As the after-effects of the global pandemic still impact domestic supply chain transportation, trucking is more important to the U.S. supply chain than ever. However, with this increasing reliance on the trucking industry, there is also an equal increase in double brokering, a practice that poses a significant threat to the integrity and profitability of this vital sector. In fact, this illegal practice has cost the domestic shipping industry more than $500 million in a year. So, what exactly is double brokering and why is it detrimental to the trucking industry?
Understanding Double Brokering
Double brokering involves a middleman or broker accepting a load from a shipper and then sub-contracting it to another carrier. The process begins when a shipper entrusts a broker to arrange the transportation of their goods. The broker, instead of fulfilling their responsibility to secure a reliable carrier, opts to subcontract the job to another carrier without disclosing their role as a middleman. The second carrier, unaware of the original agreement, believes they are dealing directly with the shipper.
This deceptive practice often leads to multiple parties unknowingly handling the same shipment, exploiting the lack of transparency and communication between shippers, carriers, and brokers. This could result in a series of problems, such as delayed deliveries, loss of cargo, and damaged relationships between the parties involved. This miscommunication and lack of accountability can also lead to potential fraud, low-quality service, and financial loss.
With the deceptive nature of double brokering, it’s common that the carrier that ends up actually transporting the load hasn’t been carefully vetted and may not meet the shipper’s standards. The double broker may also fail to pay the carrier entirely, creating a completely new issue.
Negative Impacts on the Trucking Business
Double brokering undermines the very foundation on which the trucking business operates, ultimately harming all parties involved.
1. Compromised Quality and Accountability
By introducing an extra layer into the transportation process, double brokering dilutes accountability and makes it challenging to identify who is responsible for any shortcomings, such as delays in shipping or damage to delivered cargo. The lack of direct communication between the shipper and carrier results in a diminished ability to address issues promptly and effectively, leading to dissatisfied customers.
2. Increased Risks
Double brokering increases the likelihood of cargo theft and fraud, as multiple parties are involved in the handling of shipments. Each additional party in the supply chain creates an opportunity for unauthorized access to the cargo, heightening the risk of theft, loss, or damage. Furthermore, as mentioned earlier, double brokering also means that there is a lack of accountability for any such cases, making it challenging for shippers to identify who is responsible for these shortcomings.
3. Erosion of Trust
Trust is the backbone of any successful business relationship, including those within the trucking industry. Double brokering erodes trust by deceiving both shippers and carriers, leading to damaged reputations, strained partnerships, and a reluctance to engage in future transactions. The resulting loss of trust can have long-lasting negative consequences for the overall functioning of the industry and for individual shippers, brokers, and carriers affected by freight fraud.
Combatting Double Brokering
To mitigate the adverse effects of double brokering and safeguard the interests of all stakeholders in the trucking business, a multi-faceted approach is necessary:
1. Strengthening Regulation and Enforcement
Regulatory bodies and law enforcement agencies need to collaborate to enforce strict guidelines and penalties against double brokering. Clear industry standards should be established to deter individuals from engaging in this practice, and regular audits and investigations should be conducted to identify and penalize offenders. In the U.S., many logistic providers as well as transportation associations are aware of the uptick in double brokering and actively working to implement new protocols against it.
2. Enhancing Transparency and Communication
Improved communication channels and technologies should be embraced to facilitate direct interaction between shippers and carriers. By minimizing the role of intermediaries, trust can be restored, and potential risks associated with double brokering can be mitigated. On the side of shippers, they should also do their due diligence to investigate and conduct background checks on their carriers before engaging in their services. Tools like Carriers.FYI can help verify carrier identities and reduce the risk of double brokering.
3. Raising Industry Awareness
Education and awareness campaigns should be launched to inform shippers, carriers, and brokers about the risks and consequences of double brokering. Industry associations, trade shows, and conferences can serve as platforms to discuss best practices, share experiences, and collectively work towards eradicating this unethical practice.
Double brokering undermines the trust, efficiency, and profitability of the trucking business. By understanding the basics of this practice and its detrimental impact, stakeholders can unite in their efforts to combat double brokering. With strengthened regulations, improved transparency, and increased awareness, the trucking industry can reclaim its integrity, fostering a more reliable environment for shippers, carriers, and brokers alike.