May 19, 2023 •Kevin Baxter
Each year, the weekend before the Indy 500 is set for qualifications, which are essentially a "prove you belong" set of time trials for race crews that also determine positioning. Verifying freight qualifications is a bit less cut and dried, but there are ways to prove a freight broker or carrier is legitimate and qualified to move cargo. Why is this important?
Because throughout the shipping process, there are opportunities for bad actors to act badly and swindle shippers, logistics providers and carriers out of their money - and even their goods. We recently talked about broker fraud with TIA President Anne Reinke on our podcast, and detailed fraudulent double brokering in writing as well. But long story short, it's an unfortunately growing problem that can be mitigated with some legwork verifying freight qualifications.
There are resources available for stakeholders who need help validating freight broker license requirements are met and that a broker is legitimate. Before going any deeper, a freight broker must be registered and properly licensed through the FMCSA. A few clicks and keystrokes through its simple publicly accessible database can check that box.
To get a license, a freight broker must also be properly insured and bonded. The minimum required bond level is $75,000, but freight brokers can go beyond that level. Those that do must pass credit checks, show insurance information, verify industry experience and show overall financial solvency. While the bond covers claims against the broker for bills and fraud, insurance separately covers things like cargo damage, accident liability and more.
Before proceeding further, it's important to point out that there have been cases of fraudulent brokers becoming FMCSA licensed. So it's important to go beyond the basic search parameters noted above to check additional items like industry certifications, years in service and overall reputation- even verifying an operating address. Some of this information can come directly from the broker, while reference checks are also invaluable via phone, in person and email.
Similarly to freight brokers, there are some straight-forward steps to go about verifying freight carriers' legitimacy. In fact, the same FMCSA search is a good starting point for carrier license checks - this time, get and input the carrier's MC number to review that the number is valid, years of operation, and to find out if the operating authority has ever been revoked (and if so, why).
Next, the SAFER system - using that same MC number - allows you to check the safety rating of the carrier. While you'd think a clean record would be best, sometimes a spotless record can indicate an issue. Case in point, if a carrier has been operating for an extended period but has no inspection history, that could indicate the company is actually a non-asset broker posing as a carrier. By the same token of course, a high out of service rate is a problem, too, so checking this record is a must.
There are other database searches that can supplement these as well, including DAT's CarrierWatch among them as well as state-level information in many cases.
Also just like a freight broker, a freight carrier must have insurance. So ensure the carrier provides you with a certificate of insurance proving their coverage level - and verify their policy dates, coverages and deductibles. Ensure this information is accurate with a follow up to the insurance company as well.
And once again, illegitimate carriers are sometimes able to game the system and receive licenses, so follow up to verify addresses, contact information and check references to ensure you're working with a legitimate freight carrier.
The shortcut especially on carrier verification is to work with a trusted logistics service provider like us here at InTek. Drop us a line and you can rest assured that your freight will be handled safely and securely by the best logistics pros and verified carriers every step of the way. If you're looking for more information on freight and logistics - and us - read through our free Freight Guides.