In any professional services business, having smooth communication and establishing strong relationships are essential to its success. When contractual agreements are in the equation, they’re more important than ever. If you’re familiar with the logistics industry, you may have heard the term “double brokering”, but what does it exactly mean? We’ll dive deeper into what double brokering is, why it’s not recommended in this industry, and how you can prevent it.
Double brokering is when a freight broker that originally tendered a shipment assigns it to a different freight broker without any knowledge or consent of the party that owns the cargo or original broker. In other words, this happens when the secondary freight broker falsely represents themselves as a carrier prior to accepting cargo from the original brokerage. In this scenario, playing a double agent can lead to disaster instead of a solution.
Why Double Brokering is Not Recommended
Double brokering has the capacity to become illegal when it results in a carrier not receiving payment for its work due to malicious intent on the secondary broker’s part. This can cause contracts or agreements to be broken- allowing for legal action to take place as well as a damaged reputation and removal of any industry licensure on the broker’s behalf. At any cost, double brokering should be avoided in all supply chains as it causes unnecessary confusion and risk.
How to Avoid Double Brokering
Due to the risks that are associated with double brokering, here are some ways you can avoid it in future loads. To start, here are some questions you can ask your intended brokerage agency before signing any contracts:
How do you secure capacity?
How do you vet their carriers?
What steps do you take to avoid instances of double brokering?
How long has this broker been operating?
What kind of expertise/experience do you have?
How many employees does this brokerage have?
What ongoing training do your employees receive?
Along with asking the above questions, here are some warning signs you should keep an eye out for:
Noticing if a broker asks the carrier to check in under a different name than the carrier’s company name.
Check the broker’s information on Safer, FMCSA, or by verifying their information on Google or their company website.
Discovering if the load has an unusually high rate for a basic load.
Keeping an eye out for double brokering will help you prevent it in the future
What to do if a Carrier Unknowingly Hauled a Double-Brokered Load?
If there is a possibility that a carrier unknowingly hauled a double-brokered load, contact the shipper and or receiver as soon as the news is discovered. Normally, the party paying for the freight bill is unaware of the issue. If the person(s) paying the bill hasn’t paid the fraudulent party, they can pay the carrier directly with the proper documentation.
Timely Route Updates- From Us to You!
When working with Lone Star Logistics, you will feel confident knowing we only work with reliable, trustworthy, fully licensed, and fully insured carriers. On an added note, we only work with those that pass our extensive background checks. As a family-owned and operated non-asset freight brokerage, we ensure direct shipper communication is facilitated at the highest level and is continued throughout the shipment process.