they have a clear understanding of their responsibilities and obligations, as well as the rates they will be paid for their services. In addition, establishing a relationship can create more efficient bookings in the future which leads us to our next solution.
Strengthen relationships with existing carriers
You’ve worked hard to establish your carrier base - why wouldn’t you continue to look for more opportunities to work together? Having open lines of communication and a well-established carrier profile can help you understand where and when your preferred carriers are working, allowing you to book more often with consistency.
Build a base of trusted carriers
Another way to avoid double brokering is for shippers and brokers to work with reputable carriers. This can be done by conducting research on potential carriers, including checking their safety records, reputation, and insurance coverage. Using data from the FMCSA can be the baseline for finding a trusted new partner.
Stop posting across multiple load boards
“Posting and praying” is not a strategy, it’s a method that needs to stop. You are immediately at risk for double bookings, not to mention, broadcasting your data across the internet for competitors to scrape and use. Use a platform like FreightFriend that allows brokers and carriers to share information with only those they trust - allowing for quick bookings with trusted partners.
Check for compliance
Finally, make sure carriers are compliant. This includes:
Verifying insurance
Verifying the MC on the truck with the driver before loads are booked
Checking for inspections. If the carrier doesn't have any inspections in the state they are hauling for it's a sign that is associated with double brokering
In conclusion, double brokering is a serious problem in the transportation industry that can result in significant costs and risks for all parties involved. However, there are steps that brokers can take to avoid double brokering, including establishing direct relationships with carriers, working with reputable carriers, and using technology to improve visibility and efficiency. By taking these steps, carriers and brokers can help ensure that they are providing the best possible service to their customers while minimizing the risks associated with double brokering.
Ready to learn how FreightFriend can help you avoid double brokering? Sign up for a demo here.
