Exposing Double Brokerage Scams | Final Mile #26

Freight 360

January 16, 2024

Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:

  • Dealing with double brokers as a freight broker
  • Dealing with double brokers as a motor carrier
  • How many calls does it take to get a customer?
  • Freight broker employment benefits
  • What to do when carriers want more money and customers want to pay less

Support Our Sponsors:
Bluebook Services: Click Here
DAT Freight & Analytics – Get 10% off your first year!
DAT Power – Brokers & Carriers: Click Here
DAT Express – Brokers: Click Here
Truckers Edge – Carriers: Click Here

Recommended Products: Click Here
Freight Broker Basics Course: Click Here
Join Our Facebook Group: Click Here
Check out all of our content online: Click Here

Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:19

All right, welcome back for another edition of the final mile, where we answer your questions every single week here, whether it's from the website, through email, from YouTube comments, we're here to help you guys out. Please take a moment. Check out the description box and you can see all of our recommended products and sponsors there. And check out our website, freight360.net, to learn more about our training, especially the Freight Broker basics course. That'll help you do everything you need to do to succeed as a freight broker. So let's get right into it. Ben, today's first two questions are kind of similar. They're on double brokerage, one from the broker perspective and one from a carrier perspective. So we'll break them down individually. I'm starting with the broker. What do you recommend if you have been a victim of double brokerage and the real carrier contacts you to ask for more money to deliver the load, and they'll even hold the load hostage?

Speaker 2: 1:11

I'm confused with this question how do they pay? I guess they had to quick pay the first carrier, yeah.

Speaker 1: 1:17

I'll give you a real role example. These are the most common ones that I've personally seen myself. You hire a carrier and they take a quick pay. A month down the road, or two months down the road, some other carrier comes knocking saying, hey, I never got paid. I called the customer. They pointed me to you. You were the actual broker here, right, and the carrier that scammed you promised them like an exorbitant amount of money like an unrealistic, so let's say you're going to be expected seven grand on the load.

Speaker 2: 1:48

They thought it should be paying four grand. They thought they're going to set. But how do they hold a load hostage three weeks?

Speaker 1: 1:52

They're going to say I'm not like, because typically you'll be like well, hey, you got scammed, it was a double broker. You know we're going to pay you, but we can't pay you. The lights are flickering Power, we're still good, we're not going to pay you seven grand, like in your case. We can only pay the four grand that we originally agreed to. Because our customer is not paying us seven grand, we can't take a huge loss here. And they might say well, no, I always promise seven grand, I want it, I'm going to hold the load hostage. Typically they don't go as far as holding the load hostage. You can usually mitigate that by just explaining like this was fraud, we're going to take care of you, we're already going to take a loss by paying this load twice. Holding a load hostage totally different situation. I'm going to defer to check out our episode on cargo theft and hostage loads with the folks from cargo net. But yeah, you can usually talk them down and explain that like, hey, I'm going to get you paid, but I can't pay you the fake amount. I can pay the real amount. I'm sorry this happened. That's pretty straightforward. I hate to say that it's a common occurrence, but that's really what tends to happen here is carrier agrees to take a load for a really cheap amount that seems too good to be true. They take it. Then they go and sell it for a too good to be true high amount to another carrier. The reality is they have no intention of ever hauling the load or paying that actual carrier. It's nasty.

Speaker 2: 3:19

But I still don't understand. I just don't understand this, though, because in this question it says like the real carrier contacts you to ask for more money to deliver the load and they hold it hostage. How does the real carrier ever call a broker in a double broker situation? How does the real carrier know?

