In this highly competitive and often confusing world of transportation and logistics, there are many things to know and look out for.

New freight brokers come into this industry everyday and when they hear something like co brokering, or double brokering, they may be immediately confused and unsure of what co brokering actually is.

In this article we are going to go over what co brokering is, and how it differs from double brokering.

What Is Co Brokering

Co brokering is when two brokers or a broker and a carrier work together to find a carrier who can move freight for a shipper.

There are times when it can be difficult to find carriers to move freight and a broker may not be able to secure the resources to move all of their loads on their own.

Therefore, some brokers choose to participate in co brokering to help handle their demand and alleviate a backlog of loads.

Whether this is good practice is often highly debated. A co brokering arrangement can very easily turn in to double brokering and end up having a negative impact on the freight brokerages involved.

Is Co Brokering Illegal

The main thing that most people want to know is whether or not co brokering is illegal.

Co brokering is not illegal, there are no regulations set forth by the FMCSA or any other regulating body. However, there may be stipulations in the freight broker agreements with shippers and carriers.

There a times that shippers will not allow a freight broker to participate in co brokering. And there are also carriers who do not want to take freight when it is being co brokered.

Simply because something is not illegal, does not mean it is entirely safe to participate in.

Co Brokering Vs Double Brokering

As we briefly mentioned earlier, co brokering can easily turn into double brokering. But what exactly is the difference between the two?

The best way to put it, is that in a co brokering relationship everyone involved will know what is going on and that there are multiple brokers working together.

Alternatively, double brokering is when one broker (or carrier) attempts to hide the fact that they have received a load from another broker and pass it off as their own. They do this to take a small portion of the profits without having to do the work of finding the load from a shipper themselves.

If there is full transparency, it is considered co brokering. If any party is being hidden from the transaction, it would be considered double brokering.

Risks Involved With Co Brokering

While co brokering is not illegal, and you may not have an agreement that prohibits it, it can still be a concern for your business.

Allowing someone to co broker a load with you can open the door for  a number of issues.

First, does co brokering with another broker or carrier affect your liability? For example if they are the ones that were responsible for securing the carrier, did they perform all of the necessary checks?

If not, and they were to use an inadequate carrier and there happened to be an accident, you and your brokerage could be at fault and liable for the damages.

Protect Your Reputation

It’s always been my practice, and what I teach when training freight brokers, to simply just not get involved with co brokering.

It borders to closely to the line of double brokering and often times, most people don’t know the difference anyway.

Once shippers and carriers begin to get word that your participating in these practices, it can cause them to not want to do business with you.

Always use the best judgement when growing your freight brokerage and steer clear of anything that may cause you to look bad.

After all, succeeding in this industry relies heavily on having a good reputation.