The global movement of commodities is accomplished via a sophisticated global network of carriers, brokers, and shippers known as the freight business. Connecting shippers with carriers and ensuring that items are delivered on schedule and under budget, freight brokers play a crucial role in this process. However, some unscrupulous brokers engage in double brokering, a behavior that can have detrimental effects on all parties involved.
When a freight broker receives a shipment from a shipper and then transfers it to another broker or carrier without notifying the shipper, this is known as double brokering. This may occur for a number of reasons, including the original broker’s inability to locate a carrier to carry the items or the broker’s attempt to quickly turn a profit by raising the original price.
Double brokering is problematic because it can result in a variety of problems, including delivery delays, the loss or damage of items, and disagreements over money between parties. The shipper might not have any options for recovering their losses if the second broker or carrier fails to deliver the goods or files for bankruptcy. Double brokering is also against the law and is punishable by fines, license revocation, and potentially criminal prosecution.
How can a broker earn a living then? Each cargo that a freight broker arranges results in a commission, which is normally between 10% and 35% of the overall cost. This commission is paid by the shipper and covers the broker’s services, such as locating carriers, settling on prices, and guaranteeing that the shipment will arrive on schedule and in excellent shape. The broker’s objective is to locate a carrier who can deliver the items for the most affordable price while still guaranteeing that the shipment complies with the shipper’s specifications.
It’s crucial to understand that a broker and an agent are two different things. An agent works for a brokerage firm and represents the interests of the company, whereas a broker is an independent contractor that coordinates shipments between shippers and carriers. Brokers have greater freedom in terms of the carriers they engage with and the pricing they negotiate, even though both brokers and agents receive commissions.
So how can one become successful as a freight broker in such a cutthroat market? In their interactions with shippers and carriers, brokers must put honesty and openness first. Although double brokering could appear to be a simple technique to generate a quick profit, it can harm a broker’s reputation and have legal ramifications. Brokers must also be prepared to invest the time and energy necessary to develop relationships with shippers and carriers in order to locate dependable partners who can deliver goods on schedule and at a fair price. A freight broker can position oneself as a reliable partner in the freight sector by putting a heavy emphasis on ethical procedures and developing solid relationships.