Insider Secrets to Successful Freight Brokering

Freight Broker Negligence

Well, it happened again, unfortunately. A truck driver who was coming off a high, fell asleep, hit another truck and the truck driver who was inspecting his own truck. The truck driver near the roadside was killed.

Naturally, the driver coming off the high was primarily negligent. The court then found the freight broker who hired the trucking company negligent as well. It's called "vicarious negligence". Sort of like "second-hand" negligence.

The fact is the guilty trucking company did not have their proper authority or insurance.

Folks, there is no excuse for being negligent in hiring trucks. It takes only a few minutes to check the carrier out. Many freight brokers don't know they need to do this nor do they know how.

Don't be caught with a multi-million dollar suit for something that can be so easily avoided. Get the proper training. Start here: http://www.atexfreightbrokertraining.com

A Freight Broker's Liability

A freight broker normally does not take possession of cargo and, consequently, there is no broker liability, generally speaking. When damage or missing pieces occur, the parties involved may look to the bill of lading, separate contracts and, perhaps, the Carmack Amendment which places the liability squarely on the motor carrier when the carrier has possession of the cargo.

When it comes to personal injury, however, this is another issue. Brokers are more likely to get hit here with a liability suit for one reason or another. Actual negligence or vicarious liability come into play here.

The broker's conduct and the relationships between and among the parties need to be understood and clarified. Sometimes a shipper is uncertain if they are dealing with a motor carrier or a broker.

This is why, in my training, a simple statement is included in the broker's set up package whereby the broker indicates his or her role relating to both the shipper and the carrier. The broker should indicate that they are independent contractors, that they do not take possession of the cargo, that they are not a motor carrier and so on.

Making these simple statements can go a long way toward lessening freight broker liability. If you are uncertain about your legal liability, you might want to consider comprehensive training where all the details of operating a freight brokerage are covered. Check it out at: http://www.atexfreightbrokertraining.com

Your Business Name

You most likely will start your business as a sole proprietor, a corporation, or a partnership. In either case, you need to select a business name that is available. For a sole proprietorship, you normally would file an assumed name application with the county clerk.

Sometimes you can do an online search with the county clerk's database to see if your desired name is available. Otherwise, you may either call them or pay them a personal visit. It usually costs just a few bucks to file the application.

For a corporation, you would normally search the secretary of state's database to make sure your desired name is available. Once you find a name that is available, go ahead and file your corporate papers to secure the name.

Let me tell you, for most corporations, the filing process and fees are quite easy and affordable if you don't go through an attorney.

In the next post, we will discuss the form of doing business and whether you need an attorney or not

By the way, in my training with one-on-one unlimited support, I help you do all this over the phone and Internet. Most of my clients are so happy and relieved with the help.

 

Do Freight Brokers Need More Scrutiny?

For some time now, legislation has been pending which would place more scrutiny on freight brokers. There are horror stories of how some freight brokers are able to open several companies, generate income, hide behind which ever company they want to and then avoid paying carriers. This does happen. And if it happens just one time, that is one time too often.

The legislation wants to increase the surety bond/trust funds limits, among other things, which would allow carriers access to more funds in the event the freight broker fails to pay the carrier.

I am conflicted on this legislation to some extent. If this legislation continues into law, it would change the situation in more ways than one. First, it would make it more difficult for a person to start a freight broker business on a "show string" budget which is good and bad.

Many businesses started on a shoe string budget have gone on to reap tremendous success. Other businesses have failed to get off the ground for lack of funds.

There are many people in the freight broker business who should not be in it, in my opinion, and maybe raising the entry fees is the answer. I don't know.

But if a person is not planning to pay trucks, no amount of required trust fund fees will stop them. I plan to keep informed on this legislation and if you have some input on this matter, let's hear from you.

Freight Broker Liability

In an earlier blog post, I stated that "Normally, a freight broker is NOT liable for property or cargo damage, missing pieces, injury, death or other related forms of acts related to cargo in transit."

Yet, CH Robinson, one of the largest 3PLs, was hit with a $23.8 million dollar damage suit for two fatalities that resulted from a truck driver's errant behavior. The courts, however, believed that CH Robinson did not take the necessary precautions that could have prevented the fatalities. The courts found CH Robinson to be "vicariously liable" which is a form of secondary liability.

I have not followed up on any appeals that may have followed this ruling. But let me say two things:

one, if you are a freight broker that is hiring a motor carrier, take whatever precautionary measures you can to ensure that you are not negligent in your hiring; and

two, it is almost impossible to get 100% satisfaction that the carrier you hired will not incur any errant behavior. You would have to micro manage the hiring and monitoring of truck drivers. Is this realistic? I think not.

Take your normal precautions and go from there.

What Happens As Your Freight Brokerage Grows?

As your freight brokerage grows, you increase your market share, you increase your customer and carrier databases, and hopefully, you increase your net worth as well as your cash flow.

But there is something else that happens. You also increase your exposure to liability.

Do you know how to deal with this? Do you know how to proactively avoid, or at least lessen, your exposure to law suits and claims against you?

Normally, a freight broker is not liable for damage or loss in the case of cargo. This especially holds true if the broker is not negligent in carrying out its duties. But in the case of personal injury, it may be a different situation.

A relatively recent court case has drawn attention to freight brokers and their potential liability related to the selection process in hiring carriers, to encouraging carriers to violate carrier laws (aiding and abetting) and to being "vicariously" liable all of which I will attempt to explain in future blog posts.

We discuss some of these issues in our freight broker training. The day of taking the freight broker off the  hook may be over. But with proper knowledge and preparation, the freight broker can avoid and even overcome any claims that may be presented.

Can a Freight Broker Be Liable?

In my training, I always talk about freight broker liability and what sets freight brokers apart from others in the supply chain and logistics process. Normally, a freight broker is NOT liable for property or cargo damage, missing pieces, injury, death or other related forms of acts related to cargo in transit.

But stay tuned, you might be surprised how this can turn on you AND you can learn some simple steps to avoid all this.

I'll be making another post related to this.

Freight Broker Liability Insurance

I contacted a representative for this insurance company. I indicated that if a freight broker does their "due diligence" they can easily and quickly find out the status of a motor carrier's insurance standing. It only takes 10 minutes.

Yet, the insurance rep told me that many people do NOT do their "due diligence". It is hard for me to believe this but I am realizing more and more that there are all sorts of individuals getting into freight brokering and not knowing what the heck they are doing. I talk to a few of them from time to time.

They have NO idea about their requirements and what is expected of them and they have NO idea what to expect from others. To be blunt, these people will not be around very long. Freight brokering is difficult enough when you KNOW all the requirements and expectations.

But there are people out there "winging it". All I can say is, Good Luck!

Each motor carrier, in addition to cargo insurance, is required to carry Bodily Injury and Property Damage (BI/PD) insurance by filing either a BMC91 or BMC91X. The amount depends upon the gross truck weight and the type of cargo being hauled.

And, like I said, it takes only 10 minutes to check this out. In the meantime, these insurance guys are making big bucks off of those freight brokers who are so ill-informed that they think they need this insurance coverage.

It's sort of sad.