Double Brokering, Carrier Invoicing, and Building Success | The Final Mile #24

Freight 360

January 2, 2024

Prepare to navigate the murky waters of logistics with us, as industry expert Ben pulls back the curtain on the notorious practice of double brokering. Ben, armed with ten years of experience, distinguishes the fine line between co-brokering and double brokering, unraveling the legal and ethical safeguards that can protect your business. We’ll also tackle the nuanced world of carrier invoicing, where the rules are written in the federal register but the drama unfolds in real-world scenarios. Whether you’re a broker looking for smoother business operations or a carrier aiming to understand the complex billing landscape, this episode is your compass.

When cargo claims turn into nightmarish mazes, we reflect on personal stories from the front lines, including a stolen load that put our problem-solving skills to the test. We explore how maintaining customer trust can sometimes mean absorbing financial hits and share insights on how to handle the delicate dance of claim denials. Beyond the transactions, we discuss the profound impact of human connections in our industry and the growth that springs from them. It’s not all work, though – we cheer for the Buffalo Bills, infusing our session with a spirit of optimism and community. Join us for a deep dive into the heart of logistics, where every challenge is a chance for growth and every relationship is a step towards success.

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Nate Cross: 0:19

All right, happy New Year and welcome back for another edition of the final mile where we answer all of your questions. Make sure to continue to send them our way through the comments on YouTube, through the website. I actually didn't pull any from the YouTube comments this week. These all came from Facebook or from our website, so we'll get started right away here. Our first one comes from Gustavo, who asked how long has double brokering been around and do you think it'll go away anytime soon, or is this an issue we have to learn to live with? So, ben, you got in the industry, probably about 10 years ago, right Roughly, maybe a little less. Yeah, give or take, and double brokering existed then. Correct For sure, it did. Yes.

Benjamin Kowalski: 1:06

It's probably existed forever, since the inception of the market, I would guess.

Nate Cross: 1:12

Really kind of like scam has definitely happened, right, I think we just noticed double brokering more because the way in which it happened took a sharp right turn. It went from like, hey, I don't have a truck, but I'm going to give it to my buddy or someone else and all is good, I'll just pay him less and I still make some money right, whereas now it's like I don't have a truck, nor do I ever intend to have a truck, and I don't ever intend to pay anybody. I'm just going to take this load, get a quick pay and then ghost everybody right.

Benjamin Kowalski: 1:50

Yes, I was going to say I used to run into this a lot because these terms aren't defined by the federal government, some statute or websters for that matter, not that I guess there's even a dictionary company anymore. But my point is co-brokering and double brokerage can be used interchangeably and had been even when I started. Right I am some of my first customers. I guess now you would say we co-brokered loads, but they were double brokered. It was a freight broker that was tendering loads to me as a freight broker and I would book trucks. That is absolutely an acceptable part of the industry if it is done where everybody is aware that it is being done and everybody has paperwork. Co-brokering, yes.

Nate Cross: 2:38

You have contracts in place with transparency on it, right.

Benjamin Kowalski: 2:42

My point is it was absolutely referred to as double brokering and you could probably make the case that it was. I think we would now probably say double brokering refers to fraudulent brokering as opposed to co-brokering.

Nate Cross: 2:55

refers to being done the legal term that TIA uses is illegal brokerage activities. That's the way that they've put the legal stamp on it of what they're going to officially refer to it as, because there's been debate for years. Is double brokering illegal or is it just frowned upon? The reality is, if you're a freight broker and you give a load to another freight broker, who then uses their authority and brokers it to a truck, no law has been broken. If you're just a trucking company that doesn't have a brokerage authority, you take a load from a broker and then you rebrokered without a license to do so. Now you've broken a law.

Benjamin Kowalski: 3:40

Yeah, see, I guess technically it almost makes sense that you could call the second one double brokering. I'm like, yeah, because technically you rebrokered a load that was brokered to you. What makes the second one a problem is the person that brokered it doesn't have a free brokerage license. That in of itself is what makes it wrong, not the fact that it was a load that was given to them by a broker. What makes it wrong is that a motor carrier gave the load to someone else.

