A financially under capitalized individual broker files for bankruptcy leaving the shipper's freight and the shipper's customer out in the cold.
An unknown fact to many shippers is the asset carrier can collect from the shipper, even if the shipper did pay the broker.
Broker did not exercise reasonable care in diligence in their carrier selection and is unable to cover losses through its carrier's insurance or its contingent cargo insurance policy.
With the above in mind, we would highly recommend that before booking or accepting freight with a broker that due diligence falls under the saying an ounce of prevention is worth a pound of cure. Start with the broker's MC number and work all fronts to ensure you are dealing with a reputable broker.
Freight brokers are tremendous resources and experts in all modes of freight and topics in the shipping industry. The expertise comes from being in the market all day, every day on all things freight related. This expertise also includes technology, as high volume brokerages need the very best tools to efficiently tender, move, communicating to all stakeholders throughout a shipment, invoice, audit & pay carriers, negotiate freight RFP's, manage spot rate business, and optimize & analyze for the most efficient solution. The trend over the years has been for these high transaction oriented brokerages to extend their business model to include a full outsourced solution for shippers of all sizes for a quick implementation and return on investment by allowing shippers to tap into the technology and connections established.
Before closing, we do want to stress that freight brokers should not be confused with freight forwarders.
Unlike freight forwarders, freight brokers do not take possession of the freight. Freight brokers coordinate the shipment by matching the shipper up with a carrier where freight forwarders actually take possession of the freight and then arrange for the shipment. With that said, most freight brokers' insurance are not primary cargo coverage, but contingent cargo coverage. Now this is not always the case, as some freight brokers offer primary cargo coverage.
All in, using a freight broker may be a good solution for your company. We'd love to be a part of the conversation as you work through your buying journey, so please do not hesitate to contact us and begin reading our blogs.