Navigating Freight Broker Compliance Requirements: A Guide for Trucking Industry Professionals
Compliance is crucial to your success as a freight broker operating in the trucking industry. Failing to meet federal regulations can lead to significant fines, loss of license, and damage to your reputation. In this blog post, we will discuss the key compliance requirements that every freight broker should be aware of to operate legally and efficiently.
The most important compliance requirements that every freight broker is found in the Code of Federal Regulations (CFR), Part 371- Brokers of Property. The CFR lists the general requirements that freight brokers must comply with.
The main compliance requirements are the following:
1. Insurance- Brokers must provide proof of insurance coverage, a Surety Bond, or a Trust Fund Agreement (Form BMC-85) with a minimum amount of $75,000. This is a yearly bond, so it is important that you keep up with annual renewal dates.
2. Form BOC-3 – Brokers must have a BOC-3 on file; this is a Designation of Process Agent Form. However, brokers are able to designate themselves as their own process agents in the states they are writing contracts.
3. Record-Keeping - Brokers must keep detailed records of all transactions that occur for three years from the date of occurrence.
Records must include the following such as:
• Motor Carrier Information
• Bill of Lading
• Name & Address of Consignor
• Amount of Money Received by the Broker
4. Brokers must clearly state that they perform brokerage services to avoid misrepresenting themselves. (§371.7) Brokers are only allowed to perform or offer services in the name they registered with the FMCSA. Example: If you are a registered Freight Broker, you cannot misrepresent yourself to another Broker by saying you are a Motor Carrier. (Learn more about Double Brokering)
5. Brokers, like all businesses, must be able to account for all their expenses and revenues for the business they engage in. (§371.13). Brokers must be able to distinguish the expenses and revenues that are part of the brokerage services offered.
6. As a Broker, you may not charge carriers for services in which the brokers own or has an interest in the shipment being transported by the carrier. This also includes services that you, the Broker, own or if you are also the shipper. Brokers are also not allowed to offer or give anything of value to shippers.
7. There is another section for Household Goods Brokers, including having to add it to your application or apply to have it added separately. Please see Subpart B of Part 371 of the CFR to familiarize yourself with it.
Compliance with federal regulations is essential to the success of your freight brokerage. By understanding and meeting these requirements, you can operate legally and efficiently while building a reputation for reliability and professionalism. Remember to regularly review the Code of Federal Regulations, maintain appropriate insurance coverage, file Form BOC-3, and keep accurate records of all transactions.
About Vallon Consulting LLC: Vallon Consulting is A Full-Service Trucking Consulting Company that tackles some of the most critical challenges and obstacles in the trucking industry. Our diverse global team is passionate about helping carriers and fleet managers meet their goals and ensure business stability. We do this by providing services, solutions, resources, and education.
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