Home > Forum > Is This Illegal Or Considered Double Brokering?

Is this illegal or considered double brokering?

Feb 11, 2019 at 07:16 PM CST

I use to work for this carrier that booked their loads from a load board for a set amount. The carrier would then give the load to another independent driver after taking a percentage off top. Okay....let me try to explain this so that it makes sense. Say ABC Logistics broker a load to XYZ Logistics (carrier) for $1000. The carrier gives the load to an independent driver to deliver for $900 and then charges the driver 15% off the $900. What is this called ? I know this has to be illegal. If not, it should be.

Replied on Tue, Feb 12, 2019 at 11:35 AM CST
It's called the free market. A better question would be if a carrier is being controlled by a broker, are they really a independent contractor or a employee of the broker? Likely to be the next debate in California regarding intermodal carriers at the ports.
Replied on Tue, Feb 12, 2019 at 11:59 AM CST
+ 4

A lot depends on whether ABC and XYZ are working under a co brokering agreement. While lots of people frown upon such a thing it is still a legal way of doing business. Both sides of the equation have to maintain documentation of such and agreement and both have to abide by the terms of that agreement. There isn't a carrier out there or a broker for that matter who is going to know where each and every load is or who is the original owner of that load. If you want to bypass this scenario, then you have to get on the phone or e mail or instant messenger and do your due dilligence to get as close to the source of the freight yourself. Just be sure you haven't signed a broker/carrier agreement with either the broker or carrier and they have a back solicitation clause in their contract. You can be sued and if back solicitation is proved, you can be liable for damages and it will cost you more than the lost money going thru the broker. The best thing to do is to decide if the rate offered meets your standard of operation. If it doesn't walk away and say no. You have the power to decide what works and doesn't work for you.

Replied on Tue, Feb 12, 2019 at 04:41 PM CST
I gather your not too happy with rates right now? I am just curious where you would like to see them? I have my own Ideas, but I would be interested in learning what you or anyone else thinks they need to be at. Personally I think there should be nothing priced at a backhual anymore, when you consider the current operating environment, lack of parking lost productivity to commie ELD's, and the fact that nobody wants to do this job anymore.
Replied on Tue, Feb 12, 2019 at 05:10 PM CST
+ 6

There is no such thing as a backhaul. Any load can be someones headhaul out of home. The person that coined the term back haul should have been lumped in with the same guy that came up with pallet exchange and with the same guy that invented the necktie. They should have been taken out behind the barn and dealt with appropriately. I bid my rates between 2.75 and 3.25/mi depending on location and how tough it is to get out of the area. Most of my arguement revolves around if the merchant has checked where his health insurance and car insurance have went over the past year. Has the cost of repairing his personal vehicle gone up or down, has replacement cost of his personal vehicle gone down. What about cost of your homeowners insurance?. Mostly I hear crickets chirping in the background when i ask that and the response is usually that one thing has nothing to do with the other. Then I ask if he is taking less of a margin because the cost of his product has gone down or is he maintaining his margin at a level he can make a profit. By this time they have usually slammed the phone down on me. It appears that rates have dropped because "fuel costs are down". How much are they down from last year. Not a heck of a lot. They were paying better rates a year ago at similar fuel prices but this year, the 8-12 cent difference in fuel is astronomical and rates must drop. I better shut up on this or it could end up being an all night sermon. What it boils down to is the difference in philosophy of a trucker vs the philosophy of a merchant. I have dealt with this issue for many years having been on both sides of it, both as an owner operator and a trader or merchant. We will never solve the problem until drivers understand that they have to make a profit and they need to know their cost of operation. Learn to say no. I heard that word a lot when i was in highschool looking for a prom date and I have found that the same word can be applied equally effectively in the freight game. Never give up the fight and if you look hard enough and kick over enough rocks you can find the good rates out there. You just may not be able to go 100 mi away from home and be home by 4pm in the afternoon.

Replied on Wed, Feb 13, 2019 at 07:45 AM CST
Originally Posted by: DAVE WINTERS
Quote: "I gather your not too happy with rates right now? I am just curious where you would like to see them? I have my own Ideas, but I would be interested in learning what you or anyone else thinks they need to be at. Personally I think there should be nothing priced at a backhual anymore, when you consider the current operating environment, lack of parking lost productivity to commie ELD's, and the fact that nobody wants to do this job anymore."

