Federal regulators have attempted to clarify differences between brokers, bona fide agents and dispatch services in new interim guidelines issued Tuesday by the Federal Motor Carrier Safety Administration.
Mandated by last year’s infrastructure bill, the guidelines are aimed at cracking down on companies that engage in truck brokering but without proper authority from FMCSA, an issue that brokers claim illegally undercuts their business.
While FMCSA acknowledged that dispatch services “can help to ensure the motor carrier has a steady stream of shipments” that allows them to focus on moving freight, the way in which dispatch services perform that function can mean the difference between being under FMCSA authority — including the requirement that they have a $75,000 bond to protect their motor carrier customers from nonpayment — or not.
To make that distinction, FMCSA listed six factors to help determine if a dispatch service needs broker authority. Such authority is needed if the dispatch service:
- Interacts or negotiates a shipment of freight directly with the shipper or a representative of the shipper.
- Accepts or takes compensation for a load from the broker or factoring company, or is involved in any part of the monetary transaction between any of those entities.
- Arranges for a shipment of freight for a motor carrier, with which there is no written legal contract with the motor carrier that meets the aforementioned criteria.
- Accepts a shipment without a truck/carrier then attempts to find a truck/carrier to move the shipment.
- Is a named party on the shipping contract.
- Is soliciting the open market of carriers for the purposes of transporting a freight shipment.
FMCSA’s guidelines clarify that dispatchers operating as an unauthorized broker carry civil penalties of up to $10,000 for each violation.
Congress also mandated that FMCSA clarify what defines a “broker” versus a “bona fide agent” that works specifically for or on behalf of a motor carrier. Because the view among most of those providing comments on the proposed guidelines saw no need to change the current definition of “broker,” however, the agency felt the need to make only one clarification: the relevance of handling funds in shipper-motor carrier transactions.
For example, the Transportation Intermediaries Association (TIA), which represents brokers and 3PLs, and the Owner Operator Independent Drivers Association viewed the handling of money had “at least some relevance as to whether one is brokering,” FMCSA stated.
However, while handling money exchanged between shippers and carriers “is a factor that strongly suggests the need for broker authority … it is not an absolute requirement for one to be considered a broker,” the agency stated.
As for the definition of a “bona fide agent,” FMCSA noted that multiple commenters, including TIA, the National Industrial Transportation League and the Small Business in Transportation Coalition contended that to be considered a bona fide agent one can represent only one carrier.
FMCSA disagrees, stating that “representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent.” In other words, a bona fide agent does not necessarily represent only one carrier.
But FMCSA also states: “Any determination will be highly fact specific and will entail determining whether the person or company is engaged in the allocation of traffic between motor carriers.”
In commenting on FMCSA’s guidelines, Chris Burroughs, TIA’s vice president of government affairs, said the agency incorporated several of the association’s suggestions on dispatch services.
“This is a positive first step, though TIA believes it should be the first and not final step as the number of unlawful brokerage activities continues to rise and these illicit dispatch services skirt registration and regulatory requirements,” Burroughs told FreightWaves. “TIA looks forward to continuing to work with the FMCSA on this important issue.”
FMCSA emphasized the interim guidelines do not have the force of law and are nonbinding. The public has 60 days to comment, with possible updated guidance from the agency based on comments received.
Broker
The broker is the one who has the relationship with the customer paying the bill. The broker then puts up their own money to pay the carrier within 30 days. When the Customer does not pay their bill for sometimes 90-180 days. The broker is dealing with the constant “breakdowns” and miscommunications with the carriers. The most common problems I see id that the carrier will tell the broker anything to secure the load. Then when they show up late to the pickup because they were not honest about when they would get empty with the load prior. Or try to pair an undersized “full load” with a partial causing timing problems. The broker is the one taking the heat from the customer on one hand. The broker is also dealing with the lackadaisical attitude of the carrier when something goes wrong. The carrier does not care, they do not have the working relationship with the customer. The carrier is quick to pump the broker for $ if they have any hold up on a job, but will not budge when the fault lands on the carrier.
M
Once again, the TIA and the FMCSA have partnered against the whole industry and won, and honest dispatching companies/services have to pay the price because of those operating illegally.
The main issue that we requested help with, (Broker transparency) still has not been addressed and it would appear that they never will disclose what we’re all trying to get answers for.
Alfred
The services of a dispatch is for carriers to keep on moving by not wasting time negotiating and filling out paperwork for each load they take, a motor carrier is well capable of doing such thing but wasting time specially in this industry is wasted money. Dispatchers just get compensated for their time and is usually an amount a motor carrier is willing to pay so they don’t waste their own time. In the other hand Brokers take more than they should and a motor carriers can not do anything about besides not taking the load and run into the same problem with another load, as a driver I seen this at first hand several times, brokers take an average of 30-50% of what they charged for each load if not even more, for example I picked up a load from a military installation and since it’s a military installation they have to provide all the information about the load including the actual pay of such load, I got this load for the amount of $5000 while my Bill of Lading had the amount of $7500 that is 33.33% a broker kept of the load just so he/she could post it on a load board, brokers try to stop this information from getting into the hands of motor carriers by asking the shipper to send them the BOL instead of shipper giving it directly to the motor carrier then brokers modify the BOL with the price that had been negotiated at first before they send it to the motor carriers. In another occasion I took a load for $600 and found out by the customer in this case the receiver that he had paid $1400 to the broker to get his load moved that is over 50% of the load yet motor carriers take full responsibility and put their lives at risk every single mile they spent on the road but you all want to keep beating around the bush. Yes brokers do their job by making hundreds of calls to get loads so they can put them in a load board but the percentage they take of each load is absurd and unfair taking advantage of small motor carriers business trying to stay afloat.
Gio
Brokers taking such a big cut from loads is what take many o/o out of business this should be criminal and shut off! not fair that someone sitting in a desk makes much more money than the driver risking their lives and taking full responsibility of the loads. THIS IS THE MAIN PROBLEM IN THE INDUSTRY.
Geck
The brokers are the ones stealing, a dispatcher don’t get paid until the driver does and that’s a problem how??
PHUK THE BROKERS
YALL BEATING AROUND THE BUSH WITH THIS ARTICLE. THE TRUTH IS THESES BROKERS ARE STEALING FROM THE CARRIER AND THE WAY THE ARTICLE MISLEADS YOU TO BELIEVE THEIR ARE ILLEGAL BROKERS IS FAKE NEWS
Russell
What about passing the law that requires brokers to show the rate sheet to the carriers that comes from the shippers. So that they will no longer be able to take more than their percentage. Let’s get this problem out of the way first before we deal with other issues. Brokers taking extra money has been a problem way before dispatchers came along.
Inquiring truck driver
Will the FMCSA stop unethical activities by brokers such as Total Quality Logistics?
Brokers take more than they deserve, yet no regulation on how much brokers skim from each load. Who do we need to be buddies with, to make brokers pay fairly?