How to Check if Your Freight Broker is Legitimate

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Customer Service Representatives (CSRs)

Small Package/Parcel Shipment Processing

Freight Forwarding: Ocean, Air, Containers

Transportation Business Intelligence

Transportation Freight Terminology

Cerasis Security Standards Overview

How to Check if Your Freight Broker is Legitimate

//Svetlana Guineva//April 17, 2014//

Wouldnt it be great if you did your business trusting all of the parties involved in freight without a shadow of a doubt?

Sometimes this is indeed possible when youve worked with the same partners for years and youve managed to build a work environment of mutual trust and cooperation.

Most of the time, however, its not a bad idea to use available channels to check if the freight broker whose services you are about to use is legitimate.

Lets review the basics, and see what you can do to ensure that the person youre dealing with is really who he says he is.

Usually, the freight broker services are highly appreciated, because a good broker knows the shipping industry in and out, uses the latest technology to accomplish his clients goals, and works with reliable carriers that otherwise may be hard to locate.

Lets review the benefits of using a freight broker:

Benefit 1:The freight broker can find the best shipping option for you and save you time and money. He will seek out bids from a variety of companies that you may not consider otherwise, simply because you are unaware they exist. The good broker will approach each load with equal amount of attention and diligence, and make sure you get the best possible price on the carrier services.

Benefit 2:Transporting goods interstate or even overseas is connected with a lot of state and federal regulations. An experienced freight broker will know what those regulations are, whats the necessary paperwork to be filled out along with anything else you need to consider when shipping internationally, for instance.

Benefit 3:Freight brokers are troubleshooters. They should be able to find a solution even to your most complex shipping needs. Large or heavy shipments, the broker can take care of any size, weight or specific measurements issues that you may have to consider when dealing with a traditional shipping company. Presumably, the freight broker has a extensive network of contacts in the shipping industry, and will know whom to call and what to do.

Its not a rare practice nowadays, however, for a company to act as its own freight broker to save some money. But even such companies reach out to brokers from time to time to secure an important load.

Now, in order to operate, a freight broker needs to be licensed and bonded.

Here is how you can check if your broker is legitimate.

All freight brokers are regulated by the Federal Motor Carrier Safety Administration (FMCSA).

Just go to theagencys websiteto check whether the broker you are working with has a valid license. Make sure that its been renewed on time and the required surety bond hasnt been cancelled.

The website will also provide you with additional information, such as whether the license has ever been revoked, and perhaps later reinstated, and how many times has that happened.

Even if the broker checks out online, its always a good idea to request a copy of the brokers operating authority. Compare whether the name, motor carrier number and all dates appear the same as the ones in the FMCSA database. If there are discrepancies, ask why and use extra caution.

To make sure your broker is legitimate, ask these three key questions:

UCR is a federal, but state-administered program that became effective in 2007. It says that states mustcollect feesfrom motor carriers, freight forwarders and brokers, and leasing companies, based on the number of commercial motor vehicles in their fleets.

The registration is mandatory. If a broker or carrier does not register but engages in interstate commerce, they may become subject to law enforcement action. Steer away from legal troubles when possible, andcheck in advanceto see if a broker has a current registration.

Every freight broker must have an insurance certificate (but not required by law, but to show MORE legitimacy due to the investment in risk mitigation for themselves and their shipper clients) and you should make sure to obtain a copy for your files. Once in your hands, verify all the information on the certificate.

Pay special attention to whether the insurance company is the same as the one listed on the FMCSA website. Along with that, all other information you find on the agencys site should match with the certificate. Double check the insured name, policy numbers and effective dates.

Even better, you can contact the insurance company and ask them if the policies are still in effect.

Freight brokers are obliged to purchase a surety bondin order to be licensed and operate legally. The bond, also known as BMC-84, is required by FMCSA and its placed to ensure fair play. If a carrier isnt paid as agreed, they can make a claim against the bond and receive all due payments.

Prior to Oct. 1, 2013, the minimum bond requirement was $10,000, but then it hiked to $75,000. Losses up to $75,000 will be compensated fully!

Again, you can use FMCSAs website to find out whether a brokers surety bond is active.

If you keep a record of all the freight brokers your company ever works with, you can create something like a work history for each one. This profile doesnt need to be limited to technical document verification.

You can also include details about the brokers overall approach to the work load, if theyre capable of meeting deadlines, if they have a good business ethic and so on. This will give you a better-rounded image of each one, to better help you decide who to call again.

Much like dating, in order to build trust and feel comfortable with each broker, you can ask the broker about any social media accounts, where you can see activities and interests outside work. This will not only help you bond, but also build a strong long-term relationship.

In addition, make sure to include all contact details such as phone and fax numbers, valid emails and even physical addresses so you can easily get in touch. Keep a record of the payment and transaction history for each load and update the database regularly.

And why not take advantage of what technology has to offer? You can use tools for data organizing such asAccessorZoho Creator, to help you keep track of everything.

Freight fraud and identity theft dont happen every day, but they do happen.

It is also true that good partnerships are nurtured with trust and mutual understanding.

However, if youre operating your own business it would be wise to take all necessary precautions and carefully verify the information a broker provides for you.

Above all, be sure that the broker is compliant with all federal and state licensing and registration requirements.

Have you ever had any bad experience with an unlicensed broker? Share with us below.

And did we cover everything? Tell us in the comment section if you apply any other practices to ensure that the broker you work with is legitimate!

Svetlana Guineva is a contributor forBryant Surety Bondsblog. She is a graduate of Metropolitan State University of Denver and is an expert in the field of surety bonds and licensing. She has written numerous articles on the topic of Freight Broker Bonds and Auto Dealer Licensing.

Svetlana Guineva is a contributor for Bryant Surety Bonds blog ( She is a graduate of Metropolitan State University of Denver and is an expert in the field of surety bonds and licensing. She has written numerous articles on the topic of Freight Broker Bonds and Auto Dealer Licensing.

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Great article and highlights the criticality of freight brokers in the supply chain performance and risks. Although due diligence is usually applied to contracts with suppliers of goods, some contract service providers, such as freight brokers in this instance, are overlooked.

This is an interesting article but I would like to add some points. Concerning UCR registration there are non participating states so if your broker is located in one of them it isnt the best tool. Another great way to vette your broker is by checking their credit references. This offers two advantages: a check of the financial health and responsibility of the broker and a sampling of their carriers to vette for safety and general fitness. A third point is to ask what your brokers carrier compliance requirements are so you can get an idea of the types of carriers they partner with. Lastly, its a good idea to ask questions about how their carrier contracts provide protection to you as a shipper. For example do they include language that states the carrier cant pursue you for payment if the broker hasnt paid the carrier.

Catherine, these are fantastic additions. We always say, no freight broker should worry about who and how they are getting vetted by customers. If you are doing what you are supposed to be doing, then nothing should worry you. All shippers need to know more about who they do business with. Thank you, Catherine!

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