Since the new freight broker surety bond regulations took effect in October, some 2,800 brokers have lost their licenses, according to a carrier marketing website.
The freight broker industry has been on shaky grounds since last July when new legislation was passed by Congress and later signed into law. It postulated that the surety bond would increase seven fold from $10,000 to $75,000. The bond is required as a guarantee that freight brokers will pay carriers and will not use unethical business practices in dealings with their clients.
Some estimates point out that there are more than 21,000 freight brokers in the U.S., therefore, some 10% of them have been affected.
After the enactment on Oct. 1, the industry was given a 60-day grace period until Dec. 1 to prepare and meet the requirements. Now that the final deadline has passed, the Federal Motor Carrier Safety Administration (FMCSA) has began the broker license revocation process.
Starting on Nov. 1, warning notices began to circulate, informing the parties concerned that if they didn’t comply with the requirements, they would have their operational authorities revoked. Some 9,000 brokers have received such notices. It is hard to say how many of the brokers had their license revoked, or surrendered it voluntarily due to the high amount.
Brokers will be eligible for reinstatement as soon as they meet the higher bonding requirement.
At Bryant Surety Bonds we write these bonds year round, and even now we can backdate to an Oct. 1, 2013 effective date. From Dec. 1, FMCSA allowed another 30 days until the beginning of 2014, for those who waited to the very last minute to give them a last chance to renew their license.
A free piece of advice: we recommend that the bond is written with a back date to eliminate any questions of compliance and an unnecessary risk. We don’t require collateral, and most applications get approved, with good or bad credit. The only exceptions are open bankruptcy and unpaid child support. Apply today!