Double Brokers Gone in 6 Months?

NO THIS IS NOT AN APRIL FOOLS JOKE!

Introduction

Is it possible to Completely Eliminate the Illegal Double Brokering scams in just 6 Months?

I think it is possible. Many Shippers, Carriers and #SmartBrokers could be protected forever!

We will just need a little help from the Federal Motor Carrier Safety Administration (FMCSA), Transportation Safety Administration (TSA) and Department of Transportation (DOT).

Background

What is Double Brokering?

The definition of double brokering is when a broker selects a trucking company to haul their freight, and then without notice to the broker, the trucking company proceeds to re-broker or double broker the load back out to another carrier that ultimately picks up, transports and delivers the freight to the consignee.

This practice poses a serious threat to the integrity of the freight industry and has significant financial implications for all parties involved.

I see this as much more than just a financial issue. In my opinion, it these scams affect Highway Safety and National Security! In a recent poll on LinkedIn more than 88 percent of those polled identified Double Brokering as the number one problem in the Ground Freight Industry in the United States.

In this white paper, we will explore the concept of double brokering, the risks associated with it, the steps that are currently be taken to help prevent it, and how Double Brokering can be completely ERADICATED by Christmas.

Risks Associated with Double Brokering

Double brokering poses several risks to shippers, carriers, and brokers alike. For shippers, the primary risk is financial. If a shipment is double-brokered, the shipper may end up paying twice for the same service. In addition, the carrier actually transporting the shipment may not have the necessary knowledge or resources to properly handle the shipment, which could lead to delays, damage, or loss.

For carriers, the risks associated with double brokering are also financial. If a carrier accepts a shipment from a broker who has already assigned it to another broker, the carrier may not receive payment for their services. While the US Supreme Court has ruled that the "Carrier Must Be Paid" (Southern Pacific Transportation Company v. Commercial Metals Company, 456 U.S. 336 (1982), n There are costs involved such as attorney's fees, collections fees, etc. In addition, the carrier may be held liable for any damages or losses that occur during the shipment.

Preventing Double Brokering (today)

Many shippers and brokers today try to prevent double brokering by working with reputable carriers who have established relationships with carriers and brokers.

While systems such as #MyCarrierPackers , #AssureAssist , #Carrier411 , #FreightGuard , #BrokerCarrier , #CarrierWatch and others do a fine job in helping to identify Double Brokers through user reporting, it simply is not enough.

Carriers that are most being taken advantage of are those with 10 or less trucks. That equates to 95.7 percent of the more than 2 million licensed motor carriers in the United States.

The Monitoring and reporting systems listed above cater mostly to the Brokers. Brokers use these tools to ensure that the carrier they are using meets certain standards - one of the major components the Broker looks for is any history of double brokers. However, the issues here are

1. The Carrier May have never been reported by a subscriber to the platform
2. Carriers (especially the smaller carrier) don't generally look to these tools to vet the party that is giving them the load (in a double broker scheme this is usually another carrier) because either they think that these companies only have info on bad carriers and not on brokers (generally he thinks he is getting the load from a broker)
3. There are nearly 40,000 licensed brokers and a very small percentage of these brokers subscribe to these services. When they are the victim of a Double Broker Scheme, many do not even know to report it. and if they report it to the FMCSA it just gets added to the list of 80,000 other complaints
4. They depend on load boards and have developed a false sense of security by thinking "well the carrier/broker is on DAT, so they must have met criteria and are a good company"

Truth be told, we are just placing a band-aid on a wound that requires a tourniquet!

Training

Carriers should be trained to verify the legitimacy of the broker they are working with and ensure that they have a valid contract in place before accepting a shipment. Further, carriers should be required to receive training on MAP-21, 49 CFR so that they are familiar with the Federal Motor Carrier Safety Regulations. Every carrier that applies for authority signs the Certification Statement in paragraph 31 of the Form MCS-150... but lets be real, how many carriers or brokers have read the Regulations?

While it is clear that Brokers should establish policies and procedures to prevent double brokering, including conducting due diligence on carriers and shippers and establishing clear communication channels with all parties involved. In addition, brokers should educate their clients about the risks of double brokering and encourage them to work directly with reputable brokers.

Is the FMCSA really to blame for the Double Broker Epidemic?

According to the Department of Transportation Website, there are over 2 Million Licensed Motor Carriers, more than 8.9 Million Drivers, over 8 Million Commercial Motor Vehicles and over 50,000 licensed Freight Brokers and Freight Forwarders in the United States

There are just 1150 Federal Motor Carrier Safety Administration employees... You do the math.

So the BIG Question

How can Double Brokers be ERADICATED by Christmas?