Nate Cross: 4:10

They don't have authority to broker load their motor carrier and remember yeah, the scam is when the fraudster is not paying the actual truck. Had that fraudster been a freight broker, they would have a surety bond Could then be filed on to get payment Correct. So to answer this question, how long has it been around? Probably since the beginning. I can only speak to the last like dozen years, and it's been around since then. Is it an issue we have to learn to live with? To an extent, but I think it'll be less and less prevalent as we find different ways to combat it and prevent it. But that just means there'll be something else we have to be vigilant about. Yeah, yes, so like. Next, matt says how long does a carrier have to submit an invoice for their services before I can write it off or delete the transaction? So like, how long do they have to send in an invoice for a line haul for hauling a load or a tonu? If that's what it was, I'm fairly confident. There's no legal statute here, but I will tell you a best practice that I have always gone by and that's been well. First of all, have some kind of verbiage in your rate confirmation or your carrier contract that states must submit X amount or, you know, must submit paper with an X amount of days, right, you know, to prevent any deductions or for whatever I found it. By the way, you did Okay.

Benjamin Kowalski: 5:38

Yes, so Is there a legal statute.

Nate Cross: 5:41

I've always gone with like six months.

Benjamin Kowalski: 5:43

So yes and no. So federal regulation 49 CFR, part 377, 377.205 presentation of freight bills. This section dictates the timeframe for a carrier to present their freight bill. For prepaid shipments, the carrier must present their bill within seven days from receiving the shipment, excluding weekends and holidays. For collect shipments, the carrier must present their bill within seven days from delivering the shipment at its destination, again excluding weekends and holidays. This timeframe establishes the default window for expecting an invoice from a carrier. Now Section 49, usc 13710. This section sets a 180-day limit for either the carrier to submit an invoice for additional charges Beyond the initial bill or for the shipper to contest the amount charged they are here to add charges beyond it or for the shipper to contest. That says 180 days. Now it says wow, not a deadline for the initial invoice. It provides a maximum timeframe for potential charges to appear.

Nate Cross: 6:58

Now here's the piece that is the kicker answer like your tonu or an adjusted rate for layover or detention, stuff like that too.

Benjamin Kowalski: 7:06

Contractual agreements. Your specific agreement with the motor carrier may stipulate a different timeframe for invoice submission. This could be shorter or longer than the seven-day window. Always refer to your contract to determine the agreed upon invoicing timeframe. Based on these factors, you can generally consider writing off or deleting an invoice after 180 days from the shipment delivery date, as this covers the maximum potential invoicing window and the time frame specified in your contract if it differs from the federal default.

Nate Cross: 7:33

And that's what I've always gone with is 180 days. Now the reality is you don't want to get to that point, you would hope. I mean you want to get paid by your customer, right, so you can actually realize that profit, and a lot of times you can't do that. So you've got a BOL and imagine going to a customer five months down the road and invoicing them for a shipment five months ago. They'd be like, huh, what's this? They may have been like I'm writing this off so. But communications huge and you know, keep reminding your carriers, right, stay on top of what's not been invoice, what's not been paperwork collected on, yet stuff like that.

Benjamin Kowalski: 8:07

You don't want to get to 180 days so to that point, had a client this year that had a business partner that owned the business before they brought our client in and they lost their main customer when they came to us and they lost their main customer for this reason. The previous owner Didn't bill for like seven months and then invoiced everything for seven months and then didn't invoice again for four months. So then invoiced everything for four months and the company was like I think they literally didn't invoice anything For like almost a year and the customer basically respondent said like we wrote these off, like we don't even know if we can Actually pay you through our system because they're so old, right, yeah, and I mean this is People think service is just your truck shows up, right, and your truck picks up and your truck delivers on time, right, you're invoicing procedures are also service, right. So making sure they're going out timely, that you're on top of it, is absolutely important. And lastly, on a point, I was like I'm working through some invoices that are more than a year old with one of my customers right now. So I mean like this absolutely happens, even when things are done the way they're supposed to. But, like you said, carrie didn't get a BOL back Didn't get invoiced. Now they refute it and it takes forever to clear these things up, and the more time passes the harder they are to fix, because it's really hard to go get information Nine months after the fact from a carrier, or for anybody from that matter Yep.

