Truckload shipping compliance can affect costs, delivery reliability, and legal risk. This guide will help you understand carriers and brokers, as well as Federal Motor Carrier Safety Administration (FMCSA) regulations, insurance, and claims. USA Truckload Shipping is a shipping provider and third-party logistics (3PL) company that helps shippers like you book vetted capacity. We’ll use our experience and knowledge to guide you through truckload shipping compliance.
Key Takeaways:
Want to learn how to become a shipper-of-choice and secure lanes faster with trusted carriers? Our shipper’s guide has you covered.
Before you can start shipping, you need to know the difference between a carrier, broker, and 3PL company.
Each provides shippers ways to ship goods, and while some services overlap, there are fundamental differences between each entity.
We’ve compiled the ways each provider assists shippers with freight in a comparison table below.
While each provider can support your supply chain, 3PLs provide a full-range of freight solutions where other options fall short.
The FMCSA is an agency of the U.S. Department of Transportation (DOT). FMCSA oversees freight transportation and enforces regulations to protect shippers, carriers, and freight transit.
The FMCSA Behavior Analysis Safety Improvement Categories (BASIC) are a set of seven safety categories to evaluate carrier compliance.
Shippers are able to review each category except Crash Indicator and Hazardous Materials Compliance as these categories are only available to carriers via their FMCSA safety profile.
The BASICs help shippers vet carriers to determine if they are qualified, safe, and compliant to move goods for their company.
A Motor Carrier (MC) Number is a number assigned by the FMCSA to motor carriers operating commercial vehicles in the United States. Older MC numbers were six digits, but newer numbers are between seven and eight.
Carriers are required to obtain an MC Number to receive compensation for interstate transportation of goods.
A DOT or USDOT number is a 17-digit identification number issued by DOT to track a carrier’s compliance, safety, and inspection history.
Carriers are required to obtain a DOT number to operate vehicles with a gross vehicle weight rating (GVWR) of 10,001 pounds and/or transports hazmat freight.
Shippers can use a carrier’s MC or DOT number to look up their safety rating and other public information, like the company’s BASICs. We’ll discuss how to do this in the next section.
A safety rating is a carrier’s public FMCSA compliance record. Safety ratings come from compliance reviews. FMCSA performs an audit on the company and determines if a carrier’s performance is one of the following:
Not every carrier will show a current safety rating. Use a carrier's authority status, insurance information, inspections, and lane-specific requirements as well.
Shippers can look up a carrier’s authority status and safety rating using the FMCSA’s Safety and Fitness Electronic Records (SAFER) System or Safety Measurement System (SMS). Keep in mind, not all information is available to the public, like property carrier compliance and safety performance.
Once a shipper accesses the SAFER System or SMS site, they’ll need to input a carrier’s MC number, DOT number, or company name to review the carrier’s available safety rating, records, and other public compliance information.
Freight insurance, or cargo insurance, is a policy that protects a shipper’s freight in the event it is lost, stolen, or damaged during transit.
Carriers offer different levels of coverage for freight insurance, including, but not limited to:
While there are some exclusions to coverage, shippers can pick the best protection for their freight based on its size and value.
For example, high-value freight that’s valued at $100,000 or more requires freight insurance to protect the freight, carrier, and shipper from freight fraud or theft.
A Certificate of Insurance (COI) is a document that verifies a carrier offers active freight insurance.
Shippers can obtain a COI from their carrier as proof of insurance for freight, including the following information:
While a COI helps a shipper confirm active coverage, shippers should also verify coverage limits, exclusions, effective dates, and commodity restrictions with the insurer or freight broker of record.
Here’s a COI checklist to follow:
Going through this checklist ensures the COI you received will protect your shipment.
Cargo liability is a carrier’s insurance policy that protects a carrier from assuming financial responsibility for freight damage.
In the event a shipper files a claim for freight damage or theft, the carrier’s cargo liability insurance pays for the eligible damages, not the carrier themself. Freight brokers must hold FMCSA broker authority and maintain a surety bond or trust.
In the next section, we’ll go over the types of claims shippers can file to cover their freight investment.
Overages, Shortages, and Damages (OS&D) is a discrepancy filed by shippers when there’s an error with their freight delivery.
There are six types of OS&D claims shippers can file:
Shippers can create an OS&D claim when freight arrives in any condition not specified in their BoL. While it’s not guaranteed shippers will receive financial reimbursement for short or damaged freight, we’ll go over how to begin the claims process in the next section.
