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Forming a Company: Part 1 of 5 series for Carriers

Forming a Company: Part 1 of 5 series for Carriers

Even though Motor Carriers, just as with Brokers and Freight Forwarders have been subjected to profound regulatory changes since implementation of various elements of (A) the “Motor Carrier Act of 1980”, (B) “The Interstate Commerce Termination Act of 1995”, and (C) the omnibus transportation funding bill in 2012 under the short title “Moving Ahead in the 21st Century Act”, the nature of such changes applicable to Motor Carriers since full implementation of the 1980 Act alone, as perpetuated through subsequent ICC rule-making right up until that agency was unsettled through the 1995 Act, already had simplified the economic regulatory aspects of their operations to the extent  of full maturity prior to the impact of such further major legislative initiatives.  In other words, unlike both categories of transportation intermediaries characterized above yet to be subject to final economic rule-making by the Federal Motor Carrier Safety Administration (FMCSA) and Department of Transportation (DOT), Motor Carriers have yet to be subject to final rule-making by that agency, with respect to the full implementation of Electronic Logging Devices and other safety and environmental measures.

Nevertheless, given the regulations of such avenues of Brokers, Freight Brokers, and direct shipper interactions with Motor Carriers now facilitated by what have become vastly simplified “operating authority”, “bill of lading” (read “contract of carriage”), “rate confirmation”, and “insurance certification” forms and procedures, as implemented through the currently revised iteration of Parts 300 to 399 of the Code of Federal Regulations (“CFR”) whatever further accommodations to new safety regulations interstate Motor Carriers are still adjusting to the procedures for business entities seeking to patronize such transportation service providers remain straight forward and easily understandable.

Essentially, the number one requirement for a Broker, Freight Forwarder, or Shipper seeking the services of an FMCSA regulated “motor carrier” engaged In “for hire carrier”  within the meaning of 49 CFR 387.5, whether or not as an “exempt” interstate carrier with only a DOT registration number, for movements exempt from economic regulation in interstate commerce, or operating also as an “authorized carrier within the meaning of CFR 376.2 (a) with both a DOT and MC registration number, for movements subject to economic regulation in interstate, is to ensure must meet criteria as prescribed by laws passed by Congress and signed by the President.  Once again, all parties involved in such transactions would have access to the final fully implemented elements of such legal imparities as published in the currently revised iteration of CFR of CFR 49 Parts 300 to 399.

More particularly, it is critically important to Brokers, Freight Forwarders, or Shippers the true meaning of “Carrier Qualifications”. and how to read the FMCSA web site, and familiarize themselves with all of the requirements of a bona fide interstate Motor Carrier.  For example, to determine whether they’re dealing with a legitimate transportation service provider, or party seeking to verify such credentials may log onto the FMCSA website at www.safesys.org ( and click onto “Licensing and Insurance”).  This site allows a perspective user the opportunity to verify both Motor Carrier liability insurance and the filing of a BOC3 (“Residence filing”).  The www.safersys.org website facilitates the “Licensing and Insurance” site.  When you arrive at this site you are able to input their MC number, and it will bring up their profile.  This profile will indicate their status as either active, inactive, or pending authority.

Users may also click on “Active/Pending Insurance” on the FMCSA, which would display such a Motor Carrier’s insurance company, and if there is a cancellation date of such a Motor Carrier’s insurance.  To be sure, such a form also shows the amount of liability insurance that a Motor Carrier has on file.  The “www.safersys.org” site also reveals their business profile, the number of trucks they operate, their safety status, DOT number, and prospective user’s reference whether brokering or otherwise arranging. For movement of hazardous material, a prospective user must also ask for such a Motor Carrier’s Hazmat License issued by the DOT, and for any state, the carrier delivers to or transverse through.  Many states  require a (“HazMat”) filing in addition to the (“USDOT”).  Also, the driver must have a valid CDL with a HazMat filing endorsement on their license.

