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Freight brokers: Stop asking carriers to sign outrageous contracts!

freight broker contractAs a freight broker, we are shocked at the outrageous contracts that brokers ask carriers to sign. We do mean SHOCKED! We do mean OUTRAGEOUS!  We recently saw a freight broker contract with a carrier from a large freight broker. This 3pl asks every carrier to sign their broker-carrier contract. Below are just a few of the outlandish, partial items in their contract:

  1. No detention is paid at shipper unless the delay creates an unreasonable delay that subsequently affects a delivery appointment.
  2. Carrier shall not be paid until Broker’s Customer pays broker for the transportation…..
  3. Broker shall be named as an additional insured on carrier’s general and automobile liability and cargo liability policy….
  4. Broker shall have the right to offset from freight charges by carrier the amount of any actual or potential claim….
  5. Carrier will assume the defense of claims….to the indemnified party….Carrier will retain independent and competent legal counsel acceptable to the indemnified party…If any indemnified party determines there may be a conflict…..then, at the expense of the carrier, counsel for the indemnified party will be entitled to conduct a defense……
  6. No detention is paid for delays at the receiver before 3.5 hours. Thereafter detention is paid at $35 per hour.

Freight brokers need to stop asking carriers to sign unreasonable contracts! To make it worse, many freight brokers will not use carriers that change the outlandish items in the broker-carrier contract!  But the same brokers with the outlandish contracts may have websites that state how they respect and appreciate their contracted carriers that haul for them and recognize that they cannot exist without carriers.

Carriers need to read and understand a freight broker contract prior to signing them.  Carriers, please take these contracts seriously. To address number 3 listed above, carriers need to know that when they agree to make a broker an “additional insured” on their insurance policy, they are in effect giving the broker their insurance!  In our opinion, a more reasonable contract would request the carrier make the broker a “certificate holder”, not an “additional insured”. Carriers need to be scrupulous about reviewing these contracts as any number of provisions can be lurking in them.

As a freight broker, we know that 3pl’s must insert certain items in a contract to protect their rights and their customer’s rights. But a middle ground must be met by both the broker and the carrier. Freight brokers need carriers and carriers need freight brokers. We urge fellow brokers to take steps to generate a fair, middle ground contract that has the proper protections in place for all concerned parties and will allow for a mutually respectful business relationship between the freight broker and the carrier.  #freightbroker #3pl

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