Beginning Oct. 1 anyone acting as a broker or a freight forwarder, including motor carriers who broker loads, are required to register and obtain broker or freight forwarder authority from FMCSA. Brokers and freight forwarders will also now be subject to a minimum $75,000 financial security requirement.
FMCSA acknowledged that there are motor carriers that occasionally broker loads that have not previously been required to obtain operating authority registration from FMCSA as brokers. Therefore, FMCSA said it will phase in its enforcement of the broker registration requirements for motor carriers that also broker loads.
There will be a 60-day phase-in period to allow the industry to complete all necessary filings. Beginning Nov. 1, FMCSA will mail notifications to all brokers and freight forwarders that have not met the $75,000 minimum financial security requirement. FMCSA said it will provide 30 days advance notice before revoking freight forwarder and broker operating authority registrations
FMCSA said it will work with industry groups to use this complaint information and other data to ascertain the extent of the unlicensed broker population subset within the motor carrier industry. FMCSA will then work toward developing a comprehensive enforcement program. FMCSA said it “strongly encourages all motor carriers not to accept loads from unregistered brokers or freight forwarders, as these entities might not have the financial security mandated by MAP-21.”
FMCSA also noted that motor carriers brokering loads without properly registering with FMCSA as brokers may be subject to private civil actions.
During the first phase-in period, FMCSA will accept complaints regarding unregistered brokerage activities of motor carriers through its National Consumer Complaint Database at http://nccdb.fmcsa.dot.gov/
FMCSA offers answers to the following frequently asked questions about the new requirements:
Question: Must freight forwarders and brokers register with FMCSA?
Answer: Yes. Freight forwarders and brokers are required to register with FMCSA. Freight forwarders that perform both freight forwarder services and motor carrier services must register both as a freight forwarder and as a motor carrier. Also note that motor carriers that broker loads, even occasionally, must register both as a motor carrier and as a broker.
Question: Does a motor carrier that participates in freight interlining have to register as a broker?
Answer: No. Anyone brokering a load must be registered as a broker, which by definition may only arrange -- not perform -- transportation unless the person is also separately registered as a motor carrier. A motor carrier that is performing part of the transportation as an interline operation, however, typically performs that service under its own motor carrier operating authority registration or the operating authority of the originating motor carrier. As a result, the motor carrier arranging the interline service in order to perform the transportation service requested by the shipper would not be brokering the load and would not require broker registration.
Question: What is the minimum level of financial security that a broker must maintain on file with FMCSA?
Answer: Currently, a general freight broker must maintain a surety bond or trust fund agreement in the amount of $10,000 to comply with FMCSA’s financial security requirements and brokers of household goods must maintain $25,000. Beginning October 1, 2013, a broker will need to obtain and file with FMCSA a surety bond or trust fund agreement in the amount of $75,000 to comply with FMCSA’s financial security requirements.
Question: What is a broker?
Answer: Generally speaking, a broker is a person or an entity other than a motor carrier that arranges for the transportation of property by a motor carrier for compensation. A broker does not transport the property and does not assume responsibility for the property.
Question: What is a freight forwarder?
Answer: A freight forwarder is a person or entity that holds itself out to the general public as providing transportation of property for compensation and in the ordinary course of its business:
- Assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments;
- Assumes responsibility for the transportation from the place of receipt to the place of destination; and
- Uses for any part of the transportation a rail, motor or water carrier subject to the jurisdiction of either FMCSA or the Surface Transportation Board.
Question: What is freight interlining?
Answer: To interline a shipment is to transfer the shipment between two or more carriers for movement to final destination. For example, where the point of origin is Washington, DC and the final destination is Los Angeles, CA, Motor Carrier “A” may transport a shipment from Washington, DC and then interline with Motor Carrier “B” in San Antonio, TX. Motor Carrier “B” will then complete the transportation of the shipment to Los Angeles, CA.
Question: Does FMCSA require an interline carrier to obtain operating authority?
Answer: FMCSA requires all non-exempt for-hire interstate motor carriers to obtain operating authority. However, a motor carrier that is performing part of a single continuous transportation as an interline operation can perform that service under either its own operating authority or the authority of the originating motor carrier.
Question: Does a broker process loss and damage claims?
Answer: No. A broker assumes no responsibility or the shipment and does not touch the shipment. A claim must be filed with the appropriate motor carrier, which usually would be the delivering carrier or the carrier causing the loss. Brokers may, however, assist shippers in filing claims with the motor carrier on the shipper’s behalf.
