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    -4.9%
  • OTRI.USA
    6.190
    0.010
    0.2%
  • OTVI.USA
    12,391.500
    -166.900
    -1.3%
Driver issuesNewsTop StoriesTrucking Regulation

FMCSA revising guidance on freight brokers and agents

Federal Motor Carrier Safety Administration will also examine whether dispatch services could be considered brokers

The Federal Motor Carrier Safety Administration is moving closer to settling a controversy over how to define freight brokers while also clarifying the level of financial penalties for unauthorized brokerages.

In a notice scheduled to be published in the federal register on Friday, FMCSA is asking the public for responses to a series of questions “to inform future guidance on the definitions of broker and bona fide agents,” the agency stated.

“Over the past decade, FMCSA has received numerous inquiries and several petitions related to the definition of a broker. FMCSA is aware that there is significant stakeholder interest” in how FMCSA enforces unauthorized brokerages, it noted.

Part of the problem is that there are differences in the definition of a broker in different sections of federal regulations. In addition, because the responsibilities of truck brokers and freight dispatchers sometimes overlap, there is a question as to whether a dispatch service is acting as a licensed broker without proper authority.

For example, FMCSA points out in its information request that some dispatch services cite federal regulation 49 CFR 371.2(b) as the reason they do not get an FMCSA brokerage authority registration. The section states that bona fide agents are “persons who are part of the normal organization of a motor carrier and perform duties under the carrier’s directions pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others.”

But some dispatch services interpret this regulation, FMCSA notes, “as allowing them to represent more than one carrier yet not obtain broker operating authority registration. Others interpret this regulation to argue that a dispatch service can only represent one carrier without obtaining broker authority.”

FMCSA stated that its new guidance is required by law to “take into consideration the extent to which technology has changed the nature of freight brokerage, the role of bona fide agents and other aspects of the freight transportation industry.”

Additionally, FMCSA must, at a minimum:

  1. Examine the role of a dispatch service in the transportation industry.
  2. Examine the extent to which dispatch services could be considered brokers or bona fide agents.
  3. Clarify the level of financial penalties for unauthorized brokerage activities under 49 U.S.C. 14916, applicable to a dispatch service.

Here are some of the FMCSA’s questions

  • What evaluation criteria should FMCSA use when determining whether a business model/entity meets the definition of a broker?
  • Provide examples of operations that meet the definition of broker in 49 CFR 371.2 and examples of operations that do not meet the definition in 49 CFR 371.2. 
  • What role should the possession of money exchanged between shippers and motor carriers in a brokered transaction play in determining whether one is conducting brokerage?
  • How would you define the term dispatch service? Is there a commonly accepted definition? What role do dispatch services play in the transportation industry?
  • Do dispatch services need to obtain a business license/employer identification number from the state in which they primarily conduct business?
  • If a dispatch service represents more than one carrier, does this in and of itself make it a broker operating without authority?
  • When should a dispatch service be considered a bona fide agent?
  • What role do bona fide agents play in the transportation of freight?
  • Electronic bulletin boards match shippers and carriers for a fee. The fee is a membership fee to have access to the bulletin board information. Should electronic bulletin boards be considered brokers and required to register with FMCSA to obtain broker operating authority? If so, when and why?
  • How has technology changed the nature of freight brokerage, and how should these changes be reflected, if at all, in FMCSA’s guidance?
  • Are there other business models/services, other than dispatch services and electronic bulletin boards, that should be considered when clarifying the definition of broker?
  • Are there other aspects of the freight transportation industry that FMCSA should consider in issuing guidance pertaining to the definitions of broker and bona fide agents? 

Click for more FreightWaves articles by John Gallagher.

7 Comments

  1. I am a owner operator and since I started I been experiencing how brokers keep 50% of a load and they always say when negotiating I don’t have that much in it. But later, I learned that he/she kept 50% of the load. Please, FMCSA create regulations for freight brokers so they will treat carries better because we have to maintain our trucks and manage our business and take care our families..Thanks.

  2. Brokers need to be regulated. They are taking to much of the load an doing NO WORK. Nothing at all but posting the load and taking from the actual drivers. They should only be entitled to a small percent.

  3. One fare rate in all states all directions either carrier is going north, south, east or west. Brokers rip-off carriers lot ways. Dispatch is a scam double brokerage which hurts carriers big time. Detention have to set as a law that will solve lot problems. Parking is a big problem , shipper- receivers have to provide parking. Government have make department department where carriers can submit their request and complaints only against brokers.

  4. Govt have to control on brokers because broker is waiting up last minute to sell cheap load to carrier and then they pressurize drivers to get on pick time that also cause accidents. Government department have to decide rates not brokers, rate have to fix according fuel prices, detentions 90% not get paid to carriers because it’s all control by brokers. No one in USA work free but only truckers work free to pick up and deliver a load. Some brokers don’t give Carriers load because Carrier asked for detention or layover, brokers just ask carrier MC# and now they know who you are and simply say this load is covered. Brokers lie most of time about load appointments and product is ready or not. Shipper and receiving time have to be set up. Shipper and receiving keep waiting carrier’s for hrs and days , Obey them or leave and don’t get any detention. Brokers keep carrier waiting for a load 14-15 hrs but they pay only maximum $150 a days even truck trailer payment and insurance for a day almost $300. Truckers always in loss but they always try to feed their family with hard work. Truckers can’t control on weather and traffic but they have pay late fee and some time wait up 3-4 days for next appointment. Dispatch is double brokerage .

  5. Brokers should be regulated on how their money transactions . Brokers been keeping more than half of the fee for carriers. Carriers are the ones moving the freight and they get paid low rates while broker sitting at desk get more than 20 percent of the offer. Something has to be done.

  6. How does all this mentioned even remotely start in stopping abusive brokers from taking more than their fair share of the load? Transparency is needed in this industry. A contract or rate confirmation that originates from the shipper with the amount being paid by the shipper, how much of a percentage the broker is getting & how much is being paid to the carrier/ owner operator. Put it all on the block chain ledger & all will see who’s paying what & who’s getting screwed or trying to screw. Those brokers are the ones who should get their licences pulled. After dealing with that hot mess something should be done to make shippers and receivers accountable for wasting drivers precious time. Fmsca wants to regulate HOS to the NINES?! FINE! Make shippers & receivers pay out the nose if they take longer than 1 hour to load or unload. That’s plenty fair considering some facilities will charge a late fee of $200-$300 if a truck is late. They don’t like their time wasted if the truckers late. What’s good for the goose is good for the gander. Let them pay a mandatory $250/hr for every hour they hold up a truck. Then we’ll see how fast & efficient they become all of sudden. Lastly but not leastly force receivers to hire their own employee unloaders & stop with this mafia lumper company racketeering shakedown nonsense.

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.