Freight broker bond

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search

In order to get or renew their license, freight brokers and freight forwarders in the United States must get a freight broker bond.

In the United States, freight broker surety bonds are required by the Federal Motor Carrier Safety Administration (FMCSA) to move property such as household goods or freight and motor cargo (vehicles). Their role is to guarantee that freight brokers and auto transport brokers will operate according to their agreements with shippers and motor carriers. If a freight broker or auto transport broker does not comply with their contract, the carrier or the shipper may file a claim.

The three parties to the agreement are:

  • Principal: the freight broker / auto transport broker
  • Obligee: the party requiring the bond (FMCSA)
  • Surety: the surety company

A freight broker bond is also known as a BMC-84 surety bond, trucking surety bond, transportation broker surety bond, or property broker bond. FMCSA uses the term "property broker" instead of freight broker.

History[edit]

This first freight broker bond requirement took into effect in the 1930. In the 1970s the bond amount was increased to $10,000 and wasn't changed until June 29, 2012 when the Congress passed the Moving Ahead for Progress in the 21st Century Act (MAP-21).

The two main changes that came with the MAP-21 were:

  • the freight broker bond increase - from $10,000 to $75,000[1]:419
  • freight forwarders must now also meet the $75k requirement[2]

The freight broker bond increase took effect on October 1, 2013. Many freight brokers were against this change because they expected they wouldn't be able to meet the new requirement: it was a 7-fold increase, moreover the previous price was set constant for about 40 years. According to FMCSA there had been too many cases where shippers and carriers had been delayed (or entirely denied) payment so the bond increase was necessary.

One of the strongest objections to the changes came from the Association of Independent Property Brokers & Agents (AIBPA). They claimed that this would create a loss of 8,200 freight brokerages, tens of thousands of jobs.[citation needed]

Kevin Reid, who was CEO of The National Association for Minority Truckers[3] (NAfMT) also came fourth to object. Saying it was an "unreasonable barrier to entry for would-be entrepreneurs." Regardless of these objections and enraged freight brokers, the provisions had passed into law.[citation needed]

References[edit]

  1. ^ "Moving Ahead for Progress in the 21st Century Act" (PDF). Retrieved 8 April 2018.
  2. ^ "Broker Registration". Federal Motor Carrier Safety Administration. 18 March 2014. Retrieved 8 April 2018.
  3. ^ "National Association for Minority Truckers | Helping Truckers Succeed!". 2013-11-09. Archived from the original on 2013-11-09. Retrieved 2016-07-13.

External links[edit]