Carrier must have Broker MC# to post loads between USA <--> Canada

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SAMMY

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Oct 6, 2009
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With the new rules for Brokers, to move freight not on your own truck, a broker is required to have a valid MC# showing "Active" next to Broker Authority of the MC#. Brokers also must have minimum $75,000 bond. So this means if a Canadian Trucking company gets say 10 skids from OH to MB from their direct shipper. They accept the load, meanwhile another customer calls with a full load opportunity and since they only have the 10 skids from OH to MB, they figure they will post and get someone else to take the 10 skids, and they will take the full load from other customer. This carrier has not "Active" Broker authority. So they are illegally brokering the 10 skids from OH to MB. Yes they may think they are still servicing their customer but they don't have broker authority to do so. So if a carrier has one truck in OH but two possible loads from direct customers (No brokers involved), when they accept the full load they should be declining the 10 skid LTL. That is until you apply for your Broker MC#.

I recently caught a carrier that I booked a load with who gave my load to another carrier because their trailer broke down. He thought he was doing me a favour but explained how he double brokered my load and did so illegally because he no broker authority, only carrier authority. It was my typo that I provided a wrong P/U# that I figured out the load was re-brokered.

Please correct me if I am wrong that as an asset based carrier, if you have more loads than you can handle or have a truck breakdown, to give that load to another carrier, you must an Active Broker MC# when dealing with freight between USA/Canada. For freight within Canada this does not apply. Feedback appreciated. Maybe for many carriers this will be the first time you are find out that you now need two MC#'s. One as a carrier and one as a broker. Several years ago FMCSA issued once MC# for both carrier / broker but last Dec 10, 2014 was deadline and every MC# that had to re-apply and prove you had your $75,000 bond in place. Those MC#'s that had both carrier/ broker under one were issued a new MC# for their broker side.

I hope everyone is aware of this...feedback appreciated.
 
Last Dec 10 2014? which is in more than a month right? Or is this a typo?
 
It's a typo. The FMCSA published a decision on October 1, 2013. The rule would likely have gone into effect in December 2013.
 
I knew a long time ago about the 75,000$ bond - wasn't fully aware for the MC number. Will do some digging around here to see.

Thanks!
 
Correction, it was Oct 1, 2013 was original deadline when MC#'s had to be re-submitted to prove $75,000 and FMCSA was reinstating all MC#'s. Due to high volume of applications, the FMCSA extended deadline to Dec 1, 2013. So 2013 is correct year. Sorry for any confusion.
 
For Motor Carriers that require a Broker MC# to broker excess freight or other reasons, here are the steps to follow from the FMCSA webstie:
http://www.fmcsa.dot.gov/faq/what-forms-do-i-complete-become-broker

When you apply for a broker MC#, many other considerations such Cargo contingent liability as your Carrier Insurance may not protect you when you have brokered the freight. Double check with your insurnace company your coverage should you broker a load and the other carrier gets into a serious accident. People think brokering freight is as simple as sending a piece of paper with shipper and consignee info, think again.
 
Carriers who broker freight are called Freight Forwarders by FMCSA. As a Carrier with an MC#, since you are asset based you can only get a Freight Forwarder # from FMCSA. As a freight forwarder there are some advantages and disadvantages as to liability, mostly good. As for cross border moves the jurry is still out on if this is enforceable by the authority's. We have a FF # to sleep better, but I have not heard of any Canadian being charged by FMCSA for brokering without a license cross border shipments.
 
Here is definition from FMCSA of a Freight Forwader:

What are the definitions of motor carrier, broker and freight forwarder authorities?
PreviousNext


  • A motor carrier transports passengers or property for compensation
  • A broker is a person or an entity which 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
  • A freight forwarder is a person or entity which holds itself out to the general public to provide 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 break-bulk and distribution operations of the shipments
    • Assumes responsibility for the transportation from the place of receipt to the place of destination
    • 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


Last Updated : April 1, 2014
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When I created this thread, I am referring to situations where say an Ontario Trucking company has received freight from either a direct shipper or broker for a load (FTL or LTL) from say TN to BC. Either the truck they planned to use either is running behind, broke down, or has a better paying load and rather than turning load back to broker or customer, they broker the load to another carriers. At no point the carrier held the freight on their trailer or in their warehouse, they never see the freight like a freight broker. This is a situation where I believe a Motor Carrier CANNOT broker a load per FMCSA definition.

Where their is possible a grey area is say a Manitoba based carrier has a truck (Canadian driver) in Brampton, ON. They get a load offer from say a customer or broker to Belgrade, MT. This MB carriers plans for their Canada driver to pick-up load in ON and bring to their yard in MB. Then their US driver will take load to MT. As Belgrade, MT is not a good area to get out from, they took the load only because they found a reload to AB that paid OK. Load is picked-up in ON, all is good, then morning when driver arrives to MB, either their truck is broken down or the reload from MT to AB has been cancelled. The breakdown will make their delivery late or they can't find a back-up reload from MT. Either way they have this load in MB but they are not in a position to finish the load. So they want broker this load to another carrier. Because a good portion of miles were completed by carrier, now they want a different carrier to finish the load, this sort fits the description of FF but it is sort of re-brokering because it is not part of their regular consolidation as a FF. Either way I would think they need a different authority whenever you hand freight to another carrier even if you hauled for a portion of the trip.
 
