Setting up new carriers with a brokerage is a crucial step for freight brokers. Carriers are essential to the operation of a brokerage, and the quality of carriers can significantly impact customer satisfaction. The process of qualifying carriers shares similarities with qualifying customers, as discussed in a previous lesson.
Basic Steps for Carrier Qualification: At a minimum, several steps are necessary to ensure that a carrier is legally qualified to haul a load for a brokerage. Once a brokerage is running smoothly, this process can be completed quickly, and there are tools and services available to simplify and automate it. Most Transportation Management System (TMS) platforms integrate with carrier onboarding tools.
Carrier Authority Verification: Using the FMCSA's Company Snapshot tool, brokers can verify a motor carrier's authority and insurance on the SAFER Web database. Key details to confirm include:
Entity Type (CARRIER)
Operating Status (AUTHORIZED FOR Property)
Power Units (Number of registered trucks)
Out of Service Date (Active status)
Operation Classification (Interstate or Intrastate)
This verification ensures that carriers have the necessary authority to operate in their chosen capacity and jurisdiction.
Carrier Insurance: Brokers should obtain a Certificate of Insurance (COI) from the carrier or their insurance provider. This document confirms the carrier's insurance coverage, including:
Liability Insurance: Typically required for for-hire interstate general freight carriers, with coverage ranging from $750,000 to $2,000,000. Oil carriers require $1,000,000, and HazMat carriers require $5,000,000. This insurance covers damages to others and their property.
Cargo Insurance: While not legally required, most carriers carry coverage of $100,000 for cargo. Special policies may be necessary for higher-value cargo loads.
Additional Policies: Some carriers may have additional coverage for physical damage to their equipment, such as collision, comprehensive, fire, and theft. Special requirements should be checked with customers as specified in broker-shipper contracts.
Broker-Carrier Contract: A legally binding document used to contract a motor carrier with a freight broker. It outlines the roles and responsibilities of both parties and should be kept on file for each carrier hired. Sample agreements can be found on various online platforms, including the brokerage's website.
Additional Considerations: Beyond the basic requirements, there are subjective factors to consider when evaluating carriers as potential long-term partners:
Authority Length: How long has the carrier been in business? Some brokers set minimum authority length requirements, often ranging from 3 to 6 months.
Reviews: What do other brokers say about the carrier online? Reviews can be found on platforms like Google and DAT Directory.
History with the Brokerage: If considering reusing a carrier, review their performance on previous loads. Factors to consider include communication, punctuality, professionalism, and any history of load cancellations.
A comprehensive approach to carrier setup ensures that brokers work with reliable carriers that meet legal requirements and maintain a high standard of service quality, contributing to customer satisfaction and the success of the brokerage.
