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2022 Game Changing Dispatch Regulations?

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2022 Game Changing Dispatch Regulations?

FMCSA Put Dispatchers Under Threat 

The Federal Motor Carrier Safety Administration (FMCSA) published guidance on their definition of dispatching services. Before summarizing and analyzing the changes, please know FMCSA is giving a 60-day comment window. If this impacts your business, I encourage you to voice your issues with FMCSA here. You will have until January 17th, 2023.

The guidance is dense and has many facets but these are 5 key issues for independent freight dispatchers:

  1. πŸ‘Ž Dispatchers cannot take compensation for a load from a factoring company without a broker authority (Section F; Numeral 2) but instead receives compensation from the motor carrier(s) based on the pre-determined written legal contractual agreement (Section E; Numeral 4).

  2. πŸ˜” Dispatchers may not seek or solicit shippers for freight (Section E, Numeral 3) and a broker authority is required to negotiate a shipment of freight directly with the shipper, or a representative of the shipper (Section F; Numeral 2).

  3. πŸ˜‘ Dispatchers must have a written legal contractual relationship with motor carriers that clearly reflects the motor carrier is appointing the dispatch services as a licensed agent (Section E, Numeral 1).

  4. πŸ‘ FMCSA guidance is nonbinding and not enforceable  (Footnote 15).

  5. 😱 Dispatchers found in court to be operating an unauthorized broker could face up to a $10,000 civil penalty for each violation as described in 49 U.S.C. 14916.

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But wait, there's more...

πŸ’₯Dispatchers can represent more than one motor carrier!πŸ’₯ (Section B)

"FMCSA has determined that representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent."

- FMCSA Guidance: Definitions of Broker and Bona Fide Agents; Section B, posted on 15-Nov-2022

Organizations such as Transportation Intermediaries Association (TIA) and Small Business in Transportation Coalition (SBTC) pushed in comments to guide that bona fide agents (aka Dispatchers) could only represent one carrier. While unlikely to change, if you are a dispatcher representing multiple motor carriers, speak up with a comment to FMCSA before January 17, 2023.

Many elements may not impact Dispatchers who already adhere to best practices, such as obtaining a limited power of attorney from their motor carrier customers. Nonetheless, for those who may not have been aware of best practices, FMCSA guidance on these issues will help:

  • Dispatchers need a legal contract with each motor carrier
    • Specify insurance and liability responsibilities (Section E, Numeral 2)
    • Engagement in long-term relationships will protect you better in court (Section E, Numeral 1)
    • Pre-determine how the motor carrier will pay you (Section E, Numeral 4)
    • Specify whether the relationship is an IRS 1099 contractor or a W2 employee (Section E, Numeral 6)
  • Stay away from involvement of the financial transaction between a broker and a motor carrier (Section E, Numeral 5)
  • Do not take accept a load for a motor carrier (MC) and give it to another MC (Section F, Numeral 4)
  • Do not name your dispatch service on the shipping contract (Section F, Numeral 5) 
  • Do not post a load to the open market, such as Facebook or loadboard, in search for a truck/carrier without a broker authority (Section F, Numeral 6)

FMCSA seemed to understand the value dispatchers provide and did not want to cause harm to motor carriers depending on their services:

"The dispatch service can help to ensure the motor carrier has a steady stream of shipments while allowing the motor carrier to focus on its core business of safely transporting freight. FMCSA does not believe it is the intent of Congress to eliminate the services that dispatch services provide."

- FMCSA Guidance: Definitions of Broker and Bona Fide Agents posted on 15-Nov-2022

Truck Driver Power (TDP) is seeking input from independent dispatchers.

If that's you, would you book a time to talk, please?

I'll Help TDP

What's Next...

The FMCSA has a comment window open until 17-Jan-2023. While unlikely for them to make large changes to this guidance, there is a possibility for small refinements. Dispatchers should tell FMCSA about issues that will hurt their business and motor carriers. 

❓❔❓ There's talk about what it means to engage "in the allocation of traffic" (Section D). FMCSA likely left this language intentionally vague since it is complicated. It may be the only thing further clarified after January 17th, 2023. Dispatchers should tell FMCSA how they want this defined or it will be left to other industry participants to bend the meaning against dispatching services. Keep in mind that obtaining an FMCSA broker operating authority registration requires a $75,000 surety bond or trust fund agreement, a $300 non-refundable processing fee, and a 4-6 week processing time.

"If a dispatch service arranges transportation on behalf of multiple motor carriers and engages in the allocation of traffic, however, then pursuant to 49 CFR 371.2, it is not a bona fide agent and must obtain broker operating authority registration."

- FMCSA Guidance: Definitions of Broker and Bona Fide Agents; Section D, posted on 15-Nov-2022

Other players, largely in the brokerage space, are petitioning for regulations that would be enforceable. And while that may take a few years to progress through governmental rulemaking procedures, it is already in the works by SBTC as referenced in Footnote 17.

Stay informed and know if players are advocates or making moves against you. For information about where some of the other stakeholders stand, such as the Owner-Operator Independent Drivers Association (OOIDA) and Intermodal Association of North America (IANA), read our blog post analyzing the previous comment period.

Please do not consider any of this legal advice. I am not a lawyer. If you have concerns, please seek legal counsel. 

Truck Driver Power (TDP) is seeking input from independent dispatchers.

If that's you, would you book a time to talk, please?

I'll Help TDP

Please comment below and share any questions, issues or concerns with this blog. It would be great to hear from you. 

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