Speaker 1: 3:39

I've seen it like two different ways. I've seen it where they figure out that it's a double broker situation while they're driving, while it's in transit because they're like this rate confirmation doesn't look real, it looks doctored. Or they get to the pickup or the delivery or one of the stops along the way and their shipper, receiver or someone along the way is like, oh, I thought it was going to be ABC Express. And you're like well, no, I'm DEF logistics, what do you mean? And then they're like, well, no, our broker, ben over at whatever, told us that this truck was coming. And then they, so they can identify it along the way. Right, and you're right, I did. The answer I gave was in reference to not while it was in transit, but it could have been down the road. But if it happens in transit and they're off or they're threatened to hold it hostage, you can usually talk them down. But another thing that'll happen to back to my original one is that they might you tell them hey, I can't pay you more that real carrier might take another load from you and try to hold that hostage until you give them more money for the first load. So that's, that is. I have seen that it's not as common. It's rare, but either way, try to talk them down. Worst case scenario you typically like give them a rate confirmation that says, sure, we'll pay a seven grand. And then it's just, you're going to do a rate deduction for extortion, just what it is. So all right. The next question, which takes us to the carrier side. This guy is basically asking for a friend. He says my friend was scammed by a broker who changed the delivery location and listed a different broker on the bill of lading. The scam aimed to steal a forklift. Now, dealing with the shipper and the original broker, they're offering a very low payment and threatening to report the load as stolen If not accepted. This doesn't cover the costs. The load is undelivered. What can be done? So now we're in the now. If you go back to our first question, this is the actual carrier that's wanting to get paid, right? They're saying well, they want to pay me less. They're going to report me as holding the load hostage or stolen If I don't accept the actual rate. What do I do? The reality here is you want to find out for sure, with no doubt, who is the actual broker here and who, along the way got this screwed up right Cause the broker they're saying that scammed them is probably the fraud double broker, right? And now they gotta figure out who's the actual original broker, which is sounds like they're dealing with the shipper and the original broker, which is good, right Identify who those parties are and then have a real conversation like, hey, I'm the one hauling this. Clearly I've been scammed and you're gonna end up taking a lesser payment because it's just, you were offered way more money than was actually available on that load, Unfortunately, and as carriers the same way that we talked about this on our episode from last week on Frey360, when you go to vet a carrier as a broker, carriers you need to be vetting your brokers as well, For sure, Right, If something looks fishy on a rate confirmation, it probably is. If it seems too good to be true, it probably is. If you look up a broker's MC number and it's listed as identity theft on highway, right, Someone has stolen their identity at least once before. All right, so that's a red flag. What you can always do is, when you're dealing with a broker as a carrier, if the email domain doesn't match the email domain from FMCSA, or if the phone number doesn't match the phone number from FMCSA which a lot of times it won't because you have multiple people you have to do something to verify that you're talking to the right person. Okay, and unfortunately you know someone tried to steal a fork lift in this one. I don't totally understand that part of it, but whether you're the broker who got scammed or the actual carrier who's got scammed and will not get paid less than you thought, it's unfortunate, but we can prevent all of this preemptively if we do proper vetting as both a carrier and as a freight broker.

Speaker 2: 7:47

Yeah, I think my take was truck picked up a load and just, for instance, say it was on the load board of, like Miami to Atlanta truck goes, takes that load, finds out on the way to Atlanta that, like it wasn't originally supposed to deliver to Atlanta, that is a warehouse where they were going to steal what was ever in the truck. So when they called the shipper where they picked up, they went no, this load goes all the way to Buffalo. And they went well, how much does it pay? And they were like well, I'm not going to drive all the way to Buffalo for $1.35 a mile with this on here. That's true. I thought it stopped at Atlanta. And they're like well, I'm not going to drive to Buffalo. And they're like well, you have to, we're going to tell you you stole the load. And they're like well, they clearly didn't steal the load right, like they were loaded. They were just misled in a way that, like now they got a choice of seems like two terrible choices drive a lot farther to where it was supposed to originally deliver and get a lot less money for all of the work and none of the headache that you got paid for. I think your other option is to also possibly turn around and just drive it back to the shipper, but now you're getting no money, so like I would probably weigh those two.

