Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Posted by on in Freight Broker
  • Font size: Larger Smaller
  • Hits: 17970
  • 0 Comments
  • Print

As October 1 approaches, US Freight Brokers must post a $75,000 Bond

At the time of this writing, there is less than a week until the new US federal $75,000 financial security requirement for freight brokers and forwarders goes into effect.  By now, most everyone has the deadline of October 1st committed to memory, but many still do not understand the options available to meet the FMCSA requirement.

October 1st Deadline Stands

According to the FMCSA (Federal Motor Safety Administration), all brokers and forwarders must file new BMC-84 and BMC-85 forms confirming $75,000 financial security as of October 1, 2013.  Although the FMCSA has allowed for a “phase-in” period which has created confusion, the agency’s guidance released September 5th indicated the extension was provided solely to allow the industry to complete all necessary filings.

If proof of the $75,000 bond or trust is not filed on time, freight brokers and forwarders will receive notification from the FMCSA giving 30 days to get the bond or trust in place before revoking the broker or forwarder authority.  The fact remains that brokers and forwarders must have the $75,000 financial security in place in order to operate legally.  Even though a broker may not be penalized by the FMCSA until December 1st, their clients will not be guaranteed payment until the $75,000 financial security is in place, likely affecting their ability to continue operations.

Map-21

MAP-21, the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141), was signed into law by President Obama on July 6, 2012. Funding surface transportation programs at over $105 billion for fiscal years (FY) 2013 and 2014, MAP-21 is the first long-term highway authorization enacted since 2005.

MAP-21 is a milestone for the U.S. economy and the Nation’s surface transportation program. By transforming the policy and programmatic framework for investments to guide the system’s growth and development, MAP-21 creates a streamlined and performance-based surface transportation program and builds on many of the highway, transit, bike, and pedestrian programs and policies established in 1991.

Two Options for $75K Financial Security Remain

The $75,000 financial security mandated by MAP-21 may be met by either a surety bond or trust fund agreement.  Both are filed electronically with the FMCSA as proof of meeting the $75,000 freight broker security requirement.  MAP-21 allowed for a third alternative known as a group surety trust fund; however the FMCSA will not accept this option at this time.

Freight broker bonds must be issued by a Treasury-listed surety company.  These surety bonds serve as a guarantee to both shipper and carrier that brokers and forwarders will follow federal regulations.  The surety company will pay claims, but if a claim is found to be legitimate, the surety provider will seek reimbursement from the principal. 

Freight broker bonds provide financial security up the full amount of $75,000.  Premiums are a percentage of the bond amount and must be paid annually.

Trust funds are fully funded with $75,000 cash or a loan.  A freight broker’s money is readily available in the event of a claim as funds are deposited with an insured financial institution.  The trust company or bank will hold these funds for the duration of of the license and assess annual fees.

For many, meeting the financial security requirement comes down to the choice of posting 100% collateral or being backed by assets of a surety provider for a fraction of the cost. However, a thorough investigation of providers should be conducted, as hidden costs could exist.  Brokers need to be mindful with either choice to work with only those who specialize in these instruments for confidence the broker's bond or trust will be in place by October 1st.  



 

Thank you to Eric Weisbrot and Sandy Miller at JW Surety Bonds (http://www.jwsuretybonds.com/surety-bonds/commercial-bonds/freight_broker_bond.htm?utm_source=dantranscon.com&utm_medium=Guest+Post&utm_campaign=$75K+Freight+Broker+Bond) for this informative and helpful post.  To stay up to date on the latest transportation news, free subscriptions are available to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466 )

