How to Verify the Legitimacy of Your Freight Broker

 

In an ideal business scenario that involves two or more parties, legitimate and reliable interactions and operations are essential.

In many cases, this is a possible scenario, especially when you have teamed up with the same companies for years, and you’ve succeeded in building a work setting of common trust and collaboration.

However, in the majority of cases, it wouldn’t hurt to utilize all current means to verify whether the freight broker you are considering is legitimate. 

SO WHAT ARE THE PERKS OF WORKING WITH A FREIGHT BROKER?

A solid broker has a vast knowledge of the shipping sector inside and out, employs the newest technology to achieve client targets, and partners with reliable carriers that may be hard to find otherwise.

Here are some advantages of using a freight broker:

-The freight broker can look for the best shipping choice for your needs, saving you both time and resources. He will look for bids from different companies that you may not have in mind otherwise, simply because you don’t know they are there. A solid broker will also approach each load with the due focus and commitment, and ensure you receive the best possible quote on the shipping services.

-Carrying stock from one state to another or overseas engages several local as well as government regulations. A seasoned freight broker will be aware of these regulations and all the necessary documentation.

-Freight brokers are problem solvers. They can diagnose and find a solution to your most complicated shipping requirements. They can also tackle any volume, weight, or specific capacity estimation problems you may encounter when working with a conventional shipping company. Ideally, your freight broker will have to own a vast network of contacts and partners in the shipping market.

However, it’s not uncommon nowadays for a company to play the role of a freight broker as well to save some resources. But, even these companies seek brokers occasionally to facilitate a major load.

Check your freight broker qualifications online

In order to work legally, freight brokers need to be bonded and licensed. All freight brokers are monitored by FMCSA (Federal Motor Carrier Safety Administration).

Head to the organization’s website to confirm whether the broker you are considering is licensed. Also, ensure that their license is up-to-date, and the necessary surety bond hasn’t been terminated.

The platform will also give you extra details such as whether their license has ever been taken back and returned later and the times this has occurred.

Even if the broker cashes out online, it’s always a great idea to seek a copy of its working authority. Check whether their name, motor carrier no., and all dates look the same as the ones found in the FMCSA database. If you find any inconsistencies, find out why and exercise extra caution. 

To confirm the legitimacy of a freight broker, consider these major questions:

1. Is the broker a legit member of the UCR (Unified Carrier Registration) Program? The UCR is a national but state-handled program that became enforced in 2007. It demands the collection of fees from motor carriers of the state, freight forwarders, freight brokers, and leasing agencies, based on the amount of commercial motor units they have.
2. Registration is necessary. If a freight or carrier becomes involved with interstate trade without registering themselves, they may be subject to legal penalties. Avoid any legal issues as much as you can, and search in advance to check whether a broker is currently registered or not. Is this broker bonded or insured?
3. Every freight broker needs to have an insurance contract, and you should ensure that you keep a copy of this in your files.

 Check if the details on the document are valid. Pay particular attention to whether the insurance agency appears the same as the one indexed on the official FMCSA database. Moreover, all the extra info you encounter on the agency’s website should be the same with that on the certificate. Verify the insured name, validity dates, and policy numbers.

Additionally, you can call the insurance firm and ask them if the stated policies are still applicable. Also, make sure that the freight broker is bonded.

 

 

Frame brokers also have the obligation to buy a surety bond to obtain their license and work legally. This bond is also named “BMC-84” and is needed by FMCSA to secure fair play. In case a carrier isn’t paid as agreed, they can file a claim against this surety bond and get all their money due.

 

Before the 1st of October 2013, the min. Bond threshold was $10K, but it quickly went up to $75K. Losses reaching up to $75K will have to be paid fully.

Again, you can go to the FMCSA platform online to check whether a broker’s surety bond is enforced.

MAINTAIN A BROKER DATABASE

Keeping tracks of all the freight brokers that your company partners with, will help you generate something like a working history for each broker. These reports, however, don’t have to include technical paperwork only.

You can also list other info relevant to the broker’s general approach to the workload, their adherence to deadlines, their business ethic, and other relevant info. This will offer you a better glimpse of each broker and help you judge who to contact again (or not).

Ensure that you keep all their contact info such as phone and fax numbers, existing email addresses, and physical addresses so you can easily contact them. Also keep track of the billing and transaction records for each load and update the database as needed.

Combating fraud isn’t a daily phenomenon, but it does happen from time to time. It’s also true that solid relationships are cultivated with trust and shared appreciation.

However, when you are running your own business, it would be wise to take all the needed precautions and double-check the info a freight broker gives.

Most importantly, ensure that your broker follows all the federal and state licensing and registration demands and regulations.