A claims process is an action taken by a shipper after they file an OS&D report. Unlike cargo liability, carriers are financially responsible to reimburse shippers for over, short, or damaged freight.
An OS&D report is a document including the shipper’s freight information and discrepancies observed after delivery. Shippers must file an OS&D claim to receive reimbursement for damaged freight.
Reimbursement is not applicable in the event that freight damage occurred due to shipper negligence, natural disasters, perishable freight that naturally decays, or acts of foreign military force or the U.S. government.
OS&D reports need to include the following to start the claims process:
Many full truckload (FTL) and less-than-truckload (LTL) claims follow standard timelines set in your freight shipping contract and federal regulations. Make sure you confirm the filing deadline before your freight starts moving.
Onboarding is a process for shippers to vet and train a carrier on the shipper’s procedures to support their supply chain management.
Onboarding includes learning a carrier’s FMCSA compliance and transportation history by speaking with a freight broker, directly to a carrier, and/or reviewing the carrier’s information in the SAFER System or SMS.
Here’s a checklist of items we recommend requesting when onboarding a carrier:
We’ll discuss the tools you’ll need to onboard a carrier in the following sections.
A scorecard, or carrier scorecard, is a document outlining a carrier’s compliance history and performance in services the shipper requires.
Once shippers have vetted the carrier to partner with them, shippers then onboard the carrier to learn their supply chain needs and management process.
Supply chain management is tracked with data tools like:
These tools reduce missed appointments and paperwork errors. We’ll go over each of these tools in the following sections.
A Standard Operating Procedure (SOP) is a step-by-step procedure to follow a shipper’s process for supply chain management.
The elements of supply chain management SOPs help organize include:
To streamline freight delivery and meet the shipper’s demands, shippers must communicate with carriers their role in their supply chain to effectively get the job done. Since carriers can be individual or 3PLs, their role can range from transportation to 3PL warehousing.
Other data tools for carrier onboarding include EDI, API, and TMS software that’s used to organize each step in the shipper’s supply chain. Let’s take a closer look at each.
Electronic Data Interchange (EDI)
An EDI is an electronic tool that transfers data between shippers, carriers, and third-parties like vendors or retailers.
EDIs manage a shipper’s electronic documents to send to partners that include shipping documents like freight bills and BoLs, as well as invoices and purchase orders.
Application Programming Interface (API)
An Application Programming Interface (API) is a software connection that lets systems exchange data automatically. Shippers use APIs to connect a TMS with carrier tracking, warehouse systems, and customer portals. APIs also reduce manual status updates and improve shipment visibility.
Where EDIs are a singular tool to share data communication internally, APIs are a singular tool that connects to other tools, or applications, to share data with partners externally.
Transportation Management System (TMS)
A Transportation Management System (TMS) is a software that automates routines in a shipper’s supply chain. A TMS helps shippers to book lanes, track freight shipments, and organize shipping documents like BoLs and customs paperwork.
Keep in mind that these tools are also used by 3PLs with delegated freight teams to manage multiple carriers, warehouses, and other logistics resources. 3PLs offer a cost-effective approach to manage a shipper’s supply chain as an all-in-one freight solution.
In this guide, we’ve covered how shippers can vet carriers to find the best partner to ship their goods. Now, let’s discuss what elements encourage carriers to do repeated business with shippers.
A shipper-of-choice is a shipper with a healthy relationship with carriers due to frequent lane bookings and great communication.
We’ve compiled a checklist of habits shippers may want to implement to sustain a strong partnership with a carrier, broker, or 3PL:
If you’re new to shipping, these behaviors are essential to build a long-lasting relationship with the businesses you’d like to work with.
We’re a team of experienced freight experts with the network and resources to haul freight anywhere in the United States. Our network of over 22,000 carriers are FMCSA compliant and capable of assisting you with FTL, LTL, and hazmat loads with expedited shipping available when you need it.
Give us a call at (866)-353-7178 to speak with a consultant or submit your Request for Proposal today.
FAQ:
What’s the difference between a freight carrier, a freight broker, and a 3PL?
Freight carriers haul cargo with trucks and drivers. Freight brokers arrange transportation. 3PLs manage transportation and related services like tracking and warehousing.
What is a COI?
A COI is a document that verifies a carrier provides freight insurance.
What is an OS&D claim?
An OS&D clam is a reporting and claims process when freight doesn’t match what was tendered.
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