Carrier TMS vs broker TMS: what is different

Carrier or broker: the legal difference first

A motor carrier moves freight in its own trucks, driven by its own drivers or by owner-operators leased to it. A broker, as 49 CFR 371.2 defines it, is a person who, for compensation, arranges or offers to arrange transportation of property by an authorized motor carrier. A carrier arranging loads it is itself authorized to haul and has agreed to haul is not acting as a broker. The two roles carry different authority, different financial security and different records, and that is why their software differs.

Workflow: dispatching trucks vs tendering loads

In a carrier TMS the dispatcher matches a load to an available truck and driver, sends it to the driver's phone and watches it through pickup and delivery. The system needs to know your equipment, which drivers are available and qualified, and how a load with several stops is sequenced. Proof of delivery comes back from your own driver.

In a broker TMS the same load is offered to outside carriers. The system needs a carrier list with each carrier's equipment, lanes and documents, a way to send the offer and collect accept, decline or counteroffer responses, and a record of who was offered what. Paperwork such as the POD and bill of lading has to come back from a company that does not work for you, so a carrier portal or a reliable email path matters more than a driver app.

Money: driver pay vs carrier payables and margin

A carrier's costs are its own: driver wages, owner-operator settlements, fuel, maintenance, insurance. A carrier TMS earns its keep on settlements: paying company drivers by mile, load, percentage or hour, and paying leased owner-operators exactly as their lease says, with each deduction shown. The federal leasing rules in 49 CFR 376.12 shape that work: the lease states the compensation, lists each charge-back and how it is computed, and requires payment within 15 days after the required delivery documents are submitted.

A broker's main cost is the carrier's rate. A broker TMS earns its keep on margin: knowing the buy and sell rates for each load before it is tendered, warning when a tender would fall below your floor, and paying carriers on time from carrier payables. Brokers also tend to need rate agreements per customer, accessorial charges passed through to the shipper, and claims tracking when freight is damaged.

Compliance: what each side has to keep

Carriers

• Driver qualification files for every driver, with the contents listed in 49 CFR 391.51, kept while the driver works for you and for three years after.
• Hours-of-service records and supporting documents for at least six months (49 CFR 395.8(k)), which in practice means the ELD data.
• Drug and alcohol testing records under Part 382, some for five years (49 CFR 382.401).
• IFTA returns every quarter, built from miles and fuel by jurisdiction.
• Authority, UCR, IRP and insurance records with their renewal dates.

Brokers

• Broker authority and financial security: a surety bond filed on Form BMC-84 or a trust fund filed on Form BMC-85, for the amount set in 49 CFR 387.307. FMCSA will not register a broker without it, and registration stays in effect only while it does.
• A record of each transaction showing the consignor, the carrier and its registration number, the bill of lading or freight bill number, the broker's compensation and who paid it, any non-brokerage services, and the freight charges collected and the date the carrier was paid. These records are kept for three years, and each party to the transaction has the right to review them (49 CFR 371.3).
• Carrier records: authority, insurance certificates and their expiry dates for every carrier you use. A broker TMS should keep a carrier out of the tender list when the paperwork you hold on file has lapsed.

If you run trucks and broker freight

Many carriers broker overflow loads to partner carriers when their own trucks are full, and many brokers buy a few trucks. If that is you, the questions are practical:

• Can one load board show both? A dispatcher should be able to decide, load by load, whether it goes on your truck or to a partner carrier, without re-entering it in another system.
• Is there one customer list? Two systems mean two customer lists, two invoice numbering schemes and two receivables reports that never quite agree.
• Are the records separate where the law separates them? Brokered loads need the 371.3 transaction record; your own loads need driver and hours-of-service records. One system can keep both, but it has to know which load is which.
• Do you hold the right authority? Carrier authority does not let you broker freight you are not hauling. Brokering needs broker authority and the financial security above.

If you are not sure which registrations your operation needs, the FMCSA registration checker walks through them.

How TruckerPro covers both

TruckerPro has five carrier plans and two broker plans. Carrier plans start with the dispatch board, customers, invoices, receivables and document storage, and add owner-operator and contractor pay, IFTA, fuel cards and factoring from the Operate plan. Carriers that also broker get the brokerage tools from the Mobile plan up, on the same account.

For brokerages, Broker Basic covers tendering with counteroffers, customers, rate agreements, accessorials, invoicing, carrier payables and claims, plus a carrier portal where carriers accept, decline or counter and upload PODs, bills of lading and insurance certificates. Broker Everything adds waterfall and broadcast tendering, carrier scorecards and margin rules with approvals by lane, equipment or customer.

How to choose

Start from where your revenue comes from today and where it will come from in two years. A pure asset carrier needs depth in dispatch, settlements and driver compliance. A pure brokerage needs depth in tendering, carrier records and margin. A mixed operation should test one real load each way in the demo: your truck first, then a partner carrier, and see whether the system keeps the invoice, the payables and the records straight. Our TMS demo questions include a section for operations that broker.