business advice - Autosled

Unmasking Double Brokering in Automotive Transport: A Quick Guide

By: David Sperau, Co-Founder of Autosled

This article was featured on Auto Success and can be found here.

The auto transport & logistics industry has been undergoing significant disruption over the last several years. Supply chain issues have impacted both the retail automotive industry as well as transport and logistics. As the industry transforms, so does the use of not only helpful, but hurtful practices. Transport and Logistics, like other industries, is not immune to fraudulent practices. One such practice that has gained attention over the last several months is double brokering. This article delves into what double brokering is, its legality, consequences for car carriers and brokers, and how to not only spot it, but avoid it.

What is Double Brokering?

Double brokering is a practice where a motor carrier accepts a load with the intention of booking another carrier for the shipment, often posing as a third-party logistics brokerage (3PL). This practice puts all other parties at risk. Shippers lose control of their vehicles and are exposed to liabilities that were never agreed to, transporters don’t get paid, and the broker has to contend with the resulting mess.

In a double brokering scenario, the fraudulent company or individual will apply for a motor carrier (MC) number, use that MC number to book a load with a reputable 3PL, and then, using the documents provided by the 3PL, pose as a different reputable 3PL to pass that load onto a different carrier that will actually haul the freight.

The outcome of this is that the fraudulent individual will either steal the shipment or have the carrier deliver it as promised, only to collect payment from the brokerage and disappear.

Is Double Brokering Legal?

The legality of double brokering is complex. To draw some clear lines around this issue, MAP-21 Laws were enacted in 2012. These laws made it illegal for motor carriers without a proper broker authority from the FMCSA (Federal Motor Carrier Safety Administration) to broker shipments. It is also considered illegal for motor carriers with authority to double-broker loads without the knowledge and consent of all parties involved.

However, there is a legal practice called “co-brokering” where a shipment is passed onto another carrier, but the shipper has first given consent and agreed to the liabilities involved. Co-brokering works if a carrier has more loads than it can effectively manage but only if that carrier also has the proper brokerage authority to re-broker the freight to a different carrier company.

The main difference between co-brokering and double-brokering is that, in the former, the practice is done with the shipper’s knowledge and consent, while the latter is done secretly to exploit money. Double-brokering a shipment is always considered illegal.

What are the Consequences of Double Brokering?

Double-brokering scams, including fraudulent fuel advances, are estimated to cost the transportation industry more than $100 million per year.

For carriers, the consequences of double brokering can be financially devastating. When a carrier unknowingly participates in a double-brokered deal, payment ends up not being received for services rendered. All of their time, labor, and resources that have been invested, including fuel and maintenance costs, go uncompensated. Brokers, on the other hand, must handle both disgruntled shippers and carriers, while spending considerable time resolving disputes. Additionally, both carriers and brokers face damaged reputations by being associated with failed or problematic deliveries, even if they had no knowledge of the double brokering.

Auto dealers are also at risk. When a vehicle is double brokered, the dealer loses control and visibility over the transportation process, leading to uncertain delivery times and vehicle conditions. This can disrupt a dealership’s operations significantly. Stores could have customers waiting for those specific vehicles. Even if they don’t, all dealerships plan their inventory management based on estimated delivery schedules. In the worst-case scenario where a vehicle becomes stolen or totaled during transport, the dealer could potentially face financial loss of that unit.

How to Spot and Avoid Double Brokering

Preventing double brokering requires diligence and attention to detail on behalf of all parties involved. The transportation industry is a complex web where drivers, dispatchers, and everyone in between frequently move from one company to another. Individuals with malicious intent can take advantage of the chaos that’s created by these changes, in order to sneak into even the most robust of networks.

Dealers can mitigate their risk exposure by choosing reputable shipping partners that verify all of their carriers’ information and certifications. Not only will this help avoid double brokering scenarios, but dealers gain an extra level of support if a situation ever does arise.

Staying clear of double brokering is a difficult task for carriers that are trying to move as many loads as possible. Because of that, we’ve included some tips for carriers to ensure that their companies are not engaging with someone that’s impersonating a brokerage firm:

If you’re using a new broker for the first time, there are tools provided by the DOT like SAFER that provide company snapshots to verify information.
Ask yourself, “is the rate too good to be true”? Is it consistent with the lane, or does it seem too high? Scammers will often post loads with inflated prices to secure a carrier, without any intention of paying for it.
If a contract or other documentation has been provided, does it look like it has been altered?
When agreeing to take a shipment, did you speak with an actual person, or was the communication strictly through email or text messages? Have you repeatedly attempted phone calls without success?
Do the email address and web address match (e.g., @ExampleTransport.com and www.ExampleTransport.com)?
If a broker communicates through a free email service like Yahoo! or Gmail instead of a company domain, that is a red flag.