1. Make the ability to get a FMCSA Motor Carrier Authority match the significant responsibility that goes with the job. Obtaining FMCSA authority should be more than just filing out a couple forms and putting $300 on a credit card

To become a barber in the United States a person is required to:

1. Complete a course or apprenticeship (in most states a minimum of 1500 hours)
2. Successfully complete a Licensing Examination
3. Meet Requirements for Licensure - Pass a Background Investigation and Physical Examination

To obtain Motor Carrier Authority and become a licensed Motor Carrier one must:

1. Have a pulse
2. Complete and Submit an application (takes about 15 minutes)
3. Pay $300
4. Obtain insurance on as little as One Motor Vehicle
5. Wait 30 days

It really is that simple. One person can (and do) have several MC Docket numbers. When they get caught in a fraud scheme they just use another

My position is that when a driver delivers empty baby bottles to an airline for a flight on a passenger aircraft, he is required to present a TWIC card, but if someone from a foreign country wants to start a trucking company here, he does not.

Here is the answer:

Require any current or future applicant company principle(s) (owning 5 percent or more) to:

1. Complete 40 hours of training from an accredited Freight Broker/Motor Carrier Training Entity (ie TIA Certified Transportation Broker Training #OOIDA #DOTCSA #Hubtek #ProfitQuest and others) PRIOR to applying for DOT or MC Authority. The applicant must pass a written examination indicating complete understanding of Federal Motor Safety Regulations and MAP-21
2. Obtain a Transportation Workers Identification Card (TWIC). Per current regulations, a holder of a Motor Carrier authority at no point is required to provide any identification. Applicants can be (and Many Are) based in other countries and have no intention of living in the United States. Someone could literally use the name Charlie Brown and a company name Comic Book Trucking and Get Authority - Through the TWIC Process, the Owners of the entity must apply in person, are subject to a background check and must have no disqualifying offenses or factors (including offenses in foreign countries) - The TWIC number will be made available as public record for monitoring companies, brokers, shipper and carriers to validate companies
3. Because the TWIC card must be renewed ever 5 years, the carrier authority must also be renewed every 5 years. IF the TWIC Card cannot be renewed, neither can the authority
4. IF a carrier is reported, investigated and found guilty of Double Brokering, or if the carrier is placed out of service, the Carrier Authority and TWIC card are Revoked. The Principle is prohibited from applying for a new TWIC or MC/DOT Authority for a period of 5 years. The Principle also forfeits any TSA PreCheck, FAST or Global Entry privileges for 5 years.
5. If a motor carrier or broker is sold, the FMCSA must be advised immediately and the new principles must provide TWIC Card Information at date of close of the sale. If the new owner does not have a TWIC Card, they will want to submit application at least 60 days prior to sale date to ensure there is no lapse in authority
6. If a motor carrier authority is revoked (voluntary or involuntarily) it is PERMANENTLY revoked. One cannot simply reactivate. This will eliminate the sale of old MC numbers that may give an impression that the company has been around for some time. A new application and TWIC Card Must be submitted.
7. Prior to insuring a Commercial Motor Carrier Insurance companies must confirm TWIC Card information and place Principle TWIC number on Certificate of Insurance. Insurance company must ensure that the mailing address, email address, phone number and TWIC number provided matches FMCSA/DOT records
8. Principle can have only ONE authority associated with a TWIC Card number (Exceptions can be made if the principle has a separate Motor Carrier, Broker or Freight Forwarding Authority) A Waiver may be applied for on a case by case basis
9. If a company ceases operations, the associated MC Number/DOT Number is permanently Revoked
10. Penalty for conviction of Double Broker shall be a felony.

To make this happen within 120 days for Double Brokering, The DOT and FMCSA must require

1. Any the principles of any holder of a Motor Carrier authority and/or DOT number to provide a valid TWIC Card within 45 days - if they do not have a valid TWIC Card they must prove application and deadline will be extended to 90 days. If the deadline passes, the motor carrier authority will be revoked.
2. Principles must provide proof of training at accredited broker training/motor carrier training that includes applicable 49 CFR Training and MAP-21 Training within 90 days. The verification must be submitted electronically to FMCSA by the training entity

New Applicants must complete all training, obtain TWIC card, provide proper Certificate of Insurance from Insurance Provider with Verification of TWIC, address, etc. prior to applications

Conclusion

Double brokering is a serious issue that poses significant financial risks to all parties involved. To prevent double brokering, shippers, carriers, and brokers should work together to establish clear communication channels, verify the legitimacy of their partners, and educate themselves about the risks associated with this practice.

But the first step in eliminating double brokers is by identifying them. With assistance of FMCSA and TSA, we can do that. With the time saved by not passing out MC Numbers and Authorities like Santa Claus passing out Candy Canes to unidentified applicants, FMCSA staff can concentrate on properly vetting new carriers and proper renewal of current carriers.(It is really just making sure they have a TWIC Card, TSA already vetted them)

By requiring a TWIC card as a prerequisite for obtaining an MC or DOT number, for the first time in FMCSA history, there will be no doubt about who owns a Docket Number or a DOT number. After all it is called a Transportation Workers Identification Card - Lets Properly Identify our Transportation Workers !

By taking these steps, we can help to ensure the integrity of the freight industry and protect the interests of all stakeholders, our carriers, brokers, shippers and ultimately the general public.

--Dale Prax

President and CEO

Direct Expedite LLC