I was once in a meeting with a company that was wanting our services. We discussed several different things and then got down to the meat and potatoes of the discussion. Rates. They told me that they paid everyone the same rate based off a base rate and a fuel surcharge spreadsheet rounded to the 10th of a cent per bushel. I asked them if they thought that everyone's operating cost was the same. I used us, a company they used and a local owner operator that also hauled for them and told them the three of us all had different operating cost and profit margins. Their response was that it was easier for them and seemed fair to them to pay the same to everyone. I told them I could line 3 guys up. The one in the middle thought that it is fair, the one on the right thought he was mining gold, and the one on the left wouldn't even start his truck for that. I politely told them when they could pay me the rates that I had provided them for the lanes to call me until then don't even waste the phone call. I loaded myself up and headed back to the house stopping to enjoy a nice bbq lunch in Wichita. Still haven't got a call from them 5 years later. lol. My point is this. If it don't make you a profit then don't load it. I don't care what everyone else is hauling it for.
Replied on Wed, Feb 13, 2019 at 07:45 AM CST
+ 1
I think most people so far have misunderstood the question, unless i'm reading this wrong. You mentioned the first broker giving a $1000 load to the second broker, then the second broker gives it to an independant for $100 less PLUS takes 15% Commission. I would say that's double dipping, and the carrier agreement between that broker and the independant carrier should clear up what the broker can charge. if it states 15%, then the Broker is clearly violating is own agreement. however, i'm sure you can find someone to dispatch your truck for a lesser rate.
Replied on Wed, Feb 13, 2019 at 08:34 AM CST
Originally Posted by: BRUCE GARMAN
Quote: "I think most people so far have misunderstood the question, unless i'm reading this wrong. You mentioned the first broker giving a $1000 load to the second broker, then the second broker gives it to an independant for $100 less PLUS takes 15% Commission. I would say that's double dipping, and the carrier agreement between that broker and the independant carrier should clear up what the broker can charge. if it states 15%, then the Broker is clearly violating is own agreement. however, i'm sure you can find someone to dispatch your truck for a lesser rate."

I was under the impression that since the load was booked off of a load board, broker "B" had to give broker A 10% to buy the load, then resold the load to the trucker minus 15%.
Replied on Wed, Feb 13, 2019 at 11:07 AM CST
If the contract says that your broker keeps 15% of what the load paid him, how is he double dipping?
Replied on Wed, Feb 13, 2019 at 11:08 AM CST

If everyone has a contractual relationship, then it is just fine. "Finding" something on a board and reselling it to someone else is not the best way to do business although Landstar does it all day. If Broker A has a relationship and a co-broker agreement with Broker B and the Carrier has a contract wih Broker B, then it is fine. Any legalities aside, it is about service. Without contracts and relationshiops Broker A will be so far out of the loop they can never provide good service or communication for that load.

Replied on Wed, Feb 13, 2019 at 11:26 AM CST
and unless you are in the back office or dispatcher send the rate confirmation from said broker you really don't know how much is coming off the top unless your doing all of it but agreed probably isn't right and shouldn't be legal but it happens everyday I'm sure
Replied on Wed, Feb 13, 2019 at 11:26 AM CST
Originally Posted by: DAVID HAYES
Quote: "I was once in a meeting with a company that was wanting our services. We discussed several different things and then got down to the meat and potatoes of the discussion. Rates. They told me that they paid everyone the same rate based off a base rate and a fuel surcharge spreadsheet rounded to the 10th of a cent per bushel. I asked them if they thought that everyone's operating cost was the same. I used us, a company they used and a local owner operator that also hauled for them and told them the three of us all had different operating cost and profit margins. Their response was that it was easier for them and seemed fair to them to pay the same to everyone. I told them I could line 3 guys up. The one in the middle thought that it is fair, the one on the right thought he was mining gold, and the one on the left wouldn't even start his truck for that. I politely told them when they could pay me the rates that I had provided them for the lanes to call me until then don't even waste the phone call. I loaded myself up and headed back to the house stopping to enjoy a nice bbq lunch in Wichita. Still haven't got a call from them 5 years later. lol. My point is this. If it don't make you a profit then don't load it. I don't care what everyone else is hauling it for."

