Co-Brokering vs. Double Brokering—What’s the Difference?
Last Updated June 28, 2024
Every now and then, freight brokerage companies or carriers will utilize the services of a secondary freight company to deliver the shipment that they were hired to manage. Sometimes, though, this happens illegally.
When a secondary broker or carrier gets involved in the process, it’s considered either co-brokering or double brokering. But what are the differences between co-brokering and double brokering, which is legal, which is illegal, and what are the ramifications of each from the carrier’s perspective? Let’s take a look.
What Is Double Brokering?
Double brokering is the illegal act of a freight brokerage or carrier passing off the load to a secondary transportation company without the shipper’s consent. When double brokering occurs, the shipper is left completely unaware of a secondary broker or carrier’s involvement.
Why Is Double Brokering Bad?
You might wonder why double broker scams are all that bad if, ultimately, the load is still being transported to its final destination on time.
Well, double brokering is illegal because it puts the carrier at risk of not being paid for their work. For example, if a carrier illegally passes the load off to a second carrier who completes the delivery, the initial carrier could very well pocket the money without doing any of the work.
Additionally, double brokered loads can become uninsured. Therefore, if something happens during the haul, such as an accident, injury, or damaged or lost goods, it can put a carrier in serious jeopardy that could even lead to losing their business.
What Is Co-Brokering?
Co-brokering is completely legal. Similar to double brokering, co-brokering involves a secondary carrier or freight brokerage.
But what makes co-brokering legal?
It’s all about transparency. With co-brokering, the shipper is aware and consents to the involvement of the additional broker or carrier in the transportation process. It can be written into the contract, meaning no laws are broken. Because of this, the carrier is not at risk financially or liable for any potential damages, accidents, or injuries throughout the process.
Co-Brokering vs. Double Brokering—What’s the Difference?
There are only a few differences between co-brokering and double brokering, but those differences are critical. To recap, here’s what you need to know about the two:
| Co-Brokering | Double Brokering |
|---|---|
| Is legal | Is illegal |
| Shipper is aware of another broker or carrier’s involvement | Shipper is unaware of a second broker or carrier’s involvement |
| Carrier not at risk of non-payment and the load remains insured | Carrier is at risk of non-payment and the load can become uninsured |
In-Summary: Co-Brokering vs. Double Brokering
If you’re just entering the trucking industry—whether as a company driver, carrier, shipper, or broker—your first step should be learning how everything works. To do so, you’ll want to gain an understanding of various terms and situations just like what you’ve learned about in this article—co-brokering and double brokering.
Hopefully, you can take what you’ve learned about these different legal and illegal strategies used by certain brokers and carriers to help protect yourself and your peers in the trucking industry.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
