The safety and security of our customers’ freight is paramount at Gebrüder Weiss, and we’re proactively taking steps to prevent one of the latest fraud concerns: double brokering. By drawing on our extensive history of secure international freight forwarding, utilizing industry-leading fraud prevention software, and upholding our focus on dedicated customer service, we’re protecting our customers’ freight from end to end.
Double brokering is on the rise, costing up to $700 million in payments each year, according to industry group FreightWaves. Double brokering and freight fraud can occur in multiple ways:
- Undisclosed subcontracting: Legitimate brokers accept loads from shippers but then subcontract them out to other carriers without the shippers’ knowledge or consent.
- Fraudulent intermediaries: Well-intentioned shippers unknowingly contract illegitimate brokers posing as legitimate businesses and then subcontract out the loads, taking a commission without performing the work. In some cases, neither the shipper nor the carrier may realize they are working with a fraudulent intermediary.
- Cyber scams: Cyber thieves may get a hold of shipping information and then intercept the loads – either holding them for ransom or stealing them completely.
In addition to the financial implications, double brokering creates supply chain delays, costing supply chain professionals valuable time, eroding trust, and even leading to legal battles.
Preventing Double Brokering
Preventing double brokering begins with due diligence - increasing visibility into partners, ensuring that tracking systems and processes are in place, and strengthening contracts.
Partnership Vetting:
Accurate information is the ultimate weapon. It creates barriers to scams and establishes effective deterrents. Shippers can reduce their risk of double brokering by working with carefully vetted third-party logistics partners (3PLs) with stellar industry reputations. Newer entrants in the market are more challenging to vet, and background checks may not reveal potential concerns. Hard data, detailed financial records, and performance history can provide additional verification of a company’s reputation. Our 500+ years of supply chain experience and measurable track record provide clients with the transparency and trust they need to make informed decisions.
Carrier Tracking Systems:
Double brokers rely on ambiguity and lack of visibility in the intermediary process to conduct their schemes. Carrier identification and monitoring can prevent double brokering before it starts. At Gebrüder Weiss, our vast partner network and advanced technologies provide customers insight into their shipments as standard practice.
To further protect customers, we’ve engaged Highway, a carrier identity and fraud prevention company with sophisticated carrier identity mechanisms. These processes can remove “bad actors” from consideration and enable communication and tracking to prevent and mitigate any issues throughout a shipment’s journey.
Contractual Reviews:
While freight theft is illegal, double brokering is more legally complicated. For example, the legal practice of co-brokering entails one broker working with a buyer and a different broker working with a seller, allowing both brokers to receive a split commission. This is an above-board, agreed-upon practice disclosed to all parties.
Some double brokers have exploited this co-brokering structure, finding legal loopholes that make it harder to recoup losses from double brokering. If there is no contract explicitly stating that a broker can’t subcontract without the shippers’ consent, the double broker may have a legal “out,” even though it’s highly unethical behavior. Companies can strengthen legal frameworks by including or requiring contractual clauses specifically prohibiting double brokering, outlining clear responsibilities and expectations for all parties, and including detailed consequences for violations.
Looking Ahead
Regulatory conditions and enforcement capabilities will improve over time, but enacting new laws can be a slow process. In the meantime, stakeholders across the supply chain are taking responsibility for stopping double brokering in its tracks. Rather than scrambling to react to a scam or double brokering issue, companies with carefully vetted partners and advanced monitoring systems can proactively prevent it from happening in the first place.
Gebrüder Weiss has a 500-year track record of leadership in freight forwarding and logistics.
Contact Kevin Sendre, Director of FTL North America, to learn more about ways to protect your shipments.
