Q: Is it legal for one individual to operate as a “sales-operational” agent for more than one entity? In this case, from my understanding, this individual works with at least one (maybe more) licensed transportation broker, and is also an agent for a large trucking (asset-based) and agency (owner-operator) company and also at least one more trucking company.
This person does not have any employees and is paid (I’m assuming here) commission from the brokers/carriers on the freight he obtains from shippers. This person has no licenses, etc. In a way, this person is avoiding the cost of operating a valid third-party business with a valid license, bond, insurance and contingent liability policy, etc.
I’d appreciate your opinion and your interpretation of existing transportation law. I believe years ago when the Interstate Commerce Commission was in existence that an agent could only represent one trucking company, and if that person (owner) had three employees, the company could actually be an agent for four carriers. More than the 1-to-1 ratio, this person would have to acquire a license to operate legally as a broker or a freight forwarder.
A: I can’t comment on your recollection of the former ICC’s rules, and would require a truly comprehensive transportation law library to dig out the answer. Even then, I expect that answer would vary depending on the particular era of the ICC’s existence. At one time, the commission was positively autocratic in its exercise of authority over the industry, but, especially during its final years, it lightened up considerably.
Be that as it may, it isn’t a history lesson you’re seeking but rather the current status of the individual you describe. And you’re way short of the information required for a full assessment of the situation.
You call the person a “sales-operational” agent, and include the quotation marks. By this I gather that you yourself are a bit unclear as to precisely what this person’s job description encompasses.
You have a point that the activities of this person seem to overlap the legal definition of a “broker,” as set forth in 49 U.S.C. Section 13102(2). By that definition, the mere selling of motor carrier service, without more, qualifies as brokerage.
But the reality is that today’s broker, or third-party logistics provider as they like to call themselves now, goes a lot further than just peddling service, and is involved in the transaction under its own name. Your salesperson, however, seems to be acting solely in the name of his or her principals (otherwise how would you know about the multiple representation?). To call this a “brokerage” seems to me getting pretty technical about things.
So if the person you mention is simply going around selling multiple carrier/broker services, naming them to the shippers and setting up the transactions in the principals’ names, I don’t see anything functionally improper. I mean, where does this differ from, say, a load board at your local truck stop or online or such? And they’re not brokers.
I'm postulating here that the person goes to a shipper, names a particular client, and declares only that affiliation for the transaction. It’s another matter entirely if the person greets a customer specifying that he or she represents multiple clients and the arrangement is reached that the load will be given to whichever client the salesperson independently selects; now we’ve crossed the line into actual brokerage.
Things get even murkier when I consider the “operational” part of your description of the person’s activities. If this individual is actively involved in the operations of one or more of his/her clients, rather than simply acting as sales agent, this might be a lot more than a third-party activity, and I have no idea what to call it.
I suspect, though, that you’re looking for a real-world answer, and the only one I have to give you is “who cares?” The Federal Motor Carrier Safety Administration certainly doesn’t, and it’s the only agency charged with responsibility for acting in cases such as this.
And if the FMCSA isn’t going to initiate action — it has a lot of what it sees as more important duties on its plate — the only way something will be done about this is if some private party complains, probably loud and long. Otherwise, the situation will continue, be it legal and proper or not. Sorry, but that’s the way of deregulated trucking these days.
Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.