The Dangers Of Trucking Company's Working With Freight Dispatchers
Trucking Companies who decide to work with freight dispatchers who are not licensed by the FMCSA and are not qualified property brokers should be aware of the many dangers involved. If a trucking company allows an anonymous freight dispatcher, that they have never met and who do not legally work solely for their trucking company, to pull loads off a load board for a fee, then the illegal lines just could possibly have been crossed.
The FMCSA has strict penalties for failure to comply for the main purpose of protecting the consignee (The Shipper) and other parties involved with the valuable product being moved. Moving freight or taking possession of freight illegally could possibly cause their trucking authority to be revoked, they can also be liable for damages with the shipper’s property under false pretense and liability issues if ever a claim arises. If there are damages or claims issued and the FMCSA learns a 4th individual, or freight dispatcher was involved, then other legal issues are sure to arise. The idea of working with unqualified 4th person to whom dispatchers are considered, is another reason that freight prices are higher and less profits for carriers.
Truck Dispatchers also known as freight Dispatchers are individuals who solicit services to move or dispatch freight for trucking companies. These individuals are not property brokers and generally have no license or insurance to legally move freight. They act and represent themselves as working for the trucking company and usually will represent multiple trucking companies from a home office. Freight Dispatchers have become a common term in the logistics industry. Many small trucking companies are turning to freight dispatchers for the service of getting freight loads on behalf of their company since they either don’t have an internal dispatch system set up or because they are owner operators driving their trucks and find it difficult to get freight booked on their own.
Let’s distinguish the actual legal role of so called freight dispatchers and property brokers. Many people confuse being a dispatcher is also being a Freight Broker. In all reality there are some major legal discrepancies with so called freight dispatchers being that they truly have no legal right no move freight and to be compensated from moving freight. They are 4th person involved with the movement of freight and 3rd person receiving compensation or charging fees for their services of moving freight that has been posted by legal freight brokers already.
The FMCSA defines who can receive compensation from freight movement in Title 49 part 371.2 “ (a) Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.” (b) Bona fide agents are persons who are part of the normal organization of a motor carrier and perform duties under the carrier's directions pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others.
Also the FMCSA recognizes other services for carriers or shippers by stating this in title 49 "(d) Non-brokerage service is all other service performed by a broker on behalf of a motor carrier, consignor, or consignee." Which states that brokers can provide other services such as Dispatching for carriers. The FMCSA does not recognize any services in this situation by dispatchers or also by bona fide agents.
Closely reading this its very difficult to see how individuals who are working from home for multiple carriers can call themselves a bona fide agent. Also bona fide agents are people who arrange traffic, meaning the load has already been placed and they arrange the directions, traffic and so on for the carrier. Most freight dispatchers if you have ever spoken to one, are not interested in the traffic part but more of the compensation part which draws a red flag when it comes to the whole legality part. So instead they call them selves a freight dispatcher. The FMCSA calls a Bona Fide agent as a person engaged in the daily activity of the trucking company, meaning this would be an employee doing the work on behalf of the carrier. Dispatchers do not work for these trucking companies under normal circumstances, and in most cases have never met the trucking company personally. Dispatchers are acting as Bona Fide agents but are charging fees and arranging the transport of freight on behalf of the carrier and collect a percentage for this service. Which is what Freight Brokers do. So, the difference between the two classifications can become confusing.
Freight Dispatchers in many terms are causing a real problem within the industry for several reason. The lack of clear definition of where they truly fit into the whole transportation industry seems to be unclear. Most freight dispatchers are advertising their services for trucking companies and charging around 6 to 10 percent of the gross line haul for services that in some people’s point of view is illegal. Below let’s look at the dangerous of dealing with so called freight dispatchers and why.
Dispatchers mostly do not have liability insurance or cargo insurance.
Most Dispatchers cannot be bound for insurance to cover their actions since there is no clear description for the policy to be written upon. For motor carriers this is a very dangerous position to be in for many reasons but mostly if ever there was a claim. When a dispatcher pulls a load off a load board and gives it to one of there numerous carriers they are working with and the carrier has an accident or damage to the product, the victim is going to be the shipper. In most cases if the freight dispatch company had some sort of insurance, getting the insurance company to pay for illegal activities will be difficult or impossible in most cases. The insurance company will claim the movement of the freight did not follow under the guidelines of the FMCSA and the insurance company will cancel and leave the freight dispatcher to handle it on their own.
