Vetting trucking companies and freight brokers is paramount in the trucking business. The Federal Motor Carrier Safety Administration (FMCSA) Safer Web Company Snapshot and the associated Licensing and Insurance (L&I) database are key. They provide valuable information on trucking operating authority. Today, there are more than 750,000 active trucking companies in the US, according to the American Trucking Associations. And finding out how to sort through their data records is a nightmare.
However, relying solely on a manual or irregular trucking authority verification process may not be enough. This blog explores trucking authority verification and why freight brokers and shippers should dig deeper during the vetting process.
Understanding the FMCSA Licensing and Insurance Database
To understand the limitations of trucking authority verification, it is essential to grasp Federal Regulations and the FMCSA Snapshot. This database contains valuable information about every carrier and broker that has an active USDOT number. Such information includes:
- Direct contact information.
- Operation classification.
- Type of freight they may move.
For reference, Authority refers to operating authority and may also be referenced as MC (motor carrier), FF (freight forwarders), or MX (Mexico-domiciled) number, depending on the specific type of authority granted through the application process. In most cases, companies operating as for-hire carriers in interstate commerce, transporting goods or people across state lines, or transporting federally regulated commodities, must have Motor Carrier authority referred to as a motor carrier (MC) number.
But digging beyond this first database and exploring the L&I database can reveal much more information. In the L&I, there are three types of authority to know. These include Common carrier, Contract carrier, and Broker Authority. It’s all accessible via the MC, FF, or MX number as well as the USDOT number.
Each type has specific requirements and regulations affecting carrier compliance. But the big issue is more about insurance. Carriers must have specific insurance coverage to protect against potential liabilities when operating commercial motor vehicles in interstate commerce.
Bodily Injury Property Damage (BIPD)
BIPD insurance is a crucial aspect of carrier compliance. It provides coverage for bodily injury or property damage that may occur during the operation of commercial motor vehicles. This insurance ensures that carriers are financially protected in case of accidents or mishaps on the road.
The amount of BIPD insurance required varies depending on the type of authority held by the carrier. For interstate carriers with Common or Contract Authority, the minimum coverage required is $750,000 for non-hazardous freight and up to $5 million for hazardous materials.
Cargo insurance is only required and regulated by the FMCSA and L&I for household goods carriers and in the amount of $5000. Prior to 2011, it was necessary for all carriers to maintain this degree of coverage for any cargo, reports Transport Topics. The minimum coverage for cargo insurance for those in the mandated group is $5,000 per vehicle, but it can be higher depending on shipper requirements and expectations.
Rather than assuming a carrier has an active policy, today’s companies could instead use a data distribution provider, such as Carrier Details, to verify cargo insurance prior to hiring if needed.
The BOC-3 Status
The BOC-3 filing is significant for brokers and a vital part of every application process. Also known as the “Designation of Agents for Service of Process,” this status refers to the filing of a process agent. And it is required for every interstate motor carrier, broker or freight forwarders.
The premise is simple. The filing ensures that a designated person can receive court or legal documents on behalf of a company.
Now, companies may act as their own process agent. But it’s limited to intrastate commerce only. Operating beyond the borders of your existing state means you must designate a third party for this role.
The Value of Looking Beyond Trucking Authority
Accessing the Safer Web database is the first true step to evaluating trucking authority as a broker, but why?
The answer rests in understanding just how quickly the industry grows. Numerous carriers enter the industry regularly, making it essential to evaluate their track record and performance beyond their authority status.
Any company may file for authority status, but that can change. The FMCSA Operating Authority is generally updated anytime a significant event occurs. For example, a change in insurance coverage may trigger an update. Or the carrier could even lose all authority.
However, the unknowing broker may not find this information out until weeks, months, or even years later. Relying on manual or irregular trucking authority verification alone may lead to overlooking potential red flags or issues impacting service quality.
This volatility necessitates thoroughly evaluating carriers beyond their authority status to ensure long-term partnerships and consistent service quality. Also, freight brokers may still be liable if they skip a complete review of the given carrier’s authority.
Impact of Time Lost on Overhead
Time wasted on vetting carriers inefficiently can result in increased overhead costs and reduced profitability. But it’s easy to miss why.
What does manually reviewing data mean for a company? Let’s think about the revenue for a given freight broker and the costs of completing a manual query. ZipRecruiter reports that the average freight broker hourly rate is $27, but it can vary widely up to $46.31.
It’s possible to assume that if the average person spends 15 minutes reviewing carrier authority, assuming a review of 80 carriers per week, that amounts to 20 hours of lost time actually working to secure more loads and approximately $540 – $926.20 in labor costs.
The traditional, manual process for retrieving trucking industry data is outdated. It’s time-consuming and prone to errors. What happens if a person copies data incorrectly? What happens if they mistype a number?
There’s the human element and its risks. But what if another solution existed?
Streamlining and Automating MC Number Data Retrieval
The existing FMCSA trucking database gives brokers access to comprehensive carrier information, including USDOT number, safety ratings, insurance details, and authority history, quickly. But instead of a manual review, an automated data retrieval process—the foundation behind Carrier Details, is better. Such a process offers several core benefits beyond saving time, including:
- Instant data distribution.
- Up-to-date FMCSA source data.
Automation improves information integrity. This leads to more reliable carrier partnerships and reduced risks associated with poor carrier performance.
Overcome the Challenges of Trucking Authority Verification With Carrier Details
Trucking authority verification means looking beyond a manual FMCSA database review of authority. Today’s brokers must enhance their vetting processes to reap the most immense rewards. Are you ready to streamline and automate the data you use to vet and monitor your for-hire motor carriers? Carrier Details can help. Connect with Carrier Details today!