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.
Peter rd
In this industry the most important is the drivers . Also the drivers or carriers is the most over regulated . Just look it eld . Since eld became in to the industry, the accident rate jump up 15%. If you work with humans you can’t used them like robot .
I have a perfect solution .
Have to develop a website where shippers posted a loads with the details . No brokers . And carriers negotiate with the sippers directly .
Peter
You can change the regulation hundreds of time . Until the brokers acting like a middleman the industry have a serious problem . Transportation can be lot better with out the brokers . Only direct conversation working between shipper and carrier. Loads going to be fester , cheaper . Until brokers involved this industry not working properly.
Annette Luyten
How will these guidelines be enforced if they are nonbinding and without the force of law?
Sammy
Reading all these comments is eye opening.
I was unaware that carriers are required to work with brokers and cannot get their own freight.
Absolutely, if a business is forced to work with only certain types of businesses, there should be some type of regulation.
Personally, I would rather see carriers being allowed to work with anyone and not forced to work with brokers. And from these comments, I think many would prefer to be able to get their own freight.
But absent that change, then something needs to change.
Jimmy
There shouldn’t be any brokers. They are stealing carrier’s money. There should be direct carrier & shipper relations so no middle man to take the cut. It will be alot cheaper for the shipper if they work directly with the carriers.
Everyone blaming high fuel prices, but we truckers freight rate has dropped. So these corporates are raising prices of every day goods for no reason.
Arthur
So you telling me the FMCSA changed a rule to benefit the brokers becuase they were crying about non liscensed people getting freight, but they continue to allow the brokers to determine what is a partial, ltl, or full truck. This is the bigger problem in the eyes of the people that matter in this business. We have brokers requesting half you trailer and paying peanuts on loads.
Jonathan Elliot
Doesn’t matter at this point does it? Brokers are stealing us blind rite now. Govt needs to step in so we get fair rates. But govt wont because politicians palms are being greased by those greedy brokers.
XNT Transport LLC
Importante el que El servicio de Despachadores sea lejitimamente de aqui ,de los EEUU no de la india o otros paises ,molesta tratar de lidiar con estas personas en la mayoria de las veces debido a que esas personas no viven en el pais y no saben De donde a donde se puede ir o no ir entre muchas cosas mas ,en base a los Broker y Dispachadores bueno hay tienen un juego porque ellos ponen sus pautas desde el principio y la cantidad que ellos van a Ganar ,pero como puede ser posible que si yo soy dispachador o broker y por solo buscarme la carga ,cobre el 20 % de esa Ganancia y algunos que quitan el 12% y haci pero yo entiendo no es justo porque el que hace el trabajo y arriesga su vida es el chofer ,ellos deberian Ganar lo justo para ellos no ganar el 2 ble o mas ,por eso las cargas estan muy baratas ,porque eso es lo que nos toca a los owner el resto se lo llevan ellos ,ademas el congreso deberia solucionar el bendito problema del petrolio el Diesel esta en precos record 6.01 el galon ,que gano yo hay si la carga me la pagan a 2.70 x milla nada trabajo por amor al arte y eso no es Justo ,yo soy owner operator y tuve que Parar mi camion y compañia para poder salvarla y no me fuera a quiebra ,ahora trabajo de chofer para un compañia porque hay que seguir pagando bills