How to Know if Your Freight Broker Is Legitimate

Tags: Transportation, Logistics, Supply Chain

Freight brokers act as intermediaries in moving shipping and logistics forward, and in recent years, more brokerage operations have flooded the scene, making it easier to secure a partnership that is beneficial to your overall business.

While having more options for freight brokers is beneficial in finding the best fit intermediary for the best price, it can be a challenge to know if the freight broker selected is legitimate in terms of licensing, bonding, and business operations. Here are a few ways to vet your freight broker to ensure you are getting what you pay for while keeping your bottom line in mind.

Check for Freight Broker Registration

The first step in establishing the legitimacy of any freight broker is to check if they are registered to operate as a brokerage under federal regulations. All freight brokers are required to register and hold a license with the Federal Motor Carrier Safety Administration, or FMCSA. This organization allows individuals to search for freight brokers and their respective licenses online. Not only does this tool allow you to quickly see if a specific broker holds a valid license, but it also provides information on if a license has ever been revoked, if and when it was reinstated, and how often that has taken place.

As an added step of precaution, you should also take time to request a copy of the broker’s license and credentials, and compared these details to what is listed in the database. If there are any discrepancies, get clarification from the broker on why things do not add up and proceed with caution. You may also want to check that your broker is registered with the Unified Carrier Registration Program, or UCR. This federal program is administered by each state, and brokers and carriers are required to register so that fees can be collected based on the number of vehicles in each fleet. If brokers are not in compliance with the UCR registration, they may be subject to legal action against them.

Is Your Broker Insured and Bonded?

Another way to check if your freight broker is legitimate is through insurance and surety bond certificates. While insurance is not always a legal requirement, all freight brokers are mandated to hold a freight broker bond in order to operate legally. The FMCSA put this requirement in place to ensure freight brokers handle business in a safe and lawful way, and a minimum bond requirement of $75,000 is needed as part of the broker license process. The FMCSA website also lists out detailed bond information for each freight broker registered, but be sure to check that the certificate provided directly from the broker matches what the site states.

Track Your Brokers’ Success

If you have been in the transportation and logistics industry for some time, tracking the success of one freight broker over another can become burdensome in a hurry. Take the time to monitor the brokerage partnerships you have had in the past, keeping notes on the cost, the broker’s approach to managing workloads, and how often they meet deadlines. This information is simple to track over time, and it can make all the difference in selecting the right freight broker for the next job. Be sure to update your freight broker database regularly, and highlight the companies or individuals you prefer to work with moving forward.

There are thousands of licensed freight brokers operating in the United States today, with more entering the market every year. With all the competition in the transportation industry, it is critical to vet each freight broker you plan to work with to ensure licensing, bonding, and federal and state registrations are up to date and accurate. Taking these simple steps will keep your transportation business moving forward in the most efficient way possible, without harming the bottom line of the business or the customers you serve.

 






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