JOC.com — A potentially dangerous type of freight brokering is on the uptick as capacity tightens, a practice that can expose shippers to liabilities ranging from cargo loss to deadly accidents, third-party logistics providers (3PLs), and truckers warn.
Some use the term co-brokering, which is legal, while others say it is double brokering, which is illegal. Regardless of the terminology, it is the act of a broker giving a shipper’s load to another broker instead of a motor carrier. In the most controversial form, one broker may unwittingly hand a load to a second broker thinking it was booking a carrier.
The difference between legal co-brokering and illegal double brokering comes down to commissions and communication. In co-brokering, the two brokers will split one commission and work as a team to vet the driver sent to the shipper’s dock. The co-broker also often has the blessing of the shipper.
In double brokering, each broker gets a separate commission by lowering the rate to the driver twice to build in two margins. Often the transparency is lacking between the two brokers, and communication between the brokers and the shipper is virtually non-existent.
But with some due diligence and a hands-on approach, shippers can mitigate some the chances this activity will occur with their loads.