If you are starting out in freight, you need to know which of these you are, because the answer decides what you have to file and what you are responsible for. FMCSA looks at what you actually do, not what you call yourself.
This is a general overview, not legal advice. If your business sits between these roles, ask a transportation attorney.
Freight broker
Under 49 CFR 371.2, a broker is a person who, for pay, arranges or offers to arrange the transportation of property by an authorized motor carrier. A broker doesn’t move the freight. Brokers need operating authority and $75,000 in financial security.
Freight forwarder
A forwarder holds itself out to provide transportation, assembles and consolidates shipments, takes responsibility for the shipment from receipt to destination, and uses a carrier for part of the move. The key difference from a broker is that responsibility for the freight itself. Forwarders have their own FMCSA registration.
Motor carrier
A carrier physically moves the freight. A carrier that arranges a shipment it is already authorized to haul, and has accepted and committed to move, isn’t acting as a broker for that shipment. If it hands off freight it has no intention of hauling, the answer can change.
Truck dispatcher
A dispatcher typically works for one or more carriers, finding loads and handling paperwork for a fee. FMCSA has said there is no legal definition of "dispatch service". It looks at the activity: a dispatcher who is in effect arranging freight for pay may be providing brokerage and need authority, whatever the job title says.
A carrier’s bona fide agent works within the carrier’s normal organization, under a continuing agreement, and has no discretion to allocate traffic between that carrier and others. Choosing between several carriers’ trucks is a warning sign that you may be acting as a broker.
Quick comparison
- Arranges freight on others’ trucks, for pay: broker.
- Takes responsibility for the shipment and consolidates freight: forwarder.
- Hauls the freight: carrier.
- Handles loads for a carrier under its direction: possibly an agent or dispatcher, depending on the facts.
If you’ve decided on brokerage, start with getting your authority.
Common questions
Do truck dispatchers need a broker license?
Not automatically. It depends on what they do. A dispatcher who is in effect arranging transportation for pay may need broker authority.
Can one company be both a carrier and a broker?
Yes, with separate authority for each. Keep clear which capacity you are acting in on each load.
What is the penalty for brokering without authority?
Federal law makes it unlawful and allows civil penalties and liability for claims. Check 49 USC 14916 for the current terms.