To further show, I ran a lane from Canada to the USA and there was freight posted from brokers and carriers. Several carriers did have "Active" Broker Authority. I easily found two leads that when you clicked on their MC# showed "Broker Authority: NONE", these are the carriers that should not be posting freight. upload_2014-11-3_20-56-23.png upload_2014-11-3_20-59-58.png
 
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To add to this, in the new ruling the broker MC and carrier MC must be seperate, they can no longer run dual authorities on the same MC. For one; it's confusing, and two; it gives carriers access to posting and brokering freight that was tendered to them as a carrier, intending they would haul it on their own equipment...

Wew rulings will also come out later on where individuals caught brokering without proper authority and bond can be taken to court, let's see how that works out at that time.

They are trying to level the playing field, but someone always seems to find a loophole or simply never get caught.

P.S. In the new ruling from 2013 if an unauthorized company brokers freight they can be held fully liable, past the $75,000. So the $75,000 bond is protection for the carriers hauling the freight but also for those brokering the freight, it will minimize the damage.

Just my 2 cents, I may be wrong.
 
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Just to clarify, the bond, properly called a surety bond, is in place to provide financial restitution in the event a broker defaults on his obligations to pay his contractors. A surety refers to a third party, in this case usually an insurance company who assumes the obligation in return for an annual premium. There are various bonds used in different industries to achieve a similar level of protection for both suppliers and in some cases, customers (a performance bond). Any action involving the broker's surety bond would have to be the result of a non-payment issue, nothing else.
As to a carrier offering freight without a brokers licence, the numbers from Load Link tell the story. On any given day, the majority of the available freight on their system, is being offered by carriers, not stand alone freight brokers. Sammy, if your investigation has turned up a large number of these carriers that do not have a freight brokers registration number, I am not surprised. In addition, the number of complaints on this forum regarding non-payment issues is usually between two carriers. One acting as a carrier and the other acting as a broker.
 
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So you are saying not much we can do until:

1. FMCSA clamps down on carriers with no broker authority posting loads.

2. Loadlink changes their system to block carriers without broker authority to post their loads. Any US load board requires MC# for each authority - Carrier - to post your truck and broker MC# to post freight.
 
In terms of official enforcement, current or pending, no, there isn't much one can do. However, as a broker, you should ensure that the carrier you have selected is indeed the carrier who will perform the work. There have been previous threads describing that process. For a carrier, there are a number of questions that should be asked prior to accepting freight from any broker or carrier. Certainly the first should be, are they a properly licenced freight broker if the shipment is cross border. In order to be licenced, the bond will already be in place. But perhaps even more important for carriers accepting freight and for brokers offering freight is, who are you dealing with currently? A list of credible references (not fuel companies, telecommunication companies, etc.) is really your best source of information as to whether or not you will be paid or if the service promised will be delivered. Having all of the required licences is no guarantee of good service or proper payment, but at least it demonstrates that the other party is serious and professional about what they do.
 
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As a carrier we look for brokers with valid MC# as shown on the FMCSA website. Its just another way to ensure you're working with the people who are in the industry for the long run. We put lower AR limits to people with no valid MC# or invalid bonds because the bond is one more tool to get your funds.

When doing sales we advise our potential customers that they should choose a broker with a valid MC#/bond and should ensure that they stay current. We have obtained a few customers after their legal department have reviewed the actual law and their relationship with their 'Freight Broker'.

As far as I know the FMCSA is clear that a load originating or terminating in the US requires a valid brokerage MC# if you are to broker it out. The enforcement of this law is negligible in Canada.
 
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Technically, if you're a carrier that is assigning a load to a carrier partner instead of putting on your own assets, there are 2 ways to do it:

a) Have broker authority to broker excess freight
b) Use 'interline' agreements between you and your carrier partners. These are typically only used when say you're pulling XYZ's loaded trailers. The difference here is that effectively you're insuring the load in transit, it's not contingent insurance. And for the carrier broker, it's not a recourse for payment.

I'm usually wary of the deals that Sammy mentions because more often than not it's a carrier that takes freight off the Link, and pulls one leg of it themselves and partners the rest of it. Wary because many times it is undercapitalized partners that pose significant credit risk.

Our MC# actually has 2 prefixes -- one as a carrier, the other as a broker. It's not rocket science.
 
Our MC# has two prefixes as well ... one as a contract carrier and the other as a common carrier. The advantage of being a common carrier is that I can legally "interline" a load provided I follow the interline rules.
And you're right Stan ... it's not rocket science. Fill out the paperwork, pay for the bond, mail it all in, and it's done.
 
eventually you won't be able to use the same MC number for broker / carrier, they will force you to split up your operations as to not confuse people.
 
Hence the suffixes. When we have customers that we act as both on, we seperate the operation by holding multiple SCACs and applying the appropriate SCAC to each type of operation.
 
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