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Freight Brokers Must Be Licensed, If you are A Fleet Owner & Want to Broker Freight, Learn These 6 Steps

broker freight

It seems like only yesterday – the whole hoopla surrounding the increase of the freight broker license requirements and the surety bond minimum that jumped from $10,000 to $75,000 last October.

To recall, the Federal Motor Carrier Safety Administration (FMCSA) implemented new regulations, all summed up in a new transportation bill known as Moving Ahead for Progress in the 21st Century, or MAP-21. Brokers who did not comply with the rule were to have their bond canceled and license revoked.

By the end of 2013, struggling with the aftershock of such a drastic increase, many freight brokers lost their licenses and were forced out of business.

MAP-21 also stipulated that all entities acting as a broker or a freight forwarder, including fleet owners who broker loads must obtain a license and post a surety bond. Up to that point, FMCSA did not require motor carriers that sometimes brokered loads to get registered as brokers.

There have been some disputes in the past whether fleet owners who want to be successful as brokers should separate the two business operations. Whatever you’ve found to work best for you, remember that if you are a freight forwarder occasionally acting as a motor carrier and you broker loads, you must register both as a motor carrier and as a broker.

Here are some easy to follow steps to obtain a license and learn more about the mandatory surety bond.

How to Get Licensed So You May Comply with the Rules and Broker Freight

1. Fill out the application.

You can find the right form on the FMCSA’s website. Keep in mind that there are three types.

  • The Form OP-1 pertains to motor carriers, common or contracted, that transport household goods or other loads. The same form is valid for brokers and US-based enterprise carriers of international cargo, again involving household or other goods.
  • The OP-1 (P) form is for common or contract motor carriers of passengers.
  • The OP-1 (FF) form concerns freight forwarders of property except household goods and those carrying only household goods.

All application forms require a $300 registry fee, paid by credit card. One payment is acceptable for multiple fees.

2. Obtain your Motor Carrier (MC) or Freight Forwarder (FF) number.

It’s usually provided immediately when the application is filled out online. Also, there is a confirmation grant letter that will arrive via mail.

If you apply by mail, the whole process will take a much longer time, approximately 4 weeks. The MC and FF number will be used by insurance companies and process agents for filings on behalf of applicants and help them complete the application process.

3. Get Safely Through the Protest Period

When each company’s application is published in the FMCSA register, a 10-day protest period follows. During that time, anybody can file a protest with FMCSA providing evidence of why a company shouldn’t be issued a license.

4. Get Insurance

When the applicant receives the MC or FF number, an insurance company can file on their behalf all the necessary forms. The filing needs to happen within 90 days of the date FMCSA publishes the application in its registry. Otherwise, the federal agency will dismiss the application without returning the paid fee.

5. Choose a Process Agent

This is a representative of the carrier company who, in case of a legal action brought against a motor carrier, broker or freight forwarder, can receive court papers and act on behalf of the company. The license applicant must designate a process agent in every state in which they operate or maintain an office. If they have a physical office in any state, motor carriers can act as their own process agent.

6. The Final Step: Receive your certificate, permit, or license

When the protest period is through without any protests; when the FMCSA has approved the application, insurance and process agent filings, the motor carriers are issued a certificate allowing them the desired business operations; freight forwarders receive a permit and the brokers get a license.

Other State Regulations and Requirements to Broker Freight

Along with all federal rules, applicants must comply with state regulations and procedures such as fuel tax, registration and more.

If your company intends to engage in expanded interstate operations, make sure you know the transportation regulations in every state in which you are planning to conduct business.

The Surety Bond Requirement

broker freight imageIn addition to all the license requirements, there’s the surety bond. The FMCSA now requires a bond of $75,000 from freight brokers, and a bond of $25,000 from household goods brokers.

To apply for either of these, use the BMC-84 form, which can be electronically filed on a bond agency’s website. Obtaining your surety bond can become a hassle at times, but with the help of a bonding agency, you can save yourself the headache.

Some agencies even offer special “bad credit” bonding programs to make the process easy for those who would otherwise find it hard. You can obtain bonding even if your credit score is as low as 500. There are no requirements for business or personal financials, or net worth; no spousal indemnity, and even non-US citizens can apply. Your freight broker business can get an instant online approval without any obligation.

If you’re a fleet owner and want to broker freight, get started on the licensing and bonding process today. This will help business flow smoothly, even with the new MAP-21 regulations in place.

To learn more about surety bond requirements and your bonding options, visit us at Bryant Surety Bonds.

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