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Forming a Company – 5 of 5 in Starting a Logistics Operation – Brief History of the Brokers

Brief History of the Brokers

The transportation industry has changed drastically since the Interstate Commerce Commission “ICC Termination Act of 1995” which deregulated the trucking and the transportation industry.  Prior to 1980 there was only one authorized broker operating in the United States, but after 1995, there have been thousands of Property Brokers authorized to broker property.  Within the U.S. Brokering has become an integral part of the transportation mix.  Brokers perform an important function within the logistics and transportation industry.  Carriers rely on brokers to supply hem with freight, both as front haul as well as back-haul freight.

Shippers look to brokers to fulfill the important function of supplying the many trucks required to meet their shipping needs.  The small fleets and owner-operators find that the broker can supply freight needed by the carrier, thereby, relieving the carrier. Thereby relieving the carrier need of hiring a sales force to find freight for their company.  Shippers on the other hand may need hundreds of trucks a day to move their freight.  Rather than calling carriers, the shippers can have one call, find one or one hundred trucks.

The modern day computer network provides the broker with a “virtual terminal” with thousands of trucks at their fingertips.  With the Internet , they can post the number of trucks, and type of equipment they will need to meet their shipping needs at a moment’s notice.  The tendency is to quote the lowest rate possible, but remember it is not always the lowest rate that gets the freight.  Having a following of owner operators who deliver on time and for a reasonable rate, is the best sales tool you possess.

In addition, a user-friendly web site is an important asset in the modern transportation market place.

Frequently Asked Questions:

 What is a Truck Broker?

The technical terminology for what is referred to as a “Truck Broker” is  reality, a “third part” logistics provider.  The Federal Motor Carrier Safety Administration (FMCSA) would classify it as a “Property Broker”.  The other type broker is referred to as a “Household Goods Broker”.

A third party logistics provider is rarely or if ever shown as a party to the Bill of Lading, which is the controlling document in the movement of freight in interstate commerce.  Therefore, a broker should have well written “rate agreement, linking you directly with the shipment.

What is Double Brokering?

The hotly debated issue in today’s transport industry is “double brokering”.  Although this practice is not spelled out as illegal practice in any of the FMCSA’s broker regulation, it is not a good practice, and many carriers will not accept any such shipment.  Most importantly delivering carriers will net get paid.  The underlying surety bond form, BMC 84 or trust agreement BMC 85 does not allow for payment to a broker, only payment to a regulated carrier or shipper.

What is a Truck Broker?

The technical terminology for what is referred to as a “truck broker” is in reality a third party to a transportation contract.  The broker is in fact a party inserted between a carrier and the shipper.

In essence, the property broker assumes the sales and the billing position for the carrier, and receives percentages of the truck rate for providing the services.  The carrier retains the responsibility for all regulatory, safety, liability insurance,

cargo insurance and all other legal responsibility for the transportation act.  Although the shipper pays the broker direct, technically he is paying for the transportation services only.

What is the role of a Property Broker in Interstate Commerce?

The essential duty of a broker in interstate commerce is to become a third party in a transportation transaction.  In a traditional movement of freight the shipper would contact a carrier and contract with him or her to deliver a sum of freight for a set amount of money (a rate).

When a broker enters the picture, the circumstances change drastically, no longer is the trucker the second party to the movement, but the “broker” becomes the second party, and the trucker becomes the “third party” to the transaction.

The broker assumes the responsibility of paying the trucker for the transportation charges.  In one sense, the transportation pie becomes smaller because the broker has inserted himself in the middle of the transaction, but assumes the reconcilability of paying the carrier and collecting from the shipper.  The carrier is assured of being paid, and is relieved of the duty of billing the shipper, and they can spend the time driving and dong what they do best.

In return, the carrier relives themselves of the problem of finding freight, and worrying about collecting their money from the shipper.  The shipper is in turn relieved of the responsibility of finding carriers and negotiating with each one what their rate will be.

