Freight broker’s are responsible for much more than matching customer’s loads with available trucks. They are responsible for overseeing a strict and complicated process that is highly regulated by government bodies like the DOT, FMCSA, NHTSA and IRS. Therefore it is very important for freight broker’s to have a well organized process backed up by a paper trail for everything that they do.
Learning to organize paperwork is a necessary skill as a freight broker. But from my 15 years of experience as a freight broker, there is one set of documents that is more important than any. This is the carrier packet.
PS. If you want to skip all of this and have a digital done for you carrier packet so that you can look and feel professional to your carriers, I suggest you make a free account on Trucken.io.
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What is a Carrier Packet?
A carrier packet is a collection of documents sent from a broker to a carrier that include a company profile, operating agreement and request for licenses & insurance. Once filled out, these documents act as a screening mechanism for carriers to be approved to haul freight.
Packet’s can vary from broker to broker, but there is a core set of agreements that should be present in any carrier packet.
In this article we are going to look at everything from how to set up a carrier packet, what should be in your carrier agreement and more.
Why do you Need a Carrier Packet?
Just about every major event we experience in our lives come with a contract. Buying a house, leasing a car, starting a business with a partner all start with a collection of documents that outline the terms and conditions of the agreement we are about to make.
These agreements, “set the rules”. They outline how disagreements are handled as well as container mutually agreed terms as to how an arrangement is going to operate. A carrier packet is no different and plays a major role in protecting both brokers and carriers who choose to work together.
Carrier packets contain vital information about the arrangement between a brokerage and a carrier. These packets verify both parties credentials as well as govern the rules that state how each party will be paid, how disputes (claims) will be handled, and communication expectations between the broker and the carrier.
Carrier’s should always make sure that a broker sends them a packet before ever moving a load because this will be crucial in the case that a broker refuses to pay their bill.
Likewise, broker’s should never move a load without a carrier on file or they will open themselves up to tremendous liability should something go wrong.
I have personally heard stories of customer’s being lost based on the fact that brokerages were not properly screening their carriers with signed carrier packets. It shows a high degree of laziness and carelessness that major shippers and customers simply do not tolerate.
How to Set up a Carrier Packet?
Carrier packets can range from being very simple to extremely complicated, so when you are setting up your own carrier packet you should make sure that it is easy to understand, fair for both parties and easy to fill out.
There are a few ways you can go about setting up a carrier packet, so let’s look at what those ways are and how you can build one for yourself.
- Hire a Lawyer
Option one is by far the most expensive but will always be the most reliable. Transportation lawyers are very well versed in all of the laws surrounding the movement of freight and can advise you based on their years of experience creating carrier packets. While it may be pricey up front, it will always be cheaper than learning you have a weak carrier packet after something goes wrong with one of your loads.
Just be sure to find a lawyer with specific experience working with freight broker’s and developing carrier packets.
- Download online templates/ask a friend
Now there are plenty of templates available online for carrier packets and most of them do a pretty good job of protecting you. Now this isn’t legal advice by any means, but if you do choose to go this route you have to be careful.
If you are not experienced in reading these contracts and aren’t 100% sure what to look for in a carrier packet, you could make the mistake of using one that is incomplete which could land you in trouble.
The same goes for if you borrow a carrier packet from a friend, in an online group or forum for example. If you don’t know the origins of that carrier packet, how it was developed, who developed it, you will always run the risk of using a carrier packet that isn’t fit for your business.
- Buy a vetted template from a trusted source
A great way to find a carrier packet worthy of using is to buy a pre made template from a trusted source who has experience as a broker and has done their own due diligence to pay lawyers to create these documents.
That is exactly why I made my very own carrier packet that we use in our brokerage today available when you join the Freight Skills Academy
What are the most important parts of a carrier packet?
In general a carrier packet should always contain the same information that is vital to verifying a carriers identity, proving their reliability and establish trust between your and their company.
The following pieces are the most important and you should not have a carrier packet without any of them.
- Carrier Profile
A carrier profile is a simple page that requests all of the important information from a carrier. You should not only provide your contact information, but you should request theirs as well. You will need their Company name, representative name, phone number, email and address.