Speaker 1: 8:52

You could try to negotiate some. If you realize it right away and you're only a hundred miles down the road, you might tell your. When you find out the actual customer or broker, you can say like, hey, well, definitely don't deliver it. But I either got to figure this out and get the right payment to the right address or just pay me a ton. I'm going to turn on and drop this thing off. Give me 200 bucks or 300 bucks, whatever, and you guys can figure this out on your own. So unfortunately it still sucks Like toe news, resulting in carriers making less money than they should have. But they're going to compensate it at least for their time. So all right. Next question as a new freight broker agent, how long does it take to get your first shipper? How many calls? Well, there's no perfect answer here, but we can give you some realistic expectations on what you can expect, and I'll tell you it's a little different for everybody. I'm going to assume from this question that this person is green, totally brand new. But they are trained at this point. Right, let's say they went through training, they understand how the industry works, they're ready to start making their dials, Probably going to take you a month, Maybe less if you put a lot of time in making dials. But that's also ambiguous. What does that mean? Your first shipper? Are you just talking to somebody that's you're gonna call a shipper? Are you bidding on a load list that comes out every day? It could be date one you get your first shipper. Or are you actually getting a load to move which could take you a couple of months? It just depends. I would say, put in the activity, make sure you check out all of our prospecting on our our lead gen content, because it'll get real, real, granular and thorough on you know how much you should be doing time wise for prospecting and how many calls to make. Then what do you think you you've you worked in a big box brokerage around a lot of people. What did this look like? You know you're doing? different how long to get your first shipper?

Speaker 2: 10:48

to your point. It varies a lot based on who you can call, whether or not you can choose any company you want to go after and which commodities and which market you're calling in, and what time of year or you're all big variables that affect the time of this. But the only one you can really control is how many calls you make, and I'm gonna answer this with a real-world example of a client that we have that I have. Soar of sing has been a client of ours since right around middle of November, so you know, right before Thanksgiving give or take Took him a couple weeks to really start making phone calls and get into the you know, understand the questions and the same stuff we talked about in our show. He's been a fan of our show for a long time. We're now January 9th as we're recording. I did a bid last night with a very, very large shipper that he was able to get in his first call it six weeks, and Three or four other shippers that we are running bids on where on boarding them and going through the credit app Process to hopefully start moving a couple loads this month. So in this market right now, somebody that is green has never picked up a phone to sell any product and about six weeks has one very large shipper that we did a bid on and a handful of small to medium-sized shippers. They're doing I don't know 10 to 30 loads a week that we're quoting lanes on and he's starting to get some you know, action to be able to move a load here there. So good deal. Real world right now.

Speaker 1: 12:10

Yeah, and again, everyone's different. Your Ability to connect and effectively prospect and ask questions is gonna be a big part of that and that's what I want to get at.

Speaker 2: 12:19

Here's the numbers. He's calling between 70 and 80 calls a day and has been doing that since about the second week of December. From November to about the second week of December he's probably making 20 or 30s. He was just getting his feet underneath them, learning you know how a CRM works, where to put leads, where to find leads and all those things. So you know 20 or 30 a day to now doing 60 to 80 and a little bit better on some days, and he's getting results. So I mean the proofs out there.

