Can I be a carrier and a broker at the same time? (2024)

Can I be a carrier and a broker at the same time?

While it is uncommon, yes, a trucking company can broker loads if it possesses both FMSCA motor carrier and property brokerage authority. Trucking companies that possess both authorities are a one-stop shop for customers.

Companies with existing motor carrier authority should include their current USDOT Number on the OP–1 form when they register but leave the MC Number field blank. FMCSA will issue a separate MC Number for the broker authority.

Civil Penalties: The Federal Motor Carrier Safety Administration (FMCSA) can impose civil penalties for violations related to double brokering. The fines can vary depending on the severity of the violation, ranging from a few thousand dollars to tens of thousands of dollars.

Double brokering is the illegal act of a broker or carrier transferring a load to another trucking company without notifying the shipper. In a legitimate shipper-broker agreement, the broker assigns loads to carriers, and those carriers pick up and deliver the loads according to the terms of a broker-carrier agreement.

A freight broker's job is to contract available loads with a carrier and find an acceptable rate within a specified time frame according to the shipper. The freight broker cuts down the time and effort it may take for a company to look for its own carriers and may decrease costs by shopping quotes.

What is Double Brokering? Double brokering is a situation where the freight broker that was originally tendered a shipment proceeds to give it to a different freight broker without the knowledge or consent of the party that owns the cargo (or, in some cases, the original broker).

The only time a company will need multiple DOT numbers is if they operate two or more separate commercial driving entities.

Often, the second carrier is never paid for the load, resulting in a financial loss for the original carrier. The impacts of double brokering are felt by carriers and brokers alike, disrupting operations and causing financial and liability risks for everyone involved.

If you've been asked to check in at a shipper under a name other than your own, warning bells should go off. You might also see another carrier's name on the Bill of Lading, and/or a completely different broker's name. If the details aren't consistent, ask questions and confirm legitimacy. Unusually high payments.

Can a freight broker make millions?

The fact is, the freight brokerage business is very fragmented with thousands of brokers and the majority of freight brokerage firms does less than $5 million per year in sales. It's important to note that while gross revenue is great, the key lies in running a profitable and sustainable business.

When done properly, there is absolutely nothing wrong with co-brokering, assuming the transaction is handled in accordance with the permission of the original broker.

Carriers will develop an understanding of the shipper's individual needs while freight brokers provide access to a larger network of carriers that can offer speed and cost savings. Freight brokers also pinch hit for shippers when their main carrier is unavailable or has limited capacity.

If a broker won't pay and has violated your agreement, you may be able to sue them for the amount they owe you. In other situations, you might hire a collection agency to collect your money for you.

Freight brokers make their money in the margin between the amount they charge each shipper (their customer) and what they pay the carrier (the truck driver) for every shipment. Although it varies from one transaction to the next, healthy freight brokers typically claim a net margin of 3-8 percent on each load.

In 2020 various industry sources estimated that double brokering cost the transportation industry $100M per year.

Often, double brokering occurs because of scammers, a carrier wants to save on money, or an overall lack of enforcement. Moreover, it's only illegal for someone to broker a load without a license or securing the financial requirements.

The original carrier is still liable to the shipper and to the broker for its own acts and omissions. It is also liable for the acts and omissions of its agent, the second carrier hired by the original carrier.

A US DOT number identifies carriers operating in interstate commerce while an MC number identifies a carrier who transports regulated commodities for hire in interstate commerce. Generally, items that have been changed from their natural state are regulated commodities requiring an MC number.

You will only need more than one DOT number if you operate more than one commercial vehicle for different businesses. The process of obtaining more than one DOT number isn't always easy, so make sure you have all the necessary information and start the process early.

How do you handle a double brokered load?

If some loads do get brokered under your identity and you receive invoices and proof delivery (PODs), you need to reach out to the carrier or factoring company who sent the invoice to let them know of the fraud and the shipper or consignees on the bill of lading (BOL) and alert them of the situation.

- Lack of control: When you use a freight broker, you're giving up some control over your shipping process. - Dependence on technology: Freight brokers typically rely heavily on technology, so if there are any problems with their systems, it can cause delays in your shipments.

Although agents may be registered in multiple states, they're generally barred from registering with more than one broker-dealer or issuer. There are two exceptions to this rule. First, an agent could be registered with multiple broker-dealers or issuers if those firms were affiliated.

Here are three warning signs of double-brokering. Names or phone numbers are not provided for the carrier. A carrier with just a single truck, and the VIN doesn't match the one you have on record.

The following are examples of double brokering fraud and the associated risks: Shipment not delivered: A broker accepts payment from a shipper for a shipment, but instead of hiring a carrier to transport the goods, they double-broker the shipment to another broker who is not able to fulfill the delivery.