Due to tighter capacities, freight brokerages are seeing an uptick in double brokering.
What is Double Brokerage?
Double Brokering is the unauthorized re-brokering of a load to another trucking company. This unauthorized activity is a violation of FMCSA legislation and is considered illegal. Additionally, this fraudulent activity leaves carriers and shippers alike exposed and with no way to mitigate any issues with delays.
Why should you be concerned?
When these occurrences happen, there is considerable exposure to all parties associated with the shipment in question because the shipment is potentially now uninsured. Insurance policies are very specific about what is insured to the policyholder. When a shipment is double brokered, the primary or initial party the shipment is tendered to may have insurance. However, the insurance policy is not applicable when the freight is rebooked with another provider outside the policy guidelines. In my opinion, cargo is the least of the concerns. There is no lack of injury lawyer signs on the road today. In the event of a tragic accident, the same company that arranged for the shipment potentially will be held liable for any claims or worse. Sure, the carrier and/or broker that double brokered the shipment will be at considerable risk and have to pay a claim without insurance. The carrier and/or broker would pay the claim outright and protect their client in a perfect world. However, this might not be an option due to the potential significance of a multi-million-dollar claim.
There are two common Prevention Best Practices: Contracting and Carrier Vetting Processes.
Contracting:
Making a transportation agreement contract a mandatory requirement for a carrier to work with a 3rd party brokerage is widely adopted. In addition, the agreement spells out insurance requirements and prohibits double brokering of loads.
Carrier Vetting Processes:
This was eye-opening to me recently when I was going thru onboard training with BM2 Freight. Currently, my team is vetting carriers thru a rigorous process previous to working with a new carrier. Not to mention continuing to monitor current carrier relationships. We do not just rely on the latest digital brokerage philosophy and automate this process. Rather following the multi-step procedures. This may seem extreme for some. Or, if you are like me, you can appreciate this approach. We are a relationship-based service company, and we work hard to be advocates for our clients and protect them. We take great pride in the value this provides to our clients and our own company by being proactive and avoiding double broker occurrences or not working with carriers without current authority or insurance. This is not an easy process, but the results speak for themselves.
Increasing Occurrences in a Tight Truckload Market:
The lack of current capacity today is primetime for double brokering activity. People are scrambling in the spot market to secure necessary capacity, so the desire for those much-needed trucks may be greater than validating the truck and driver on every shipment. Recently I was on the I-80 head East in the great state of Nebraska, and I noticed a retail company’s trailer being pulled by a leased truck. The first thought I had was, “does that driver have the proper insurance and currently have a registered authority with the DOT?” If it was booked thru my team, then absolutely. I would recommend discussing with your current carriers and brokers what steps they are taking to avoid shipments being double brokered.
About BM2 Freight: Family-owned and operated since 2008, BM2 Freight is headquartered in Covington, KY, and is dedicated to providing strategic transportation solutions to customers throughout North America by connecting them with a network of reliable carriers. Service. Communication. Integrity. It’s that simple.
CONTACT: John Graham, (773) 575-1586, jgraham@bm2freight.com
