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An auto transport broker is a type of
cargo broker{{Underlinked, date=February 2021 A shipping agency or shipping agent is the designated person or agency held responsible for handling shipments and cargo, and the general interests of its customers, at ports and harbors worldwide, on behalf of ship ...
that specializes in the shipping and transportation of vehicles. Most vehicles shipped in the U.S. are cars and trucks, but many brokers handle boats, RVs, motorcycles and other types of vehicles as well. Auto transport is classified as "specialized freight trucking" under
NAICS The North American Industry Classification System or NAICS () is a classification of business establishments by type of economic activity (process of production). It is used by government and business in Canada Canada is a country in the ...
code 484230.


Overview

An auto transport broker is part of the personal vehicle freight business industry chain. In the U.S., these broker companies must have proper licensing and authority from the
FMCSA The Federal Motor Carrier Safety Administration (FMCSA) is an agency in the United States Department of Transportation that Regulatory economics, regulates the trucking industry in the United States. The primary mission of the FMCSA is to reduce cra ...
to be allowed to broker vehicles for customers. The individual or business that needs to move a car or other vehicle is the shipper; the shipper contacts a broker to have their vehicle shipped or transported. Once a broker is booked, the broker's job is to find a carrier, which is the individual or company that actually employs drivers and operates the car transport equipment. Brokers are employed because they have access to freight
load board Load or LOAD may refer to: Aeronautics and transportation *Load factor (aeronautics), the ratio of the lift of an aircraft to its weight *Passenger load factor, the ratio of revenue passenger miles to available seat miles of a particular transpor ...
s, where they can post the job and find carriers that have transportation resources in the area. They can also get lower shipping prices by getting competing bids by different carriers. However, brokers and carriers are not always separate entities - a number of auto transport companies handle both brokerage and transport.


Statistics

The
US Department of Transportation The United States Department of Transportation (USDOT or DOT) is a federal Cabinet Cabinet or The Cabinet may refer to: Furniture * Cabinetry, a box-shaped piece of furniture with doors and/or drawers * Display cabinet, a piece of furnitur ...
keeps statistics on cargo shipments, showing over $651 billion worth of motorized and other vehicles (including parts) moved by truck in 2007. Of that number, $452bn of cargo was moved via for-hire truck. Official statistics about the size of the secondary auto transport market, number of commercial-size
car carrier Roll-on/roll-off (RORO or ro-ro) ships are cargo ships designed to carry wheeled cargo, such as cars, trucks, semi-trailer trucks, buses, Trailer (vehicle), trailers, and railroad cars, that are driven on and off the ship on their own wheels ...
vehicles on the road and number of vehicles shipped aren't kept by the DOT. With the advent of the Internet, the auto transport industry has seen an influx of new brokers, attracted by the low cost of starting a brokerage business online. While this encouraged greater competition and lower costs in the industry, government agencies have also seen a "dramatic increase in complaints against auto transporters and auto transport brokers" due to Internet fraud.


Licensing requirements

Auto transport brokers in the USA are subject to government licensing. The candidate must obtain an Operating Authority number from the
Federal Motor Carrier Safety Administration The Federal Motor Carrier Safety Administration (FMCSA) is an agency in the United States Department of Transportation that regulates the trucking industry in the United States, also known as an "18-wheeler A semi-tractor-trailer truck i ...
by filling out a form on the FMCSA website. There is a small application processing fee. Brokers are also required to obtain a
bond Bond or bonds may refer to: Common meanings * Bond (finance) In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of ...
. Known as a
Freight Broker Bond A freight broker bond is something freight brokers and freight forwarders in the United States must obtain in order to get or renew their license. In the United States, freight broker surety bonds are required by the Federal Motor Carrier Safety A ...
, it exists to cover losses by the motor carrier, in case the broker commits fraud or other lapses. Prior to 2012, the minimum bond was $10,000, although many brokers chose to obtain higher amounts.


2012 regulations

The
Moving Ahead for Progress in the 21st Century Act The Moving Ahead for Progress in the 21st Century Act, MAP-21, is a funding and authorization bill to govern United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contig ...
, signed by
President Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician and attorney who served as the 44th president of the United States The president of the United States (POTUS) is the head of state and head of government of ...

President Obama
on July 6 of 2012, introduced a number of new regulations for auto transport brokers. The chief among them is raising the minimum broker bond from $10,000 to $75,000. The new provision goes in force on October 1, 2013, and has applied to all existing brokers retroactively. The BMC-84 Freight Broker Bond is paid for on an annual basis. The freight broker bond cost is figured as a percentage of the bond amount depending on * Credit of ownership (
credit score A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness A credit risk is risk of default (finance), default on a debt that may arise from a borrower failing to make requi ...
, age/status of any Public Records) * Years in Business * Financials * Experience Other rules include: * A license status review by the FMCSA every five years; the FMCSA also has the power to revoke a broker's license in case of unethical practices. * A 3-year relevant experience and certified training requirement to obtain a broker license, bringing auto shipping broker qualification requirements in line with the ocean shipping industry. * Tighter regulation of "interlining," the practice of freight carriers hiring other carriers to "perform all or part of the services the originating carrier is obliged" to provide. Now, carriers that contract all or part of the job to other carriers will need to procure separate broker authority from the government. A transport company will also be required to notify its customers what role (carrier, forwarder or broker) it plays at each stage of the transport job, as well as which USDOT body regulates the activity.


Industry Reactions

The Association of Independent Property Brokers & Agents (AIPBA), a property broker trade group that claims 1,400 members, has petitioned and lobbied against higher bond requirements when these have been proposed in the past, and has harshly criticized the new law. The founder & president of AIPBA, James Lamb, has called the law a lobbyist-driven attempt to "eliminate small brokers from the market" and establish an oligopoly that charges customers more and pays carriers less. The National Association for Minority Truckers (NAfMT) has also come out against the higher bond requirements. NAfMT CEO Kevin Reid called the $75,000 bond an "unreasonable barrier to entry for would-be entrepreneurs." He also spoke out against the new restrictions on owner-operators brokering out excess freight. The NAfMT has joined efforts by AIPBA to repeal the stricter surety requirements. Other industry associations have been supportive of the law. The
Owner-Operator Independent Drivers AssociationAn owner-operator is a small business or microbusiness owner who also runs the Business operations, day-to-day operations of the company. Owner-operators are found in many business models and franchising companies in many different industry (economic ...
(OOIDA), a group that represents independent trucking owner-operators, has been a key force behind the new regulations. While the final rules in MAP-21 fell short of the OOIDA's wishes, Todd Spencer, executive vice president of the organization, praised them as a "win-win" for truckers and legitimate brokers. The
Transportation Intermediaries Association Transport (commonly used in the U.K.), or transportation (used in the U.S.), is the Motion, movement of humans, animals and cargo, goods from one location to another. In other words, the action of transport is defined as a particular movement ...
(TIA), a major third-party logistics trade organization, has also advocated for the new FMCSA regulations through its lobbying arm TIAPAC as a way to protect motor carriers from both incompetent and unscrupulous brokers. TIA board member Ken Lund acknowledged that the new bond may be difficult for smaller brokers to pay, but defended it as "reasonably priced" and useful to prevent fraud.


References

{{reflist Transport by cargo Business occupations Road transport