Nate Cross: 9:35

Yep, exactly, all right. Our next question Omar Omar is very active on our Facebook group so I want to say thank you, omar. Hope he listens to the show. A lot of stuff that he he asks is intended to just generate discussion, which I like, yeah. So he said what does it take to be a quote-unquote good broker and how come he's start to bridge the gap? So I will tell you to be a good broker. I'm gonna make super Barney style simplify this. Integrity and good communication those are like the two things to me that I think stand out. I've told the thing about my boss. One time told me to be a good fray broker, you need to have two things integrity and your cell phone. If you lose either one, pretty much shot you're done. Right, and it's so true because integrity encapsules a very broad scope of things. Right, it's not just telling the truth, it's fairly and honestly quoting and paying and approving a tone, even when your customer denies it, but you know the carrier deserves it. Being honest about how crappy a pickup location might be or a delivery location, like just doing the right thing, so your reputation is intact and is a good one. And then communication is like I always say, bad news gets worse with time, like giving timely updates, being quick to give good news, bad news and then different news. So those are the two things to me that I think make a good broker. You should be playing the game per se, where everyone's all working together from shipper to fray. Broker motor carrier we're all in it together.

Benjamin Kowalski: 11:19

What do you think what makes a good broker the things that I would add attention to detail good listener? I guess it considered is probably under Considerate. Yeah, it's probably under integrity. It's good. But because I think about those a lot right, and I'm reading a book now on listening, and I was curious one because I've never found a book on listening and no one ever talks about it, because it's like a passive activity, right, and it talks about a lot of the things we talk about in our show, right, and it's like you can't actively listen to somebody unless one. You're curious or you care what they have to say, which is something I never really thought about. But I'm like, when you think about it, like that's what makes a good broker, like they're genuinely paying attention and listening to what their customer's saying, not just the things they wanna hear, and they're writing them down somewhere and making sure that they can pay attention to that detail later. Right, it can be all the other things. If you can't do that, like our job is we trade in information, right? We don't actually move physically anything. We get information from somebody and get it to somebody else. If it doesn't get to the other party intact, then you're not doing your job either, and to me that's probably a big one that I've thought more about lately.

Nate Cross: 14:02

Yeah, that's good, that's a great idea. That's a great point there. Next up, what can I do if a carrier's insurance denies a cargo claim? Have you ever had this happen before, ben?

Benjamin Kowalski: 14:12

I got a second one too. I'm gonna add to this before this. And what do you do if the carrier doesn't respond to their own insurance to assist you with the claim and the carrier's insurance goes. I can't do anything about this until they-.

Nate Cross: 14:26

I was gonna just say I was gonna relate to the question because we had that happen this year.

Benjamin Kowalski: 14:32

I've heard it literally times. I think you probably told me, but I know at least two or three other people that have mentioned this to me this year too.

Nate Cross: 14:38

So the situation that we had and this is not where the question came from, but we had in it it was a double broker situation. We don't even truly know like. We filed a claim on who we thought was a carrier but it got denied Because there's basically no evidence that they were the carrier. We don't know who the real carrier was. The load basically got stolen and then dropped off at a different warehouse but we ended up holding the bag Like what do we do here? Do we tell the customer? So, to answer the question, what do you do? Remember, when you're filing a claim, you're facilitating it. You're not the actual payee on it, right? You're not the one that's actually being insured. Your customer is the beneficiary of the insured party, which is the motor carrier themselves. So straightforward example let's use fresh produce, because we had some of the folks from Blue Book on earlier this year. We talked about sometimes a denied claim because the customer was at fault. So let's say, customer wants file a claim because spoiled product shows up, carrier does their whole process, or the carrier's insurance does their whole process and determines that the carrier did everything right and that possibly the product was loaded damaged or something like that. Claims denied. What can you do? You can tell the customer sorry, this claim got denied, the loss is not covered. They've determined that they're not at fault. You as a broker are typically not at fault either, so you could just tell them it was denied. Probably gonna lose a customer out of that. We've had instances where claim has been denied and we feel that we wanna make the customer whole because we wanna keep that relationship intact. So we've offered to split the loss proportionally, like maybe we'll take half or we'll eat a third of it. We've taken full amount before in instances of error on our part. So, like we do, you know double broker situation, right, we screwed up by not sending the right truck in that we thought it was. We missed some vetting step along the way and allowed this to happen. We're going to own up to it and reimburse you for your loss because we had some. You know we were the, we were part of the reason that it happened. Yeah, and we're going to take, we're going to eat that and we're going to salvage the relation with the customer. What did you? So the other instances that you had mentioned, what happened? What'd they do? Because by all means you could just say I'm sorry, like we're, it's not paid and we're you're going to, you're not getting any money for it because we're not liable as a broker.

