FMCSA creates clarity on broker and bona fide agent definitions

On Nov. 15, the Federal Motor Carrier Safety Administration (FMCSA) released interim guidelines to create clarity on the differences between brokers, dispatch services, and bona fide agents in the trucking industry, as reported by Freightwaves.

An infrastructure bill published last year spurred the creation of these guidelines. They work to stop truck brokering companies who don’t receive FMCSA authority. Brokering without FMCSA authority cuts down on brokering businesses who have received FMCSA authority, they claim.

FMCSA agrees that dispatch services “can help to ensure the motor carrier has a steady stream of shipments,” which in turn allows them to focus efforts on moving freight. The specific way in which this is accomplished means the difference in having FMCSA authority, or not. Incumbent in all this discourse is the reality that when brokers get FMCSA authority, they must pay a $75,000 bond to protect their carriers.

To cut down on the confusion on if authority from the FMCSA is necessary or not, six clear guidelines were released. If the dispatch service: is involved in any monetary exchange between the broker or factoring company; accepts a truck/carrier-less shipment and then finds a truck/carrier to move the shipment; uses the carrier open market to move a freight shipment; directly interacts with the shipper or its representative to negotiate a shipment; forgoes any legal contract with the motor carrier that adheres to certain criteria and arranges a shipment; and is on the shipping contract.

If an unauthorized broker commits any of these violations, they will be charged $10,000 for each violation.

The clarification did not stop with these six guidelines. The FMCSA, mandated by Congress, had to clarify the respective definitions of broker and bona fide agent. The only change the agency decided to make on the definition of broker was to include the importance of dealing with funds in transactions between shippers and motor carriers.

When money is exchanged between shippers and carriers, “a factor strongly suggests the need for broker authority … it is not an absolute requirement for one to be considered a broker,” the agency said.

The FMCSA clarified that they disagree with the ascension of some agencies that to be considered a bona fide agent can represent just one carrier.

“… Representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent,” the agency said.

The agency continued in their clarification of a bona fide agent.

“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,” the agency said.

The Transportation Intermediaries Association (TIA) vice president of government affairs, Chris Burroughs, said that the agency considered and applied the TIA’s suggestions.

“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 said. “TIA looks forward to continuing to work with the FMCSA on this important issue.”