For companies with goods to ship, there’s no shortage of advice on choosing a transportation provider (freight broker, trucking company, 3PL) to move them.
Many transportation businesses offer resources — articles, videos, webinars, podcasts, etc. — created to help shippers improve their understanding of the logistics industry so they can be more efficient and profitable. When studied properly, this information can help companies of all sizes improve their supply chains by adhering to best practices and avoiding common shipping mistakes.
Unfortunately, there aren’t as many helpful resources created specifically for trucking companies. Which, when you think about it, is kind of weird. Companies like yours face a lot of challenges every day. Whether it's ensuring steady cash flow (factoring is a good solution for this), picking optimal routes or selecting the right freight, running a trucking business isn’t easy.
If you haven’t already, eventually, you’ll work with a freight brokerage company to source and move a load. Usually, these transactions are mutually beneficial. However, there are also some ill-intentioned brokers in the U.S., making it important to do your due diligence before working with any of them.
The last thing you want to do is accept a shipment from an unknown broker without doing your research. This can lead to major issues like communication lapses, payment problems and, in extreme instances, cargo theft.
As a multinational transportation company, at Anderson Trucking Service (ATS), our job is simple: help our partners (carriers and shippers) navigate the transportation industry seamlessly.
That’s why, in this article, you’ll learn five tactics for vetting and validating the freight brokers you accept freight from as a trucking company. Put these tactics to use going forward and avoid the pitfalls of utilizing a bad freight broker (there are a lot of them) in the future.
How to Validate a Freight Brokerage as a Trucking Company
Ensure the freight broker you choose to work with is well-established and adheres to sound business practices by doing these five things:
- Verify they have a freight broker bond or fund in place
- Check their MC number and operational history
- Read reviews
- Verify their information
- Don’t be afraid to ask questions
1) Verify They Have a Freight Broker Bond or Fund In Place
Today, all parties operating as a freight forwarder or freight brokerage within the U.S. must have an active surety bond (BMC-84) or trust fund (BMC-85) in place. Under the MAP-21 (Moving Ahead for Progress in the 21st Century) act — which was signed into law in 2012 and was active starting October 1, 2013 — a BMC-84/BMC-85 must be posted in the amount of $75,000.
This ensures these third-party transportation companies are capable of meeting their commitments to customers and carriers, even if something goes wrong. Without an active bond or fund, freight brokers won’t be granted authority to operate in the U.S. Freight brokerages must renew their bond/fund each year to retain operating authority.
Before working with a new freight broker, make sure they have a surety bond or trust fund in place. Here’s how you can check:
Step 1: Go to the FMCSA’s Licensing and Insurance public portal.
Step 2: Type in the freight broker’s information (USDOT Number, Docket Number, Legal Name, DBA Name, State).
Step 3: Select the correct broker from the list (there may be multiple).
Step 4: Under the section “Insurance Type” verify their bond says “Yes” in both columns.
Once you know they have a bond in place, you can breathe easier — they’re a legitimate company. However, while you have that screen open, check that they have “Active” brokerage authority and the authority to move “Property.”
2) Check Their MC Number and Operational History
When evaluating a freight broker, your first step is to ensure they have operational authority and an active bond. With that out of the way, there are several tools available to help you identify a trustworthy company.
The FMCSA’s Safer Web Portal
Lean on the FMCSA which has a SAFER portal that houses high-level information on carriers and brokers (we’re sure you’re familiar with it). Use the SAFER portal to search for important details like the date the broker last filed their MCS-150 form, granting them operating authority.
The DAT Directory
DAT Freight and Analytics is a well-known company in the transportation industry. They offer freight market insights, factoring solutions and a great load board. DAT also has the DAT Directory which is available on all of their free products and offers valuable insights on each freight broker in their system.
Other Third-Party Resources
There are a lot of technologies and service providers available to help you get some insight into a freight broker’s history. In addition to the DAT Directory, other load board providers like Internet Truckstop offer insights on brokers within their platforms. Additionally, factoring companies, like WEX Capital, offer free freight broker credit checks. use these to verify each broker’s legitimacy.
3) Read Reviews
There is no shortage of review sites where you can learn more about a potential freight brokerage. Make sure to browse each freight broker’s Google/Bing Business reviews as well as their ratings on each load board you use. Make sure to look at information regarding what it’s like to work with them as well as their days to pay.
At the end of the day, if more than one trucking company has bad things to say about a broker — or most of the reviews are negative — there’s probably a better option.
4) Verify Their Information
Another good way to validate that a brokerage is trustworthy and legitimate is to pay attention to their contact and company information when communicating with them. Does everything match up?
Fraud exists in the transportation industry and even well-established brokers aren’t immune to it. So, if you start getting calls from an area code that your broker shouldn’t be contacting you from, or emails from strange addresses, be wary.
Everything should line up — from the number they’re using to call you, to their website, to their email addresses all the way to the information listed on the rate confirmations you receive.
5) Don’t Be Afraid to Ask Questions
Finally, make sure to ask new brokers questions. Don’t hesitate to dig in until you feel comfortable. The best freight brokers expect to be questioned by new trucking companies and they’ll definitely have some for you.
When you’re flushing out whether you want to haul for a brokerage, here are some things to ask:
- What is your average time to pay?
- How long have you been in operation? (less than one year is a red flag)
- How many people work at your company?
- Who can I contact if I have problems/questions after hours?
- How is your company structured?
- How are you making money?
This isn’t a comprehensive list. Bring anything additional you’d like to know to the table; a great brokerage will answer your questions confidently.
Practice These Five Tips to Avoid Issues
There are thousands of registered freight brokerages in the U.S. Some of these are agent companies (operating alone) and others are massive businesses with a global reach and tens of thousands of employees.
Regardless of their size, before your trucking company works with any of them, do your research. Put in the work on the front end to avoid problems down the road. You need to work with freight brokers that will be there to pay you for your deliveries and that won’t get you mixed up in cargo-theft schemes.
Do this by verifying they have active insurance, a bond in place and the authority to operate. Make sure you check up on their operational history and reviews. Finally, don’t hesitate to ask every new freight brokerage questions about how they operate and how long they’ve been in business. All of these things will keep your company running efficiently, without issue.
Doing your research right now will also help you avoid issues like double brokering. Here are some red flags to watch out for in that regard.
Here at ATS, we’ve been operating a freight brokerage since 1989. If you’d like to join our network of carriers, visit our Become a Carrier page for more information. Every ATS Logistics/Sureway brokered carrier has access to the ATS FreightMatch load board app to help make them more efficient and profitable. Learn more about ATS FreightMatch here.