Jump to content

Freight broker bond

Add links
From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by 2601:243:c400:b800:7097:572:fbc6:3123 (talk) at 20:09, 16 November 2016 (→References). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

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). Their role is to guarantee that the broker will operate according to their agreements with shippers and motor carriers. If a freight 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
  • 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 use the term "property broker" instead of freight broker.

History

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
  • freight forwarders must now also meet the $75K requirement

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.

Kevin Reid, who was CEO of The National Association for Minority Truckers[1] (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.

References

  1. ^ "National Association for Minority Truckers | Helping Truckers Succeed!". 2013-11-09. Retrieved 2016-07-13.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Freight_broker_bond&oldid=749907164"