Double Brokering

What is Double Brokering in Trucking

Double brokering occurs when a freight broker reassigns a shipment they have already contracted to a carrier to another carrier or broker without authorization.
This practice can be considered illegal and can lead to a chain of custody issues, insurance complications, and a lack of accountability​

Is Double Brokering Illegal

FMCSA does not specifically mention double brokering as illegal. However, FMCSA can take action against non-fair or fraudulent practices, which double brokerage can be considered. 
Consequences come in the form of civil penalties* up to $10000 and suspension of the broker’s authority if found guilty. At this point, this practice is considered a violation of FMCSA legislation.
Engaging in or turning a blind eye to this practice can damage a company’s reputation and lead to legal penalties. Compliance with FMCSA regulations and adherence to ethical standards is a key component for the sustainability and credibility of businesses in the trucking industry.
*A civil penalty is a fine imposed by a government agency as punishment for a violation of a law or regulation, typically in non-criminal cases.

Technology and Double Brokerage

Advancements in technology offer new tools to combat double brokerage. Digital brokerage platforms and broker alert websites can enhance transparency and accountability in the freight transportation process.
One of the more famous websites is Freight Broker Alert, where you can stay updated on brokering companies who indulge in this illicit act by looking up an MC or USDOT number.

Risks and Consequences

The unauthorized nature of double brokerage means that the original terms of the contract, particularly concerning insurance, are often breached. In the event of an accident or loss, the shipment might be uninsured, leaving the involved parties exposed to considerable risk. The original broker or carrier, even if not directly responsible for the reassignment, could be held liable for any damages or claims arising from the incident​​.

Contractual Safeguards

To prevent double brokerage, many companies in the trucking industry implement strict contractual agreements with carriers. These contracts explicitly prohibit the practice of double brokering and outline specific insurance requirements. By making such agreements a mandatory part of carrier relationships, companies aim to ensure transparency and compliance throughout the transportation process​​.

Current Trends and Challenges

In today’s fast-paced and capacity-strained market, double brokerage incidents are more likely to occur. The urgency to fulfill transportation needs can sometimes overshadow the due diligence required in vetting. This situation is exacerbated in the spot market, where the demand for immediate capacity can lead to hasty decisions, increasing the risk of double brokering.

External Links

Freight Broker Alert – click here.

Double Brokering: How to Protect Your Trucking Company – Article by KASE Insurance – click here.