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When Does A Motor Carrier Need Broker Authority?

On October 1, 2012 the US Commercial Motor Vehicle Safety Enhancement Act went into effect, and one of the Act's provisions states that "a motor carrier may not broker transportation services unless the motor carrier has registered as a broker under this chapter" (MAP 21 provision amending 49 United States Code 13902).

So when exactly does a motor carrier need a broker license?

If you are a for-hire motor carrier accepting freight from customers, and you transport that freight under your own USDOT number and MC Number/For-Hire Autority, you DO NOT need a broker license, because you are both accepting and transporting the freight.

If your company has a private carrier fleet that transports your own goods in your own vehicles as part of a primary business that is not trucking (for example, a food manufacturer), but sometimes you contract with a for-hire carrier in order to transport your goods, you DO NOT need a broker license because you are hiring another carrier to transport your own goods.

However, if you are a for-hire motor carrier accepting a load to transport which you then give to another authorized carrier, the first carrier (in this case, you) is acting as a broker and MUST HAVE a broker license. The first carrier is "arranging" the transportation of the freight rather than acting as a carrier and actually transporting the load.

A broker license is only required when a motor carrier accepts a load and then hires another motor carrier to perform the transportation.

If your company is acting as a broker, FMCSA broker authority is required, and a designation of process agents (BOC-3) and bond must be on file. Another provision of this new act will also require brokers to have a $75,000 bond (an increase from the current $10,000 bond) as of October 1, 2013.

Information from this article was referenced from Do You Need Broker Authority? by J.J. Keller & Associates Inc (July 19, 2013).

 

Tia Chisholm, HUB International TRANSPORTATION

HUB International TRANSPORTATION specialists are based in Vancouver. Our longstanding relationships with the best providers in the business allow us to deliver the solution that serve you best. With HUB, you can run your business knowing that you are headed in the right direction.

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