In the hustle and bustle of freight logistics, it's not uncommon for freight brokers to seek external support to manage overflow, handle specialized freight, or tap into networks they may not otherwise reach. At Freight SideKick, we've seen an increasing number of brokers come to our platform for quotes— without realizing that are a freight brokerage agency. This often leads to confusion about co-brokerage versus double brokering.
In this comprehensive guide, we clarify what co-brokerage is, the risks of double brokering, and explain why it's essential to understand the nuanced difference between the two. These terms are sometimes used interchangeably in casual conversation, but they mean very different things under FMCSA regulations.
What Is Co-Brokerage?
Co-brokerage is a legitimate, FMCSA-compliant arrangement between two licensed freight brokers who work together to move a shipment. Typically, this involves:
- Broker A: The originating broker who has the relationship with the shipper and owns the customer relationship.
- Broker B: The partner broker who helps secure carrier capacity to move the load.
In this structure, Broker A remains the primary point of contact with the shipper, while Broker B may source and manage the carrier. Crucially, both brokers must hold valid FMCSA brokerage authority, and the relationship should be governed by a formal co-brokerage agreement. Transparency is key: the shipper should be aware that two brokers are involved.
Co-Brokerage vs. Double Brokering: A Nuanced but Critical Difference
The confusion around co-brokerage often stems from how the term "double brokering" is used colloquially versus how it is defined legally.
Double Brokering (Legally Speaking)
Illegal double brokering typically refers to:
- A carrier, not licensed as a broker, accepting a load and then re-brokering it to another carrier without authorization.
- A broker or carrier who reassigns the shipment to another carrier or broker without informing the shipper and without proper authority.
This unauthorized re-brokering creates serious risks:
- The carrier hauling the load may not get paid.
- The shipper may lose visibility into who is handling their freight.
- Insurance coverage and liability may be compromised.
- Cargo theft or fraud is more likely.
Co-Brokerage (Legally and Practically)
By contrast, co-brokerage is transparent and legal. It involves two FMCSA-authorized brokers working together, with the shipper's knowledge and documented consent. Even if a load is passed from Broker A to Broker B, this is allowed as long as the arrangement is disclosed and documented.
Co-Brokerage vs. Double Brokering: Side-by-Side Comparison
| Practice | Legality | Consent Required | FMCSA License Needed | Transparency |
|---|---|---|---|---|
| Co-Brokerage | Legal and compliant | Yes (shipper informed)Yes (carrier knows who’s hauling) | Both brokers must be licensed | Full transparency |
| Double Brokering | Illegal and high-risk | No | Often missing or misused | Typically none |
Remember: the act of transferring a load is not inherently illegal. It becomes problematic when it is done without proper licensing, authority, or disclosure.
When Co-Brokerage Makes Sense
Co-brokerage is not only legal but often essential in real-world freight operations:
1. Surge in Volume or Complex Projects
Brokerages handling seasonal spikes or project freight often need additional capacity. Partnering with another broker allows them to scale quickly.
2. Freight Forwarders Needing OTR Support
Forwarders that specialize in ocean or air often lack deep coverage in over-the-road (OTR) or less-than-truckload (LTL) freight. Co-brokering with a road freight expert fills that gap.
3. Modal or Regional Gaps
Some brokers specialize in flatbed or refrigerated freight but need dry van coverage. Others dominate one region but lack national reach. Co-brokering bridges these operational divides.
4. Urgent or Specialized Loads
Heavy haul, over-dimensional, high-value, or time-sensitive freight may require partners with specific expertise or equipment access.
What to Look for in a Co-Brokerage Partner
- FMCSA-licensed with active brokerage authority
- Insured appropriately for the freight type
- Proven industry experience in the relevant segment (LTL, flatbed, reefer, etc.)
- Strong carrier relationships
- Transparent business practices and willingness to sign formal agreements
Why Brokers Choose Freight SideKick
At Freight SideKick, we provide:
- Capacity support for freight forwarders entering domestic OTR markets
- Overflow solutions for high-volume brokers
- Expertise in complex freight modes like LTL, reefer, and flatbed
- Technology to simplify quoting and booking
With a formal co-brokerage agreement in place, you can confidently expand your service offerings and maintain shipper satisfaction.
Final Thoughts: Clear Up the Confusion
Double brokering is often misunderstood because the term is used loosely. But legally, it refers to unauthorized, undisclosed re-brokering, especially by carriers posing as brokers.
Co-brokerage, on the other hand, is a legal, transparent, and valuable business relationship when documented properly.
As long as:
- All parties are licensed and insured
- The shipper knows who is handling their freight
- The carrier knows who the true broker is
- And there is a clear co-brokerage agreement in place
…then you're operating legally and professionally.
Ready to Co-Broker with Us?
Visit our Co-Brokerage Page to learn more and request a formal co-brokerage agreement. We look forward to helping you serve your shippers with confidence and compliance.
