Owner Operators - Owner Operator REXpert

Brokered Load / Lease Agreement / Hotshot Loads


By Rex Evilsizor

I am a retired Interstate Commerce Commission (ICC) Investigator with more than 45 years in transportation. For the past 11 years I have been a transportation consultant assisting those who would like to get their own motor carrier or broker authority. Send me your questions and I will use my expertise and knowledge to answer them.

Every day I answer your transportation questions. The majority of the questions deal with property brokers and owner-operator leasing. The questions that I answer each month come from questions emailed to me during the previous month. All answers are up-to-date. With the cost of fuel continuing to increase, I also teach the truth about fuel surcharge. Check out the complete schedule at www.evilsizor.info.

Q Sometime when I need a backhaul from the east coast I get a load from a large carrier. Sometimes they have too much work and broker it out. When I go to the Safer website to check on their authority status, it shows they did have a broker authority, but it is inactive now. Can they legally broker loads? My question is basically, can a carrier outsource extra work and broker loads without broker authority?
 
A No carrier can broker extra loads without an active broker's authority. Also, be careful about so-called "dispatch" services on the internet. If a dispatch service does not have a broker's license, they cannot broker loads either. I would be especially cautious about a carrier that had a broker's license and it is inactive now. It sounds like they might not have paid freight charges to some carriers that accepted a brokered load.


Q I have my motor carrier authority and have a chance to lease on some carriers that also have their own authority. Can I construct a lease agreement which utilizes their insurance or must I provide insurance for his equipment as well?
 
A Before you lease anyone to your authority, you should provide the information of the owner-operator to the insurance company. The insurance company should be aware of everyone that will be leasing to your authority. Actually, your insurance will be the primary insurance. You can also deduct any increased premium to anyone that leases to you, providing the deductions are in the lease agreement. The trucking company that is leasing to your authority will now probably be paying two premiums and I do not see how this will benefit them. They will also have to have your USDOT number and name on the side of their trucks as they will be treated just like any other lessor. You can find the regulations at 49 CFR 376.


Q I want to start a "hotshot" business with my present vehicle which is under 10,000 pounds. What do I need from the USDOT?
 
A If you are 10,000 GVW or less, and not transporting hazardous materials, you will only need an MC number and SSRS (Single State Registration). Vehicles under 10,000 GVW do not fall under the requirements of obtaining a USDOT number, nor do they fall under the USDOT safety regulations unless you are transporting hazmat.


Q I want to start a brokerage. Can you tell me where to start?
 
A The above question comes to me in various forms every month. Many want to get their broker's license and do not know where to start. March 24, 2006, is being set aside for readers of this column to come in person to a special broker seminar. If you really want to learn brokering, whether you get your own license or just get loads from brokers, this seminar is for you. For more information, go to www.evilsizor.info


Q Can I ask to have a copy of the broker's license before I take a load from them? When a broker does not pay within a certain time, can they still take out their brokerage fee?
 
A A broker should always be happy to provide you with a copy of their "license." However, in the event they do not, you should always check out their authority to see if they are an active broker. If you cannot prove they are an active broker, my suggestion would be to get your loads somewhere else. The time limit for brokers to pay will be in the contract between the broker and the carrier. In the absence of a contract or in the absence of the time limit in the contract, the broker would not be late even though they might pay in 60-120 days. Two items should always be in the contract: (1) The time limit for paying the carrier; and (2) the amount to be paid to the carrier.


Q I want to get loads for my dad who has his own motor carrier authority. Do I need to get a broker's license?
 
A As long as you only obtain loads for your dad, you can be his agent and you do not need to get a broker's license. If you also provide loads to another carrier, then you must get a broker's license. You can be a carrier's agent only if you provide this same carrier with all the loads you find. The carrier can also pay you a fee for each load.

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Ask Rex...

Rex Evilsizor & Associates specializes in filing motor carrier authorities (both freight and passenger) with the Federal Highway Administration. Rex is a retired ICC investigator (Special Agent) and Licensed Insurance Agent with more than 49 years of transportation experience.

Due to the amount of questions we receive, we are unable to answer all of them individually. We will answer as many as possible in this column.

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