Working With Freight Brokers: Broker Carrier Agreement and Setup (Part 1)

You’ve found the load, and you’re ready to book. But wait, are you set-up yet to work with the broker?

This is Part 1 of a four-part series on “How to Get Set-up With Brokers.” We’ll dive into the weeds on set-ups, sharing with you our first-hand knowledge from working with both carriers and brokers.

What’s a broker set-up?

Small carriers or single-person owner operators will find that broker set-ups are a common part of doing business. Broker set-ups are typically done at the administrative level. Company drivers or owner-operators leased on to another authority will probably never run across a set-up themselves.

A broker set-up is a process where the carrier submits required company information to the broker to get set-up to haul a load and complete an overarching broker-carrier agreement. Required information includes legal, insurance, MC/DOT, and payment information in broad strokes. The broker side reviews the submitted information and also in return provides the carrier information on the broker for review. In an ideal situation, this set-up is a two-way compliance review where brokers and carriers assess whether or not the other party is a good business to engage with.

What’s the broker-carrier agreement?

The broker-carrier agreement is the overarching legal agreement between the broker and carrier. Without this agreement on file, carriers are usually not permitted to haul loads with the broker. The terms and conditions are set forth by the broker, and there is not often much that carriers can negotiate. However, it is important for carriers to know what they are signing up for.

In case of a legal dispute on a load, the carrier will need to reference both the terms of the broker-carrier agreement and the rate confirmation. Carriers should make sure to retain a copy of the fully executed broker-carrier agreement for their records. The fully executed version will reflect the terms and conditions at the time of entry into agreement. This is important because broker agreements can be updated from time to time.

This definition is provided here for informational purposes only and should not be construed as legal advice. For any advice pertaining to your personal situation, please consult with a legal professional.

Information Required

Before getting started, make sure the following information is readily available:

W9 - This form is required to help brokers report income information to the IRS. This form needs to be complete and accurate. A blank form can be found here for reference.
Certificate of Insurance (COI) - This provides proof of the carrier’s insurance. The insurance must clearly show the coverage limits as well as period covered (and expiration date). This should be provided on an Accord format to ensure it’s accepted.
FMCSA Certificate of Authority (COA) - This is proof that the motor carrier is authorized to haul loads. Many brokers will require you to upload this document. The document should clearly show authority age and type of authority. Screenshots of the FMCSA will not likely be accepted.
If Factoring: Notice of Assignment (NOA) - This is provided by the carriers’ factoring company. The document should clearly state the effective date and include banking information to issue payment to.
If Not Factoring: Payment Information - For payments made by check, instructions should be provided on who to make the check out to and where to mail it. For ACH payments, banking information with a voided check should be provided. In any payment set-up, an email address where remittance information can be sent should be provided.

The Process

The process boils down to paper-pushing. Depending how the broker administers this process, the set-up can actually be quite cumbersome or breezily fast. We’ll break down the processes into two broad categories:

The Pen and Paper Shops
The Technology Adopters

The Pen and Paper Shops

Almost universally, the set-up process for small brokers is a simple PDF packet ranging from 10 to 20 pages. Of those pages, roughly 5 to 7 pages will require completion, and the rest are informational.

There’s typically a single point of contact on the broker side who will run point on the load negotiation, set-up paperwork, and then get the carrier hauling. This immensely simplifies the back-and-forth on a set-up which usually occurs on a single email chain. The turnaround on these set-ups can be as fast as fifteen minutes. The longest we’ve seen these set-ups take is roughly a day, assuming the carrier meets all requirements and there’s a hot load to move.

The process for pen and paper shops

Broker sends over a PDF packet. The cover sheet has the broker name and typically outlines the contents of the packet along with instructions to complete the set-up.
Carrier signs the broker-carrier agreement and submits the required documents. The required documents typically include:some text
1. Carrier Signed Broker-Carrier Agreement
2. Completed broker questionnaire (providing MC/DOT # and address information)
3. Completed W9
4. Certificate of Insurance
5. FMCSA Letter of Authority
6. Notice of Assignment, if working with a factoring company
7. Payment information (with a voided check), if not factoring
Broker confirms receipt of the initial document and typically accepts the carrier to haul the load. The rate confirmation for the load is then signed.
Carrier follows up with a Certificate of Insurance that shows the broker as additional insured. This is done by the carrier reaching out to their insurance provider. The insurance provider should then send the updated Certificate of Insurance to the broker, cc’ing the carrier.
Ideally the broker sends back to the carrier the completed broker-carrier agreement, but that’s not always the case.

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These are some of the simplest set-ups for carriers done over email. These applications can be moved quickly along with prompt email follow-up. Carriers can get ahead of these set-ups by having a readily available PDF editor software where they can complete the documents and provide an e-signature. Our preferred software is DocHub which is a native app that integrates well with email providers such as Google.

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The carrier should also ideally have a pre-packaged carrier packet which has all of the necessary documents in one PDF along with pertinent carrier information.

Lastly, the carrier ideally should request from the broker during this process proof of the broker’s authority, ideally with an FMCSA letter of authority. The broker should similarly provide a copy of its surety bond, in the case that the carrier should need to file on the broker bond. For savvy carriers, confirming that the broker has properly inputted the payment information is also a good idea. Brokers can gloss over this part because it’s not immediately relevant.

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Smaller brokers can review carrier applications faster because they can work with one broker contact. Cultivating a strong working relationship with this single-point of contact for both the booking of the load and compliance can help the carrier over the long-run.

