FUNDAMENTAL TERMS OF THE TRUCKING INDUSTRY
- CARRIER- aka Trucking Company- The authorized, licensed operation approved by the federal government, as well as the state governments, to operate “FOR HIRE” to transport for customers, brokers, freight forwarders, and other types of businesses within interstate or intrastate commerce within the United States. These operations hire, lease, and subcontract operators with the Carrier to move their freight from their customer base. Carriers can be Brokers, in addition to approved Carriers.
- IFTA- International Fuel Tax Registry- Governing body that ensures each state collects their mandated fuel take from commercial vehicles that is required to register with the governing body. They calculate these taxes based on “in-state” fuel purchases and mileage driven in that specific state both loaded and empty miles, for each truck they operated within that specific quarter.
- OWNER OPERATOR- A) truck owner who operates under a lease agreement with a carrier for a set percentage of load gross pay, or a set mileage rate. Truck owner may or may not operate truck himself. Truck owner is responsible for expenses; typically everything, but insurance of Carrier they are leased. B) This term is also used to describe a Carrier Owner that is also still operating a truck as a operator, while running the Carrier business as well.
- INDEPENDENT OWNER OPERATOR- This term is also used to describe a Carrier Owner that is also still operating a truck as a operator, while running the Carrier business as well. Many of these are smaller 1-35 truck operations, where the owner is typically still operating a truck for his fleet. These are the hands on type owners.
- FMCSA- Federal Motor Carrier Safety Administration- Federal regulating body whom sets the standard for carriers, that cross state lines in interstate commerce. They issue motor carrier numbers (MC#), validate insurance requirements, set policies, and governing rules and regulations that the states must follow to regulate Interstate Commerce.
- DOT- Department of Transportation- typically are State departments that are the police of the carrier and commercial vehicles within each respective state. They uphold, inspect, and execute the rules and regulations from state and federal laws. All the Scale Houses within each respective state that weigh, inspect, and regulate Carriers- intra and interstate operations- truck drivers, equipment, licensing, and paperwork are all DOT Locations.
- SCALE HOUSE- aka “Chicken Coop”- These are the operation hubs for the execution of the regulation of the rules set forth by the laws of our government. The Police of the commercial transportation road industry, if you will.
- DEADHEAD- these are the miles traveled empty between drop off and pickup locations, or even extra miles to pick up extra freight to load in the equipment. These miles can be paid or unpaid but are considered dead miles of the route.
- BROKER- middlemen of the industry- businesses or individuals that are authorized through the FMCSA to broker freight between two parties as a service to the parties. They do require a bond to secure payment to the carrier. They basically, earn a fee- either flat rate or percentage of gross-between the shipper, carrier, and sometimes a third party. They must get the freight to ship on the carrier, then get a carrier to book the load. Arbitrage is their montage!
- AGENT- is a person under contract through either a carrier or broker who works on behalf of that contracting carrier or broker to operate as their responsible party under their Authority, for a rate or percentage of profits produced. They can be either a Carrier Agent, Broker Agent, or both–Exclusive or not.
- CARRIER AGENT- person or business, authorized by contract to the Carrier they are contracted to: They are typically authorized to hire, dispatch, bill customers, safety, and are required to operate through the authorizing Carrier. Essentially they operate as a Carrier Terminal or Hub for the Carrier. Typical pay for these agents are based on percentage of gross pay, after they pay trucks under their terminal fleet operation, through the Carrier to ensure truck operators are paid.
- BROKER AGENT- person or business, authorized to broker freight, from customer base to carrier base of the Broker. They are paid via percentage of profit after all expenses. They can be multiple employees or just the solo agent of the broker.
- DISPATCH/DISPATCHER- for a Carrier this is a key position- a dispatcher can and will commonly do Sales, Quote Freight, Billing, Dispatching, and even may Broker (if Employer is authorized to Broker Freight), along with after hours needs for the fleet they manage. They usually maintain a single fleet per dispatcher or dispatch team depending on how the employer is set up. They are the contact between the driver fleet, Carrier, and many times the customer as well. They can be paid salary, hourly, or even a percentage of profit. Large Carriers have their dispatchers managing anywhere from 50-150 trucks per fleet.
- FACTORING COMPANY- The “Factor”- is a financial service provider who will charge a fee for the funding of accounts receivables, invoices, billed to customer for the Carriers services that are completed. Factoring is usually charged out at 3% of the invoice for “recourse” if the customer does not fulfil their typical obligation to pay the invoice in the alloted term that it is due to Carrier; or it is charged at 5-8% of the invoice for “nonrecourse”, whereas they are paying 92-95% of the invoice amount to the Carrier for the accounts receivable from the Carrier, and they have no recourse if the customer does not fulfill the obligation within the term allotted for their credit terms with the Carrier.
- LOADBOARD- these are the centralized internet based service that charges a fee monthly to post load available/trucks available to the providers who pay for the service. They are a place to find loads load and trucks depending on the side of the process that the customers of the loadboard need. Carriers and Brokers both utilize these to produce revenue for their respective businesses.
What other terms of the trucking industry do you think should be on this list? Leave your comment belowby