When shipping goods around the globe, sometimes they just don't travel from Point A to Point B. Sometimes, they travel on more complex routes with various stops along the way. This process is called transshipment. But what is transshipment, and how does it impact t he supply chain? Let's break it down simply below. What is Transshipment? Transshipment is like taking a bus: You transfer at a station to another bus before reaching your final stop. It's a process where goods are moved from one vehicle or ship to another at a midpoint location. Goods don't move directly from their origin to the final destination ; they have to reach a port or airport, unload them, and then again load them onto a new vehicle or ship . Suppose you mailed a package from a small town to a distant country. Your package may travel to a big city's airport, get transshipped onto a larger plane, and then reach another airport where it's loaded onto a truck. The ...
What is Double Brokerage and How to Avoid It?
Double brokering, in the context of a logistics company, occurs when a carrier accepts a load from a shipper or broker, and then, instead of handling the transportation themselves, they transfer the load to another carrier. This means the original carrier acts as a broker and subcontracts the job to a third-party carrier.
In this blog post, we will explain in detail what double brokering is, how it works, what are the risks involved, and how you can protect yourself from it.
What is Double Brokerage?
Double brokering refers to an unauthorized reselling of a freight shipment by a transportation broker or carrier to another carrier without informing the original customer. Essentially, double brokering deceives parties in the transportation chain.
For example, if shipper X has given a load to carrier Y who further gives the load to another carrier Z without the knowledge of shipper X, then it is double brokerage. In such cases, shippers are at risk of their load being mishandled while the original carrier who transported the load may not be paid for their work.
How Does Double Brokerage Work?
Double brokering is typically done to earn extra profit instead of transporting the load as contracted. It usually starts with a perpetrator posing as a genuine broker or carrier and getting assigned a load by a shipper after usual verification checks. The fraudster then uses the load details and shipping documents to repost the shipment at highly discounted rates without the shipper's consent.
An unsuspecting second carrier gets booked for the same load by the fraudster and handles the actual hauling. However, after delivery, the original shipper ends up paying the fraudulent middleman who disappears without fulfilling either carrier payments or paperwork responsibilities.
This leaves the hauling carrier unpaid and the shipper with cargo delivered but no control over the process, potentially violating contracts and service guarantees established with their own clients.
How to Avoid Double Brokering?
Double brokering can be avoided by taking proactive steps to validate brokers and carriers before signing contracts. Check their company history, registration status, online reviews and testimonials to gauge reputation.
To avoid the complications associated with double brokering, shippers, carriers, and brokers can take the following preventive measures:
Vet brokers and carriers: Check the credentials and reputation of the brokers and carriers you work with, using online databases, references, or reviews to ensure you work with genuine logistics company in the US.
Contract clarity: Make sure the contract explicitly states that sub-brokering is not allowed without the shipper’s consent, and that the payment terms and conditions are clear and fair.
Verification: Confirm the identity and authority of the brokers and carriers you work with, using phone calls, emails, or other methods.
Communication: Maintain regular and open communication with the brokers and carriers you work with, using tracking systems, invoices, or receipts.
By thoroughly screening transportation partners, maintaining transparency in operations through technology integration and staying continually engaged throughout the shipment lifecycle, shippers and brokers can minimize double brokering risks.
Conclusion
Double brokerage is a serious issue in the logistics industry, affecting operations and causing financial and liability risks for everyone involved. It can harm the interests and reputation of shippers, carriers, and brokers. By understanding what double brokering is, and how to avoid it, you can protect yourself and your business from this fraudulent practice.
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