The Technology Adopters

Brokers have increasingly turned to software providers to solve its carrier compliance problem. These brokers are no longer small enough to use PDFs to complete the set-up. By this stage, the brokers would have adopted some sort of software solution for their set-up compliance needs. For medium sized brokers, the software implementation is almost an afterthought, so there tends to be issues. For large brokers, the software implementation is an entire operation backed by teams of people reviewing the submissions.

There is a plethora of software that owner-operators will encounter during the set-up process. The set-up process remains virtually unchanged from the PDF process except that everything happens via a cloud-based user interface.

The process for technology adopters

Broker sends an invitation to set-up via email that includes a URL to the set-up page. The starting page will list the broker requirements for new carriers.
Carriers will go through an onboarding process as follows some text
- Input and verify MC/DOT #
- Complete a W9 Online
- Complete broker online questionnaire (usually about vehicle and services providing, and preferred routes). Input the agent if requested to fast track approval.
- Provide insurance information
- Input payment information
- E-sign the broker-carrier agreement
If the software platform does not have the carrier’s insurance on file, instructions will be provided on how to update this. RMIS will directly request the certificate of insurance from the agent information on file. Some platforms may request the carrier to follow-up via email.
An email confirmation is typically sent to the carrier’s email when the submission has been sent to the broker’s compliance department. Note that this confirmation email is confirmation that the carrier’s application has been submitted. It does NOT mean the carrier has been approved to haul.
Broker will send an email follow-up to the carrier upon approval by the compliance team. If not approval is received within 3 to 5 business days, call the broker to figure out why.
Ideally the carrier saves the login information for the portal and can check back to the portal for updates on their approval status.

Easy Sign-up, Difficult Compliance

Because everything is done online, the sign-up process is a breeze. There are fewer documents that the carrier needs to submit since the software platform tends to pull the information automatically from various sources like the FMCSA or DOT, its internal database, etc.

However, what is difficult is knowing when the approval will go through. The carrier submission is sent into a queue that is manually reviewed by people from the broker side. There’s no direct point of contact to help resolve any hiccups that may happen along the way. Long calls on a 1-800 line is not an uncommon occurrence to troubleshoot any setups issues.

The Players

We’ve now learned about the set-up process done via software. We’re going to now move onto the key players in the field.

MyCarrierPackets

MyCarrierPackets is one of the most prevalent compliance solutions for medium sized brokers. As a low cost solution, the system works well enough but can feel outdated. MyCarrierPackets handles processing the certificate of insurance on behalf of brokers. This means that if the carrier has a COI on file with MyCarrierPackets already, then there’s typically no need to do it again.

The primary issue for carriers with MyCarrierPackets is accessing the portal. The carrier has one universal login credential across all brokers, even if each broker set-up link is unique. To prevent fraud, carriers who forget their password will have to verify their identity with a phone number and/or email address that MyCarrierPacket has on file or linked to the carrier’s FMCSA profile. Carriers we have worked with have had issues accessing the platform on a recurring basis.

DAT Onboard

DAT Onboard is DAT’s version of carrier onboarding compliance. The process itself is of similar quality to DAT’s user interface for its other products making this a pretty easy to use platform. Like MyCarrierPacket though, carriers have one login credential for DAT Onboard. The reset password process is much more streamlined and is similar to other cloud-based software password resets.

RIGZ

RIGZ is a technology platform for logistics transportation that does a bit of everything. We haven’t seen very many brokers use RIGZ for their compliance set-up. From what we can tell, the carrier receives a unique link every time for a set-up that the broker provides. Like the other platforms, carriers can login with a universal credential.

RMIS

RMIS, a Truckstop company, is a big player in the field. Each broker has their own unique link that is a subdomain of RMIS. The carrier on the other hand can use a universal credential to sign into any broker sign-up link. This is similar to the three platforms already listed above. What’s different is that the login process actually works! Since integrating with Truckstop, carriers can use their Truckstop login credentials or better yet their social login via Google.

Given the number of instances where truckers can not access their portal because of forgotten credentials. The login via Google option will come as a lifesaver and an immense user experience improvement. More importantly, this tackles one of the previous weaknesses of RMIS, which is security.

RMIS takes a step further and automates a lot of the checks required for compliance review on behalf of the brokers such as:

DOT / FMCSA Information - By automatically pulling this information, the carrier’s profile is more complete.
RMIS Internal Insurance Information - If a carrier already has insurance on file with RMIS from a previous broker set-up, the same information will be used again. Typically, the carrier gets to skip the follow-up step of adding the additional insured information
TIN Matching - RMIS does TIN matching where it verifies that the information on the W9 matches the IRS’ records.

Some of the other platforms here attempt to do some if not all of these automations, but insofar RMIS has been the most successful.

Highway

Highway.com is a new player on the market. Of all the carrier compliance solutions available, this up and coming software might be one worth watching. One of its customers is Knight-Swift which has switched from its in-house developed broker portal for set-ups to Highway’s new slick custom UI. With the former CEO of TriumphPay at its helm, we’re excited to see where this player is going to go next.

Mastering the Basics

Broker set-ups can feel like a mundane part of the process. For admin geeks like us at TrueNorth, however, breaking down the broker-carrier set-up process is how we help carriers gain an edge in the market.

We’ve completed hundreds of broker set-ups as a carrier and as dispatchers for other carriers, allowing carriers to tap into new market areas previously inaccessible. Getting set-up with more brokers in the market allows carriers access to more loads, and in turn allows truckers to make more money.