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.
Bianca Wang
Broker should be remove period ! The shipper should put the loads on the software and let dispatcher and carriers handle this issue with the pay. Broker wants to take the whole money and don’t leave any to dispatcher or the carrier . They want to pay 1K under to move a load but they don’t realize the gas is high .
Dorry Flynn
Being in tje international and domestic transportation industry for close to 45 years, I couldn’t be happier for the Federal Agencies regulating the trucking industry, step in, stop the annoying and irritating soliciting of thousands of illegal “truck brokers”! When did this become a part of our industry? Years ago, “licensed” Customs Brokers and “licensed” NVOCC’s or OFF OTI’s, dealt directly with numerous inland carriers. We negotiated service and rates, collected charges for the service provided, picked up and delivered the loads, as scheduled, as quoted and as promised. Without fail. Unexpected or unavoidable truck delays, when seldom occurred, wee addressed and resolved immediately, due to the direct communication between the carrier and the consignor who hired them. We never had these “middlemen” who are merely “messengers “ bumping up the actual carrier’s charges and providing absolutely no services of their own, other than what your secretary or assistant does, by picking up the phone, if even that, and not an email to the carrier, which is more likely, in today’s digital, robotic, non-customer service world, where our industry has lost the concept of what actual “customer service” truly entails. These Brokers, along with numerous other job titles, don’t even have a clue. We receive a minimum of 20 emails and 20 phone calls daily, from these telemarketer salespeople, soliciting trucking services and promising the world. Every single one of them are pathetic, and 95% of their voice messages are comprehendible, left by a sales vulture who cannot even speak the English language clearly, and mumble their voice messages expecting we call them back to utilize their useless 3rd party involvement. They should all be shot or hung. They should all find a REAL job, and stop their constant, irritating interruptions of phone solicitation and influx of emails,while playing the telemarketing role, something I did for a couple of months when I was 17, for a few bucks in my pocket between high school amd college years. Then I grew up and learned an actual “skill”. Trained to provide exceptional “customer service” , and not simply promising it, but morally capable and intelligent enough to deliver what we promised, without fail, or with the dignity and grace to contact our customers ON THE PHONE, advising them immediately, when and if an issue has occurred, which causes a change other than as scheduled. Pitiful and pathetic. Please intervene and rid our industry of these vultures. Enough changes have occurred already in the Contact Logistics industry, we surely do not have room for these robots to interfere with our jobs, for those of us who are still committed and concerned enough to offer dependable and reliable services to our customers who rely on us to keep our word by doing so. Thank you. Dorry F.
Irvin
huge industry ! Carriers don’t exist without dispatcher ,broker don’t exist without carriers shipper don’t exist without moving loads ! It’s multiple tasks for each party in this field ! In these regulation something missing !
ILIOSBEL OSORIO
Mas que intermediarios creo que son unos oportunistas.Se aprovechan de la necesidad nuestra para estafarnos, ya que muchas veces lo que pagan a penas alcanza para el petróleo del viaje de que forma vamos nosotros los dueños de pequeñas compañías vamos a pagar seguro, gastos de reparación y vamos a mantenernos. Considero que el gobierno debe tomar medidas lo antes posible y eliminar el sistema de brokerage entre los dueños de camiones y los dueños de cargas .
More than intermediaries, I think they are opportunists. They take advantage of our need to scam us, since many times what they pay is barely enough for the oil for the trip, how are we, the owners of small companies, going to pay insurance, transportation expenses? repair and let’s stay. I believe that the government should take action as soon as possible and eliminate the brokerage system between truck owners and cargo owners.
ILIOSBEL OSORIO
Creo que deben eliminar a los broker de en medio de este negocio porque no son justos se quedan la mayor parte de dinero sin trabajar ni arriesgarse la vida como hacemos los drivers ellos están de más en este negocio .
I think they should eliminate the brokers from the middle of this business because they are not fair, they keep most of the money without working or risking their lives as we drivers do, they are redundant in this business
Robert Morton
I just haul a load from Fort Myers. Florida to Mississippi they said the load was $28.000 but paided me $1050.00 and I burned $977.00 in fuel ⛽️ and I made $24.18 bring home how you stay in business you can’t
Tom Mann
If you accept a load from a shipper, you should have sufficient equipment to move the load, if you do not then you have no business taking said load or making any money for such load. Period. Anyone taking a load without a way of transporting it should be jailed and fined. Period.
Blu
I totally agree with the rates being disclosed to all. A broker cannot make more than the company hauling the load. Anyone that’s against it,is a broker that wants to rip off every OOP. This is the only time i agree that government should stick their nose in.