Benjamin Kowalski: 17:19

It's more of an asset. In fact, the same way customer disputed it, they, you know, didn't pay. It didn't work with the customer anymore. That's how it played out. But I was curious. I'm like how can a carrier just I just don't see, like, if a carrier is liable and they do something and there's damage, like how just not responding to their own insurance company in any way?

Nate Cross: 17:44

So I think in my, in our situation and I don't have this was like, or a lot of other earlier this year, so I don't, it's not fresh in my mind, but for us to try like, let's say it's a, let's say this low is like double brokered four times. We don't know where the real truck is. So for me to find out and tell the right person hey, go to your insurance who they might not even have insurance or the right kind of insurance right. Then I've got to get a double broker to admit to the double brokered a load of mine and admit to tell me who they gave that load to. And then I got to go to that person and do the same thing again, right. And they're just not going to do it. They're going to hide from you, they're going to run away and ignore it, like that's just how it happens. That's just exactly, unfortunately so, because, like you, had an example where a guy got double brokered on and the carrier that actually hauled it didn't have coverage for whatever that was. And in that case, right Like, you can either go to your customer and say I'm sorry, I screwed up and they double brokered this and it's not covered and they're going to fire you as a freight broker or you can own up to it and say, hey, this happened, we missed something along the way. We're going to make it whole for you and we're going to make sure it doesn't happen again, but then you've got to eat however many thousands of dollars that is of the loss. So it's messy man for sure.

Benjamin Kowalski: 19:05

It absolutely is, so I think it's also a good thing to point out. This is one of the reasons why your prospects will say they only want to work with asset carriers right, Because it avoids all of this risk. They don't have to worry. Did the load get double brokered to a carrier that doesn't have insurance and there's a claim on it, right? So this is one of these scenarios where, like you need to be able to explain or help reassure your prospect as to why this won't happen to them if they work with you. So you really should understand how this is happening so that you can overcome that objection and ultimately do business with them.

Nate Cross: 19:44

Yep, exactly, all right. Last up, my customer got promoted I'm assuming this is the point of contact of the customer. So my customer got promoted and they hired a new guy to manage the shipping. What should I do? So I've seen this happen, like it happens all the time. It's fairly common, right.

Benjamin Kowalski: 20:06

Very common. The reality is like A person stays at a job for two years, two and a half years every job. So if you think about it, Exactly so.

Nate Cross: 20:14

The reality is you're going to have people there's going to be change all whether it's promoted, fired, quit, you know, bought out. Like there's going to be change in who's making decisions. What would I do? I'd congratulate them on their promotion and immediately like get involved in that transition, meet the new person. And also we talked about this before like you shouldn't just know your point of contact, you should know, like their boss, their subordinates, if they have any, whoever their backup Excuse me whoever their backup base if they're out on vacation or sick. Have some like Well, can I I want to use like a football analogy have like some depth right, have a depth chart of like who your contact is there, who you can go to. But yeah, the reality is like so if you knew the boss before and your contact gets promoted and either becomes the new boss or is somewhere else in the company, you still have a relationship intact with somebody else there who's like yep, keep working with Nate, His company has been a lifesaver and a huge help for us. Now let's say you hadn't done that. What you know, let's say all they know, is that one person, person gets promoted, not even in shipping anymore. There's a new big dog in town. What do you do? What would you do?

Benjamin Kowalski: 21:36

Oh, I do.

Nate Cross: 21:37

Yeah, I mean You're kind of starting, you have to build a relationship from scratch. I guess the luck is like you're still moving their freight so you're not having to start totally from scratch. But you got to win them over that no-life trust part right.