Speaker 1: 12:45

There you go. The proof is in the pudding pudding, right. The proof is in the prospecting All right. Next question what kind of this is actually the first time we've gotten this Kind of benefits are normal for someone working out of freight brokerage. So I'm gonna go ahead and say right now, if you own your own brokerage, you're a business owner, you're not gonna get benefits. You have to go get your own and set that up. If you're an agent, you're very likely not going to get any benefits. Some might have Health insurance offered. There's like certain rules based on the state. You know the number of W2s versus 1099s. They can extend a health insurance to yada yada. Let's say you're a W2, like the majority of people who may be asking because they're thinking about going to work at a and in-house brokerage. I Don't know that it's unique to freight brokerage, but you can typically expect, after some Waiting period, to be off. You know available to get Retirement. So, like a 401k or Roth 401k option, you might have a, an HSA for health. You might have health insurance options where they might cover part of your annual premium. I I personally, I'm W2 at Pierce and we, so all the above I have offered to me 401k health insurance. We even have a life insurance, but I mean those are just kind of like standard, you know, standard benefits. What I would tell you when it comes to compensation is that and we've talked with Beth Carroll about this, we talked to Trey Griggs about this you know everybody has a different thing that motivates them and that it's important to them. So Benefits for me, like, for example, we have great health insurance at Pierce I don't use it because I get it for basically free from the army. When I retire in a few years from the army, you'll bet that I'm gonna go look at there, you know, see what they've got, because it's probably a good. One Side note here Steven, our producer in the chat said gongs, ping pong tables, free flowing coffee and energy, drink, vending machines, nice, those are like kind of like your in the building benefits I guess I never even really thought about. Do you get? Do they buy lunch for you? Are they giving you vacation time? Are they filling the blank on whatever other kind of stuff you can get? But you think your standard ones are like after a certain amount of time you can do retirement health insurance. What did you see when you were a W2Bend?

Speaker 2: 15:15

Same. I mean it's pretty standard for entry level jobs, kind of into any company, right, you're going to get you know decent health insurance. What they cover, percentage wise, varies company to company, who their plans are. So I mean those widely change. Usually get some small match or something into the 401k.

Speaker 1: 15:31

Oh yeah, that's one. I forgot the match.

Speaker 2: 15:33

Yep, A little bit of life insurance, usually nothing that's really going to move the needle much.

Speaker 1: 15:39

but it's nice to have 50k or something like that 50k or 20k, I mean those are predominantly your benefits.

Speaker 2: 15:46

You're going to get at any entry level kind of company and they're both the same in our industry, I would say.

Speaker 1: 15:50

Yeah, I mean I know Stephen kind of said it as a joke, but those are like some of the benefits that are you're non-standard ones that are really important to some people. What is the work environment like? And I think if you're looking at a job in brokerage as an entry level, maybe just fresh out of college or something like that, ask about those things too right, because you're not going to get your 401k and health insurance day one typically, but you know what you will get day one is the culture and the climate of that office. Is it toxic leadership or is it very empowering great mentorship inside of those four walls? Do you have a great work environment where people get to go play ping pong or foosball on their break and really build camaraderie and build rapport within the office and on that team? We legit had a monster energy fridge at the last company that I worked for, not because they were trying to keep us juiced up on caffeine, but Monster was one of the customers for the brokerage. So Monster would send us 20 cases a month or something like that for the 100 people that worked or the 50, whatever worked in that office. But yeah, I mean that's stuff like that. We would do fun stuff, have potlucks and celebrate birthdays and all that stuff, and you know that makes your work a lot more enjoyable and that matters to a lot of people Working from home. Yeah, you don't get that. My dog hangs out with me in my office all day long, so that's my benefit. But you know there's a lot of tangibles and untangibles that just very important wise to different people.

Speaker 2: 18:44

Yeah, it's a one. I mean I definitely miss that about working with kind of a larger office. We had, I think every year we would use our budget on something like the one year we bought a you know the side by side basketball hoops with the arcade version. We had a ping pong table. I brought in like all of my golf stuff, so I had like a chipping lane with like a net to chip golf balls into. With the phone ones I had like a real golf net that I would literally hit golf balls in when people like weren't in the office. Little putting green, which is nice because, like when you're busting your ass, making 80, 90 calls a day for those breaks every hour or every 20 minutes, to be able to go and just hang out with your buddies and play a game of ping pong real quick, to just kind of reset, really helps get through doing that eight to 12 hours a day for months at a time and it is not a small thing. And I do think that that is what lots of companies everyone kind of jokes about it. They're like that's where they spend their money rather than spending money on like what. We would consider other benefits to go to people's pocketbooks, but they're not small and, yeah, they help benefit the company by keeping camaraderie up and, like you said, culture and energy levels, but they're real benefits and I mean they do have a reward to the people there as well as the company.

