Glossary · FMCSA & freight
Freight broker
Also called: Broker, Property broker
Definition
A freight broker is a company registered with FMCSA that, for compensation, arranges truck transportation of other people's freight by authorized motor carriers without hauling it.
FMCSA defines a broker as a person who, for compensation, arranges or offers to arrange transportation of property by an authorized motor carrier (49 CFR 371.2). Brokers need broker operating authority, a $75,000 BMC-84 bond or BMC-85 trust, and process agents in each state where they have offices or write contracts.
Brokers must keep a record of each transaction for 3 years, including the carrier, the bill of lading or freight bill number, the compensation received and the freight charges paid to the carrier, and each party to the transaction has the right to review it (49 CFR 371.3). That right can help a factor or carrier resolve a disputed load.
In freight factoring, the broker is usually your account debtor. Underwriting focuses on its credit and days-to-pay, its authority and bond status, and whether the contacts you are dealing with really belong to it.