Carriers often hear "dispatcher" and "broker" used as if they mean the same thing. They do not. The difference determines who the dispatcher works for, how they are paid, and whether federal registration is required.
The dispatcher works for the carrier
A dispatcher acts on behalf of a motor carrier under a written agreement with that carrier. The dispatcher searches for loads, negotiates rates for the carrier, and handles paperwork. The carrier keeps its own operating authority, reviews and signs its own rate confirmations, and is paid directly by the broker or shipper. The dispatcher is paid by the carrier, typically a percentage of the load's gross.
The broker arranges transportation
A property broker arranges the transportation of freight by an authorized carrier for compensation. Brokers must hold FMCSA broker operating authority and maintain financial security, currently $75,000, through a surety bond or trust fund. The broker contracts with the shipper and engages the carrier.
Warning signs a "dispatcher" may be acting as a broker
- Taking payment from the shipper rather than from the carrier
- Signing rate confirmations as a party instead of on the carrier's behalf
- Collecting freight payments and paying the carrier from them
- Marking up the rate between what the shipper pays and what the carrier receives
Questions a carrier should ask any dispatcher
- Is our arrangement in a written dispatcher-carrier agreement?
- Will every rate confirmation come to me to review and sign?
- Will brokers pay my company directly?
- How is your fee calculated and invoiced?
Clear answers to those four questions protect the carrier's authority, its cash flow and its relationships with brokers.
This article is general information, not legal, tax or regulatory advice. Rules change; confirm current requirements with the responsible agency or a licensed professional.