couldn't have said it better myself....
Replied on Thu, Feb 14, 2019 at 07:59 AM CST
+ 1
You should carefully re-read the original post. It States that the first Broker Gives a load to Broker B for $1000.00. I take that as $1000 to any carrier that wants the load. then that broker offers it to his independant carrier for $900, then charges 15% on the $900 for dispatch. So Broker B keeps the first $100 PLUS 15% of the remaining $900. TOTALLY DOUBLE DIPPING. Basically taking the cream off the top of the load, then still charging dispatch. You definately can find someone better to pull for than that. I couldn't bring myself to pull such a dirty stunt, especially with such a high dispatch fee.
Replied on Thu, Feb 14, 2019 at 10:01 AM CST
Ok Bruce the way you describe the scenario is definitely double dipping, and I think we all agree that's criminal. But how does broker A stay in business if they are routinely giving loads away for free to broker B ? The way this was originally described would indicate this was a continuous practice. The 15% number seems outrageous as well, for someone operating their own equipment under their own Authority. Back when folks were required to publish their rates with the ICC, you could easily tell who was stealing off the top. The free market would work better if we went back to that, because nobody would pull that load if they knew they were being scammed.
Replied on Thu, Feb 14, 2019 at 11:44 AM CST
Originally Posted by: DAVE WINTERS
Quote: "I gather your not too happy with rates right now? I am just curious where you would like to see them? I have my own Ideas, but I would be interested in learning what you or anyone else thinks they need to be at. Personally I think there should be nothing priced at a backhual anymore, when you consider the current operating environment, lack of parking lost productivity to commie ELD's, and the fact that nobody wants to do this job anymore."

First off the phases "backhaul" and "Out of season" should be thrown out of the vocabulary. A truck on the road has to create revenue for every mile that the truck runs! The truck has to move a certain amount of miles per week to be profitable and crack the weekly nut that static costs create, IE, License, insurance, IFTA, Road use and all small costs that are associated with the operation of the truck. Once these costs are factored in with the costs of operation, IE, Fuel, Maintainence, Driver and incidentals then you can figure out what the truck needs to make per mile and this is a static number for every mile that the truck turns. Now factor in the fact that no one in this business is in it for fun and a little profit is nice!. Each company will have their own target number that they are comfortable with the truck making on all miles in a week. Once you establish that target number then use that number to figure your rates accodingly and you should have no problem surviving in this industry.

That's just my thoughts.
Replied on Fri, Feb 15, 2019 at 07:24 AM CST
+ 1
Because broker a gets the load for 1100. Passes to broker b for 1000. And well you know the rest.
Replied on Sat, Feb 16, 2019 at 06:57 AM CST
Hello good morning , this is double brokering , is this load goin over state line if not it's doable , if it is goin over state line and the broker has a license to do so they can not , look it up on fmsa get your answers , I know I have take in a load before from broker in this manner because there was good money in takin it I didn't mind
Replied on Sat, Feb 16, 2019 at 06:57 AM CST
I know I went through this independent or employee thing with workman's comp was a pain in the ass I sent them all the ownership all their own insurance has all their own workman's comp paperwork and we still fought for six months and I finally decided that they were independent we've been doing this for 30 years I don't get it but anyway I tried to have them pay for my office gals time for extra paperwork we had to do for the insurance company that didn't happen so the next step was to get a lawyer I didn't I just rather punch him in the face sorry for the anger but you feed them all this money and then they want more get on the insurance business if you can handle it have a good day
Replied on Sun, Feb 17, 2019 at 11:46 AM CST
who gives a blank as long as everybody got paid the amount they agreed on and were able to cover their expenses
Replied on Sun, Feb 17, 2019 at 12:09 PM CST
Originally Posted by: CHRISTOPHER STIER
Quote: "who gives a blank as long as everybody got paid the amount they agreed on and were able to cover their expenses"

They call it law , if there is plenty of money y not
Replied on Fri, Mar 08, 2019 at 07:47 AM CST
Natasha,I used to have 4 guys leased onto me under the Master Trip Lease Agreement.I got it from OOIDA and edited it to my specs.
I got 15% off the top,excluding fuel surcharge,the truck owner got 100% of that fuel surcharge.I always gave them the amount (85%) of the negoated rate con.I sent rate cons on request also.I furnished trailers for a seperate fee since none of these guys had trailers.
It was all perfectly legal and moral.However,you do pose a few risks,one is insurance.We did not all have insurance with the same people.Luckly,no wrecks or clains during this period.