Owner Operators - Owner Operator REXpert

I am a Licensed Insurance Agent and retired Interstate Commerce Commission (ICC) Investigator with more than 49 years in transportation. For the past 16 years I have been a transportation consultant assisting those who would like to get their own motor carrier or broker authority. Send me your questions and I will use my expertise and knowledge to answer them.

Q Where can I get information on trucking and brokering? Where do I find the regulations regarding interstate transportation?
A I have just updated my e-book entitled "Getting Started in Transportation and Staying in Business." I am extending this free offer through December 2006 and it is yours just for the asking.

Q I have motor carrier authority and I do not have enough trucks to move the loads that I have. Can I broker these excess loads without a broker's license?
A NO. In order to broker loads, YOU MUST have a broker's license. No exceptions.

Q When can owner-operators lease to a broker?
A Brokers can never give loads to owner-operators as owner-operators do not have motor carrier authority. Owner-operators must lease to a motor carrier and never to a broker.

Q What, in your opinion, is the best authority to have for 2007?
A In my opinion, it is best to have common and contract carrier authority, and broker authority. Having both motor carrier authorities will provide more opportunities from shippers and brokers that are not aware that you can really do everything with either the common or contract carrier authority. There really is no difference between the two today. With motor carrier authority you can have as many owner-operators lease to you as you can handle. With broker authority, you can broker all excess loads to authorized motor carriers. Having both motor carrier and broker authority provides you with the best of both worlds.

Q Where do I find "Brokers Regulations"?
A The regulations are found in Title 49 of the Code of Federal Regulations Part 371. Just go to google.com and type "49 CFR 371" and you will find the regulations.

Q Should I attend a broker school in order to get my broker's license?
A I would never recommend attending any broker school unless you are positive you can get your own surety bond or trust fund. If you are not able to get your insurance (surety bond or trust fund), the most you will get out of the broker school is to become an agent for a broker.

Q What is a freight forwarder?
A A freight forwarder is not a broker. A freight forwarder is not a motor carrier. A freight forwarder is a company that arranges for the transportation of cargo belonging to others, utilizing for-hire carriers to provide the actual truck transportation. The forwarder does assume responsibility for the cargo from origin to destination and usually does take possession of the cargo at some point during the transportation. Forwarders typically assemble and consolidate less-than-truckload (LTL) shipments into truckload shipments at origin and disassemble, and deliver LTL shipments at destination. A freight forwarder can have a separate broker's license and a freight forwarder can have a separate motor carrier's authority.

Q I just got my motor carrier authority and I deal with several brokers. Each broker pays differently. What is the regulation as to when the broker pays the carrier?
A There are no regulations governing when a broker must pay a carrier. The answer is really in the "contract" the carrier signs with the broker. There should be a statement in the contract that states how soon and how much the carrier will be paid. In the absence of this statement, the broker will never be late even though he does not pay in a timely manner. With more than 5,000 brokers in the United States, you will probably find as many different contracts or in some cases no contracts at all.

Q How does a broker handle fuel surcharge? Is it passed to the carrier?
A A broker will never reveal how much it collected from the shippers, therefore, the carrier will never know if there was a fuel surcharge involved. If the carrier receives the amount contracted for, then it really does not matter if any fuel surcharge was involved.

Q What is fuel surcharge?
A Fuel surcharge actually came about as a means for "common" carriers to increase their "tariff" rates. At one time, common carriers had to file, or publish, their rates and regulations with the Interstate Commerce Commission (ICC). Common carriers could only charge their published tariff rates--no more, no less. When fuel charges increased, the common carrier was able to file a supplement to its tariff showing the actual fuel surcharge. In order to have a fuel surcharge, you must have a base price. The base price for common carriers was its published tariff rates. On the other hand, "contract" carriers never filed their rates; they just entered into a contract with the shipper. What is the difference between a common carrier charging $1.00 per mile plus 10 cents fuel surcharge, and the contract carrier just charging $1.10 in their contract with the shipper? Today, the term ??oefuel surcharge” is used and misused by whomever it will benefit. In reality, there is no such thing as fuel surcharge, as both common and contract carriers can now enter into contracts with shippers and brokers.

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Rex Evilsizor & Associates specializes in filing motor carrier authorities (both freight and passenger) with the Federal Highway Administration. Rex is a retired ICC investigator (Special Agent) and Licensed Insurance Agent with more than 49 years of transportation experience.

Due to the amount of questions we receive, we are unable to answer all of them individually. We will answer as many as possible in this column.

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