Benjamin Kowalski: 21:49

For sure. So I am going to position myself as a resource for them in their new role, where they could reach out to me with any question they might have, regardless of if I'm handling that ship. So I would meet this new person and I would explain how long in the relationship I had with the previous person, I would say, hey, I periodically talk to them and catch up with them. I know they're not in this role anymore, but, hey, I want to let you know that. I know, hey, you're new to this. Maybe they're new to this job entirely and they've never even been in this type of job. Maybe they have done this job somewhere else and they're just new to this company. In either scenario, I am going to explain like, hey, I'm here to help you and whatever that is you need. This was the previous relationship. These are the things that we did, but I want to let you know that if you have a question about anything, even if it's a load with another broker or another motor carrier, and you just want somebody to run something past or to ask a question to that, you might not feel comfortable asking somebody. Call me anytime, shoot me an email. I want to be there to help you and whatever it is you need in your new job, regardless of it's a shipment that I'm working on. That's how I'm going to try to make myself a resource to really endear myself to them. But I genuinely do want to help. It's not like it's not true, but if I can get them to trust me, to ask me the questions they need help with whenever and wherever that is and when that comes up, they're way more likely to connect with me, for me to be able to start establishing the same relationship that I had with the second person.

Nate Cross: 23:19

Yeah. So a great point and we'll wrap this up is what you just described. There is being a helper and not like an asker. Right, you're not going in there like, hey, what's going on today.

Benjamin Kowalski: 23:31

I need this. I used to get this.

Nate Cross: 23:32

It's how can I help you, how can I help you be successful in this new job? Congrats on the hire getting hired, by the way, for this role. So there's all that.

Stephen Ruhe: 23:44

So one thing I just wanted to add. One thing I wanted to add to that is I'm going to no-transcript. When I was in the military, my boss told me and I've carried this through this job as if you ever need anything, you need to know somebody two levels up. They should know your name. And If you want somebody that needs stuff from you to be in that place of power, the two levels below you needs to know your name. I do the same thing in sales. So all my customers, two levels up, two levels down, they all know my name. So if somebody gets tired, somebody gets promoted, fire, whatever, somebody knows my name, so that way that that relationship could continue.

Nate Cross: 24:24

It's funny you mentioned that from military. We had a similar thing and I always described it like as know and Understand what it is that they do and their or their level of the organization does so like, if you read this to brokerage and that same aspect. Sure, my contact might be the, the traffic manager, but two up from him or her might be like their VP of I don't know, like procurement or of Logistics right, or director, whatever it might be right, and I have to understand what goes on in boss's head and bosses world that impacts my guy or my girl here in the traffic booth. So exit, excellent, point for sure for sure.

Benjamin Kowalski: 25:09

And again, these are great prospecting Questions to ask, and it's a great time to meet all these people when you are prospecting, because you've got lots of questions that are unanswered Right. Like I always think of it as like one up and one over. Like whoever I'm talking to, I want to know the person above them and the person to the side on either, or right, I love the person below, for sure. But you also want to ask questions that both of you guys point out are like what are these other roles, responsibilities and what are their pain points? Right, what do they care about? Right? Like, if you talk to more procurement people, they care more about budget and the number of vendors. They care very little about on time percentage in some cases, because that's just not what they get yelled at about. They care more about the budget and the number of vendors. That's what they manage right. And then you might talk to somebody that's like like one of you guys went, like the Director who's above the person that tenders you, the loads they might get you know, Like their quarterly review might be on time percentage, budget and the number of vendors. Like you want to at least have some idea of what's important to the people around them, because Oftentimes we need you to approval from those people, right, you need to know what they care about. And that always comes into into play when you're getting on board in the first time, right, because the person that sends you loads might be like yes, I'm having a hell of a time finding trucks, I can't get anything covered and I'm it's a mess over here, but they go. I can't approve you, the director has to. And then when you talk to the director, he doesn't care about any of those things. He cares about completely different things, right? So, yep, I think those are like invaluable things to keep in mind, always at the beginning, and no matter who you're working with. If anybody listen to this doesn't know the person next to their customer or the person above them, like, make a point to get to know them as fast as possible, because for sure gonna happen Inevitably yep Well, good questions.

Nate Cross: 26:58

Happy New Year everybody. We appreciate it Been any final thoughts.

Benjamin Kowalski: 27:03

Whether you believe you can or believe you can't, you're right and until next time go bills.

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