The Buck Stops Where?
Here are a few important questions to consider pertaining to carrier payments:
“What happens if pay my logistics company and they don’t pay the carrier can they come after me?”
The short answer to this question is yes. A carrier can go after the shipper/consignee if the logistics company does not pay the carrier. Often times a shipper thinks just because their logistics company is bonded they don’t have to worry about the freight charges. In theory the broker bond is set up to protect the carrier from freight brokers who do not pay the carrier. In practice the bond requirement of $75,000 is not sufficient to cover all payment liabilities due. One project with one trucking company can easily run in excess of that amount. Companies should also take into consideration that while a trucking company can go after a logistics company’s bond it will often take the path of least resistance and go after the shipper and/or consignee. It is extremely important to work with a financially solid company. Many logistics companies have come and gone over the last few years and have left their customers on the hook.
“What is double brokered load?”
A double brokered load is when a logistics company/freight broker ships out something through another logistics company/freight brokers carrier or broker. Confused yet? What this means in layman’s terms is you give a shipment to Freight Broker A to haul, Broker A then searches the market for a company who can haul the freight for the lowest cost, Broker A then contracts Broker B to find a carrier to move that shipment at an agreed price, Broker B may have a carrier in their direct portfolio or they might broker it out even further.
“OK what about co-brokering?”
Cobrokering is the same thing as double brokering the only difference being their may be a set arrangement in place between 2 or more freight brokers beyond a single transaction.
“Are their any Drawbacks to double/co brokered freight?”
There are several issues when a shipment is double brokered.
First of at a very basic level you lose visibility and tracking when a shipment is double brokered, whether you are aware of the double brokering or not. You can call company A and Company A has to call company B and company B has to call Company C etc.
Second, accountability in terms of motor carrier due diligence is lost, you have no real way of knowing how carriers are vetted and who really is showing up to haul your freight.
Third, you have issues with billing and disputes, we have covered many times the importance of the pre-audit when it comes to freight. We already know how most logistics companies lack in this category now imagine trying to fight with a freight bill that is 5 weeks old by the time any of the logistics companies involved catch wind of a dispute if they even do a post audit.
Lastly and the biggest drawback involves following the money upstream from the customer to the carrier. If you pay Broker A and Broker A doesn’t pay the carrier you at least know who you are dealing with (Broker A). However most double or co-brokered loads are not disclosed to the customer. Meaning if you paid Broker A and up the chain, money makes it way to Broker B, but Broker B doesn’t pay the carrier, the carrier will go after the shipper and consignee meanwhile you thought you paid the freight bill. Now the shipper can very easily be a valued vendor and the consignee could be your best customer and your reputation is hurt because of another party you had no idea was involved in your shipment.
Bucking the trend PNGLC is privately owned, debt free and does not double broker freight. Customers who work with PNGLC know exactly where the buck stops. If you have questions on carrier payments or would like PNGLC to audit your current provider to check for double brokering give us a call at 717-626-1107×3 or email email@example.com