Most shippers are never aware that a 4th person is involved with their load. The shipper would be the consignee, giving it to a legal freight broker who in return post the load on a load board, then another individual Dispatcher takes the load and gives it to a carrier. When a claim arrives, who is going to be liable. If the shipper says the Broker is liable, the broker is going to realize that the dispatcher would be liable since they gave the load illegally to a carrier. The Shipper is also going to bring claims against the dispatcher for being involved and against the carrier for using an unqualified person who is involved. SO, in the middle of the claim many fingers will be pointed towards the dispatcher and the carrier. The dispatcher normally has no insurance, so they can only walk away from the deal and leave the carrier. At the end, the Shipper is the victim who is left with mismanaged freight and multiple people who where involved.
Freight Dispatchers are not legally qualified to move freight.
Dispatchers to professional freight brokers are like ambulance chasers to attorney’s. They want to be involved in freight movement, but they don’t want to operate their business in the legal way and take the necessary financial legal steps to do this. Freight brokers are great to work with for dispatching since they are licensed, bonded, and Insured. Working with a freight broker from a dispatch perspective is a great idea since the freight broker can provide multiple avenues of freight and they are legally able to do this. Working with a Dispatcher is another whole different story since they have no license, no bond, and no insurance. They somehow find themselves in the middle while essentially doing the same job as a freight broker without the credentials. This is very up-setting to legitimate freight brokers since freight brokers pay several thousands of dollars a month to operate legally to be able to provide dispatch services for carriers. Dispatchers usually pay minimum for load boards and that’s about all.
Freight Dispatchers lack abilities to grow trucking companies.
Most dispatchers I have met in the past are just looking for a quick load off a load board to make a dollar. Being that they are operating illegal, and do not have insurance, is a good indication that their concerns for the trucking company might be somewhat lacking. Most freight dispatchers I have seen who operate their business are looking for a volume of different carriers, which once again makes their whole job duty illegal since Title 49 317.2 says a bona fide agent is part of the every day operations of the motor carrier. The question is how can a person working from home be part of the daily operations of multiple trucking company’s? They can’t and there can be the problems. Dispatchers will pull loads of the load board quickly and without much thought mostly cause the carrier excessive dead head and lower paying freight. The logistics industry is seeing this more and more daily and a lot of trucking company’s find themselves pulling freight for lower pay since the dispatchers are satisfied with quick loads for small pay in large quantity volume. Dispatchers build their business from a numbers game by moving freight for multiple trucks and making their money daily from volume. In the end the carrier is the one who suffers as well as being part of potential FMCSA compliant issues.
Trucking company’s need to be aware that when they are looking for someone to help move their freight, that turning to a so-called freight dispatcher is just a bad idea on many levels. Trucking company’s also needing to be aware that if the FMCSA truly wanted to, they could pull the trucking company’s authority for allowing a non-qualified and non-licensed individual to be involved with the movement of freight for compensation. The only people allowed to arrange the movement of freight for compensation is the trucking company itself, or a licensed property broker. The idea of a freight dispatchers being involved under the guidelines of the FMCSA is just bringing trouble to the carrier at some point in time.
Trucking companies who are needing help with their dispatch services need to turn to a legal property broker for this. Freight brokers are more than happy to provide dispatch services and, in most cases, more affordable with better professional services than so called dispatchers. Property brokers can not only give dedicated freight of their own, but also help with outside loads to keep the trucking company within their respected freight lanes. Property brokers will have access to better paying freight and can negotiate better terms and rates on behalf of the carrier.
Working with a true freight dispatch company gives the carrier and the freight broker time to build a solid relationship and the freight broker can represent the carrier to direct shippers. The trucking company also knows that they are working with a company that has the skills to perform great dispatch services and they are licensed, insured and bonded. It’s a great situation for both sides that can lead to long term freight movement and growth.
When deciding to possibly work with a company for freight dispatch services, trucking company’s need to make sure with whom they are working with. Always make sure to ask if the Dispatch Company soliciting their services is first licensed as a property broker. Also make sure to check their insurance and they have Errors and omission coverage as well as Contingent Cargo, and Contingent Auto Liability. Working with a qualified property broker who can provide freight dispatch services is a great idea and can literally increase your trucking company’s profit.
To learn more about how to find a licensed freight dispatching company, you can contact firstname.lastname@example.org
About Author Michael Thomas
Michael Thomas has spent the last 17 years working as a freight broker and trucking company owner. He works daily within his own company's and enjoys sharing his knowledge with individuals all over the world. His goal is to help others enjoy the freedom of logistics and learn how to become a freight broker or how to start a trucking company business. Contact Michael Thomas today at https://www.logisticalforwardingsolutions.com/ or send an Email at email@example.com