FMCSA Clarifies Broker Guidelines
The definitions for “broker” and bona fide agent” have subtly changed under new guidance from the Transportation Department.
For brokers — traditionally regarded as a third-party conduit between shippers and carriers — the Federal Motor Carrier Safety Administration (FMCSA) is tweaking the existing definition to note “the relevance of an entity’s handling of funds in a transaction between shippers and motor carrier,” according to a Nov. 16 Federal Register notice.
“Handling money exchanged between shippers and motor carriers is a factor that strongly suggests the need for broker authority, but it is not an absolute requirement for one to be considered a broker,” reads the notice.
FMCSA similarly massaged the definition for bona fide agent — normally considered advocates for a single carrier’s services — but expanded the definition in this case. It said that “representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent.”
The interim guidance, which is intended better reflect changing market dynamics, takes effect immediately, according to the notice.
FMCSA also attempted to define a dispatch service, in an effort to distinguish it from a broker or a bona fide agent.
The guidance lists six factors that would indicate a dispatch service needs to obtain broker authority:
It interacts or negotiates a shipment directly with the shipper or its representative.
The dispatch service is compensated for a load from the broker or a factoring company, or is involved in financial transactions between any of those entities.
The service arranges for a shipment for a motor carrier without a contract that meets the other criteria.
It accepts a shipment without a truck or carrier, and then attempts to find a truck or carrier to ship it.
The service is named in the shipping contract.
It solicits freight shipping services to the open market of carriers.
The agency will be accepting comments on the guidance through Jan. 17, 2023.