In an effort aimed at controlling illegal freight brokerage, the Department of Transportation has issued tighter definitions of broker legal terms.
Issued by DOT’s Federal Motor Carrier Safety Administration (FMCSA) on Nov. 16, the interim guidance clarifies the federal regulatory definitions of freight brokers and bona fide agents, and the role of dispatch services in the distribution of goods
Congress directed FMCSA to issue the guidance under the Infrastructure Investment and Jobs Act, bipartisan legislation enacted last year.
The Transportation Intermediaries Association (TIA) pointed out that its members have continued to see a rise in the amount of unlawful brokerage activities in recent years.
It said this includes an increase of dispatch services that illegally broker freight by handling “traffic allocation” for multiple trucking companies without the proper registration and regulatory requirements
TIA President Anne Reinke added that FMCSA had listened to its members’ concerns and incorporated several of TIA’s suggestions regarding these illegal dispatch services.
“This is a positive first step, but TIA believes it should not be the final step,” she added. “The number of unlawful brokerage activities continues to rise and these illicit dispatch services skirt registration and regulatory requirements.”
FMCSA’s guidance proposes conditions that would require brokerage authority for dispatch services, as well as laying out other conditions that would not require such brokerage authority.
Specifically, the agency explained that if dispatch services handle the exchange of money between shippers and motor carriers, then broker authority would likely be required.
In addition, dispatch services will need brokerage authority if they do business with more than one entity and if they handle traffic allocation.
