MAP-21 When do you need a broker's license?

As the first long-term highway authority since 2005, MAP-21 - Commercial Motor Vehicle Safety Enhancement Act of 2012 has one provision that addresses the requirement for a broker license from the FMCSA for motor carriers who are also acting as brokers.

The provision amends 49 United States Code 13902 by adding "Separate Registration Required - A motor carrier may not broker transportation services unless the motor carrier has registered as a broker under this chapter."

Exactly when a motor carrier also needs a broker license is causing some confusion.

A for-hire motor carrier may accept freight from customers and transport that freight under the carrier's own USDOT number and MC Number/For-Hire Authority. In this case, the motor carrier does not need a broker license because the carrier accepting the freight is also transporting the freight.

A company that also has a private carrier fleet (transporting their own goods in their own vehicles in furtherance of a primary business that is not trucking) may contract with a for-hire carrier to transport their goods. A broker license is not required because the company owns the goods and is simply hiring the carrier to transport their goods.

However, if a for-hire motor carrier accepts a load to transport and then gives the load to another authorized carrier, the first carrier is acting as a broker and must have a broker license. The first carrier is "arranging" the transportation of the freight rather than acting as a carrier and actually transporting the load.

A broker license is required only when a motor carrier accepts a load and then hires another motor carrier to perform the transportation.

Basically, a broker arranges, for compensation, the truck transportation of cargo belonging to others, utilizing authorized for-hire carriers to provide the actual truck transportation. For an entity to function as a broker, FMCSA broker authority is required, and a designation of process agents (BOC-3) and bond must be on file.

New bond requirement - Another provision in MAP 21 requires brokers to have $75,000 bond, an increase from the current $10,000 ($25,000 household goods carrier brokers). The FMCSA intends to enforce this provision October 1, 2013

Source: J.J. Keller