Double brokering happens when a load is handed off to another trucking company without the shipper being told. It’s against the rules and becoming more common because of tough market conditions. Sometimes, it’s due to poor planning or miscommunication. Other times, it’s done intentionally to make money dishonestly – and that’s where things can go very wrong.
In the second quarter of 2023, 85% of freight brokers and carriers surveyed claimed to be affected by double brokering.
The money lost was serious. Over half (56%) of businesses lost up to USD 50,000, while 18% lost between USD 50,000 and USD 150,000. Another 10% had to deal with losses between USD 150,000 and USD 500,000, and 1% lost even more than USD 500,000.
Being aware of double brokering is the best way to protect your business. This article explains what it is, why it’s happening more often, how to spot it, and what you can do to avoid it.
What is Double Brokering?
Double brokering occurs when a broker or carrier gives a load to someone else without informing the shipper. Usually, a shipper hires a broker, who is supposed to arrange for a carrier to move the goods. If this broker or carrier passes on the job to another party without asking the shipper first, it’s called double brokering.
The following situations count as double brokering:
● A carrier agrees to a job, then gives it to a different carrier without confirming the swapping action with the original broker.
● The second scenario is that a broker hands over a job to another broker without letting the shipper know.
You should not confuse this with co-brokering, which is a legal activity. In co-brokering, all parties are well informed and agree in writing on how to handle the job. Everyone knows which party will move the goods, and they share the fees evenly.
How to Detect Double Brokering?
Things you must do and know to spot the signs of double brokering:
● Thoroughly check the entire freight shipping paperwork, especially the rate confirmation and bill of lading, to see if your load has been passed on.
● Watch out for words like “subcontracted” or “transferred.”
● You must also confirm that the carrier listed in the booking is the same as the one picking up the goods. If you find more than one broker or carrier name, it’s a red flag.
● Talk to everyone involved in the process and recheck the details. It’s better to check twice than risk your load being double brokered.
What Makes Double Brokering So Widespread?
There are three usual reasons why double brokering happens:
- Too Much Work, Not Enough Trucks
Some carriers take on more loads than they can handle, hoping to grow fast. When they realise they don’t have enough drivers or trucks, they quietly pass the job on to another carrier. This can be handled properly if they tell the shipper and broker first. If they don’t, it’s illegal.
- Brokers Trying to Cover Shortfalls
Some brokers can’t find the right carrier in their network. So they send the job to another broker, hoping the shipper won’t find out. Again, it becomes illegal if the shipper hasn’t agreed to this.
In both cases, if people are not upfront about what’s happening, it puts everyone at risk.
- When It’s Done on Purpose
Some dodgy brokers and carriers use double brokering as a scam. They sign a contract to move the load themselves and then give it to someone else to carry for less money and keep the difference. In some cases, these types of brokers/carriers even take the money and disappear. The carrier is left unpaid, and the shipper is stuck.
Thus, if you’re going to pass a job on, you must have the shipper’s written permission. Anything else is illegal and could land you in serious trouble.
The Real Costs of Getting Caught in Double Brokering
In a 2023 survey, 78% of freight professionals acknowledged that double brokering is a widespread problem. Here’s how this common phenomenon impacts you:
- Damage to Your Name
It can ruin your reputation if you’re seen as being involved in double brokering, even by accident. You could lose your licence or find yourself blacklisted by reliable brokers and shippers if it happens.
- Money Problems
If the freight is passed around without the proper process, it’s hard to tell who moved the load. Because of such messed-up situations, the goods could be damaged or late. Hence, the carriers may not get the payment, particularly if they don’t have a contract with the original broker. The carrier will never see a penny if the broker disappears with the money.
- Insurance Trouble
If something goes wrong, like an accident or lost load, the carrier may not be covered. Insurance companies will not pay out if the job wasn’t agreed upon correctly.
How to Prevent Double Brokering?
Let’s introduce you to some productive ways in which you can save yourself from the adversity of double brokering:
- Work With Trusted Carriers
You must always move your freight through a reputable carrier. Look deep into who you’re working with and learn about their work and reputation in the market. Ensure they are properly insured and have a worthwhile track record. Don’t make a hasty decision or rush into partnerships without doing your homework first.
- Keep an Eye Out and Speak Up
Many reports show that double brokering schemes cost the industry between USD 500 million and USD 700 million annually. So you must keep a check to prevent this menace.
Determine if there’s anything unusual in the contract or the carrier’s other aspects. Ask questions if a new driver shows up or if the truck details don’t match. Check the vehicle number and ask the driver who they’re working for. Turn on tracking to confirm the driver is near the pickup point. Take immediate action if things don’t seem right. You can cancel the contract and switch carriers.
- Go Slow With New Carriers
It could be that you just started your business and are sending freight for the first time, or you may be working with a new carrier. You must give this carrier smaller jobs, as you’ve never worked together before. It will allow you to assess their performance and tell you if you can trust the carrier in the future with high-value loads.
- Adopt Smart Tools
Tools like an advanced tracking system can give you full visibility into the shipping process. You can see where your shipment is at every moment and also other related details. If there is any problem, like delays, at any point, you can catch the issue right there and look into the matter. The live status updates let you fix or spot unusual activity immediately before it gets to the point of irreversible damage.
How Shiprocket Cargo Helps You Avoid Shipping Risks
Your freight is in the safest hands with Shiprocket Cargo, as your loads get handled directly and carefully. There’s no worry about it being passed around. You stay in complete control of your cargo throughout the journey with full tracking and support, which makes your shipments more secure.
You can track your shipment in real time, speak to our team if anything feels off, and avail clear updates. With straightforward and honest communication, we help reduce the chances of your load falling into the wrong hands or getting caught in double brokering.
Benefits that we offer:
● Wider reach with 24,000+ pin codes covered across India.
● Digitised B2B logistics with 14 carriers to help you optimise your supply chain.
● Real-time tracking to monitor shipments from order placement till delivery, with live status updates via email and SMS.
● AI recommendations provided through our AI-powered shipping platform to select the best courier partner.
● Affordable PTL/FTL/LTL cargo rates to help you cut your shipping costs.
● Round-the-clock customer support whenever you need it.
Conclusion
Double brokering is against the rules and can seriously hurt your business. It happens more often than people think, both by accident and on purpose. Either way, the risks are the same.
Ensure you always let the shipper know if you will hand a job over to someone else. Get their written permission and stay transparent. This helps you avoid problems, keeps your name clean, and protects your business in the long run. Moreover, reliable shipping companies like Shiprocket Cargo can support you in this journey, taking the burden off your shoulders and safeguarding you.
