Double Brokering: How to Protect Your Business
by Tommy KeyMarch 4, 2020
How to Protect Your Business from Double Brokering
In the last year, we've seen mid- to large-size carriers shut down at
nearly twice the rate as the previous year. There are several reasons for this, one of the most notable being the
2018 boom and corresponding inflated rates were not sustainable. For veteran drivers, there is a silver lining in this news,
as it's an opportunity for them to run under their own authority. With a strong work ethic, business-savvy truckers have the potential to earn
as much as an engineer, even if they don't have a college degree.
For freight broker agents who may be working with an increased number of smaller fleets, these changes mean it's more
imporant than ever to develop lasting, personal relationships with both new and established fleets. And we all know
that great relationships are built on trust and transparency, so when you're a freight broker growing your book of business,
it's essential to understand the impact that co-brokering and double brokering can have on your customers' trust in you.
What is co-brokering and double brokering?
Co-brokering is a mutually beneficial arrangement in which one freight broker works with another freight broker
to secure transportation for a load they don't have capacity for at that momoent. Both brokers benefit in a co-broker
agreement, which is legal and completely acceptable on the condition that it is transparent. This requires the agreement
you have with your shipper to allow for it and all parties must be informed of their roles and responsiblities in the shipment.
At Nationwide Logistics, we always establish an amicable and official TIA co-broker agreement.
You might want to consider co-brokering if:
- It gives you access to more available resources for meeting customer requests.
- It allows you to expand your list of services.
- You're concerned about having to refuse loads and lose customers.
- You could use support in filling niche needs, like hazardous materials, oversize equipment, bonded freight,
border crossings and local contracts.
- It enhances your ability to respond and grow when new situations and opportunities arise.
Before entering into a co-brokering arrangement always do your due diligence and research the other broker. Your contract should be specific to
co-brokering and outline all expectations of and for the parties involved.
Double brokering is illegal, and it can cost you accounts. Double brokering occurs when carriers book loads through one broker, and then
turn around and brokers it to another carrier. If this happens, you will not be able to properly check that second carrier's credentials to
ensure they are paid. This poses dangerous liabilities such as:
- It's unsafe. You won't be able to verify that the second carrier is qualified and insured, plus double brokering is sometimes used
to hide bad drivers and poor safety scores.
- You'll lose control of the line of communication when problems arise. For example, if a truck breaks down and can't continue, you will
not be able to help fix the problem and get the load back on schedule.
- It is reputation damaging. You won't receive confirmation of the carrier being paid and, if the carrier is not paid, he or she may go
directly to your client seeking payment.
At Nationwide Logistics, we urge all of our agents to make sure they have a process in place to ensure that the right trucks are picking up their loads.
Even though we are in the age of automation, we believe it's critical that you take the time to build and protect your professional relationships,
and having the right broker-carrier agreement in place to protect you from getting burned by double brokering is key. We can help you establish an
official TIA co-brokering agreement, and we'll also always take the time to make sure you have access to a real person who can help you make decisions
that positively impact your relationships with customers. Find out more at
nationwidelogistics.net.