The most important responsibility of the Property Broker is the selection of a “Bona Fide Carrier” authorized by the Federal Motor Carrier Safety Administration (FMCSA) to operate as a: Contract or Common Carrier in interstate commerce.

It is solely the duty of the authorized property broker to insure that the carrier they select has a valid Motor Carrier (MC) number, and US DOT number, and is in good standing with he FMCSA.  Th broker must be informed as to their cargo and liability insurance coverage before the shipper releases freight to the carrier.

Background and Experience

It would be virtually impossible to produce a “Transportation Guide” that would cover all aspects of freight brokering from the novice to the experienced broker agent.  Therefore, we attempted to produce a learning manual that would be user friendly to the complete novice as well as to the person with experience in the trucking and shipping industry.

It is a decided disadvantage for a complete novice entering the freight brokerage transportation industry.  The same would be true for a novice entering into  any other field of endeavor now to that person.

The general public is completely unfamiliar with the world off freight transportation.  In fact, May 2016 I was invited as an “Expert Witness” to the FMCSA Round Table on Financial Responsibility as only one of two financial because of the recent law

That increased bonds/trust from $10,000 to $75,000 and they had concerns that financials under financed the bonds and would amass claims that they would be able to pay.  They were wrong, but the experience in listening to all of the major insurance companies

That provided BMC 84 Bonds provided me a new level of education. Being in a room filled with transportation professionals and attorneys was truly educational.

This is said not to demand the general public.  The same public could be true to any person entering a new field.  Anyone in a new field could be taken advantage of during the learning curve. This is why “Transportation Consultant and Attorneys must be utilized.

This is why the Transportation Guide designed with real cases of day to day operation has Questions and Answers that are comprehensively structured for carriers, freight brokers, freight forwarders, shippers, and intended to help the newcomer as well as the experienced veterans of the transportation wars.

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How to use a load board: DAT TruckersEdge

How to use a load board: DAT TruckersEdge

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The Learning Center

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Contract Permit Versus Common Carrier Certificate

Contract Permit Versus Common Carrier Certificate

A word of caution when contracting a common carrier, as common carriers authorized by the Public Law that sunset the Interstate Commerce Commission, an act entitled “ICC Termination Act of 1995).  Entering Into a contract with a common carrier can be risky since common carriers have published rates in addition to the “spot rate”

 

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Service…Support…Communication

Service…Support…Communication

Transport Financial Services LLC, herein referred to as “TFS” has been an intricate role in the lives of motor carriers, freight brokers, and freight forwarders for several generations. TFS depicts today’s technology in the futuristic business platform website, www.eTruckBook.com.  Since opening its Shopping Mall in 2017 the transportation industry has evolved to include Electronic Logging Devices, compliance requirements, immediate access to a central location to Process Agent services for obtaining and retaining authorities.

As TFS expands it literally has become the center of the transportation industry, and exemplifies the phrase “One Stop Transportation Shop”.  The mall is more than just a Transportation Shopping Mall, but the destination for all members in this industry.  We welcome Network Providers…Shippers…Factoring Companies, and all parties interested in designing successful logistic operations to enjoy shopping at “One” convenient location, www.TFSMall.com , the Center of it All!  TFS has incredible services, and there’s always something exciting happening so make Tfsmall.com your Transportation “Go To” Network.

TFSs primary goal is to be the first responder in reconciling all transportation matters, and provide Federal Motor Carrier Safety Administration (FMCSA) and Department of Transportation (DOT) compliant products.  Prepare yourself with information and emergency (911) support from a cohesive team of trained transportation professionals working as to meet the industries transportation needs.  Let us help set-up your business, and provide increased opportunities for a successful logistics operation.

The “Mall Concept” was designed for expansion of all transportation services at a “Central Location with live agents, and to never close.  “State to State” shipper data bases, insurance monitoring creates economic stability for carriers…brokers… and freight forwarders.

