Double-brokering freight fraud is a major concern for shippers, carriers and logistics providers worldwide, costing the industry around $100 million per year.

This type of fraud occurs when a freight broker or carrier sells a load to multiple parties, without the intention of delivering it to the rightful recipient. In essence, they take the money and run, leaving the shipper without its cargo and the carrier without payment.

The effects of double brokering can be catastrophic. Beyond the millions of dollars in losses, affected parties suffer reputational damage and potential legal issues. It’s therefore crucial in the transportation of goods to take proactive steps that can mitigate this risk and protect against fraud.

Market fluctuations are inevitable. Economic downturns, changing consumer preferences, and global events can all impact the demand and supply of goods and services. While the ups and downs can be nearly impossible to foresee, misfortune like freight fraud can be anticipated and prevented. This is where carrier relationships come in. 

A strong shipper-carrier relationship requires regular communication and collaboration to build trust and foster a mutually beneficial arrangement. By working together, shippers and carriers can identify potential risks and proactively address them, such as implementing enhanced security measures or providing training to drivers and staff. Carriers with a proven track record of reliability and trustworthiness can greatly reduce the likelihood of their partners falling victim to this type of fraud.

Carriers with a vested interest in maintaining a positive reputation will be more likely to take proactive measures to prevent cargo theft and double brokering freight fraud. Actions can include implementing additional security measures, such as GPS tracking or surveillance cameras, or conducting regular training and education sessions for employees.

One measure taken by many freight brokers in combating double brokering freight fraud is to ensure that proper onboarding procedures are in place. This involves thoroughly vetting all potential carriers, verifying their credentials and conducting background checks. This can help identify potential red flags, such as a history of fraudulent activity, so trustworthy carriers will gladly undergo this process.

The use of trusted digital tools can help facilitate the process. Digital freight-matching platforms can help pair shippers with carriers that have a proven track record of delivering goods safely and efficiently. They can also provide real-time tracking and visibility, allowing for the monitoring of freight at every stage of the journey.

Most important, however, is the building of strong relationships with carriers, an effort that does more than just secure your freight now. It also keeps freight brokerages competitive in a crowded marketplace.
 It’s intuitive that companies would want to obtain the lowest possible freight rate, but that desire will often get them into hot water if they don’t take into account the positive relationships they already have in place. A cheap rate might pay off in the immediate future, but is that business model sustainable in the long run? It’s crucial to develop a sense of loyalty to your carrier partners, and stick by them now for a better ROI in the future.

Strong relationships are key to avoid falling prey to commonplace scams. One of the best ways to decrease the likelihood of double brokering and fraud is the repeated use of trusted carriers that have been properly vetted. Technology can also help — a good transportation management software (TMS) system can display your top-rated carriers and their quote history, so that you can offer them the first opportunity to quote a shipment. This reduces the common tendency of blind-posting every load, and makes your company less vulnerable to fraudulent carriers and other scams.

By providing brokers with data and building trusted carrier relationships, logistics businesses can create a network of support that will give them true peace of mind.

Sean McGillicuddy is vice president of sales and marketing for Tai Software.