35% of brokers have authority revoked in bond increase measure, broker group says
The number of freight brokers disappearing from the federal rolls has been increasing by the hundreds every day since Dec. 1, following the new requirement to carry a $75,000 bond, boosted from $10,000 by the MAP-21 highway funding act passed last year.
Today, 35 percent of brokers in business at the beginning of the month no longer have active authority, says James Lamb, president of the Association of Independent Property Brokers & Agents.
As of noon, Dec. 10, 7,561 fewer authorized brokers were active than on Dec. 1, Lamb said, and that number will likely continue to rise until around Dec. 15 — 30 days after the last of the notices of investigation were sent to brokers by the Federal Motor Carrier Safety Administration. Overdrive reported last week on the decrease in brokers and AIPBA’s court fight against the bond increase. Click here to see it.
That number, however, could also include brokers who had their licenses revoked for reasons other than not complying with the bond increase, said Norita Taylor, spokesperson for the Owner-Operator Independent Drivers Association. She also said OOIDA hasn’t heard from any of its members about losing brokers.
FMCSA published a notice in September 2012 saying it would revoke operating authority from brokers who did not comply with the bond increase by Dec. 1, even though the MAP-21 bill required brokers to comply with the increase by Oct. 1.
Brokers are now required to carry a surety bond of $75,000 — up from the previously required $10,000. OOIDA supported the increase, saying it would better protect owner-operators who otherwise would not have been paid by over-extended brokers.
Taylor said the increase helps protect owner-operators from fraudulent brokers. “While most brokers provide a valuable service, the previous system left too much room for fraud where funds were collected from shippers but not paid to owner-operators.”
The American Trucking Associations and the Transportation Intermediaries Association also support the increase.
Because of the 60-day grace period and the time that brokers had to comply with the bond increase, Lamb says it’s “highly unlikely a significant amount” of the non-compliant brokers will be reinstated.
The group is also still fighting the increase in court, Lamb says. Click here to read more about that lawsuit in previous Overdrive reporting.
Lamb says the next phase could push the number of brokers whose authority has been revoked as high as 75 percent. That phase, he said, would come after the “shaky” bonds some brokers purchased to remain compliant come up for renewal in a year.
He also said the industry would now be controlled by larger brokers, who will ask for higher rates, but will not pass those rates onto owner-operators. In fact, he said, they could restrict rates for owner-operators.
In previous Overdrive reporting, though, OOIDA’s Todd Spencer echoed Taylor’s comments, saying the bond increase will help truckers who “have been cheated by bad brokers out of” money they’re owed for hauling a load.
Overdrive covered the broker bond issue in an in-depth report last year, when the bond increase was tied to the highway funding act. Click here to read that story, which covers how it affects owner-operators and how it impacts brokers.