Opinion: Freight Brokering Laws Lack Enforcement

This Opinion piece appears in the Aug. 10 print edition of Transport Topics. Click here to subscribe today.

By David G. Dwinell

President

Truckalocity.com

Since its inception, MAP-21 has allowed the Federal Motor Carrier Safety Administration to play fast and loose with its enforcement of regulations involving brokers — particularly when it comes to double brokering.

The legislation, signed into law July 6, 2012, by President Obama, was supposed to create a better environment for those who transport freight. It included more financial responsibility for brokers arranging freight transport and for motor carriers transporting goods that need to broker their excess freight.

Additionally, greater transparency was required from brokers, freight haulers and shippers on the source of and handling of every load hauled. As a result, carriers and brokers are now required to give “written notice” to shippers of the name and motor carrier authority of the person actually hauling the cargo in question, according to 49 USC 13901–07(c).

The law changed how transportation business is conducted. For example, and most importantly, motor carriers no longer may broker their excess freight. They must apply for and post a bond and receive a broker license to do what they were doing before the law changed.

A licensed and bonded broker may not work a motor carrier’s load and post it. Conversely, a carrier is prohibited from brokering excess freight without a broker’s license.

However, motor carriers generally have not flocked to this required change. Carriers without broker licenses continue to post their freight on load boards — as do “brokers” who do not have a license — in violation of MAP-21.

On top of that, carriers without broker licenses continue to grab and repost information from public load boards onto their own dispatch boards. This reposting takes loads away from licensed and bonded brokers — and is illegal. Only licensed and bonded brokers may post loads on load boards.

Is anyone at FMCSA even looking at motor carriers that are posting loads illegally?

Then there is the problem of double brokering loads by other legitimate, licensed and bonded brokers and carriers, which also is illegal.

For example, if a motor carrier posts a load after taking a transportation commission, then gives the load to its owned brokerage and that company takes another commission, that is double brokering. This no longer is beneficial to the motor carrier hauling the load, defeating the purpose of MAP-21.

FMCSA has taken steps to declare “convenience interlining” to be “brokering” and not legal transport — and subject to MAP-21 regulations. Carriers can take loads from licensed and bonded brokers but not vice versa. Perhaps the law is misnamed and should be called “The Brokers’ Protection Act.”

The original version of this law was titled “The Motor Carrier Protection Act of 2010.” What Congress eventually passed in 2012 is called the Moving Ahead for Progress in the 21st Century Act, MAP-21. This law goes a long way to achieve the goals listed above but leaves intact the ability for two brokers to take one commission each before the carrier get its money. The law discreetly leaves out the term “double brokering” and replaces it with “rebrokering,” an undefined, totally new term. A rose by any other name . . .

However, co-brokering means two brokers split one commission, as it does in every other industry.

Load boards and electronic bulletin boards provide the basis for double brokering. A major problem for shippers is they don’t know who actually hauls their load. MAP-21 requires “written notice” to a shipper of who is responsible for its freight movement.

Additionally, many motor carriers are paying the price for double brokering, which lacks transparency regarding the source of the load, throwing financial responsibility to the wind.

So why are carriers, especially small carriers, continuing to be victims of the rip-off? One reason is very few people comply with MAP-21. In fact, double brokering is even more rampant after the passage of MAP-21, especially by the nation’s largest brokerages and motor carriers. Additionally, carriers that rely on brokers pay as much as 15% off for the extra taken commission.

MAP-21 requires broker training, but two years after implementation, education seems to be an afterthought as motor carriers, especially small motor carriers, continue to be victims of the brokering process. As a result, the general attitude that licensed and bonded brokering gets a free pass on responsibility for public safety persists.

Motor carriers with licensed brokerage units should end their double-brokering practices, if they haven’t already done so. Carriers that broker loads without the proper authority should observe the law, get a broker’s license and bond and be responsible to those truckers that actually haul the load. And carriers that rely on brokers and load boards should lead the fight against double brokering.

Dwinell is a professor of brokering at his own brokering school, LoadTraining.com, founded in 1987. He is a licensed and bonded broker. Truckalocity.com is an international network of master brokers trained to achieve superior transportation purchasing results for shippers.