Double-Brokering and Co-Brokering
Today many people in the transportation business believe that double-brokering and co-brokering mean the same thing. This, however, is not true. There is a difference between the two, and it is important for the industry to understand the difference, simply because one can be an asset to your company and the other a definite risk.
The question often arises regarding the legality of accepting a load from a customer and giving that load to another broker for assistance in arranging transportation. Yes, co-brokering is legal and it can be advantageous to have another broker help you cover a load, so long as your contract with the customer does not prohibit co-brokering. It can be beneficial in proving to your customer that your brokerage has resources available to fulfill all of their requests.
In a co-broker relationship, you are there to service a specific need of your customer. Both parties understanding each others functions and responsibilities you are able to use each others resources in order to serve your customer in a satisfactory way and also to make a profit on a transaction that you might have otherwise refused. After all, you’re in business, to profit. If you don’t serve your customer someone else will.
Double brokering on the other hand is a risky situation. In many cases double brokering loads does in no harm, other than reducing profit margins and slowing payments. It does become a real problem, however, when fraud is the intent from the beginning.
There are a lot of fraudulent beings out there. The most common one typically involves an imposter motor carrier who takes a load from a legitimate broker and then re-posts the load on the internet load board at an inflated rate to lure in an unsuspecting carrier to transport the freight. The imposter has no intention of ever paying this carrier they just wait for the evidence of a completed shipment from the true carrier, then the imposter submits its own invoice to the first broker, collects payment and disappears leaving the carrier who actually hauled this load high and dry.
There are ways to protect yourself:
- Make sure the phone and fax numbers match their authority.
- Make sure insurance certificates come only from the issuing Insurance Company.
- Dispatch the trucks yourself, talk to the driver and get as much information from them as possible.
- If you have a relationship with your shipper, ask them to verify the name on the truck.
- Don’t give advances.
- Caller ID. It’s a good way to double check the information they are telling you.
- Check the FMCSA safety record, safety rating, inspections, and anything else that will help you confirm they are who they say they are.
- Ask for references and check them out. It may save you a lot of time and money.
- If you have a contract prohibiting the substitution of carriers and/or double brokering without the broker’s written permission, be sure you do the follow up. Make sure the carrier did as they said they would do.
- There are many carriers who also hold a broker’s license under the same name. Make sure they are hauling loads on their own trucks and not brokering them out.
There are lots of fraudulent people in the world today. You need to protect your company and your customer. Be sure who you are dealing with and make sure you have all of their credentials so that you are not inviting financial disaster.
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