- Broker Carrier operating agreement
The Operating agreement is the most important document of all as this is what will govern every aspect of your relationship. This document can be anywhere from 8 pages to 12 pages and is full of all terms and conditions that you will both honor during your working relationship.
Some important parts of the carrier operating agreement include:
a. Terms of engagement
How long does the agreement last? Who is it between and what are the ways the agreement can be terminated? Make sure your carrier package covers all of this.
b. How are claims handled
If there is a cargo claim issued by a customer, how is it handled? You need a clear process for notifying a carrier and some guidelines that the carrier should be expected to abide by. For example, after you notify of a freight claim, how long does a carrier have to acknowledge that claim before you take legal action?
c. Communication expectations
Sometimes carriers are so focused on driving safely that they may forget to provide updates to you during the course of a load. We never want truck drivers to drive distracted or feel extra pressure just to update us on our orders, so we want to establish fair expectations for how often and by what method our carriers will update us on our loads progress.
d. Back solicitation clause
As a middle party to a transaction, there will be times as a broker that carrier’s may try to bypass you to obtain work directly from shippers. While all is fair in love and war, the same can’t be said for freight brokering. You need to protect the interests of your brokerage by including a non-compete clause in your carrier packet. This clause should put a timeline on the amount of time that needs to pass before a carrier pursues business opportunities based on the work that you provided them.
For example, if Driver A has never picked up or contacted Company A before, but I as a broker did. After hauling a load for me and company A, that driver should not be able to call them directly for a period of at least 6 months.
e. Payment Terms
This is the most important part of the agreement from a carriers standpoint. In this section you should outline, what are your standard payment terms, what documents need to be submitted by a carrier in order to get paid, and what the payment process looks like. Here would be a great place to outline any quick-pay programs you have to make your carriers cash flow easier.
3. Request for Insurance
Your carrier package should always include a formal request for insurance with your brokerage named as a certificate holder. This will serve as proof that you did your diligence and moved your customers load on a carrier who has the appropriate coverage to protect all parties.
4. Hazmat/Foodgrade/Special licenses
If you are moving specialized freight like over weight, food grade, hazmat etc. There are some special licenses and endorsem*nts carriers will need in order to haul them legally. Make sure to verify that all of those licenses are in place and up to date.
5. Copy of MC Authority
Always request a copy of your carriers operating authority. This information can easily be cross checked on the governments own database Safersys.net.
6. Proof of Broker Bond
Put your carriers mind at ease by providing proof of your own broker bond. Brokerage bonds are in place to give carriers an avenue to collect past due funds in the case of non payment. By providing this evidence you are giving your carriers peace of mind that they will get paid after hauling your load.
7. Invoicing Procedures
It is not a bad idea to include a full page outlining your invoicing procedures. Carriers should know how long they can expect to be paid, if there are any deductions removed for incidents such as late delivery and where invoices need to be sent in order to be processed.
What are the challenges with Carrier Packets?
Broker’s can work with anywhere from dozens to hundreds of carriers on a yearly basis. This creates a lot of potential problems from organization to verifying that information is up to date.
As a broker in order to avoid organization issues and to protect yourself in the event of something happening, like a lapse in insurance coverage or expiration of an agreement, you should always make sure that you have an organized filing system that contains your carrier packages for every load that you move.
There is technology available that can help you streamline this process and make carrier onboarding and monitoring a breeze.
Carrier Packages are a crucial part of any freight broker’s toolkit. They are designed to protect not only you as a broker, but your carrier partners as well. When carriers break this agreement, or you break the agreement as a broker, it makes it very easy for a court to decide who is owed what and how the problem should be rectified.
Carrier packets are all about accountability so before you move your next load, make sure you have a trustworthy and thorough broker carrier packet to send to your prospective drivers.
Video Resources: Go to this link → Get your Carrier Packet Excerpts Here to claim your free contract clauses you can use to create your own secure carrier agreement.
P.S. Whenever you’re ready… here are 3 ways I can help you grow your Freight Brokerage:
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