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.
Chris
The bottom line is that the so called brokers are not needed because they do not ship anything,they don’t carry anything,and they don’t receive anything,but yet they receive a commission of the freight and it is becoming very lucrative to people that are getting paid for doing nothing. It’s a shame because there is no need for a middle man because in all actuality that is what they are,and it is more people trying to break into that business and it shouldn’t be allowed. Shippers , Carriers and Receivers should be working hand in hand because that’s the only way this industry will survive. Carriers should be able to communicate directly to the shipper, and if there is a broker involved then switch it around and let the shipper pay the carriers directly and the carrier pay the broker a percentage of the freight. The broker should work for the carrier not the other way around. It’s hard enough for the driver between The hours of operation, fuel prices, the receivers ETA, the laws in different states and the law enforcers targeting truck drivers, the list goes on but one thing we shouldn’t have to worry about is your pay for doing a honest day of work that we took time to be trained for and perfected a craft. We have been threatened by motorist,road conditions, weather, traffic,etc and now trucks that drive themselves, by these big corporations. SMH,what about us,is anybody thinking about us.
Chandan Guleria
It is an utter shame that “Truckers”//O/O” Have to struggle to keep up with Operational Cost on one front and deal with Unsolicited Brokers/Dispatch services on the other. The struggle getting from one coast to the other is far to be realized by an ordinary person. Broken bodies, nutritional deficiencies, psychological disorders are what these Truckers endure every day and towards the end of their shelf life. While unreasonable and ignorant drivers fill up the motorways their job gets harder and accumulates stress like never before. These men/women are being forgotten and yet you want to steel from these guys. How much can you grow with the money that you robbed from these guys. These people have no voice because their life is busy negotiating the challenges of the road. Shame on the society that breeds on sweat and blood of these people. Shippers/Receivers/brokers/agents etc. you are surviving this industry because these people have sacrificed their lives and comforts to keep your businesses running. Help these people by working directly with them and not steeling from them. These are hardworking people build relations with them stop steeling from these guys.
Carolyn
Can truckers get their own l I ads without a broker?
Carolyn
Brokers are thieves. When they say they only have so much in a load you know to double it and that is what they are actually making. Who the xxxx pays $ 700 to transport 300 miles – you lnow the brokers rates to the company paying to transport the goods is paying alot more….it costs me $100 to send a small package from OHio to Maine but a company can pay a truck $700 tonsend 53 feet of chils 400 moles – come on….
Thunder Wookiee
Brokers are crooks. I can call three different brokers, brokering the same load (multiple loads coming out the shipper) , going to the same receiver at the same geographical location, with relatively the same wait, exact same cargo and get three completely different rates and in most cases the differences are significant.
With the technology we have at our fingertips today, why are brokers even needed? If a shipper wants to use a Brokerage firm then the shipper should pay the Brokerage firm a flat fee that DOES NOT dip into the actual shipping cost.
Brokers do not pass on the FSC. For instance I took a load from TQL going from Lake City, FL to Birmingham , AL. The load was a garbage paying load; $600 for 450 miles, commodity was frozen bread at 17k lbs. If the broker truly pays FSC then this load paid $285 with a FSC of $315 @ $0.70 per mile. You can’t tell me the shipper didn’t pay the broker a hell of a lot more.
These brokers will be the demise of the trucking industry. More than 50% of the industry is Owner Operators that is a far greater number than mega carriers.
The government needs to QUIT letting these thieves (brokers) continue to steal from the carrier’s.
No Brokerage firm should be a BILLION dollar a year company, especially when they have ZERO equipment. Just listen to TQL’s IVR (Internal Voice Recording) they brag about their profits, all while they rob from the truckers.
Isn’t America the land of opportunity? Maybe it is just as long as you’re not an Owner Operator in the trucking industry.
These crooks need to be abolished.
Kit prescott
Someone has got to pay dispatcher, rates are already to low or never enough, so why allow another seat at a table already full of hungry truckers the brokers are paying them out of our pay not their own
Mr. Krabz
Brokers are taking advantage of carriers and shippers and it needs to be thoroughly investigated and regulated. I personally know people who have been ac used of attempting to “steal the load” because they caught the LANDSTAR brokers double and triple brokering. I also know first hand that many brokers are charging shippers as much as 60% more than they are paying the carriers. That’s one big reason the rates as so bad right now.
We need transparency on what the shippers is being charged and what we are getting payed. Brokers need to be capped at say, 13% and be required to disclose the full rate and what their percentage/commission. Is going to be. The selling of loads to other brokers, needs to be regulated as well. There are too many hands in the cookie jar and we are getting the crumbs.
Abramowitz London
23 years trucking these brokers are stealing from us drivers left and right. We are the ones out here on these roads. I never understood how a driver haul a load out west from the east and make money. Then they used the work back haul for cheap. Fix this problem it’s a simple fix.