USA Truckload Shipping Logo

What is Double Brokering in Freight?: A Guide for the Transportation Industry

Resources > What is Double Brokering in Freight?: A Guide for the Transportation Industry
Learn more about double brokering and how this fraudulent practice is hurting those in the freight industry.
What is Double Brokering?   |   Impact of Double Brokering   |   Double Brokering Examples   |   Co-Brokering vs Double Brokering   |   Frequently Asked Questions
Published: July 20, 2023
Last Modified: December 12, 2023
Author: Josh Kimble

Double brokering is a fraudulent and unethical practice wherein a shipment is contracted out to a second motor carrier without the knowledge or consent of the shipper. But how does this deceptive practice occur and what impact does it have on the freight industry?

According to the Transportation Intermediaries Association (TIA), double brokering occurs when a broker accepts a shipment, and then tenders that shipment out to another broker, rather than overseeing the transport of the shipment themselves. This leads to significant fraud risk, increased costs, and a lack of transparency.

We’ll discuss double brokering at length and what it means to carriers in the freight industry.

A shipment moves down the highway after being double brokered.

What is Double Brokering?

Double brokering is a practice within the freight industry where a broker, who has initially secured a shipment from a shipper, subcontracts the same load to another broker without the explicit knowledge or consent of the shipper. Essentially, it involves the introduction of an additional intermediary into the transportation process without proper authorization.

The key players in double brokering transactions include:

  • The shipper
  • The initial broker (known as the first broker)
  • The unauthorized second broker

The shipper contracts with the first broker to arrange the transportation of goods. However, without the shipper’s awareness or approval, the first broker may subcontract the shipment to a second broker, leading to potential complications in communication, responsibility, and accountability.

It’s crucial to emphasize that double brokering in trucking is an unauthorized and deceptive practice. The shipper expects a direct relationship with the broker they’ve engaged, entrusting them with the responsibility of securing a carrier for their shipment. 

When a second broker is involved without the shipper’s knowledge, it can lead to a breach of trust, legal complications, and disruptions in the smooth execution of the shipping process.

A shipper gets frustrated after finding out that their freight broker got caught for double brokering.

The Impact of Double Brokering on the Trucking Industry

The rise of double brokering has led to a number of consequences for those in the freight industry. That includes an impact to honest brokers, carriers, and the shippers themselves.

Economic and Operational Disruptions

Double brokering has significant economic ramifications for all parties involved in the freight transaction. 

  • Shippers may experience increased costs due to added layers of intermediaries, leading to higher overall shipping expenses. 
  • Carriers face potential payment disputes and delays, impacting their cash flow and operational efficiency. 
  • Third-party logistics providers (3PLs) may see a tarnished reputation and increased liability if they inadvertently engage with double-brokered shipments.

Operational disruptions resulting from double brokering include miscommunication, delays, and increased risk of cargo damage. As shipments pass through multiple brokers, the lack of direct communication between the involved parties can lead to confusion regarding delivery timelines, special handling instructions, and other critical details.

It also leads to a lack of accountability, making it difficult to identify the party responsible and properly handle situations when things go wrong. This lack of coordination can negatively impact the overall efficiency of the supply chain and lead to serious liability concerns when a shipment is delayed or cargo is lost or damaged. 

Because of the additional intermediaries involved, shipping involving transportation fraud can lead to inflated prices, reduced profit margins for shippers, and an increased price of goods for consumers.This practice is currently on the rise which means the likelihood that shippers will encounter issues resulting from fraudulent freight movement will only increase. We’ve included some data to show how cargo theft has been on the rise, partly due to an increase in double brokering.

Quarterly Theft Activity (2021-2022)

Quarterly Theft Activity 20212022Theft Increase YoY

Provided by CNBC

According to Scott Cornell, the transportation lead at the insurance company Travelers, there was a 100 percent increase in double brokering between the 4th quarter of 2022 and 1st quarter of 2023. 

TriumphPay, a carrier payments platform, has also stated they’ve encountered numerous incidents of this fraudulent activity caused by this practice. In fact, they’ve claimed that between $500 to $700 million worth of freight can be considered victim to this practice. 

Examples of Double Brokering

There are multiple ways double brokering may occur, but the following examples are the most common. 

