How it works
The double brokering process begins with a shipper who has a load to transport. They engage a freight broker, let's call them Broker A, to handle the logistics of finding a suitable carrier to transport the load. Broker A then starts their search for a suitable carrier. This search could be influenced by a variety of factors such as the type of goods to be transported, the destination, the required delivery date, and the available budget.
At times, Broker A might find it challenging to find a carrier that can meet the requirements directly. This is when Broker A contracts another broker, Broker B, leading to a scenario of double brokering. Instead of the traditional broker-to-carrier relationship, there's now a chain involving broker-to-broker-to-carrier.
Reasons for double brokering
There are various scenarios in which people resort to double brokering a load. Here are a few common reasons:
Financial gain: Sometimes brokers or carriers find they’re able to lower expenses by having other parties handle their work, some of whom operate illegally and aren’t properly insured. They increase their own profits, for instance, by using drivers who potentially cut corners to offer cheaper rates than professionally licensed carriers.
Lack of appropriate carriers: In some cases, brokers may simply not have appropriate carriers available to carry contracted loads. This can be due to capacity, timing or equipment requirements, for instance, or rates that aren’t attractive to carriers in their network. In these instances, brokers may decide to engage another broker to find a suitable carrier rather than turning down a shipper’s business.
Carrier capacity: Another reason that could lead a trucking company to double broker a load is if an owner-operator has bitten off more than he or she can actually handle. If they don’t have the ability to actually carry a shipment secured from a load board themselves, they may double broker the load.
Fraud: Other situations can simply stem from people trying to make money quickly and illegally. For instance, some scammers create fake motor carrier numbers, pretending to have trucks so they can secure loads from brokers. They then re-broker the freight to legitimate carriers, and invoice the original broker or request fuel advances before the scheme is discovered. The carriers, who typically have had little or no communication with the shippers (who haven’t authorized the double brokering), sometimes have to fight to be paid.
Double brokering vs co-brokering
Double brokering and co-brokering are two distinct practices in the freight industry.
Whereas double brokering takes place without the knowledge or authorization of all parties, co-brokering is a collaborative, transparent arrangement. It is a legitimate and mutually agreed-upon practice where one broker engages the services of another broker to assist in executing the transportation of a shipment.
Co-brokering allows brokers to leverage each other's resources, carrier networks, and expertise to provide more comprehensive and efficient freight solutions for their customers. It’s legal as long as the shipper consents to the arrangement and the carrier hired to haul the load is also privy to the details.
Explore your options
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