The new broker bond of $75K was enforced on Oct 1st. The new bill MAP-21 is very controversial and many small brokers are upset. They feel that they have been targeted by the big companies who lobbied this bill. Brokers across the country claim this will create a monopoly that will hurt the trucking and transportation industry. Many predict that the prices will go up for the end customer while truckers will still receive the same pay. Therefore, the industry is now divided and a big percentage of professionals are now wondering if MAP-21 will really help America move forward.
The 75K broker bond is here!
By Oct 1st, 2013, every broker and freight forwarder should have complied with the new law and obtained the new $75,000 bond otherwise they will lose their license. A 60 days phase in period was accepted. All brokers and freight forwarders will receive mail notifications on Nov 1, 2013 letting them know they have 30 days to comply with the new law and obtain a $75K bond. After this 30 days the FMCSA will start revoking licenses. All brokers must understand that they have to take care of their new bond within this period, meaning to obtain the new bond because after that their licenses will be cancelled.
FMCSA will be providing a 60-day phase-in period beginning October 1, 2013, to allow the industry to complete all necessary filings. Beginning November 1, 2013, FMCSA will mail notifications to all brokers and freight forwarders that have not met the $75,000 minimum financial security requirement. FMCSA will provide 30 days advance notice before revoking the freight forwarder and broker operating authority registrations.
As far as carriers, the FMCSA says they don’t know for sure how many carriers are brokering loads and it will be accepting complaints through its National Consumer Complaint Database.
The FMCSA concluded its notice with a message to carriers:
FMCSA strongly encourages all motor carriers not to accept loads from unregistered brokers or freight forwarders, as these entities might not have the financial security mandated by MAP-21. FMCSA also notes that motor carriers brokering loads without properly registering with FMCSA as brokers may be subject to private civil actions pursuant to 49 U.S.C. 14707.
To read the whole notice visit the Federal Registrar.
The situation is still confusing and many surety companies are trying to make the best possible to offer small brokers new programs to help them stay in business. All brokers with good credit should be able to qualify and get reasonable rates and no collateral. The underwriting on the bond depends the brokers credit history, financial strength and reputation. Despite the new programs surety companies are offering, the fact is that the Government is slowing the filing process. The FMCSA can’t process so many filings in the same time and some brokers even complain that there isn’t even a form to file even if they qualify with their surety company. Many surety companies have been saying for long time now that they don’t have any information and are waiting on the FMCSA.
Many brokers are still unsure of what is going to happen, but there are three things they can do to prepare for the underwriting requirements of a $75K bond.
- Obtain a letter of credit from your bank.
- Discuss your financial strength with your accountant and how to improve it.
- Use your own (the owners’) personal financial statement to support the bond.
The trucking and transportation industry has been on the brim of a change many times and industry professionals would agree that it was about time. MAP-21 may however classify as a bit extreme in many small business owners’ opinion. The intentions might be good, but the steps taken instead of creating new jobs, as President Obama claims, will force many businesses to close doors.
Was Oct 1, 2013 the drop dead date for small brokers?