In Q2 2023, 85% of respondents to a survey — consisting notably of freight brokers and carriers — were impacted by double brokering.
That financial impact to their spend was steep, with nearly 56% of businesses experiencing a loss up to $50,000 and 18% seeing a drain of $50,000 to $150,000. An additional unlucky 10% experienced costs that ranged from $150,000 to $500,000, and 1% saw a loss greater than $500,000.
These results were among the most telling findings in FreightWaves and TriumphPay’s survey of freight brokers, 3PLs and asset-based carriers on the impact of double brokering. The findings, and potential solutions, were reported in depth in the white paper “Freight’s Breaking Point: The Double Brokering Dilemma.”
Double brokering often works like this: A broker posts a load to a load board and assigns it to a carrier who then re-brokers it to another carrier without informing the other parties involved. The first carrier makes money by double brokering the load for a lower rate. Often, the second carrier is never paid for the load, resulting in a financial loss for the original carrier.
The impacts of double brokering are felt by carriers and brokers alike, disrupting operations and causing financial and liability risks for everyone involved. It is estimated it affects between $500 million and $700 million in freight annually.
Because of how widespread and devastating double brokering is, brokers and carriers are alert to warning signs. Respondents ranked the common red flags that they believed were the most reliable potential signals of double brokering. Red flags included:
- The inability to contact the carrier or original broker.
- Brokers who don’t want to provide their motor carrier numbers.
- Brokers/carriers who request unusual payment methods.
- Carriers who are unfamiliar with the details of the load.
Carriers and brokers are vigilant about spotting these and other warning signs. Even though more than three-quarters of respondents reported losing money to double brokering last quarter, most respondents feel confident that they can detect the scam. Fifty-seven percent reported a confidence level of 4 out of 5, and 20% reported 5 out of 5, or extreme confidence.
Only 10% of respondents don’t have a systematic way of tracking bad actors. Respondents rely on external databases or industry-shared resources, maintain an internal list of bad actors or have another way of fighting double brokering. One survey respondent said that the company’s process was to “double and triple check paperwork.” While this is a helpful solution at the moment, it’s not a long-term strategy to root out double brokering at scale.
Trust is essential to business relationships in the freight industry, and approximately 72% of respondents agreed that trust is significantly influenced by a broker’s payment process. While “trust but verify” has been the approach for a long time in the industry, transitioning to a “verify-then-trust” approach could be what is needed in an industry fraught with double brokering on load boards.
A verify-then-trust method would ensure a broker’s payment practices were rigorously verified before proceeding with a business transaction.
TriumphPay is a carrier payment platform that connects brokers, shippers, factors and carriers. It has partnered with Highway, a technology provider specializing in carrier identity management. Together, they are enhancing the industry’s fraud detection capabilities through a verify-then-trust approach.
This is made possible through TriumphPay’s vast data on freight spending and Highway’s detailed information on carriers and their equipment. These data sets can help identify carriers handling more freight than their equipment would allow, which is a common indicator of double brokering.
Click here to read “Freight’s Breaking Point: Double Brokering Dilemma” for full survey findings and for more possible solutions.