Layover.com: The Best Authority to Have in 2008

The Best Authority to Have in 2008

I am a Licensed Insurance Agent and retired Interstate Commerce Commission (ICC) Investigator with more than 49 years in transportation. For the past 16 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.

Q	What is the best authority to have for 2008?

A	In my opinion, the best authority to have for 2008 is both Common Carrier and Broker authority. With Broker authority, you can broker your excess loads or broker the loads to other motor carriers who have the required authority. With Motor Carrier authority, you can get owner-operators lease to your authority. It is also my opinion that you should not obtain both authorities under the same MC number nor the same name.

I want to apply for my own authority. Which authority should I get?

It depends on what you want to do. The following are the authorities available from the FMCSA:

Motor Common Carrier of Property (except household goods)

Motor Contract Carrier of Property (except household goods)

Motor Common Carrier of Household Goods

Motor Contract Carrier of Household Goods

Broker of Property (except household goods)

Broker of Household Goods

United States-based Enterprise Carrier of International Cargo (except household goods)

United States-based Enterprise Carrier of International Household Goods

Motor Common Carrier of Passengers

Motor Contract Carrier of Passengers

Freight Forwarder of Property (except household goods)

Freight Forward of Household Goods

Q	Is double brokering legal?

A	Yes, double brokering is legal, however, it is not a good practice. Motor carriers should really refrain from taking a double-brokered load as each time the load is brokered, the revenues go down. The problems, too, can be enormous. The most brokers I have seen on one load is five. The shipper was furious as no motor carrier wanted to handle the load because there was no money left. The first broker was paid by the shipper and subsequently lost the shipper and refunded the money to the shipper.

How soon can I get my motor carrier or broker authority?

From the date you apply for the authority until it is available is approximately 22 days. About two days from the date you applied for your authority, the MC or FF number is published in the FMCSA (Federal Motor Carrier Safety Administration) Register. On the date of the FMCSA Register, the FMCSA will send you a letter stating

"Notice of application was published in the FMCSA Register issue of (date). If applicant fails to comply within 20 days from the date of publication in the FMCSA Register, a decision will be served notifying the applicant that the application will stand dismissed for want of prosecution unless applicant complies with the requirements with 60 days."

What this is saying is your authority can be granted 20 days from the date of publication providing you have your Process Agents (BOC-3) and insurance is on file at the FMCSA. It also states that if you have not gotten your insurance and Process Agents on file within 80 days from the date of the FMCSA register, the authority you applied for will be dismissed. It is also saying that if you want to start for-hire transportation, after the 80 days, you will need to make a new application for your authority and the time periods start over.

What is the difference between brokers and freight forwarders?

Broker of Property (except household goods): An individual, partnership, or corporation that receives payment for arranging the transportation of property (excluding household goods) belonging to others by using an authorized motor carrier.

A broker does not assume responsibility for the property and never takes possession of it. Freight Forwarders provide interstate transportation of property or household goods for compensation and typically do all of the following:

Perform or provide assembly or consolidation of less-than-truckload (LTL) shipments into full truckload shipments at origin, then disassembly and delivery of LTL shipments at destination

Assume responsibility for the transportation of goods from origin to destination

Use for-hire Motor Carriers to provide any part of the transportation

Take possession of the property or household goods at some point during the transportation (often at a warehouse)

Brokers are issued MC numbers and Freight Forwarders are issued FF numbers. Brokers are not Freight Forwarders and Freight Forwarders are not Brokers. When a Freight Forwarder uses a for-hire motor carrier (a motor carrier with an MC number and USDOT number), the motor carrier takes possession of the full truck load at a warehouse. When a Freight Forwarders uses a for-hire motor carrier (a motor carrier with an MC numbers and USDOT number), and the motor carrier takes possession of the full truck load at the shippers dock, the Freight Forwarder must also have a Brokers license.

Q	Can I make application for the authority myself, or do I need to hire a transportation consultant?

A	You can always make application yourself. Do your homework but if you need to ask one person one question about any part of the application, then you should definitely hire a good transportation consultant. In my opinion, the best transportation consultant is one that has a Transportation Practitioners License and one that is a Licensed Insurance Agent.

Q	What is factoring?

A	Factoring is a way to obtain most of your revenue within 24 hours. Many shippers and brokers do not pay in a timely manner. Sometimes brokers do not pay motor carriers until the shippers pay the broker. You should always have a written agreement with the broker as to how soon you are going to be paid regardless of whether the broker ever gets paid. Factoring is usually obtaining most of your money now and the remaining money within a period of time minus the factoring fee that the factoring company must keep in order for them to be in business helping you. In my opinion factoring is a good way to get started when your revenues are not coming in on a regular basis. You should check out what the percentage the factoring company keeps for collecting your receivables.

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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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The Best Authority to Have in 2008