Rebrokering: Why Risk It?

Rebrokering: Why Risk It?

Q: In several recent columns you’ve suggested pretty strongly that shippers should forbid their carriers, and their brokers, from brokering or rebrokering shipments.

I’m not quite clear why you advise this. As long as you can hold the original carrier or broker responsible, as the party with whom you’ve contracted, why does it matter who actually does the hauling, whether that party or someone else?

My view is that I’m buying a transportation service, getting my goods from point A to point B. Why should I care who actually does that? I know that subcontracting (brokering) is pretty common in transportation today, and I really don’t want to have to oversee the actual transportation process in the way you suggest.

Can you clarify?

A: Well, at the bottom line it’s that when I hire you to do a job for me, I don’t much care to have your eighth cousin twice removed showing up for work after you’ve passed it down through your family.

Now, admittedly, my concern about this will vary based on the work I hired you for. If it’s mucking out my stables, I admit I won’t worry about it much, and may not even notice as long as your cousin is reasonably fit and not a complete lay-about.

And there are circumstances in which your transportation needs may fit that bill. If you’re shipping, say, loads of glass cullet or scrap paper or the like — low-value, practically impervious to in-transit damage, etc. — you may not give a fat rodent’s behind who hauls it for you.

However, not all (or even most) shipments fall into that bottom-feeder category. Even at a clerical level, I want the person I hired, and not some anonymous substitute, doing the job. Likewise with the carrier or broker I engaged, I chose them to do it themselves, not farm it out.

You’re right that this kind of delegation is pretty common. Carriers and brokers work on load-by-load economics; can I maximize revenue by handling this or that load myself, or is it more profitable to sub it out and reserve my capacity for other, richer shipments? And there are plenty of other carriers and brokers eager to pick up the leavings.

But why allow it to be “common?” If you’ve put any effort into vetting your carriers/brokers, don’t you want them doing the work instead of any Tom, Dick or Harry they may sub out to? Besides, mostly they’ll slice a piece off the top of the revenue before passing your loads down the line; if you’re going to allow subcontracting, why pay the add-on “commissions?”

You’re also mistaken that you “can hold the original carrier or broker responsible.” With brokers, who don’t take much responsibility in the first place, that’s palpably false. And it’s only the carrier that executes the bill of lading — which is generally the one who hauls it, not the one you selected — that has legal liability.

So let’s say your load is lost or damaged or delivered short. Against whom may you claim? Mostly, it won’t be with the provider you thought you hired but instead whatever pig-in-a-poke to whom they farmed your freight out. Good luck with that.

Or say your originally selected provider does take responsibility, perhaps through some standing contract you have with that provider. They’ll still generally disclaim liability, referring you to the subcontractor while you try to extricate yourself from the standard pass-the-buck two-step.

Finally, suppose the subcontractee — perhaps two or even three steps removed from the provider you chose — has a catastrophic accident involving personal injury or even death. Ordinarily, other than the same passing sorrow any bystander might feel, you’d be unaffected.

But if the carrier in question were hauling your load, you could find yourself in court in a big-bucks lawsuit — especially if the actual carrier was under- (or un-) insured. Lawyers in such cases tend to go after the deepest pockets in view who even might be peripherally responsible for the truck being on the road to have the wreck — and you, as the shipper, qualify.

I won’t say you’d lose, although I’ve seen judgments against defendants only remotely associated with the actual event. But why put yourself at that risk?

If you forbid your selected carriers and brokers from farming your loads out, you ensure (as much as you can) that you do business only with known parties. Isn’t that better?

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455, phone 843-559-1277, e-mail BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80.00 plus shipping.