Tuesday, April 7, 2020
By Doug Bien
A successful freight broker agent builds their business on a foundation of solid relationships and a reputation for customer service. And for shippers, great customer service is about creating and maintaining a streamlined process that makes their jobs easier. If you master that, they’ll reward you with additional business.
One way freight brokers add value is to act as a single point-of-contact within their shipper’s transportation supply chain. This eliminates their need to work directly with carriers. However, striving to provide this value-added service can be a pitfall when brokers aren’t vigilant about defining their role — so it is important that the language you use in your freight contracts, your marketing and your conversations makes it clear that you’re a broker and not a carrier.
Avoid the lobster trap
The recent “lobster-heist” ruling against Seneca Logistics Group illustrates why brokers need to be exacting in their contractual language. The
Carmack Amendment, a set of laws adopted by Congress in 1935, protect brokers from expensive carrier liabilities by outlining how to determine who is responsible for a freight claim.
With the “lobster-heist” case,
Seneca was found liable under the Carmack Amendment by a U.S. district judge because a driver they subcontracted to had accepted an expensive load of lobsters and then disappeared. The judge’s reasoning was that Seneca was involved in all aspects of shipping the load and they presented themselves as a carrier.
Protect yourself from carrier liability
At Nationwide Logistics, we support our freight broker agents so they can provide their customers value-added services without assuming contractual liabilities. This includes helping you confirm your role as a broker and not a carrier. Since you never possess or handle the freight as a broker, you should not be held responsible for any damage that may happen to that freight.
How to clarify your role as a freight broker
Across our operations, we ensure that the language we use always makes it clear that we are a freight broker and not a carrier:
- Our Terms and Conditions clearly state that we are a freight broker.
- Every shipper/broker agreement that we sign with customers states that we are a freight broker.
- Throughout our website, we are consistent in referring to ourselves as a "freight broker."
In addition, we recommend that all Nationwide Logistics freight broker agents take the following precautions to protect themselves from liability under the Carmack Amendment:
- If shippers and customers refer to you as a carrier, correct them immediately.
- Explain to your customers that as a Nationwide Logistics freight broker, your job is to “arrange” for transportation.
- In conversation, always refer to yourself as a freight broker. Never call yourself a carrier or carrier representative.
- Do not sign any freight agreements or freight contracts until you have received guidance. This is especially important if the contract refers to you as a carrier or common carrier.
Carrier vs. broker: it seems like just a simple word change. But as the ruling in the Seneca case proves, it can cost you dearly if you do not get your language right.
At Nationwide Logistics, we can help protect you from this liability. Our freight agents receive back-end administrative support to deliver all the value-added services customers expect, keeping you front-and-center as their go-to freight agent and the person who connects them to trustworthy carriers. Find more information on all the benefits of Nationwide Logistics’ agent program at
nationwidelogistics.net/Agents.