Andrew Light and Gregory Feary were just two lawyers who spoke at a recent conference held by the American Trucking Associations.
As an article in Transport Topics notes, a panel of attorneys advised those trucking companies who ran a brokerage in addition to their own transportation services, to keep the two separate by giving them different names.
Many trucking companies choose to add a brokerage arm onto their current business, finding it easier and cheaper than to create a whole new division with its own legal representation, the site notes. But that comes with a risk.
As Attn. Light stated, “The motor carrier’s assets are at risk if the brokerage and carrier names are the same” (http://www.ttnews.com/articles/basetemplate.aspx?storyid=27055). But when classified as two different organizations, it would be the carrier and/or shipper held responsible for any liability and the broker gets off, acting as strictly a channel between the two. For this reason, many shippers require that the carrier have full liability; however, some states have in place “anti-indemnification laws that prevent shippers from fobbing off liability onto other parties,” Feary furthered.
Now consider the fact that most shippers do not know who is handling their freight when shipping via a broker, who often finds the cheapest rate, and thus, the cheapest quality service. This comes at a high risk of your products being transported by an unsafe and unqualified carrier, which, in return, leaves the shipper at a higher risk of dealing with liability issues than by shipping with an asset-based carrier such as Road Scholar Transport.
So what do the lawyers in attendance at the ATA conference recommend?
First, professionals agree that trucking companies should give their brokerage service a name that is distinguishable, yet similar to their carrier name, Transport Topics continues.
Although Attn. Feary recommends that brokers continue to use the “pass-through” method, he explains that some take it upon themselves to “seek out risk and responsibility,” doing so “as a selling point to shippers.” With that in mind, he also encouraged that carriers be on alert for “contracts and supporting documents that conflict with each other,” and “not to give back in ‘backdoor transaction documents’ what they were careful to claim in the primary agreements on service commitments, rate and payout terms, indemnification and restrictive covenants” (http://www.ttnews.com/articles/basetemplate.aspx?storyid=27055).
With Road Scholar Transport, shippers can always expect that a uniformed, qualified driver with a safe CSA rating will be pulling up to their docks, eliminating the middle man and stress of who is transporting your freight. And in the unfortunate event of an accident, Road Scholar has liability insurance to protect your freight. View Road Scholar’s certifications and request a rate today at www.roadscholar.com.
What are your comments regarding the lawyers’ suggestion for trucking companies to keep brokerage separate and give it a new name?