Industry Classification

LICENSED BROKERING: This brokering type is the only type currently legal in the USA. A person licensed by FMCSA with a “Property Broker License (it’s not an Authority) to arrange transportation between willing buyers and sellers, for compensation. This person is “licensed” (49 CFR 372.1) as opposed to obtaining “authority” to take possession of property for interstate purposes, and is thus this person is not in possession of cargo, cannot create a Bill of Lading or become a “holder” of an interest in a cargo; a travel agent of freight as it were.

RE-BROKERING: Is double brokering by a different name, and is also outlawed.

CO-BROKERING: Is legal only when 2 brokers split one commission, not when they take two commissions. MAP-21 outlaws any brokering arrangement that allows two brokers to each make one commission, to the detriment of the carrier’s revenue.

PROPERTY BROKER: A licensed person who provides a service to another, that service they could do for themselves but choose not to. Govt. definition: “person who arranges transportation for compensation”. Licensed Brokers are never in possession of freight – never a “mode” of transportation, and should never declare any interest in a cargo; if they “declare” an interest, they are liable for loss.

TRUCK BROKER: The term is obsolete and is excluded from consideration as a licensed broker. Motor Carriers may not broker at all. Only their Licensed, separate broker business entity may broker freight (see 49 CFR 371.2; Definitions which exclude motor carriers from brokering).

AGENT: “A FORCE FOR” (American Heritage Dictionary); the Principals goals: An Agent is liable for the principals goals You can be an Agent for a shipper – liable for finding the lowest charging truck, or an Agent for a motor carrier liable to find the highest paying freight. What is an agent for a broker liable for? – NOT creating liability for the broker. It is best if one neither an Agent for the shipper or the motor carrier. A broker is an agent for his contract only; it is necessary to vend equal amounts of happiness to both parties. You are an “Agent” for your rate confirmation only!

FORWARDER: A broker who takes possession of and insures the cargo among various modes of transportation such as truck-rail-truck or truck-air-truck, from point A to point B. Probably has public liability and cargo insurance as well because in all circumstance this person is in possession of cargo. (See “Miller’s Law of Freight Loss and Damage Claims” by Richard R. Sigmon, 1953) This person is liable as a “receiving” and “delivering” motor carrier for cargo loss as they have a beneficial interest in the cargo (Sec 49 USC 80101).

WHOLESALE FREIGHT RATE: Any retail freight rate less a broker’s commission – backhaul is up to 60% less than “retail”. Small Carriers spend 70% of their time and admin budget getting home which is the reason for this large discount. (See Time in Relation to Distance in Rate Development to expand on this subject).

FIDICIUARY: “In Trust”, a person who has the power and obligation to act for another (often called the beneficiary) under circumstances, which require total trust, good faith and integrity. Every State has “Fiduciary Laws” under their police powers. Penalties for violating a “trust” are severe. In all probability, MAP 21 makes the Licensed Property Broker, a “fiduciary “ of the motor carriers funds, and subject to State Law if that trust is violated.

MOTOR CARRIER: The person “Authorized” to take possession of freight in Interstate Commerce. A Motor Carrier is the Supreme Being in the transportation law, the only person allowed to quote a freight rate, as opposed to a broker, the only one allowed to take possession of cargo, as opposed to a broker; while the motor carrier has sole property interest and is “strictly” liable for the outcome of the enterprise.

MOTOR CARRIER SALES AGENT: The person authorized to act as a load finder. This is the best business opportunity for those who know truckers struggling to make ends meet. This person can make a commission for finding a trucker loads from either their own shipper client base or off load boards. No Broker License or Bond is required, as the act of finding loads itself is not “brokering”. However, this person may not participate in the motor carrier’s revenue cash flow because that is brokering. So, Sales Agent invoices load source in carrier’s name, carrier receives 100% of that cash flow, and agent invoices carrier for their commission separately.

INTERMODALITY: Any freight movement involving more than one “mode” of transportation. BILL OF LADING (BOL): Receipt, contract to haul & title between motor carrier and consignor for the transport of property interstate.

INTERLINING: Two authorized motor carriers involved in the movement of freight from A to B. Both must provide a certain number of miles (defined by FMCSA) in the move, with their own equipment, while in possession of the cargo.

RETAIL FREIGHT RATE: Any freight rate invoiced by a broker or carrier directly to a shipper is a retail event (100%) – highest market rate.