Contact Transport Financial Services Legal Department with your questions on legal issues and get real answers for more efficient daily operation in lieu of paying attorneys to research issues, and finding no real answers to daily operation issues.

 

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Goal:  Focus on Education

Goal:  Focus on Education

Transport Financial Services, herein “TFS” strives to meet platinum standards by remained focused on education and developing the most precious commodity in this industry, “Career Minded Transportation Professionals”.

TFS, remains committed to new members interested in pursuing a career in transportation.  TFS processing center is open 24 hours a day providing Process Agents, support services, and direct referrals for products that we may not provide.  Being a Business owner is sometimes very difficult, and requires a cohesive “Network” to “MINIMIZE THE STRESS” of set-up, and building a networking data-base.  Transportation professionals make your wish come true.

From set-up to a running business can be done with-in 72 hours, but he FMCSA has additional days for you to meet all compliance requirements for a bond/trust for broker, and liability insurance for carriers.  Just say “I want to become a broker or carrier” and become one, or both.  Asset based transportation firms are readily accepted.  Now that you’re the “Boss”, what’s next.

As a broker or carrier we provide all support for obtaining (set-up) and retaining authority with the Federal Motor Carrier Safety Administration (FMCSA and Department of Transportation (DOT).   You apply by 9a.m., and know by 4;00 p.m. if you are approved.

Shippers, Carriers, and broker Networking Data Bases are valuable tool to market and network with your counter-parts across the borders. Meet Your Neighbors Now with these data bases which are available updated quarterly through the FMCSA and DOT.  Gain valuable international contacts, develop great trusting business alliance, and meet industry leaders to further promote your business.

We provide all Contracts and Agreements for carriers, freight brokers, and freight forwarders to solidify your partnership with shippers, and among themselves.

The contract is the answer to all legal matters, it is document that two people mutually agreed-upon.  Be certain that your contracts are clear and concise!

TFS provides a refresher on-line training course on most Transportation Matters.  Our Transportation Consultants begin by determining your needs, and build the from there.    WE provide quality information so that you can make better decisions instead of just trial and error.

Transportation Professionals are located at one (1) Central Processing Center working as a cohesive team to listen to your needs, assess, and provide options in of your success.  There is a distinct difference between “Theory” and real day-to-day logistics operations.

TFS is that next level  you need.  Everything starts with a business plan  and we can help, and assist in job related training for “THAT” next level.  Specialize training with retainer agreements with consults are available, so is marketing and web designs.

Go to www.eTruckBook.com for communication, and an open interactive business platform, to www.TFSMall.com for support and services, and www.Transportation.school for training, and call our corporate office at 850.433.2294 now.

Let us help you set up your business, and help make your weaknesses strengths to improve on your current social and communication skills.  Let us assis you in securing funding required to build your business by providing:

  1. Embracing current technology.
  2. Providing real answers to daily operation issues.
  3. Being the 1st responder to assist in reconciling your 911s
  4. Reaching out for progress status of Monitoring Service
  5. Modern Business Principle
  6. Letting TFS be your GPS
  7. Choosing us as your go to Network
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Collaborative Partnerships

Collaborative Partnerships

Transport Financial Services (TFS) offers solutions to the industry’s logistical challenges through “Collaborative Partnerships”, entailing a single location for transportation services provided by the only BMC-85 Trust provider able to refer BMC-84’, and all transportation services for full compliance with all Federal Motor Carrier Safety Administration (FMCSA) Regulations.  Essentially, such a 24/7 commitment facilitated by mobile devices provides immediate access to a network of transportation professionals.  Obtain and Retain authority for carriers, brokers, and freight forwarders through our automated E-commerce program.  Start a business, and learn from “Experts”.

