7 Steps to Protect Your Trucking Company from Double Brokering
Double brokering is the unauthorized transfer of a load to another trucking company. Due to freight market volatility, the industry is seeing an uptick in this illegal practice in 2023. Sometimes, double brokering results from overbooking or a lack of communication between fleets and freight brokers. However, as inflation and slowing consumer demand tank freight industry profits this spring and summer, instances of double brokering executed with malicious intent have risen dramatically. That’s causing multi-million-dollar damage to trucking company profits in the midst of already difficult economic conditions.
Double brokering leaves every person in the line of transit at risk in case something goes wrong. With the increasing sophistication and scope of double brokering schemes, trucking companies must be always alert when booking freight from an unknown source. Follow these seven steps to protect your trucking company from double brokering.
7 Steps to Detect and Protect from Double Brokering
The first defense against any problem is awareness. Don’t let your trucking company get trapped by double brokering due to negligence – understand the threat with all its consequences and follow these seven steps to qualifying the broker as legitimate before you manage a load.
Step 1 – Check credit scores
Checking a company’s credit score and days-to-pay information can give you a good idea of a broker’s business reputation. A quality load board will provide this information, as will using a free online credit check tool. Alternatively, the FMSCA website also includes information about brokers that can confirm their good standing.
Step 2 – Verify contact details
Cargo and identity thieves will often pretend to be a reputable business to gain trust. Brokers must be particularly careful not to award a load to a fraudulent broker posing as a carrier. This is a common scheme with the criminal intent to double broker the load. Check the caller ID and compare that number to the company’s identification on the FMSCA website or a reliable third-party website like the DAT Directory. If the numbers don’t match, hang up and call the number listed on the FMSCA website and ask for your new contact by name. If the actual broker can’t verify your new contact, don’t accept the load.
Step 3 – Review the rate confirmation and load instructions
When working with a new broker, it’s essential to check for specific details such as a valid license, current insurance, Unified Carrier Registration, and an active surety bond. Shippers should also beware of red flags that may indicate fraudulent activity, such as:
- Carriers that operate using a different company name or MC number than recorded on the BOL.
- Carriers that send proof of delivery to a non-brokerage email address.
- Any alterations of the load documents.
Step 4 – Watch for unusually high rates
While a high rate is appealing, it may also be a red flag. If a load rate seems too good to be true, it probably is. In cases where an illegitimate broker has no intention of ever paying – offering a super high rate is how they lure in carriers. Additionally, higher-than-average rates often indicate problematic loads in general.
Step 5 – Build relationships
Many carriers only work with brokers they know and trust, and vice versa. Make sure to save the contact information of reputable brokers and carriers you’ve worked with and seek opportunities to work with them again. The more you work with a co-operating industry partner to successfully haul loads, and get paid on time, the more comfortable both sides of the contract will feel about continuing to work together.
Step 6 – Communicate clearly and openly
Effective communication between the shipper, broker, and carrier is essential to successfully transport goods and build mutual trust. When a broker or carrier doesn’t respond quickly, provides vague or incomplete information, or is difficult to contact, it could be a red flag. All parties should be clear about expectations, plus be transparent and responsive during all phases of the haul.
Step 7 – Leverage resources associated with freight factoring to conduct due diligence
Sophisticated trucking companies have learned the extensive benefits of working with a trusted freight factoring company to improve cash flow, save costs, and for protection against fraud:
- Freight factoring converts invoices into immediate cash.
- Trained and experienced collection team members work behind the scenes to improve your trucking company’s accounts receivable management, free of charge.
- Fuel discount programs and other cost saving benefits are available.
- Extensive due diligence resources and services are provided to mitigate bad debt and spot the red flags that can expose fraud.
Double brokering is illegal, unethical, and detrimental to the transportation industry. The practice is becoming widespread in 2023 and can occur inadvertently as well as with criminal intent.
Either way, the verdict may still be “guilty as charged” and going down that road may put your business at risk.
The bottom line is that whether you are taking on another carrier/broker’s load or passing your loads on to someone else, you must ensure that the shipper agrees to the change in writing. When it comes to managing your loads, be thorough, be transparent, and be part of the solution. Anything less puts you at risk of being a part of the double brokering outbreak plaguing our industry. Be aware of the dangers and take precautions to protect your business from double brokering.
How eCapital Protects Your Business Against Double-brokering
eCapital is a tech-enabled finance company with specialized services for the trucking industry. Since 2006 our organization has advanced innovations to provide our trucking customers with more control of their capital management.
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To learn more about how we can help you grow your trucking business, visit eCapital.com
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