Tagged in: broker bonds
0

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Friday, 29 March 2024

Most Recent Posts

Search


Tag Cloud

risk management Retail autonomous vehicles 2014 freight forecast driverless 3PLTL EBOR freight transportation in 2011 Business skills Driver Shortage CSA scores Software Advice computer security Training Habs Packaging technology Global experience BNSF freight agreements carrier conference last mile delivery Transportation Buying Trends Survey recession trucking company acquisitions Omni Channel hiring process supply chain management cars Emergent Strategy 2015 Economic Forecast derailments Cleveland Cavaliers shipping wine Freight contracts freight forwarders Sales Training 360ideaspace Whole Foods Transloading energy efficiency economy business start-up USMCA Driving for Profit online shopping Keystone Pipeline computer protection Fire Phone freight transportation conference e-commerce shipper-carrier roundtable Geopolitics natural disasters Digitization Donald Trump Muhammad Ali Anti-Vax Trucking Canadian Transportation & Logistics shipper-carrier collaboration Grocery consumer centric UP Amazon 2013 Economic Forecast TMS IANA Load Boards Broker Loblaw Rate per Mile KCS Tariffs Right Shoring TransForce Adrian Gonzalez Wal-Mart Accessorial Charges Education Blockchain General Motors FMCSA Covid-19 Coronavirus Harper Davos speech CRM Failure RFP Dedicated Trucking Horizontal Supply Chain Collaboration network optimization Retail transportation CN Rail Doug Nix Doug Davis Werner capacity shortage economic forecasts for 2012 freight rate increases computer USA Truck Dan Goodwill pipelines fuel surcharge Tracy Matura 2012 Transportation Business Strategies. Jugaad drones driver Sales Management LTL CSX Colilers International Canadian economy Freight Recession Schneider Logistics Impeachment FCPC Transcom Fleet Leasing asset management Comey NCC capacity shortages APL tanker cars freight audit Rotman School of Business LinkedIn Twitter Warehousing NMFC Otto Transportation service Transplace Infrastructure economic outlook China FuelQuest selling trucking companies intermodal routing guide Consulting freight broker Politics future of freight industry Justice 2014 freight volumes Business Development Facebook freight costs customer engagement BlueGrace Logistics Blogging Canada's global strategy CP Rail Transportation US Economy CSA Freight Matching solutions provider cheap oil bulk shipping US Auto Sales Regina Social Media in Transportation freight payment YRCW Load broker Rail dimensional pricing 2014 economic forecast Carriers business security US Election the future of transportation Reshoring Electric Vehicles shipping Life Lessons Government marketing Dedicated Contract Carriage New York Times Digital Freight Networks Map-21 freight cost savings FCA driver pay buying trucking companies mentoring rail safety ELD CN Social Media Stephen Harper Trade Vision Leadership dynamic pricing Business Transformation Strategy Derek Singleton JB Hunt robotics Toronto Maple Leafs laptop Search engine optimization Career Advice freight RFP Canadian truckers automation Climate Change Distribution Truckload 3PL Canada U.S. trade Crude Oil by Rail Canada truck capacity Celadon Hockey Job satisfaction Hudsons Bay Company transportation audit Trump peak season financial management Sales Freight Business Strategy Freight Capacity trade Online grocery shopping Deferred Packaging Ferromex freight payment freight audit US Housing Market Leafs driver shortages small parcel Canadian freight market Associates truck drivers MBA Freight Management Canada-U.S. trade agreement YRC truck driver Sales Strategy Shipper professional drivers broker bonds Toronto Entrepreneur Outsourcing Sales Success failure entrepreneur transportation newspaper Training New Hires TMP Worldwide MPG $75000 bond transportation news Value Proposition ShipMax CITA Shipper Pulse Survey University of Tennessee Freight Shuttle System home delivery cyber security Trucker Protest NS Bobby Harris Swift David Tuttle Conway broker security Finance and Transportation Crisis management Uber Freight FMS Canadian Protests Spanx Management Freight Carriers Association of Canada President Obama Surety bond home delibery small business Masters in Logistics Montreal Canadiens digital freight matching Transport Capital Partners (TCP) coaching Freight Rates employee termination US Manufacturing Scott Monty Microsoft LCV's shipper-carrier contracts Global Transportation Hub freight marketplace dark stores Inbound Transportation freight bid Success ProMiles NAFTA Railway Association of Canada Yield Improvement autos freight transportation

Blog Archives

March
February
December
October
September
August
June
May
April
March
January