What is dual brokerage?
Double brokerage occurs when a freight broker accepts cargo and then hands it to another freight broker without telling the client. (i.e. after accepting a proxy load, if the broker re-proxies the load to another carrier, this is double proxying.) That's not what a broker should do.
Some background
Brokers, carriers and freight forwarders are the three recognized forms of transportation providers. "Dispatch services" are new to the market and try to circumvent the rules by acting as a broker, carrier or both...without abiding by the rules and regulations of either party. This means that shippers have no legal protection when it comes to delivery services.
As part of the regulations, shippers should know who they have contracted for goods and whether they have contracted with a broker, carrier or freight forwarder.
It is generally accepted that an entity (company) should be one of three: a broker, a carrier or a freight forwarder. However, it is common practice for carriers (especially) to accept more loads than the trucks they own and then "lay off" the extra loads to other carriers. These carriers may or may not have broker authorization...but in either case act like a broker (and re-broker) without disclosing (i.e. act like a co-broker).
Companies that refer freight are notorious for "disappearing" and don't pay the carrier or break up or hold the freight hostage until the shipper (broker) pays. In general...if you don't follow the rules you are doing it on purpose and for a reason...
Going back to dual brokerage...this practice has many risks and relatively no benefits. When one broker hands over their cargo to another, they no longer know who is actually handling the cargo, or if they are using the proper licenses and insurance, nor can they track the cargo.
While technically legal, dual brokerage is a contentious issue in the shipping world. (Side note: It may be illegal if a broker accepts payment for an agent shipment, forwards it to another shipping company, and then does not pay the carrier after the shipment is shipped.)
Freight brokers can avoid double brokers by not "biting too much". In other words, if you can't tow the goods yourself, don't say you can tow the goods. If you cannot handle shipping and need to pass it on to another broker, you must do so with the client's consent.
Dual brokerage should not be confused with joint brokerage, which can be a beneficial practice. Co-brokering is when a freight broker cooperates with another broker to meet demand - a collaboration that is known to all parties. Ultimately, co-broking is there to help clients. Sometimes brokers have a specialized niche, so it makes sense to co-broker with the company instead of rejecting client requests.
