Double Brokering: What It Is and How It Affects the Freight Industry
Double brokering is a deceptive and harmful practice that has serious consequences for everyone involved in the trucking and logistics chain.
What is Double Brokering?
Double brokering happens when a load that has already been assigned by a broker or a shipper is re-brokered or reassigned to another carrier or broker without the knowledge or consent of the original parties. This creates a complicated web of responsibility and communication breakdowns that can lead to significant issues.
Examples of Double Brokering
– A freight broker assigns a load to a carrier, but that carrier then passes the load to another carrier without informing the broker.
– A shipper hires a carrier, but the carrier reassigns the load to another carrier without the shipper’s knowledge.
– A shipper assigns a load to a freight broker, who then reassigns it to another broker or carrier without consent.
How Double Brokering Harms Carriers
Payment Issues: Carriers often face difficulties receiving payment when double brokering is involved.
Load Challenges: If issues arise, resolving them can become a nightmare, with no clear party responsible.
Carrier Trust: Double brokering damages trust and disrupts the smooth operation of the freight industry.
Risk of Blacklisting: Carriers involved in double brokering may be blacklisted, making it hard to secure future loads.
Risk of Claim Denial – In the event of a claim, the insurance company will look at the Bill of Lading to determine who released the load. If the BOL doesn’t match your information, you are at risk of the claim being denied and you owe out of pocket.
How to Avoid Double Brokering
Vet Your Partners: Always work with brokers and carries that have a proven track record and good reputation. Use industry databases and reviews to verify legitimacy.
Clear Contracts: Ensure that contracts explicitly prohibit re-brokering without written consent from all parties involved.
Stay Informed: Educate your team on the signs of double brokering and keep up with industry news to be aware of common scams.
Double brokering is more than a nuisance—it’s a serious threat to the efficiency and financial stability of your operations. To safeguard your business, it’s crucial to work only with trusted and vetted brokers. Stay vigilant, know who you’re working with, and always verify agreements to avoid being a victim of this harmful practice.
Have questions or want to learn more? Reach out to Marquee Insurance Group for expert advice and tailored insurance solutions.