Furthermore, TFS manages the complexities of the transportation industry with cutting edge technology, improving customer service to nurture both foreign and domestic markets, thereby enabling development of training certification for “Today’s Broker”, as well as services for the most important commodity in this vast industry, the motor carriers, including funding requirements (factoring). All found in the business platform located at www.eTruckBook.com.

More particularly, TFS Shopping Mall’s Transportation Directory is a yellow- pages for easy access to locate shippers, brokers, and bona-fide carriers.  Shop 24/7 at www.TFSMall.com, a Central location with timely information for better management of logistic operations. This is an excellent tool for factoring companies assuring that carriers never over- extend themselves, and does not provide service to non-solvent brokers, thus keeping honest people honest.  A great example of that is the new “Cancellation Policy” proposed by TFS and implemented by the FMCSA and DOT to identify in bold red letters, “This Entity is pending Cancellation” which prevent shippers from providing loads to brokers, and carriers from accepting loads, saving approximately billion of dollars in claims.

Significantly, TFS prides itself in same-day-delivery of most services, unless additional information is required.  TFS assist carriers to meet the significant compliance requirement of Electronic Logging Device (ELD) imposed by the federal government, and is ready to answer the hard questions on:

  • Cutting Transportation Cost;
  • Technical Strategy and Implementation;
  • Expanding Sourcing from New Markets; and
  • Development of the most innovative concepts of the 21st Century; not to mention

From 3PL Transportation Management, Consultation, and government contracts the ability to contact real transportation professionals with a well- deserved reputation of providing all of the tools required to be successful in a logistics operation. Always a live agent, and by the way go to www.eTruckBook.com for all the latest in transportation, careers, products, and services.

Corporate office opens daily from 8:00 a.m. to 5:00 p.m., Central Time at 850. 433.2294 now!

TFS never closes!

 

Marold O. Studesville

 

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Forming a Company – 4 of 5 in Starting a Logistics Operation – Licenses and Permits

The Department of Transportation (DOT), Federal Motor Carrier Safety Administration (FMCSA), and Surface Transportation Board (STB) are the three agencies within the DOT that serve in the issuance of licenses and permits.

The DOT is charged with the safety elements in the transportation industry as a whole with oversight responsibilities regarding elements of railroad safety issues, and motor carrier safety inspections and transporting hazardous materials. They issue United States Department of Transportation (USDOT) numbers to motor carrier’s operations, and conduct random roadside safety checks of motor carriers.  All motor carriers operating vehicles that require a CDL, (driver’s license) both for hire as well as private fleets must have been issued a DOT number.

The Property Broker’s License or permits are issued by the Federal Motor Carrier Safety Administration (FMCSA) does not require an examination required, only the FMCSA filing fee. The broker’s license authorizes the arranging of transportation for shippers of general commodities (except household goods), including any manufactured products, such as automobiles, building material, supplies, liquids in bulk, frozen food, foodstuffs, new furniture, and any processed or manufactured products.

Broker are not directly or legally responsible for either cargo or liability insurance, but must provide proof that the carrier has adequate coverage to protect the shipper from loss.

An application for a property broker’s license is called an OP-1 can be found on the internet or requested in writing from the FMCSA.  The applicants Motor Carrier (MC) number is processed the same day, but takes 30 days to become Active as an operating authority.  A ten (10) day protest period is mandatory on all applicants to determine if any state contest their authority for any reason, and requires a BMC 84 Broker Bond from an insurance company, or BMC 85 Trust Agreement from a financial or bank.

Although an individual can file an application themselves, it is prudent to seek Process Agents services to expedite processing, and save approximately ten (10) days to become Active as a licensed broker. 

Household Goods Broker Permits

There is a distinction between “used household goods” and new furniture and fixtures, so a property broker can arrange for shipments of new furniture, but must be authorized to arrange for household good shipments by obtaining a Household Goods Brokers Permit MC number from the FMCSA.