Speaker 1: 19:56

So I don't think they should be a remember before I, before I worked at the last brokerage I was with, I interviewed with another brokerage in Western New York and they, like they really sold me on this work hard, play hard mentality. They're like we you know it's casual dress, we regularly have like picnics and parties in the office and all of that, but they they lacked else wise, like they were trying to make up for where they fell short by having like basically a party like mentality and environment. So but yeah, every company is different. What I do you mentioned like all this fun stuff to do after making a lot of calls. What I used to love with the team that I was on was we had a warehouse connected to our office and so in the wintertime we could walk around the warehouse, do some laps, throw a football around. It was nice that we'd go outside and walk around the parking lot and throw a football or just go for a walk and like kind of like unwind. You go to lunch a lot as a team, so that stuff all kind of factors into your. You know You're how happy you are at work. We'll say sure, all right. Last question this is a good one. What should I do when my rates never seem to be high enough for carriers, but never seem to be low enough for customers. I think a lot of people are falling into this right now. Right, it's a very well. I think we're climbing out of it. But we've seen we've been plagued with this for pretty much the last like year. Right, carriers want more money, shippers want to pay you less. Where is that middle ground? We could go on for an hour on this discussion, but the reality is there's a fair market rate and it is your job to Find that happy medium. Right? Different customers are going to have different things that they prioritize. Is it a low price thing? If it is a low price thing, then set the expectation. It's gonna take me a while to find you, you know, the right truck at this price. I can't do it today. I've got to, like, take a lot of time, vet some carriers out, see who's in the area needs a backhaul, because very likely, if the carrier wants more money, it's not a bad call for them. Right? They're prioritizing price themselves. So you've got to try and find that right carrier that's the right one For that specific shipment and if that's the case, there will be a margin in between that'll compensate you. Sometimes you have to just give you a reality check to your shippers, though, and say, hey, like we, you're not gonna get that move for that. Like it you might, but it's not gonna be anytime soon. And don't hold your breath, because that you're asking for a very competitive rate, and a lot of drivers are Not willing to do this, especially given whatever the X, y and Z factors are. What do you think about that one? You, we've definitely seen it a lot. We've we hear it a lot. What you take.

