Here at Shaker Logistics, our passion for reliable transportation and logistics is matched only by our passion for our customers. We’re proud of the team we’ve built, one that continues to evolve in order to provide those customers with the resources they need in a reliable, transparent manner.
That’s why we don’t shy away from answering tough questions, and we’ve been getting a lot lately about double brokering, a deceptive, illegal practice undermining the integrity and efficiency of the truck industry. Let’s break it down.
What is double brokering?
Double brokering occurs when a carrier transfers the load they’ve promised to carry to a third-party broker or carrier without the knowledge or consent of the shipper. The consequences impact brokers, carriers, and shippers alike—but the good news is the entire industry is working together to solve the problem.
How does double brokering usually happen?
In a typical double brokering scenario, a shipper seeking to transport goods hires a freight broker to find a qualified carrier. The broker then locates a trucking company, but instead of this carrier fulfilling the haul themselves, they act as a middleman, unbeknownst to the other parties.
This “double broker” then finds a second, unsuspecting carrier to complete the job. The double broker pockets the difference between the rate they charged the first broker and the lower rate they pay the second carrier.
Double brokering has unfortunately evolved beyond mere deception. In some cases, the double broker may be a fraudulent entity posing as a legitimate carrier. This “carrier” then re-brokers the load to yet another carrier, often underpaying or not paying them at all, and disappears with the profits. This leaves the shipper unaware of the situation, the original broker facing issues with the delivery and repercussions, and the final carrier unpaid for their work.
How do the consequences of double brokering differ for everyone involved?
Across the board, for brokers, carriers, and shippers, the most significant consequence is the loss of trust. When double brokering occurs, shippers—rightly so—want to know how something like that could happen, and the safeguards in place to prevent it from happening again. There’s a lot of relationship management that has to happen, which is why the industry as a whole is so focused on working together to stop this.
As for each individual party:
- Brokers have to focus on repairing the relationships with both carriers and shippers. It’s a blow to their reputation—and to add insult to injury, there’s a chance they’ll be responsible for covering the cost of the stolen cargo.
- Carriers don’t get paid for their work.
- Shippers become uncertain who to trust within the industry. They’ve lost their cargo and potentially incur costs to resolve the issue.
What are some of the challenges in identifying double brokering?
It’s important to note that double brokering is different from co-brokering. The latter involves collaboration between multiple brokers, with consent from the shipper, to ensure the cargo is transported efficiently.
That concept actually speaks to why identifying double brokering is so difficult. We live in a world that’s relatively instantaneous, where movies are available on-demand and certain companies promise to deliver your purchases within a few hours or a few days. Efficiency is important, but speed cannot come at the expense of determining if carriers are legitimate.
And even if we slow down to determine if we’re working with an authorized carrier, that’s not foolproof. All carriers operating legally are assigned a motor carrier (MC) number, which identifies them as a carrier who transports regulated commodities for hire. That number tells a broker the carrier is who they say they are. The problem occurs when that MC number is sold to a third-party carrier or broker: It gives the impression a business is established and well-respected, when in fact they’re acting fraudulently.
This is where a central database would be extremely useful, a location where we could track fraudulent companies or individuals/businesses with a history of double brokering. At this time, no such database exists, and we’ve banded together as an industry to push our representatives in Washington to help us create something.
So technology would be a valuable resource to combat this problem, right?
In theory, yes. There are existing technologies in place to review truck locations, check public data, and account for discrepancies. That said, as we get more technologically sophisticated, so do the fraudsters. They’re using similar advancements to find opportunities for double brokering, and for concealing their activities.
Effectively incorporating technology into the fight against double brokering is most useful when it complements the good judgment of an experienced, conscientious rep. Artificial intelligence and other tech are making decisions based solely on the data, but human analysis remains critical.
How are companies supposed to prevent double brokering?
The good news is the entire industry recognizes that double brokering is a serious problem, and we’re working together to solve it. Some proactive measures include:
- Increased transparency and communication. Talking regularly with other brokers, carriers, and shippers will help identify potential double brokering activities.
- Stricter due diligence, especially when establishing a relationship with a new carrier. We’re asking questions about the number of trucks they have, how many miles they’ve driven—basically taking any information they report themselves with a grain of salt.
- Collaboration. Most shippers are happy to work with us to avoid anything happening to their cargo. We’ll provide them with the names of the drivers picking up their shipment as well as the name of the company that should be on the side of the truck. If they don’t match up, shippers will call us to figure out why there’s a discrepancy.
- Strict enforcement and penalties. Regulatory bodies like the Federal Motor Carrier Safety Administration (FMCSA) and industry associations like the Transportation Intermediaries Association (TIA) are taking on a lot of the political advocacy work. They listen to the concerns from the perspectives of all of us—brokers, carriers, shippers—and champion our cause so hopefully there’ll be standardized, severe penalties for double brokering activities in the future.
It’s a team sport.
We’ll continue to fight for stricter regulations, and for a database that will centralize information. But technology will not be effective without human oversight and interaction. That’s why our best strategy to prevent double brokering is to continuously talk to each other. It’s the most effective tool we have to protect our customers’ reputations, as well as our own.
Matt Janeski, CTB
Director of Logistics Services