CTB Freight Brokerage Operations & Documentation 3 — Questions and Answers
Question 1: What does NMFC stand for in freight classification?
- National Motor Freight Classification (Correct answer)
- National Maritime Freight Code
- Nationwide Motor Freight Council
- Network Management Freight Catalog
Correct answer: National Motor Freight Classification
NMFC stands for National Motor Freight Classification, the system used to assign freight classes 50–500 based on density, stowability, handling, and liability.
Question 2: A shipper declares freight as Class 70, but the carrier's inspection reveals it should be Class 100. Who bears the cost of the reclassification?
- The freight broker
- The carrier
- The shipper (Correct answer)
- The consignee
Correct answer: The shipper
The shipper bears the cost of reclassification because they are responsible for accurately declaring the freight class on the bill of lading.
Question 3: In brokerage, a 'spot rate' refers to:
- A long-term contracted freight rate
- A one-time negotiated rate for a specific shipment (Correct answer)
- A rate set by FMCSA regulations
- A fuel surcharge applied to all loads
Correct answer: A one-time negotiated rate for a specific shipment
A spot rate is a market-negotiated rate for a single shipment, typically reflecting current supply-and-demand conditions rather than a contracted agreement.
Question 4: Which insurance type is specifically required for freight brokers by FMCSA regulations?
- Cargo insurance
- Surety bond or trust fund ($75,000) (Correct answer)
- General liability insurance
- Workers' compensation
Correct answer: Surety bond or trust fund ($75,000)
FMCSA requires freight brokers to maintain a $75,000 surety bond (BMC-84) or trust fund agreement (BMC-85) as a condition of licensing.
Question 5: A 'shipper's export declaration' (or Electronic Export Information) is required when:
- Domestic shipments exceed 10,000 lbs
- Exports exceed $2,500 in value or require an export license (Correct answer)
- All international shipments regardless of value
- Imports enter a U.S. free trade zone
Correct answer: Exports exceed $2,500 in value or require an export license
Electronic Export Information (EEI) must be filed through AES when the value of goods in a Schedule B category exceeds $2,500 or an export license is required.
Question 6: What is the purpose of a 'proof of delivery' (POD) in freight brokerage?
- To establish the original freight rate
- To confirm the carrier's insurance is active
- To document that the shipment was received by the consignee (Correct answer)
- To authorize the carrier to pick up the freight
Correct answer: To document that the shipment was received by the consignee
A proof of delivery documents that the consignee received the shipment, typically including signature, date, and any noted exceptions.
Question 7: Under typical broker-carrier agreements, when must a carrier submit invoices or supporting documents for payment?
- Within 24 hours of delivery
- Within 7 days of delivery
- Per the payment terms stated in the agreement, commonly 30 days (Correct answer)
- Only after the shipper pays the broker
Correct answer: Per the payment terms stated in the agreement, commonly 30 days
Broker-carrier payment terms are defined in the carrier agreement, commonly net-30 days, though quick-pay options with a fee discount may also be offered.
CTB Freight Brokerage Operations & Documentation 3
What does NMFC stand for in freight classification?