Speaker 2: 22:51

I think there's a lot that goes into what a rate, what makes a rate of rate and a margin a margin, and I want to spend like I can probably spend an hour just talking about this topic, right, because the thing that I think really answers that question the people that are able to do it and the people that aren't Knowledge and effort, right, an understanding of what you're doing and how much energy you're gonna put into it. I'll give you an example, right. So, foot, if a shipper says I want this moved for just a random example, a thousand bucks and the market average on that is 1100, right, and my carriers all want 1200, right, they want a little bit above the average. My shipper wants to pay a little below average, right, that's really common when you're new. So everyone always asks well, how am I supposed to make money when they want to pay me less than I gotta pay them, like I would cost me money to do business with them? Yeah, it's the effort, right, and it's on both sides. On the shipper you've got to ask questions to one this is their first offer. I always like, kind of Like, compare it to like your Christmas wish list. You're gonna write whatever you want on that, because there's no reason not to. Why not? Right, right, I want this, I want this, I want this and I want this. Right, I want to pay a thousand dollars for something that cost 1500. They don't know you that well, you just called them out of the blue. They're gonna ask because, hell, maybe you're gonna come through with something that would just make their day if you don't ask, you'll never. You don't get what you don't ask for so you got to ask hey, you know, I know you're looking at a thousand. Hey, is this where you need to be? Is this what you typically pay? Is this your target? Is this just for today? Can you give me an idea of where you normally are? Well, let me ask you, okay. I then try to test that, because they're usually gonna tell me yes, yes, yes and yes, okay, great, well, let me ask you something when does this need to pick up by? Does need to pick up by today or tomorrow? If it can pick up today, tomorrow or the next day, they're almost never gonna pay any more than whatever that low number is I. If they then tell me it's got to pick up in the next couple hours or that day, okay, now I know they're. Probably they needed to pick up more than they care about the money you need leverage. You need them to care about one other thing, other than just what they want to pay. Now I've got time, okay, so tell me about that. It has to pick up today. Well, let me ask you what if it doesn't pick up today? Oh, then my customer is going to scream at me, okay. Well, what does that mean? Is that a big deal? Can it still just deliver and they'll just be upset? No, it'll be a huge headache, okay. So let me ask you, if I go and get you the truck you need right now that can pick it up and say an hour and a half or two hours and the only truck I can make work, and say they want $12.50, do you want me to let that guy go or do you want me to bring that option to you for you to decide? And that question usually gets you a much better answer, because then they'll usually be like well, hey, if you got a guy for $12.50, give me a call before you let him go. I might be able to make that work. Now I know that everything they first told me was bullshit. The reality is, is there more than willing to pay market rate? They just didn't want to. So now I got the other side. I put the same amount of effort on the carrier side. Every carrier is going to ask me for above average. I'm going to ask a bunch of questions to find, hopefully, the carrier that needs to go where my load is delivering, because maybe I'm going to look at their MC. They're domiciled in Oakland, california. My load delivers 50 miles outside of Oakland and they want this load. It's pretty likely that they want to get home. Okay, I know you want $13.00, but hey, if my customer is only willing to do $11.50, can you take this for $11.50 or do you want me to just not call you back? Oh, if they'll do $11.50, I might be able to do that. Boom, back to my customer, get an extra $25.00, back to my carrier, maybe hopefully make them happy. Now I got a margin. The reality is is you've got to work both sides in opposite directions. They always start where they want so much that it never works. You've got to be able to get them both to reality and then be able to negotiate in good faith once you're both talking about the same things. But you can't get to that point in a negotiation unless you ask enough questions so that you're talking about the same things Somebody saying I want a rate and me saying I don't want to give it to you because I can't find it. We're just arguing over one point. You need another piece of information to leverage that point's value away. Right, if it's just rate, it's only rate and that's all that matters. If I can add time to it and then a third one service or risk that the load doesn't get delivered on time, not just picked up on time, or that there's a claim because it doesn't get where it's supposed to on time, now I've got more ammunition to be able to maybe get the shipper to pay a little bit more. That's how you really go to work for your carriers to get more money to help them right. Asking more questions, getting to the root of where this negotiation is right, that's a really good deep dive man. I like that. You've got a margin right. It's just doing this over and over again. This is why it's so tedious and time consuming. But here's the silver lining, right. Yes, it's a lot of work. Yes, it's difficult and yes, most people don't want to put that effort in. But the great part about that is, once you do that, if you can make that load work. Now you got an opportunity to go back to your customer and say, hey, how did that go? How's that load coming? Do you have that load next week? This carrier is going to be available Hopefully he is Now. Maybe you can turn that one negotiation that took you a while into hopefully a load every week all year. So now maybe you only made $150 on that one load. If you can get that load every week, that's $150 times $52. That's not a bad margin for a little bit of a lengthy negotiation. That's how you take a situation where it doesn't seem to work at all and turn it into really a part of a book of business that will grow as you do that over and over and over again, outstanding Great explanation.

Speaker 1: 28:11

That's a really good breakdown. Well, hey, thanks everybody for your questions. We appreciate it. Keep sending them. We'll keep answering them, ben bottom thoughts, for sure.

Speaker 2: 28:21

Whether you believe you can or believe you can't, you're right.

Speaker 1: 28:26

And until next time go Bills.

About the Author

Freight 360
Freight 360

Freight 360 was born from a vision to share knowledge about transportation with everyone.

To read more about Freight 360, check out full bio here.