Freight Brokers - Transport Companies - Factoring Rules & Regulations

1. U.S Department of Transportation
2. Federal Motor Carrier Safety Administration
3. Transport Company Rules & Regulations
4. Driver requirements
5. Drug and alcohol testing requirements
6. Hours of service
7. Insurance requirements
8. Vehicle registration requirements
9. Cargo securement rules
10. Freight Broker Rules and Regulations
11. Avoid misrepresentation
12. Unable to charge carriers
13. Record keeping
14. Accounting
15. Annual bond renewal
16. Conclusion
17. Need a Transport Company?

Transport companies and freight brokers play a vital role in moving goods worldwide. They provide a lot of value to consumers as well as businesses.

However, these two industries are highly regulated by the Federal Motor Carrier Safety Administration and the U.S. Department of Transportation.

So if you want to start a career in either industry, you should understand how they work before jumping in head first.

U.S. Department of Transportation

The U.S. Department of Transportation (DOT) regulates transportation brokers and freight forwarders.

The DOT sets the standards that all freight transport companies, including brokerages, must follow.

The DOT’s Office of Inspector General (OIG) investigates complaints about brokers who violate the law or engage in unethical behavior.

Federal Motor Carrier Safety Administration

The United States Department of Transportation oversees the transportation sector through the Federal Motor Carrier Safety Administration (FMCSA), a branch of the agency.

This federal agency sets safety standards for trucking companies and their drivers. The agency’s main goal is to ensure that all trucks on the road are safe for people and property.

Both freight brokers and transportation companies must register with the FMCSA.

Any violation of laws or failure to comply with the FMCSA and DOT can result in written notices, fines, or other civil and criminal penalties.

Transport Company Rules & Regulations

The transport industry is an important part of the economy and is regulated by many government agencies. These regulations are in place to ensure that both the public and companies are protected from harm or injury.

Here are some of the rules and regulations that affect transport companies:

Driver requirements

The driver must be licensed and registered with a national organization such as the U.S. Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA).

The driver must also be trained in defensive driving techniques, first aid, traffic laws, and safe loading practices. They must speak English well enough to understand dispatchers, passengers, and emergency personnel directions.

Drivers should not have any criminal convictions on their records as they may not be allowed behind the wheel if they have been convicted of felonies or driving under the influence (DUI).

To operate a car with a GVWR of more than 26,000 pounds, a driver needs to get a CDL license. The CDL license is also required to cross state lines.

Drug and alcohol testing requirements

Requirements for drug and alcohol testing of interstate truck drivers fall under the purview of the FMCSA. This federal regulation requires that each company must have a drug and alcohol testing program in place that meets the following minimum criteria:

• Random drug testing: All drivers must be subject to random drug testing at least once per year. Random drug tests are conducted without prior notice or cause.
• Post-accident drug testing: Any driver involved in an accident resulting in death or serious injury must submit to a post-accident test within two hours of the accident.
• Reasonable suspicion testing: Drivers may be tested based on reasonable suspicion that they are using drugs while operating their vehicles. Reasonable suspicion is based on behavior, poor performance, or failure to follow instructions.

The driver must be informed that they are being tested for drugs and must be given an opportunity to provide a urine sample. If the driver refuses to submit to testing, they will be terminated from their job as soon as possible.

Hours of service

The FMCSA regulates the hours of service (HOS) rules for truck drivers. The rules are in place to ensure safe, healthy, and rested drivers on the road.

Commercial drivers and transport companies must follow these rules:

• The driver may drive a maximum of 11 hours after 10 hours of being off-duty.
• The driver cannot work past 14 hours from the time they are on duty.
• The driver can work a maximum of 60-70 hours a week.
• Drivers are permitted to divide their required 10-hour off-duty period into two separate sessions. The first off-duty session must last at least two hours, and the second off-duty time must comprise at least seven consecutive hours in the sleeping berth.
• Every pair of sleeping berths MUST equal at least 10 hours. The permitted 14-hour driving window is unaffected by any of the two time periods being used in combination.
• Drivers may extend the maximum driving time of 11 hours and the driving window of 14 hours by up to 2 hours when unsafe driving conditions exist.
• Short-haul exceptions are permitted if the driver stays within a 150 air-mile radius of the usual job reporting site and does not work more than a 14-hour shift.
• When using the short-haul exemption, drivers must stay within 150 air miles of the job reporting site and report and return to that area within 14 straight hours.

Insurance requirements

All vehicles involved in transporting goods must have coverage for bodily injury liability per person/per accident ($100,000), property damage liability per accident ($50,000), and cargo liability insurance ($100,000).

Additional coverage may include cargo insurance ($1 million), commercial auto liability insurance ($1 million), medical payments coverage ($15,000), personal injury protection coverage (no limit), and uninsured/underinsured motorist coverage ($100,000).

Vehicle registration requirements

All vehicles used for transportation must be registered with the state. Commercial trucks are required to have commercial vehicle registration and license plates.

If you’re transporting goods across state lines, you may also have additional permits or licensing requirements.

Cargo securement rules

The FMCSA has a set of rules to ensure cargo is safely secured. The general rule states that the following methods must secure cargo:

• Tie downs
• Shoring bars
• Dunnage (materials used for supporting and protecting cargo)
• Dunnage bags (inflatable bags intended to fill cargo space between items)

Freight Broker Rules and Regulations

Freight brokers are also heavily regulated and must be licensed by the FMCSA and the U.S. Department of Transportation (U.S. DOT) to operate in interstate commerce.

Brokers act as agents for carriers, who are in charge of the organizing and arranging of transportation.

Brokers are subject to rules and regulations from the same agencies as trucking companies. The rules and regulations make certain that freight brokers adhere to safety and operating standards.

Avoid misrepresentation

Freight brokers have a responsibility to refrain from portraying themselves in any way as providing services on behalf of a carrier.

Any marketing a broker does must directly indicate that they offer brokerage services.

Brokers should always clearly identify themselves as such when dealing with customers.

Unable to charge carriers

Brokers aren’t authorized to bill carriers for services if they own or have a stake in the shipment they’re having them convey.

This also holds true when brokers have authority over a shipment because they own it or are owned by the shipper.

Brokers are also prohibited from providing shippers with anything of value other than affordable marketing materials.

Record keeping

A freight broker must keep records of all transactions involving carriers and shippers. These records must be kept for three years after the transaction occurred.

These records must include information regarding:

• Information of the parties involved (name, physical address, phone numbers, and email addresses)
• Details about the shipment (origin, destination, weight, value, and description of contents)
• Copies of bills of lading
• Shipping receipts
• Transportation contracts
• Other shipping documents pertaining to the delivery

Anyone participating in such a transaction must also have access to these documents to review them.

Accounting

When brokers participate in other types of business, they must accurately account for their business expenses and income.

The revenues and expenses related to the brokerage services shall be clearly identified and separated from other revenues and expenses (or shared equally with additional revenues and expenses).

Annual bond renewal

All freight brokers must renew their bonds annually. Forgetting to renew your bond could result in missing the deadline and the FMCSA suspending your license.

Because of this, sureties send out reminders at least two months prior to the renewal deadline.

Conclusion

Freight brokers and transport companies are required to follow strict and complex regulations.

The transportation industry is highly regulated, and the rules and regulations of freight brokers are designed to protect both the carrier and the broker.

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