Trucking is a huge industry and believe it or not there is fraud. As the industry moves to take freight brokers out of the middle of the transaction it opens up an unregulated marketplace that is ripe for fraud. Take a few steps to protect yourself. I was taken one time working as broker in a double broker scam by this guy. Double broker scam is where a fake trucking company calls the the broker and offer to pick up the load. They usually ask for a cash advance and quick pay and then they turn around and book the load with another carrier that they never pay. Load gets delivered and then 30 days later the broker gets a call from the real carrier demanding payment.
So in this scenario how can truckers protect them selves from being the guy or girl who gets screwed or how does a driver do business with a shipper directly and how do they insure they will get paid. Freight is a tricky thing because its a service and once the service is done the sense of urgency to pay the $4000 bill is not quite as high as it was when that load needed to be picked up and delivered.
Shipping with a broker – Check the surety bond. Drivers and brokers don’t really like each other but one thing that is nice about doing business is that freight brokers are required to carry a surety bond of 75,000 dollars. This is a protection against not getting paid by the broker. So always just just give a call to the bonding company and make sure they are up to date.
Sign and read the contract – With a broker there is a carrier agreement. This basically says they will pay you for the load and you will not back solicit their customer. Also some stuff how you are an independent carrier and have your own insurance. Basically the freight broker is a travel agent in the deal. If something happens then it is on the carriers insurance.
Shipping with a direct shipper – As the world of technology gets faster and easier to use the transportation industry is going to try and create marketplaces where shippers want to do business with carriers directly. This poses a bit of an issue because now there are no surety bond to protect the carrier. Carriers only have the regulations from the FMCSA and DOT basically it says that a shipper is required to pay the motor carrier for delivery of goods. Problem is trying to collect if the shipper doesn’t want to pay is just not going to happen. Collection agencies don’t really do anything other then annoy them if the shipper doesn’t want to pay they generally don’t. The amount they steal is generally to low to sue over and more of a hassle then its worth.
So what do you you do. It is not really all doom and gloom for the trucker. First google the shipper. Search on Manta.com to see if you can find them. If you can’t find them or they only show up in some weird yellow pages listing then be careful. Ask for payment on delivery.
Buy a credit report on them. A couple that I know of are TransCredit and RTS Credit Service .
Use a factoring company for loads where you are not sure about. Invoice Factoring comes in super handy when you are not sure of who to do business with. You don’t have to factor all the loads but if you are using a load board and not sure of the company then factor them. You can use non recourse factoring program that will ensure you get paid no matter what.
Use a shipper Carrier Agreement – Get a signed agreement between you the truckload carrier and the shipper. Just as you would with a broker. This protects both you and the shipper in case there is an issue. A link to Shipper Carrier Agreement.
For a really good look at what is in the carrier agreement check out this one we found. They have a great (but long contract) with every thing explained – Shipper carrier transport agreement with commentary
If you are a broker and want to avoid a double broker scam – The way I found out I was being scammed was that I called the insurance company that provided the insurance certification . They new right a way when I asked about the company that there was an issue. My mistake was the carrier provided me a nice insurance certificate in my the companies name right from the Progressive website. I was in hurry and didn’t double check it just thought the carrier had done some of the work for me. So I know it is a busy business but try and always check the carrier insurance.