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Anauto transport brokeris a type ofcargo brokerthat specializes in the shipping and transportation of vehicles. Most vehicles shipped in the U.S. are cars and trucks, but many brokers handle boats, RVs, motorcycles and other types of vehicles as well. Auto transport is classified as specialized freight trucking underNAICScode 484230.

An auto transport broker is part of the personal vehicle freight business industry chain. In the U.S., these broker companies must have proper licensing and authority from theFMCSAto be allowed to broker vehicles for customers. The individual or business that needs to move a car or other vehicle is the shipper; the shipper contacts a broker to have their vehicle shipped or transported. Once a broker is booked, the brokers job is to find a carrier, which is the individual or company that actually employs drivers and operates the car transport equipment.

Brokers are employed because they have access to freightload boards, where they can post the job and find carriers that have transportation resources in the area. They can also get lower shipping prices by getting competing bids by different carriers. However, brokers and carriers are not always separate entities – a number of auto transport companies handle both brokerage and transport.

TheUS Department of Transportationkeeps statistics on cargo shipments, showing over $651 billion worth of motorized and other vehicles (including parts) moved by truck in 2007. Of that number, $452bn of cargo was moved via for-hire truck.1Official statistics about the size of the secondary auto transport market, number of commercial-sizecar carriervehicles on the road and number of vehicles shipped arent kept by the DOT.

With the advent of the Internet, the auto transport industry has seen an influx of new brokers, attracted by the low cost of starting a brokerage business online. While this encouraged greater competition and lower costs in the industry, government agencies have also seen a dramatic increase in complaints against auto transporters and auto transport brokers due to Internet fraud.2

Auto transport brokers in the USA are subject to government licensing. The candidate must obtain an Operating Authority number from theFederal Motor Carrier Safety Administrationby filling out a form on the FMCSA website.34There is a small application processing fee. Brokers are also required to obtain abond. Known as aFreight Broker Bond, it exists to cover losses by the motor carrier, in case the broker commits fraud or other lapses. Prior to 2012, the minimum bond was $10,000, although many brokers chose to obtain higher amounts.

TheMoving Ahead for Progress in the 21st Century Act,5signed byPresident Obamaon July 6 of 2012, introduced a number of new regulations for auto transport brokers. The chief among them is raising the minimum broker bond from $10,000 to $75,000. The new provision goes in force on October 1, 2013, and has applied to all existing brokers retroactively.6

The BMC-84 Freight Broker Bond is paid for on an annual basis. The freight broker bond cost is figured as a percentage of the bond amount depending on

A license status review by the FMCSA every five years; the FMCSA also has the power to revoke a brokers license in case of unethical practices.

A 3-year relevant experience and certified training requirement to obtain a broker license, bringing auto shipping broker qualification requirements in line with the ocean shipping industry.

Tighter regulation of interlining, the practice of freight carriers hiring other carriers to perform all or part of the services the originating carrier is obliged to provide.

Now, carriers that contract all or part of the job to other carriers will need to procure separate broker authority from the government. A transport company will also be required to notify its customers what role (carrier, forwarder or broker) it plays at each stage of the transport job, as well as which USDOT body regulates the activity.

The Association of Independent Property Brokers & Agents (AIPBA), a property broker trade group that claims 1,400 members,9has petitioned and lobbied against higher bond requirements when these have been proposed in the past,10and has harshly criticized the new law. The founder & president of AIPBA, James Lamb, has called the law a lobbyist-driven attempt to eliminate small brokers from the market and establish an oligopoly that charges customers more and pays carriers less.11

The National Association for Minority Truckers (NAfMT)12has also come out against the higher bond requirements. NAfMT CEO Kevin Reid called the $75,000 bond an unreasonable barrier to entry for would-be entrepreneurs. He also spoke out against the new restrictions on owner-operators brokering out excess freight. The NAfMT has joined efforts by AIPBA to repeal the stricter surety requirements.13

Other industry associations have been supportive of the law. TheOwner-Operator Independent Drivers Association(OOIDA), a group that represents independent trucking owner-operators, has been a key force behind the new regulations. While the final rules in MAP-21 fell short of the OOIDAs wishes, Todd Spencer, executive vice president of the organization, praised them as a win-win for truckers and legitimate brokers.14

TheTransportation Intermediaries Association(TIA),15a major third-party logistics trade organization, has also advocated for the new FMCSA regulations through its lobbying arm TIAPAC as a way to protect motor carriers from both incompetent and unscrupulous brokers. TIA board member Ken Lund acknowledged that the new bond may be difficult for smaller brokers to pay, but defended it as reasonably priced and useful to prevent fraud.16

2007 Commodity Flow Survey, Table 7. Bureau of Transportation Statistics

Consumer Advisory about Automobile Transporters

. The Federal Motor Carrier Safety Administration (FMCSA)

FMCSA online registration page. U.S. Department of Transportation Federal Motor Carrier Safety Administration (FMCSA) Registration & Assistance: Number/Operating Authority. Archived fromthe originalon December 9, 2013


. U.S. Department of Transportation Federal Motor Carrier Safety Administration

WEISMAN, JONATHAN (29 June ngress Approves a $127 Billion Transportation and Student Loan Package.

MAP-21 Broker and Freight Forwarder Questions & Answers

. Federal Motor Carrier Safety Administration (FMCSA). Archived fromthe original

Block, Steve.MAP-21: New Surface Transportation Legislation Overcomes Political Obstacles to Bring Law Closer to Industry Realities. Forwarder Law

Seaton, termodal Moves Make for Messy Law. Commercial Carrier Journal

About AIPBA. Association of Independent Property Brokers & Agents (AIPBA). Archived fromthe originalon 22 September 2013

OPEN LETTER TO OOIDA. Association of Independent Property Brokers & Agents (AIPBA). Archived fromthe originalon 28 February 2014

Dills, Todd (23 August 2013).Small brokers reload on $75K bond.

NAfMT Official Site. National Association for Minority Truckers (NAfMT). Archived fromthe originalon November 9, 2013

Dills, Todd (26 February 2013).Broker bond increase challenge gets new backer.

Miller, Eric.Higher Bond Enrages Small Brokers. Steal Head Finance. Archived fromthe originalon August 7, 2013

TIA Official Site. Transportation Intermediaries Association. Archived fromthe originalon December 1, 2013

Dills, Todd (2 October 2012).Ken Lund: 75K broker bond no large broker move.

Articles with limited geographic scope from June 2015

This page was last edited on 12 April 2019, at 19:30

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