Small and micro motor carriers face many challenges. At the top of the list is how to avoid doing business with an unethical and unscrupulous freight broker. Does the broker pay invoices in a timely manner? Does the broker consider the best interest of all the parties involved—shipper, carrier and broker? These are just two of the concerns, but there are steps a trucking company can take to avoid these pitfalls.
Freight brokers are regulated by the Federal Motor Carrier Safety Administration (FMCSA). Every freight broker is required to be licensed through FMCSA. You can search the FMCSA website (http://li-public.fmcsa.dot.gov/LIVIEW/pkg_carrquery.prc_carrlist) for information on a particular freight broker by entering the broker’s U.S. DOT number, MC number, legal name and DBA. The site will then provide you with the broker’s type of authority such as common authority, contract authority, broker authority, property, enterprise passenger, or household goods. What you’re looking for is a “yes” next to broker authority.
The FMCSA website will also provide information if a freight broker’s license has ever been revoked and/or reinstated, along with how many times it has occurred. It’ll tell you if they have a surety bond ($75,000) along with effective date and cancellation date, plus the broker’s complete insurance coverage history.
Additionally, you need to check if the broker is registered in the Unified Carrier Registration (UCR) program. UCR is a federal, although state-administered, program launched in 2007. It requires that each state collect fees from motor carriers, freight forwarders and brokers, and leasing companies domiciled in the state. This registration is mandatory and if a freight broker is not registered but is engaging in interstate commerce, they’re subject to law enforcement action, which has the potential of creating legal problems you don’t need (http://www.ucr.in.gov/).
You also need to consider whether the freight broker has a surety bond and if so, is it insured?
The surety bond, which is filed as form BMC 84, is extremely important as it empowers a carrier to seek financial and legal recourse if the broker skips out on payments. Information as to whether the broker bond is in force can be found on the FMCSA website.
While not required by law, insurance adds to the credibility and integrity of the broker.
To complete your investigation, always ask the broker for copies of the broker authority, surety bond and insurance certificates. Compare these to what’s listed under the company’s name on the FMCSA website. Contact each insurance carrier to verify that policies exist and are active. If there are discrepancies, ask why. Don’t do business with a freight broker until all discrepancies are rectified.
Finally, set up either a digital or paper document file on each broker you investigate, whether you use them or not, and update as necessary.
Checking out a freight broker before you haul their load prevents your carrier from losing money. It’s well worth a little time and effort.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
