Friday, January 24, 2020
In 2019 mid- to large-size carriers shut down at nearly twice the rate as the year
before. There are a few reasons for this, one of the most notable being the inflated rates of the 2018 boom weren’t sustainable. The silver lining in this decline of larger carriers is the opportunity it has created for veteran drivers to finally run under their own authority—and business-savvy truckers with a strong work ethic have the potential to earn as much as an engineer, without relying on a college degree.
For freight broker agents, this means that the balance has shifted to working with smaller fleets. Developing lasting, personal relationships with both new and established fleets is more important to your business than ever. Just like in all things in life, great relationships are built on trust and transparency, and when you’re a freight broker growing your book of business, it’s critical that you understand how co-brokering and double brokering—two common practices with very different ramifications—can impact the trust your customers have in you.
What's the difference between co-brokering and double brokering?
Co-brokering is a mutually beneficial agreement
in which you, the freight broker, work with another freight broker to secure transportation for a load that is beyond your capacity at the moment. In a co-broker relationship, both brokers benefit. This is legal and completely acceptable, on one condition: transparency. The agreement you have with your shipper must allow for it and all parties must be aware of each other’s roles and responsibilities in the shipment. At USL, we always co-broker under an amicable TIA co-broker agreement.
Reasons to co-broker include:
- You can better service your customer with access to more available resources for meeting their requests.
- You can expand your list of services.
- You can profit from loads you would have otherwise had to refuse - your customers won't turn to someone else.
- You can better meet clients' niche needs, such as hazardous materials, bonded freight, oversize equipment, local contracts and border crossings.
- Your relationship with the other broker will benefit you and them - enhancing your abilities to adjust and adapt when new situations arise.
Of course, before entering into a co-brokering arrangement with another broker, you should exercise due diligence and research your potential partners. Then use a contract that is specific to co-brokering and outlines the expectations of and for everyone involved in the transaction.
Double brokering is illegal,
careless and can cost brokers their accounts. Double brokering happens when a carrier books a load through one broker, and then brokers it themselves to another carrier. When this happens, there is no way for you to properly check the second carrier’s credentials and ensure the carrier is paid. This poses a host of liabilities for freight agents, including:
- It's not safe, as there is no way for you to verify that the carrier is qualified to operate and insured. Sometimes double brokering is even used to purposely hide poor safety scores and bad drivers.
- You'll have no control in communication when challenges arise. For example, if a truck breaks down or can't continue, you will be out of the loop in fixing the problem and making sure the load gets back on schedule.
- It can damage your reputation with customers, as there is no way for you to determine if the carrier is actually paid and the carrier may go directly to the shipper asking for payment.
At USL, we urge all of our agents to implement a process that ensures the right trucks are picking up their loads. And, while many tech companies push for automation, we believe it’s the brokers who take the time to build and protect their personal relationships who will prevail. We can help you make sure you have the right broker-carrier agreement in place to protect yourself from getting burned by double brokering. We’ll also always take the time to make sure you have access to a real person who can help you make decisions that positively impact your relationships with customers. Find out more at uslfrieght.com