Double brokering has always been an issue; however, it has continued to rise in today’s market. In Quarter 2 of 2022 to Quarter 1 of 2023, Truckstop, a load board provider, has seen a 400% increase in double broker complaints.
Double brokering can happen when a carrier accepts a load but cannot run the load. To cover the load, the carrier will contact another carrier or owner-operator to get the load moved. Often, this will go unnoticed unless there is an accident or a claim against damaged freight.
Risks for Owner-Operators
There are several risks an owner-operator can face when being involved in double brokering conditions:
- Payment Issues: Owner-operators can have delays or lower payments since the payment terms and rates were agreed upon with the original carrier and were not communicated to the subcontracted carrier.
- Reputation Damage: If a subcontracted carrier does not meet the agreed service expectations or mishandles the load, this would negatively affect the owner-operator’s reputation, despite them not being the ones who directly handled the shipment.
- Liability and Legal Issues: Double brokering can cause legal and liability issues for owner-operators if they do not have contractual relationships with the broker or shipper. This can cause issues when addressing problems related to the shipment, contract disputes, or insurance claims.
- Inconsistent Work: Owner-operators relying on double brokering may see fluctuations in their work since they depend on the primary carrier securing the loads. Having this uncertainty can cause issues with revenue and business planning.
In most cases, the original carrier tries to live up to its commitment. However, this is still considered double brokering and is illegal, according to the Federal Motor Carrier Safety Administration (FMCSA). Another form of double brokering is when a fraudulent carrier accepts a load and then double brokers the load to an owner-operator or carrier. In this case, it is more about deception and theft of revenue. After the load is delivered, the fraudulent carrier will keep the payment for that load, and the owner-operator or carrier that hauled the shipment will receive no compensation.
In both cases, the owner-operator of the freight is not aware of what is going on, which can lead to insurance issues and an increase in theft risks. If an owner-operator or carrier discovers they are on a double broker load, they need to contact the customer as soon as possible; therefore, they can be paid directly for the load, and the fraudulent carrier will not receive anything.