What Every Shipper Should Know Before Hiring A Motor Carrier

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The goal of the article is to inform companies that hire motor carriers directly of the inherent risks associated with underinsured, unauthorized, and unsafe motor carriers and to present some recommendations on the procedures that can be implemented in order to minimize the risks.

Carrier, Freight, Transportation, Shipping

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A freight broker matches shippers that need to transport freight with shipping companies. Freight brokers have access to many carriers and are able to obtain the right equipment for the move and can save money for shippers.

The use of a freight broker is ideal for small and mid-size companies that do not have dedicated personnel responsible for making transportation arrangements.

Shippers that contract with motor carriers directly may inadvertently hire unauthorized, unsafe, or underinsured motor carriers which can create unlimited liabilities for shippers in the event of damage or loss. Companies can significantly reduce these and other liability risks by implementing sound carrier qualification procedures.

Carrier qualification procedures might include the following:

<b>Motor Carrier Authority and Insurance Filings</b>
Develop a file for every motor carrier and check it before tendering shipments for the first time. The file must include a copy of the carrier's operating authorities and insurance filings with the FMCSA as well as the carrier's safety rating with the FMCSA.

Verify that the motor carriers authority is active and the authority type is for common or contract. Also, verify that a BOC-3 agent for service of process has been appointed and filed.

<b>Safety Ratings</b>
Obtain a copy of the carriers Safety Rating issued by the Department of Transportation. Carriers with "Unsatisfactory" ratings should never be used. Check the carrier's Safety Evaluation Area (SEA) ratings. A SEA rating over 75 is considered to be deficient; therefore, carriers with SEA rating over 75 should not be used.

If the carriers safety rating is Satisfactory, verify business references, call insurance providers to verify that all insurance policies are current and up-to-date, and obtain a signed motor carrier agreement before tendering any loads.

If the carrier Safety Rating is Conditional, obtain a copy of the report issued to the carrier indicating its safety rating is Conditional and why. Ask the carrier about specific steps being taken to be in full compliance and restored the rating to Satisfactory. If the carriers Safety Rating is Unrated or None, find out how long the carrier has been in business. If the carrier is new and the owners have recently owned another transportation company, ask what happened and if the other company is still in business.

<b>Motor Carrier Policies</b>
Additionally, inquire about the carriers policies regarding safety including controlled substance testing, medical exams, driver training regulations and driver compliance with hours of service regulations for all motor carriers. Also, request references and verify carriers service record with those references.

<b>Cargo and Liability Insurance</b>
Always contact the carriers insurance provider and verify that insurance coverage is adequate, accurate, and up-to-date for every motor carrier. Request that the carrier provides a list of exclusions which may exist in its policies. Match the carriers name to that on the insurance certificate and on the FMCSA operating authority. Verify that there is an authorized signature at the bottom of the insurance certificate.

<b>Approved Carrier Review</b>
Motor carrier files must be kept current. All new information received must be filed promptly and the file must be reviewed on a regular basis to check for potential changes in authority, safety ratings, and insurance coverage.

<b>Double Brokering</b>
Check to see if the motor carrier also has broker authority. Some motor carriers with broker authority are known to double broker loads to other carriers who might be unauthorized, unsafe, and underinsured to transport shipments.

Although there will always be problems when hiring motor carriers, the implementation of carrier qualification procedures can significantly reduce the risk of liability.

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