Conducting your due diligence can prevent major headaches as well as thousands of dollars in thefts and claims. Double brokering can be avoided with the right knowledge and vigilance. By understanding what double brokering is and how to spot it, carriers and brokers alike can protect themselves and maintain the industry’s integrity.

Autosled has been changing automotive logistics by combining load brokering with digital tools, allowing verified transporters to safely and securely claim loads with the push of a button. Autosled has a zero-tolerance policy for double brokering and is always on the lookout for ways to improve the industry for transporters and shippers alike. If you need to ship cars or if you’re in the car-hauling business, register for free to start moving your cars safely today!

Check out other recent articles:

10 Easy Ways to Elevate Customer Service In Your Business

by Autosled

By: Marlena Jasso, VP of Operations

1) Communicate Often and Honestly.

This is true for both internal and external interactions. Whether you’re providing updates to your staff, partners, or customers, don’t wait to communicate. Establishing regular dates and times for updates reassures both internal and external teams that their ideas, concerns, or accounts are treated as utmost priorities. It’s far less stressful for everyone when you communicate in smaller, more frequent intervals. Waiting until you have one large resolution (or all of the answers) not only makes the customer wait longer for information, but increases his or her frustration.

2) Mistakes – Ownership and Resolution

All companies are made up of humans and humans have a 100% chance of making a mistake at some point. The good news is that customers know this, so that isn’t the real problem. The problem occurs when companies don’t take accountability for their actions. The same also goes for anyone who is an extension of your company. For example, at Autosled, there are over 11,000 drivers who are not Autosled employees, but represent Autosled to our customers. If one of them makes a mistake, Autosled takes accountability for it – whether it’s a simple typo or a driver running late. Mistakes happen, own them quickly and do your best to rectify them. Nothing is more infuriating to a customer than an employee who won’t acknowledge that the company has failed to meet expectations.

3) Be Human

Empathy is not the same thing as sympathy. You don’t have to sympathize with everyone in order to understand what they are dealing with. Using Autosled as an example, let’s say a vehicle was being shipped as a surprise birthday gift, but the driver gets stuck in a snowstorm in the Midwest. You can’t control the weather, but you can seek to empathize with that customer’s disappointment and frustration. Acknowledging a customer’s feelings can go a long way, even when nothing can be done.

4) Be Professional

This should be the default for every customer conversation but it still warrants saying. Always be professional! If a customer is expressing heightened emotions, maintaining an attitude of professionalism throughout the conversation helps to de-escalate the situation.

5) Listen More Than You Talk

Customers want to be heard. This isn’t possible if they’re spending the entire conversation listening to your staff talk. Ask questions- both for context and clarity. Help paraphrase what they’re saying. Example: “So, if I’m understanding you correctly, your biggest concern is ______. Is that right?” Customers want their point of view to be validated.

6) Under Promise and Over Deliver

Setting expectations upfront is key to customer satisfaction. Always tell people what you can do, and never what you can’t. If you need to double check with a manager or different team at your company regarding an issue, do that before giving an update to the customer. At Autosled, we often check in with drivers personally for status updates. It’s more important to be accurate with your information, than to simply tell the customer what they want to hear.

7) Understanding Various Needs

For the team here at Autosled, this means understanding the needs of both our dealers and our transporters in detail. It’s only from that basis of knowledge that we can work to accommodate both sets of customers. For example, many transporters speak Russian or Ukrainian, which isn’t something we’ve found as common among our retail dealership customers. In order to support our growing transporter network, we hired full-time staff that are fluent in Russian and Ukrainian, amongst other languages. This met a need that was expressed from that part of our customer base.

8) Tailored Solutions

Take the time to understand their individual needs and preferences. Remember, what might work for a large customer may not necessarily be the ideal solution for a smaller business. It’s important to customize your approach and offer solutions that align with their specific circumstances. By focusing on personalization and attentiveness, you can ensure that your clients receive the most suitable care for their operations.

9) Give Knowledge Freely

Embrace a culture of knowledge sharing and collaboration. Recognize that sharing a solution, even if it’s not perfect, can lead to collaborative problem-solving and ultimately provide the best outcome for your customers. It fosters trust, strengthens the relationship, and demonstrates your commitment to their success. Remember, perfection is not always attainable, but through collaboration and transparency, you can work together with your customers to find the most suitable and effective solutions.

10) Be Present

This is just sound advice for all interpersonal relationships and interactions, but it can become the difference between a win or a loss for your business. When interacting with people, answering phone calls or emails needs to wait. True emergencies are an exception, but most phone calls and emails do not fall into that category. Respect the people you are meeting with and the time they’ve chosen to give to you. This applies to internal and external staff, customers and partners. Be present and available so that you both can gain the most out of every interaction.