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. 

Dispatch Services 

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.