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.
Acosta Transport llc
There’s no need for brokers!. Shippers need to post their loads in the board so drivers could negotiate directly. Brokers take at least half of the load payout and drivers do all expenses! IT don’t make sense at all. DELETE BROKERS OR CHANGE BROKERS FEES.
Jeffery S Carnes
All we need is some more regulation in an over regulated business… Brokers are legal criminals that take money from companies to pay drivers to move freight and then cut the rate… Pad their pockets, and look for their next victim to take advantage of….. Look at the rates coming out of Southwest Texas ,Arizona, and generally less populated areas… Look at what companies pay to move their freight in a timely safe manner…. Look at the expense it takes us to move the freight…. And look at where the money goes….. If you guys can shove e-log down our throat you may as well look at the people who steal from us…. Maybe you guys should try to regulate fuel prices that would be a bigger help than worrying about what a broker pulls off of our load ,who cares if they are licensed or not , ever heard of a factoring company….. insurance company, ect….
Thomas Ault
The brokers only need a small percentage of the Frieght since us transporters are out here transporting Frieght for them and it should be no less than $2 a mile considering we spend all of our time on the road and we pay thousands in insurance along with the fuel price and the price of equipment and up keep on our stuff along with them asking us to break laws and hours of drive time to get the load delivered they need brought to attention on all this even the fmcsa can go on the load boards and see the cheapness of loads posted along with double brokers dipping there hands in and they ain’t doing nothing but sitting at a desk along with they don’t wanna pay when load is dropped they want to pay 30 to 90 days later
Heriberto
El problema es que como un transportista super pequeño va hacer una carga de 600 millas por 800 o 1000 dollars y el desiel a 6.00 dollars y mas. Investiguen eso, no puede ser posible, ya todo ha subido, menos las cargas. Quien se esta llevando todo el dinero,,??
Jay
There needs to be a set percentage a broker can make being 10% is the top broker need to be forced to show the rate agreement with the broker and the shipper along side of the load posting
Jerry K Lewis
Have the brokers stop killing the smaller companys 2100 dollar load for 1200 miles is insane shouldnt even be aloud to post such things with diesel so high i understand everyone is going to make money but save some for the actual truck drivers
Walter Settler jr
It would be nice to get the bad brokers out of the way. But it’s really not going to help anything because the good brokers in the dispatch services are still killing us on the prices. They’re price gouging. I don’t understand the responsibility of the dispatch services. Anyway we could do that ourselves . They’re about to shut us down. There is no way I’m going to run across country for no $3.50 a mile have anybody besides the drivers. Took a look at fuel lately. Everybody’s wanting something done for nothing. Think about flats, maintenance, fuel Man. It’s just way too expensive for someone to be cutting the prices and have before it even make it to the drivers. I’m not even going to go into detail about the expenses that I’ve went through in the last month. It almost shut me down. Then on top of that the major companies hire people with no experience throw them in the seat like their professional trainers. They have accidents all the time and insurance rates has went through the roof and I have no kind of claims. No tickets, no anything in my insurance is outrageous.
Johnson K
It beats my understanding to see brokers complaining also. They are not the most important party in this logistics chain, but they claim the biggest share. We need to eliminate them completely…..we the drivers put in a lot but reap very little.