Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.
In this edition: The FMCSA has issued final guidance on the broker and agent divide and there are big doings in the West Coast labor talks.
The Federal Motor Carrier Safety Administration has officially issued guidance for the interpretation of trucking brokerages that could help reverse the amount of double brokers. This official guidance comes after the interim guidelines were published in November. The final guidelines, per the FMCSA ruling are as follows:
- Definition of a broker: “Handling money exchanged between shippers and motor carriers is one factor that strongly suggests the need for broker authority, but it is not an essential requirement for one to be considered a broker.”
- Definition of an agent: “A bona fide agent may be either an employee of a motor carrier or a contractor but must perform its duties as specified in a pre-existing agreement between the parties.”
- Within the guidance, the FMCSA clarified that the term “allocating traffic,” which appears in the definition, means any exercise of discretion on an agent’s part when assigning a load to a motor carrier. If an entity representing more than one carrier exercises such discretion, it would not meet the definition of “bona fide agent.”
FreightWaves’ John Gallager’s article states, “FMCSA emphasized that the guidance ‘does not have the force and effect of law and is not meant to bind the public in any way.’”
But Small Business in Transportation Coalition asserted that by FMCSA making clear that entities holding themselves out as dispatchers cannot avoid having to obtain a broker’s license unless they work under the geographic and commodity principles the agency outlined, “this is effectively a death blow for unlicensed brokers calling themselves dispatchers.”
TRAC Tuesday. This week’s TRAC lane is Cincinnati to Denver. Outbound tender rejections in Cincinnati and Denver have started falling, indicating that spot rates will be following in the coming days. Putting downward pressure on spot rates will be paramount throughout the week, but ensure that rates haven’t dropped so low that it could hurt the carrier relationship.
Who’s with whom? There are big doings out West. The Pacific Maritime Association, representing the terminals, and the International Longshore and Warehouse Union, representing workers, have tentatively agreed on a new six-year contract. No major details of the agreement were released and the agreement has yet to pass through the ratification process on both sides. Acting Labor Secretary Julie Su was apparently “instrumental” in the agreement.
FreightWaves’ Greg Miller’s article said: “Reaching an agreement prior to peak season was crucial for all parties. Doing so avoided political fallout to the Biden administration from pre-holiday congestion headlines. The ILWU avoided reputational fallout from holding up Christmas cargoes to increase wages that were already relatively high. And the PMA averted losses to port productivity during peak season, which translates into more terminal profits.”
Double broker red flags
Double broker red flag No. 5: Thou shall not be bullied by a carrier.
Do not pay the carrier until it legally makes you. Demand original documentation for payment. Tell the carrier you suspect that it is a double broker and are unwilling to pay until you are 100% sure that there isn’t another carrier you actually owe the money to. If you can avoid paying these guys for 45-plus days, they will have either paid off the original carrier or stiffed the other carrier hard enough that they will come looking for you.
Got any favorite tips? Let me know or post on LinkedIn. I’d love to share them with everyone.
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