Interstate and Intrastate Shipments

The meaning of these two terms is important to anyone dealing with transportation of freight, Interstate transportation used in the context of this document means any transportation movement of loads between one state and another.  Therefore, this falls under the jurisdiction of the FMCSA regarding permits and licenses. Intrastate transportation is defined as a shipment with an origin and destination wholly within one state.  Several states require intrastate broker permits, and a separate Intrastate Broker license form from that state, as well as an additional broker bond or trust.

Issuance of Broker License

Once your OP-1 application is processed with the FMCSA you will be assigned an MC number they will notify the applicant with the instruction to complete a BOC3 through the Process Agent, and acquire a BMC-84 Bond or BMC-85 Trust.  Transport Financial Services is delegated with the authority by the FMCSA to process all FMCSA and DOT requirements for applicants to be licensed as brokers, carriers, and freight forwarders. 

The Uniform Carrier Registration form is required as a transportation requirement for all motor carriers once they acquire their liability insurance.  The TFS “Master Referral Program” is able to assist liability insurance and the Uniform Carrier Registration (UCR).

What is a BOC3?

The BOC3 form must be filed for carriers and brokers by a process agent company.  This form contains a list in all 50 states of individuals authorized to accept receipt of legal papers on behalf of a broker or carrier not residing in that state.  The FMCSA broker license authorized the arranging of transportation between the fifty (50) states, therefore must have a resident agent in each state the broker is authorized to conduct business in.  When the resident agent is served with a summons, or any legal action the broker is considered legally served.

A Process Agent is part of the TFS Network, so we are able to meet all of the transportation compliance requirements of the Federal Motor Carrier Safety Administration (FMCSA) and Department of Transportation (DOT).

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Forming a Company – 3 of 5 in Starting a Logistics Operation

Companies that plan revenue opportunities that may exceed a million dollars in annual should consult an attorney,  and  a competent Certified Public Accountant (CPA).  A corporate structure is a must for motor carrier (trucking) from medium and up. There are numerous classification of corporation, so an attorney or/and CPA should be consulted.  Contracts of any kind is an agreement between two (2) parties, and a breach of contract may have dire consequence.

Once you know that you are ready to move forward through the Secretary of State, select a “Fictitious Name”, which is the official name of your business, and a “DBA”, Doing Business As. Create a positive presence, promote your services on the social media, i.e. Twitter, Facebook. your business.

You must contact the Internal Revenue Service “IRS” for your “Federal Identification Number”  for assistance in selecting the type of business you will own, and the pros and cons of each for filing your business and personal taxes.  They range from a Corporation…Partnership…Limited Liability “LLC”… S or C Corp.

The broker and carrier business can be risky when you factor in the moving a load.  The broker agrees to pay the carrier an agreed Dollar ($)  amount for moving a load with a small profit margin for the amount of money expended for fuel, permits, and travel time.

Scenario:  In an average movement, the broker agrees to pay the carrier am agreed amount to move the load from point “Origin” to point “Destination”.  It is assumed that the full amount of the debt or cost is to the carrier.

View Point:  When a shipper is unable to pay, particularly if the shipper is deeply indebted the broker may be liable to pay the carriers and the broker may be forced into bankruptcy. In many instances the broker’s commission is only 10 to 15%.  Just one (1) or (2) bad loads could cost a broker thousands of dollars.

The corporate shield protects personal and/or business assets from creditors, except when a principal signed as a “Personal Guarantor”.

Corporations:

  • Limited Liability Company or LLP are created and created and treated differently, because they represent different  liabilities issues generally requires an attorney.  Here are alternatives to these entities for a corporation with associated cost savings for its formation.
  • Fictitious Business Names (d/ba)-  The Business name is processed through the Secretary of State in each state.  There is no protection against bankruptcy.  A legal notice that in the local newspaper, an article be posted declaring the individuals involved in the formation of the company involved in the formation of the company and the place of business is required to open a business checking account.  Interstate transportation is not subject to state and local sales tax.

Always make a call if uncertain on what type of protection is required for your business.

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