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June 11 2018

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68 The Journal of Commerce | June 11 2018 By Colin Barrett Q&A A Q I would like to know what the punishments are for motor carriers running loads under someone else's banner and Federal Motor Carrier Safety Administration registration. What would be the rules, and what does someone stand to lose when they knowingly engage in such activities, knowing full well that they are double brokering? Good question. If you want the real-world answer, there would likely be nothing at all in the way of legal penalties for what you describe, which isn't, by the way, double brokering. What your first sentence describes is something that's perfectly legal if the paperwork is properly executed. You're talking about a trucker who physically hauls a load (or more than one) using an identity that's "borrowed" from another carrier, presumably with that other carrier's knowledge and cooperation. I say the last because there are going to be obvious problems about billing if the other carrier doesn't know anything about what's happening. Now, this is pretty commonplace where the first (hauling) carrier trip-leases equipment with drivers to the second. The second carrier then presents its own invoice to the shipper and compensates the first for its work on the basis of the lease agreement. That's an entirely lawful operation, and is the means by which many owner-operators gain employment. It's not unusual that the owner-operator will bring in the business it's handling in such cases, although many such lease arrangements are negotiated to accommodate an overage of freight volume that the leasing (second) carrier has booked beyond what its own equipment and drivers (if any; some carriers do their business exclu- sively using leased units) can handle. Of course, in the day-to-day world of business in which we live, not everyone is meticulous about properly completing their paperwork, and if that's not done, what you're asking about — "running loads under someone else's banner" — is indeed illegal. But as for penalties, read on. "Double brokering" is a whole other animal, involv- ing carriers basically "farming out" loads that they've booked to other carriers for physical movement. It, too, can be legal if the circumstances are right. Specifically, the booking carrier also must have an FMCSA license as a broker and must disclose up front to the shipper that it's handling this particular load in its capacity as a broker rather than as a carrier. The "double" of the nomenclature refers to the fact that the load may be initially tendered to the booking carrier by a freight broker. In such cases, the second (hauling) carrier won't handle the movement under the identity of the first, but will normally use its own name and FMCSA number, though it will submit its invoice to the first (brokering) carrier, and that carrier will pass its own bill to the book- ing party, be that a shipper or a broker. Again, though, we don't live in a Panglossian "best of all possible worlds," so often (mostly, really) the two preconditions I've discussed aren't met. That makes this kind of activity, too, illegal. Now, in our personal lives, we've learned that trans- gressions of the law come with penalties attached. If we break the law, we'll expect to have cops coming to the door and, later, judges pronouncing sentences involving prison time and/or fines. But sometimes even then it doesn't necessarily go that way. If you jaywalk, buy a beer underage, smoke a marijuana cigarette in public, and the like, you'll find the cops not infrequently look the other way; the crimes are basically victimless and too minor to pursue. Thus, it is, as well, with some types of what might be called commercial violations of the law. And the ones that we've been discussing fall in that category. The FMCSA feels it has more important things to do than to prosecute such matters, and courts wouldn't likely take them too seriously if they tried. To be sure, the FMCSA might be motivated to revoke the involved carriers' registrations in egregious or repetitive cases, but that's about the worst. Shippers involved in such situations may, of course, pay economic consequences of their own. It will be more difficult to hold carriers accountable for in-transit problems in such circumstances, a shipper may find itself embroiled in billing and payment disputes between and/or among the carriers involved, etc. It's always inad- visable to immerse oneself in any kind of illegal activity, as much because of the practical effects of doing so as because of any potential legal penalties. But in the latter regard, realistically there's not much likelihood of that happening in the case you describe. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843 559 1277; email, Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. No penalties likely in 'borrowed' ID case

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