Example 1: A shipper contracts with Broker A to transport a high-value cargo shipment. Unbeknownst to the shipper, Broker A, facing capacity constraints, subcontracts the shipment to Broker B without informing the shipper. This creates a complex network of intermediaries and increases the risk of miscommunication.

Example 2: Broker X secures a time-sensitive shipment from a shipper. However, in an attempt to maximize profits, Broker X subcontracts the same load to Broker Y, leading to delays and operational inefficiencies as information passes through multiple entities.

As you can see from example 1, double brokering isn’t always a malicious act – sometimes it results from the constraints on the first broker. But regardless of intent, it can cause communication issues, errors, and is illegal regardless of intent. 

The second example, where the first broker hands off a shipment in an attempt to maximize profits, is a common example of freight fraud, and highlights one of the main issues that people have with double brokered loads.

In the real-world, these cases end up in financial losses and inefficiencies and often involve disputes over payment, damaged goods due to inadequate communication, and overall disruptions to the logistics chain. 

Employees from two freight brokerages communicate about co brokering.

Co-Brokering vs Double Brokering

While these two freight terms sound similar, they are two distinct practices in the freight transportation industry with very different arrangements and implications for the parties involved.

We’ve already been over the definition of double brokering and how it occurs when a freight broker accepts a shipment from a shipper, but then tenders it out to another carrier rather than arranging the transportation themselves. Essentially, the freight is brokered twice, with two separate brokers involved in the process, and it’s done without the shipper’s knowledge.

Co-brokering, on the other hand, is a legitimate and common practice in the freight industry. It happens when one freight broker (the primary broker) collaborates with another broker (the secondary broker) to fulfill a shipment request. In this scenario, the shipper is aware of and agrees to the involvement of the secondary broker.

Co-brokering is typically done when the primary broker doesn’t have a direct relationship with a suitable carrier or when the shipment requires expertise in a specific region or type of transportation. 

The primary broker and the secondary broker work together to find a suitable carrier to handle the shipment effectively. The primary broker retains direct communication with the shipper, and the secondary broker assists in securing the appropriate carrier and facilitating the transportation process.

The key difference between double brokering and co-brokering lies in the level of transparency and consent from the shipper. In co-brokering, all parties are aware of the involvement of multiple brokers and agree to the arrangement, while double brokering is done without the shipper’s knowledge or approval and is generally considered deceptive and unethical.

It is essential for brokers and shippers to have clear communication and trust in their freight arrangements to ensure smooth operations and maintain the integrity of the industry.

Ship with a Broker You can Trust

USA Truckload Shipping, powered by R+L Global Logistics, is a responsible and respected broker in the freight industry. We do not double broker under any circumstance.

With the use of our tracking software Global Vision, you’ll have full visibility of your shipment and complete transparency regarding the transportation of your freight.

Complete a Request for Proposal to learn how you can partner with us for your freight shipping, or fill out a quote for a one-time move. If you have any questions, just give us a call at (866) 353-7178.

Frequently Asked Questions (FAQ)

Q: Is double brokering illegal?

A: Yes, double brokering is illegal in the freight industry. It involves a broker subcontracting a load to another broker without the knowledge or consent of the shipper.

For more information, check out our article on the legality of double brokering.

Q: What are the penalties for double brokering?

A: Penalties for double brokering can include fines, license revocation, and legal action. The severity depends on the regulations violated and the impact on the supply chain.

For more information, check out our article on the penalties for double brokering.

Q: How to prevent double brokering?

A: To prevent double brokering, shippers should work with reputable and trusted freight brokers. Establish clear contractual agreements and vet brokers thoroughly before engaging in transactions.

For more information, check out our article preventing double brokered loads.

Q: How to report double brokering?

A: Report instances of double brokering to the relevant regulatory authorities, such as the Federal Motor Carrier Safety Administration (FMCSA). Provide details, including the names of the involved parties and any supporting documentation.

For more information, check out our article on how to report double brokering schemes.

Leave a Reply

Your email address will not be published. Required fields are marked *

USA Truckload Shipping Logo
© Copyright 2024 R+L Global Logistics

R+L Global Logistics
315 NE 14th St., Ocala, FL 34470

(866) 353-7178