"Renting" Authority / Unlicensed Broker / Government Contracts

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.

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.

Q:

Recently I was asked if I would allow another owner-operator to operate under my authority. The other owner-operator would pay me a monthly fee, find his own loads, and handle all claims. What is your opinion on this and is it a good idea?

A:

This is never, never, never a good idea. If the other owner-operator had an accident or did not pay someone, or refused to pay a claim, the carrier with the authority would be held liable and that would be you. Also, if the insurance company found out about this, they would probably cancel your insurance and that would mean you would not have any authority. There are leasing regulations that apply when an owner-operator wants to work for a motor carrier. The leasing regulations state that you would have "exclusive possession, control, and use of the equipment for the duration of the lease." You would also be violating the USDOT regulations.

Q:

I want to get my own authority and I don't own any trucks yet. How do I obtain my authority?

A:

There is no regulation that states you must own or lease trucks in order to get your own authority. Many trucking companies do not own any trucks. They do, however, use only owner-operators who have their own trucks and lease to the authorized motor carrier. When an owner-operator leases to a motor carrier, the carrier notifies the insurance agent so the owner-operator can be added to the insurance.

Q:

I am a new carrier and I want to get government contracts. What must I do?

A:

You must first get "common" carrier authority. Most, if not all, government contracts are with "common" carriers and not "contract" carriers. The reason for this is that for common carriers the cargo insurance is on file with the government and contract carriers do not have to file their cargo insurance. This is the way the government does business. You need to check to see if you have common or contract carrier authority and make sure you have the common carrier authority.

Q:

I want to learn brokering, but I do not have the time to go to a broker's school. Do you know of any online course where I could learn brokering?

A:

The University of Arkansas offers a "Brokers of Property" online course. To register, contact Claudia Cochrane at 800-952-1165.

Written By: Rex Evilsizor