Before I get into the story of my trip to Armenia, a country which I have dubbed “the double brokering capital of the world,” I would like to inform the reader of what double brokering is. A double broker takes loads from a freight broker/3PL and resells them at a lower price on the market to a carrier, who will end up hauling the load.
Typically, the double broker has two MCs (Operating Authority, which dictates the type of operation a company may run and the cargo it may carry). One MC is registered as a carrier MC, and the other MC is registered as a broker. In a perfect world, this may not be problematic.
If the double broker handles the loads given to them by a freight broker while also doing due diligence and compliance, it could be very beneficial for both parties. In this scenario, the freight broker is essentially outsourcing its freight brokerage needs to a third-party (the irony).
When double brokering is done legally, it is called co-brokering. Co-brokering is essentially the same as double brokering. Still, the most critical difference is that all parties are aware of what is happening, and all legal matters are taken care of.
However, various problems can arise when a freight broker unknowingly gives a double broker a load. Often, the load doesn’t get covered, or it gets partialled (consolidated with various other shipments), railed, or the carrier’s insurance doesn’t cover the product.
Interestingly enough, there is a massive market for double brokering. When I worked previously as a freight broker at another company, we were constantly bombarded with calls and e-mails from double brokers asking for freight. Most of these double brokers were based in Armenia, with a few in Eastern Europe.
It is really easy to spot a double broker. They typically have a very American-sounding name (ex: John Smith, Berry Johnson [yes – they misspelled Barry], etc.). They usually use a GMail account (ex: [email protected]). They are almost always based in Southern California; Glendale is the most infamous of all cities.
Although they have been getting smarter about this, most freight brokers have picked up on Glendale being the capital of double brokering in America. Lastly, the MC almost always has freight guards for double brokering on Carrier411.
So why is there a massive market for double brokering? Why are freight brokers constantly receiving emails and phone calls from them? Well, it is a straightforward business to set up if you outsource all of it to either Armenia or other third world countries (such as Ukraine or India). You hire people in these countries and pay them only a cut of what they sell. Therefore if your double broker reps cover zero loads, you don’t have to pay them anything.
Your only costs are insurance for both MCs and the technology needed to run the business (which isn’t that much). So you get people in these countries to pound calls and emails. By spamming all these brokers daily, a double broker hopes to find a couple of loads it can cover that day to make some money.
Double brokers don’t have bad intentions when they take a load from a freight broker. They need to cover your load to get paid by their bosses, and they want to service you to get more business later (in that way it is just like the relationship between a freight broker and its customer).
The problem is that the market is flooded with double brokers who aren’t trained properly and do a poor job covering a load. This ruins the reputation of the so-called good double brokers who work hard to service a load.
Because you now have a better understanding of what double brokering is and who is doing it, I want to tell you more about the world of double brokering. I believe I know more about double brokering than anyone else in the industry (other than double brokers themselves). When I started getting some traction on my Instagram page, I noticed the large percentage of Armenians that followed me.
The percentage of followers from Armenia on my Instagram account always hovers around 6%. It was the highest percentage of followers outside the United States. This intrigued me because it made me realize how big the double brokering market is. Therefore, I packed my bags and visited Yerevan, Armenia, in November of 2021.
It was a wild adventure, and I learned a great deal about the entire industry. So stay tuned for the following article, in which I will tell you what I learned and what happened.
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