Brokers, you either love them or hate them. They build relationships between shippers and receivers. They get the rate contracts ready for drivers to bid on and be there if help is necessary. They call you in the middle of your sleep to see how much longer until you deliver the freight. Some even change the rates as you pull into the receiver’s driveway.
But now, the Federal Motor Carrier Administration (FMCSA), wants to know if bone fide agencies, better known as dispatching services, are the same as a brokerage. Dispatching services are similar but handle a different type of commodity: the drivers.
Think of dispatchers as sports agents working to sell their clients to team owners. Dispatchers work to get their drivers the best freight to run. They act as intermediaries between the driver and the broker. It allows for a calmer mind to communicate between parties when that heated disagreement between driver and broker inevitably happens.
On June 9, John Gallagher, FreightWaves’ chief Washington correspondent and senior editor, posted an article about how FMCSA had issued a request for public comment on a list of questions about brokers and bond fide agents. The Infrastructure Investment and Job Act (IIJA) instructed the FMCSA to clarify the roles of dispatching services in the logistics industry. It also asks that they “clarify the level of financial penalties for unauthorized brokerage activities under 49 U.S.C. 14916, applicable to a dispatch service.”
There are a total of 13 questions “stakeholders,” in this case the general public, are being asked to respond to:
1. What evaluation criteria should FMCSA use when determining whether a business model/entity meets the definition of a broker?
2. What are some examples of operations that meet the definition of broker in 49 CFR 371.2 and examples of operations that do not meet the definition in 49 CFR 371.2?
3. What role should the possession of money exchanged between shippers and motor
carriers in a brokered transaction play in determining whether one is conducting
brokerage or not?
4. How would you define the term dispatch service? Is there a commonly accepted
definition? What role do dispatch services play in the transportation industry?
5. To the best of your knowledge, do dispatch services need to obtain a business
license/employer identification number from the state in which they primarily conduct
6. Some “dispatch services” cite 49 CFR 371.2(b) as the reason they do not obtain
FMCSA brokerage authority registration in order to conduct their operations. As noted
above, section 371.2(b) states that bona fide agents are “persons who are part of the
normal organization of a motor carrier and perform duties under the carrier’s directions
pursuant to a pre-existing agreement which provides for a continuing relationship,
precluding the exercise of discretion on the part of the agent in allocating traffic between
the carrier and others.” Some dispatch services interpret this regulation as allowing them to represent more than one carrier yet not obtain broker operating authority registration.
Others interpret this regulation to argue that a dispatch service can only represent one
carrier without obtaining broker authority. What should FMCSA consider when
determining if a dispatch service needs to obtain broker operating authority?
7. If a dispatch service represents more than one carrier, does this in and of itself
make it a broker operating without authority?
8. When should a dispatch service be considered a bona fide agent?
9. What role do bona fide agents play in the transportation of freight?
10. Electronic bulletin boards match shippers and carriers for a fee. The fee is a
membership fee to have access to the bulletin board information. Should electronic
bulletin boards be considered brokers and required to register with FMCSA to obtain
broker operating authority? If so, when and why?
11. How has technology changed the nature of freight brokerage, and how should
these changes be reflected, if at all, in FMCSA’s guidance?
12. Are there other business models/services, other than dispatch services and
electronic bulletin boards, that should be considered when clarifying the definition of
13. Are there other aspects of the freight transportation industry that FMCSA should
consider in issuing guidance pertaining to the definitions of broker and bona fide agents?
Here is the link to the FMCSA docket page for the comments. The comment period is open until July 11. I’m sure they’ll be interesting responses made about the questions asked.