Ask Mr. Broker
The Broker’s License
Last Updated: Oct 31, 2007 - 12:27:09 PM
By David G. Dwinell
Nov 1, 2007 - 11:59:22 AM
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Obtain the License the same way you get Authority, complete the OP-1 on the website www.FMCSA.DOT.GOV and pay the fee $300. After they get your applicat6ion, DOT issues a “Decision” to give a License if the applicant completes a BOC-3 (process Agents) and a Surety Bond in 120 days. The largest Surety Bond company is at 800 595 2615. Keep in mind most brokers fail; 1 in 19 survives three years). In fact the bondsman will tell you that 40% of Surety Bonds are cashed in 12 months. Those who train and become Master Brokers increase their odds of success to 1in 2 . The broker License allows a person to be a travel agent of freight without liability as cargo insurance is not required.
The License is not Authority, even if the government says it is . Unlike Authority, where a person may take possession of freight FOR Interstate commerce, brokers is LICENSED to arrange transportation, NOT AUTHORITY TO TAKE POSESSION OF FREIGHT. Broker’s may not put their name on the Bill of Lading using a broker’s license only. if they are a trucker with Authority hiring a subhauler they don’t need a License.
Anyone who puts their name at the top of the Bill Of Lading (BOL) is 100% liable for loss. Again why would a broker risk putting their name on the BOL for a 15% commission, especially without insurance? Untrained brokers make the mistake of believing trucking and brokering are the same thing.
The most common beginning broker starts as an “Agent” for a broker. No License or Bond required. The broker will train and nurse the start up to success. There is usually a Contract involved and the commissions earned are 70% for the Agent and 30% for the Broker doing the Agents paperwork, and disbursing the funds involved. The Agent creates their own “shipper following”. Agency coupled with Authority is the best way to truck. The Trucker invoices the shipper retail directly for loads hauled by them, and brokers out excess freight to truckers with Authority. You cannot be a successful trucker with Authority without being a broker. The free market to too vast and too complex. All of the Nations largest truckers, broker, even the post office.
In next months issue, installment #7 Bill of Lading (BOL) as “title” for cargo. Questions? askmrbroker@loadtraining.com. David G Dwinell is a nationally recognized Expert in transportation brokering and teaches the subject.