Trucking: Contract Carrier vs. Common Carrier, private contracts, contract carrier

Question
I am a shipper and I'm currently checking all of my carriers on the FMCSA web-site.  I recently booked a load through a broker and after the truck showed for pickup I wrote down his USDOT number and just check him out.  I was surprised to see that he only had Contract Carrier not Common Carrier Authority.

Now my question: Should I be using a Contract Carrier, either directly or through a broker that I do not have a contract with?  I thought contract carriers could only haul for the companies they were contracted with.

Thank you,
Steve

Answer
This is a good question and often the subject of confusion. Before deregulation it was an important distinction but no so much now.  I can almost guarantee that a contract exists between the Carrier and the Broker you are dealing with.  These contracts are typically written by the brokers to benefit the broker.

FMCSA Definitions:
For-Hire Carrier: A company that provides truck transportation of cargo belonging to others and is paid for doing so. To operate as an interstate for-hire carrier, a company must also register with FMCSA by filing a Form OP-1. There are two types of for-hire carriers, common carriers and contract carriers. A for-hire carrier may be both a common and a contract carrier, but must file separate registrations to obtain both licenses.

Common Carrier: Before January 1, 1996, this was a company that provided for-hire truck transportation to the general public. The services offered and the prices charged were published in a public tariff and these were the only prices the common carrier could charge.

Contract Carrier: Before January 1, 1996, this was a company that provided for-hire truck transportation to specific, individual shippers based upon private contracts between the carrier and each shipper, stipulating the services offered and the prices charged to each.

Broker: Also a company that arranges for the truck transportation of cargo belonging to others, utilizing for-hire carriers to provide the actual truck transportation. However, the Broker does not assume responsibility for the cargo and usually does not take possession of the cargo. Brokers must register with FMCSA by filing a Form OP-1.

Many smaller carriers only have Contract authority which is sufficient since the Bill of Lading will serve as a simple one shipment contract in the absence of a more formal contract.

To answer the real question there are advantages to using a broker unless you have consistent high volume traffic lanes.  Many large shippers use both for different business segments.

The broker typically has access to a wide range of capacity and can typically offer competitive pricing without you having to qualify multiple carriers that may be used infrequently.  If you contract directly with a carrier that is involved in a major accident you will likely be drawn into the litigation and be subject to negligent hiring claims.
You should have a written Shipper-Broker contract with your broker to define this relationship and to insulate you from carrier caused liabilities.

If you have consistent high volume lanes and can do the due diligence on a group of core carriers that need the lanes you can offer, you may be able to cut a better deal by contracting directly with those carriers.  In this case you need a well written Shipper-Carrier contract to protect your interests.

If you want me to review your shipment data off-line you can email me directly.  jcbowers@tampabay.rr.com

Jim Bowers