If you are a trucking company or an intermediary, you must already be in the stream of news about big changes in the trucking business in terms of the bonding requirements for broker licensing. As of 1 October 2013, the so-called Freight Broker Bond, which used to be known as the ICC bond, will be significantly increased from $10,000 to $75,000. This has left many freight brokers stunned and has raised many questions regarding the effect of this increase on mid-sized brokers. Fears are abundant – but there are solutions as well.
The history and evolution of freight broker bonds
The requirement of a surety bond in the field started in the 1930s and it aimed at providing a protection for shippers in their dealings with freight brokers. Later on, in the 1970s, the freight broker bond was fixed at $10,000 and it functioned on this level until recently. The MAP-21 Act (Moving Ahead for Progress in the 21st Century Act) introduced the changes in the field with a raise in the amount of the bond to $75,000, a higher price set by the provision called BMC-84. The Act was passed by Congress in June 2012 and contains various provisions that change the state of play in the interstate trucking companies and intermediaries world.
The freight broker bond is, actually, a necessity for obtaining a licensing permit for such brokerage that is required by the Federal Motor Carrier Safety Administration (FMCSA). The changes also imply that Freight Forwarders also have to obtain a $75,000 bond, which they did not have to do in the past at all.
The Freight Broker Bond increase and the new available solutions
Midsize brokers have three main fears about this increase: that the surety bond companies will have much higher requirements to provide bonding, that this financial burden might kick them out of business, and that they might need to collateralize the bond, which would block their functioning. These worries are all quite serious and, honestly, reasonable, but the freight brokering businesses will have to adapt to the new situation, and there seems to be help on the horizon, coming from surety bond agencies.
Bonding agencies like Bryant Surety Bonds are offering much-needed relief from these fears to brokers by providing them with the No Collateral 75K Freight Broker Bond Program. Building up on the $10,000 BMC-84 program, the $75,000 program is a solution to the freight broker’s worries. It means bonding with an A-rated and T-listed bonding agency, which gives you complete security. The MAP-21 Act has stricter requirements regarding surety agencies, thus the high rating and listing ensures that your bond will qualify for approval by the FMCSA.
The 75K Freight Broker Bond Program also entails no collateral for all credit types, and there are no requirements for business or personal financials, or net worth. You can obtain bonding even with a credit score as low as 500, which makes it an especially liberal bonding program. Additional bonuses are that there is no spousal indemnity, and even non-US citizens can take part in it. Your freight broker business can get an instant online approval without any obligation.
The freight broker bond increase is a significant and potentially scary one for midsize freight brokers, but there are ways to limit its negative effects. Choosing an A-listed and T-rated surety agency like Bryant Surety Bonds will provide your freight brokerage with a flexible and reasonable 75K Freight Broker Bond program so that your business can smoothly undergo the changes.