Trucking: Broker of Property, physical possession, trucking company

Question
QUESTION: Being a small trucking we are looking into expansion through brokering.  We are about to apply for Operating Authority as a Broker of Property.  The question I have, Is should the brokering be filed under a different company then our trucking company?

ANSWER: Ken...  Thanks for the question.

It would be a matter of choice whether you used the same company name or not.  There are advantages and possible disadvantages to each.  For one thing, many load boards have a feedback system that rates brokers.  If the feedback was all great, it could enhance the business name and the trucking side may benefit.  On the other hand, if for some reason a carrier let you down and the broker's division received a negative rating, it could be associated with the trucking company name.  For administrative management purposes, keeping the same business name for each activity may be more efficient.  Also, a benefit in economic cost of advertising might be realized by keeping the same company name.

I really can't give you a "yes" or "no" answer and the thoughts above aren't intended to be all inclusive.  However, maybe they will give you a few points to consider and I'm sure you'll think of many others.

Maybe this will help a little and give you some areas to consider further.  Good luck whatever you decide to do.

Thanks again....
....Don

---------- FOLLOW-UP ----------

QUESTION: Since a Property Broker never takes possession of the goods, there is no need to carry liability insurance or cargo insurance.  But, if we broker under our current trucking company name would there be higher probability that we could be sued since we are a Motor Carrier with authority which is hiring another Motor Carrier with authority. Your comments please...

Answer
Ken....Please don't take this as legal advice, but I really don't see where there is more or less risk of being sued.  You're correct in the fact that since a broker doesn't take physical possession of a shipment they're not required to have cargo insurance.  I'm sure you're aware the bond that is required to be posted by a broker is for a completely different purpose.

For shipments you broker, damage claims would be between the shipper and carrier so I don't see any increase in likely hood you would be sued as the broker....... nor do I see any reason it would increase the chances of your carrier side of the business being sued.  As long as a broker doesn't get involved with directing the carrier or assuming some other role in the shipping process beyond arranging carrier service, they have a high degree of immunity, especially for shipment damage liability.  

If you were to broker to the your own trucking division of the company, you would still be protected by the carrier cargo insurance.  However. that might be an area that where you would have to exercise caution not to assume both hats simultaneously and be sure to keep the broker & carrier authorities separated.  Even here I think you could maintain sufficient separation of authorities by careful documentation and not increase the risk of a law suit.  I would suggest separate and individual contracts for each action....i.e. one for the broker contract and a completely different contract between the shipper and the carrier each using their unique authority number.

As I said before, please don't take this as legal advice.  I'm not an attorney.  It is purely my opinion based on my experience and understanding of the FMCSA regulations as they pertain to motor carriers and brokers.

Again, good luck and I hope it works out well for you.
....Don