In our last blog post on exercising caution with load boards, we touched upon the topic of fraud committed by some unscrupulous entities claiming to be freight brokers – double brokering. While double brokering is not a common problem within the bulk freight brokerage industry, it is something that shippers should be aware of so that they can recognize it if ever encountered.
What is double brokering?
With double brokering, a broker accepts a shipment and then further brokers the same shipment to another broker without the knowledge or consent of the shipper. Essentially, it involves a broker acting as an intermediary between the shipper and the carrier, but instead of arranging the transportation directly, they pass it on to another broker.
Double brokering can create several issues and risks for shippers. These include:
- Lack of control: When a shipment is double brokered, the shipper loses direct control over the transportation process, as multiple intermediaries are involved. This can lead to communication gaps, delays, and potential disputes.
- Increased costs: Double brokering can result in additional fees and charges since each broker involved may add its own margin to the transportation cost. Shippers may end up paying more than they would have if they had worked directly with a freight broker 3PL they know and trust.
- Quality concerns: The involvement of multiple brokers increases the chances of miscommunication, errors, and a lack of accountability. Shippers may face difficulties in tracking their shipment or ensuring that it reaches its destination on time and in good condition.
A recent Wall Street Journal article looked at this problem more closely. It reported that online freight marketplace Truckstop.com saw fraud complaints (double brokering included) jump 400% in the past year.
The situation is so serious that, according to Overdrive reports, five US Senators and three House reps have written a letter to the Department of Transportation Inspector General Eric J. Soskin. The letter urged Soskin to work with the Department of Justice (DOJ) and the Federal Motor Carrier Safety Administration (FMCSA) to “explore a permanent task force policing fraud in brokered and other freight markets.”
The letter includes the following passage directed to the Office of the Inspector General (OIG): “We urge OIG to consider creating a special unit within the Inspector General’s office in consultation with FMCSA and the DOJ to investigate, refer and prosecute cases of transportation fraud in a systematic, concerted manner. Forming a special unit for this purpose at OIG appears to be consistent with OIG’s authority.”
How can shippers avoid fraud?
To mitigate the risk of double brokering, shippers can take the following steps:
- Verify the broker's credentials: Before working with a freight broker, shippers should conduct due diligence and verify that company’s credentials. This includes checking licensing, reputation, and industry affiliations.
- Use reputable brokers: Shippers should seek out reputable and established brokers with a track record of ethical practices. Reading reviews, seeking recommendations, and checking industry certifications can help identify reliable brokers.
- Request proof of carrier assignment: Shippers can ask brokers for proof of carrier assignment, such as a signed contract or a confirmation from the carrier. This helps ensure that the broker is not double brokering the shipment.
- Have clear contracts: Shippers should have clear contracts with the brokers, specifying the terms and conditions of the transportation agreement. The contract should include clauses prohibiting double brokering and providing remedies in case of breach.
- Maintain open communication: Regular communication with the broker throughout the transportation process can help shippers stay informed and address any concerns or issues promptly.
Lean on Bulk Connection for safe and reliable bulk freight transport
For over 35 years, Bulk Connection has helped shippers of liquid and dry bulk materials ship their products safely and reliably throughout North America. We’re one of the few freight brokers that has ISO-9001 certification, which gives our customers further assurance that every single detail of a shipment will be handled in accordance with strict quality protocols. We are also long-standing members of key industry groups such as the National Association of Chemical Distributors (NACD) and National Tank Truck Carriers (NTTC).
Don’t risk your products and your wallet by dealing with unproven vendors. Turn to the trusted bulk transportation experts here at Bulk Connection. Contact us today to get started.