35% of brokers have authority revoked in bond increase measure, broker group says

| December 10, 2013

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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. 

Related

Beefing Up the Bond

Small brokers oppose proposed regs to increase the minimum bond to $100,000 and add other owner-operator protection.

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.

Related

Broker numbers fall following bond increase, broker group appealing mandate

A broker trade association is appealing a new regulation that changed their minimum bond requirement from $10,000 to $75,000, which it says already has shut ...

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.

  • Robert

    I believe you have to have descent credit to get the bond….explains why shity brokers went under. Oh well

  • Del Ray Johnson

    So let me understand this a new tractor costs a driver over $100,000, fuel can run over $70,000, O/O have to pay among other things like repairs, and if they have their own authority a fee for filing the UCR to assist states in getting allocated federal monies for the roads. But get this these Brokers who pay us less and apparently take more cannot afford a $75k bond what is wrong with this picture?

  • Robert

    You have to have a credit check that is pretty intense and if you don’t pay your bills the rates are so steep I think you have no choice but to close shop.

  • Del Ray Johnson

    I guess they do not check credit when you ask to buy $100,000 tractor. And a driver has to have $1,000,000 of physical liability insurance on the load if you run into stuff the rate is steep as well. Maybe if these “Brokers” insisted on the money for a fair rate WE all could pay our bills go figure . . .

  • JJMclure

    Brokers had time to get their act together….they can also put up 75k in cash or a line of credit. This is why the shaky ones are gone. The claim that the big houses will drive down rates is bs because no one will haul the load if it’s too cheap.

  • Del Ray Johnson

    JJ I have not wrapped my mind about what will happen with supply and demand whether we are worst off with a monopoly shocked the drivers put up all this time and money in heavy equipment these guys cannot get a fidelity bond for $75k, which in my experience is not that hard their credit must be wrecked. So why are they calling the shots would be my questions. . .

  • BB Trucking

    We have gotten stiffed by two brokers back in 2010 for a total of $6000, when talking to the bond companies of which paid us nothing these brokers both went out owing carriers over $100,000. It’s about time someone watches out for the carrier.

  • Adriaan Verburg

    The thing of it is though that it puts the little guy under. A $75000 bond means nothing to the big guys. They do $75000 woth of business every 5 minutes. If they’d go broke today that $75000 bond would only cover 5 minutes woth of business. This bond increase only gives more business to the big guys.

  • Del Ray Johnson

    Adriaan you took the words right out of my mouth it is Robert’s assumption that @#$% brokers went under it may be the exact opposite mom and pop shops surely like you said we have all worked for outfits that can post that bond in cash (wonder where they got the money from any guesses?) and these same outfits will run, bid the rates down to keep a driver broke and 1000s of truck moving on for a small margin.

  • John Scott

    Seems to me a good broker would pay the higher bond without questions. Maybe a little grumbling but certainly the ones who now have decided to quit were probably not good brokers anyway.

  • John Scott

    Everything is big business. Really, this surprises you? Pay the man or get out. That’s how it works these days. Same goes for Owner Operators. We have to haul the freight for peanuts or sit.

  • John Scott

    Heck my deductible on my freight insurance through Landstar went from $1000 to $2000. Just part of the deal anymore.

  • Ai Pba

    In response to OOIDA, a review of the FMCSA Daily
    Register for the past 52 weeks will show that in an average week about
    56 new applicants get a broker’s license; Keep in mind, though, this is
    after MAP 21 was passed, which now requires a $75K bond for new (and
    existing) brokers and clarifies in the law that carriers who arrange
    transportation need to get a brokers license. About the same number exit
    for various reasons so the amount of brokers for the past year– until
    now– has been sustainable at about 21,500, give or take a few hundred
    (FMCSA reported as a result of our FOIA request that as of Jan 1 2013
    there were 21,795 active brokers and they reported in their final
    technical amendment rule 21,565 active brokers as of Oct. 1, 2013).

    When we factor in that many of the new “brokers” are actually carriers
    complying with the need to secure a secondary license, it is clear we
    were already losing traditional non asset based small brokers by
    attrition and there is overall a decrease this past year in new start up
    business applicants. So in terms of the context, then, over 7,500
    brokers killed off all in a 10 day period is very significant.

    For more on this see James Lamb’s letter to Transport Topics:

    http://www.ttnews.com/articles/basetemplate.aspx?storyid=33463

  • parejam

    I am a broker and I don’t make much money in this industry. Just enough to make it. The greedy drivers are the ones who make the big bucks. They make anywhere from $5000-$10,000 per load for a 5 day ride in auto transport and if they don’t make that much they don’t even make the run. They are the greediest I have ever seen. 1 auto hauler truck brings in over $300-$400 a year and small brokers only make maybe gross sales of $100,000 a year. The carriers should be paying this $75,000 not the broker.

  • parejam

    I am a broker and yes you do need to have good credit, but there are tons of small bond companies that will accept you without good credit. All they care about is if you pay them. The only problem with those bond companies is that they don’t return the money to you if you close shop because they are thieves. It’s easy to get a bond. The payments are low. If those guys got shut down, they were bad brokers because my increase was not that much per month. You are supposed to get your money back with interest from these bond companies. But I at first when I first started was with one of the smaller companies and they still owe me my $4000 that I paid into the bond that is supposed to be refundable. The good this is that if you have a good company all that money comes back to you with interest so it’s kind of like a savings account that you forget.

  • ron

    Ya, cuz sitting in an air conditioned office and typing into a computer is definitely the hardest part of getting a vehicle from one location to another. The huge investment you brokers make in a computer, a phone, and a fax (all of which haulers also have to have) isso much more taxing then the $264,000 i spent on a truck and trailer, the $105,000 i spent on fuel and repairs last year not to mention the glamorous life of living on the road. To think we should get paid more then you brokers is obviously just selfish. Idiots.

  • parejam

    Just because your not happy with what you do, you should not be taking it out on brokers. You chose that career for your self and I chose mine. Believe me dealing with you rude and nastry truck drivers who are so greedy to make $20,000 a month and then knock brokers for making nowhere near that amount. Look you would not have work if it weren’t for brokers. So instead of putting them down, whining and complaining like a little baby about having to be on the road when there are way worse things like people who make $350 a week with a family of 5, or a homeless person who has nothing. BE GRATEFUL FOR WHAT YOU HAVE and stop complaining about driving. If you don’t like it then get out of the business.

  • Del Ray Johnson

    @Ron thank you I have neither the time nor energy to response to this it sounds to me like the Brokers who are similar to a sports agent but for some reason think they should earn more than the players. This person has completely ignored you with over $100+k of thousand dollars of equipment plus among other things $70+k in fuel compares to why did you say he bought fax machine nobody handles paper it is a pdf on his computer at home.

  • Tommy T

    I believe if you are not able to secure your very own work both ways if needed and have to depend on a broker. Then you shouldn’t be in this business. PERIOD. Any body that wants to open a brokerage can. Simplest thing in the world to do. Pick out a traffic lane. Throw the rates in the cellar. “you will find some fool to haul it cheap”. Then go in business. That bond is cheap even with the increase. I assure you after 45 years in the business. None last that long.With a $75,000 they can still run up a huge accounts receivable and bail and make money. Watch. Oh wait OOIDA will give you the knowledge to survive or the ATA. NOT. Get smart get the work you can support both ways or bid it at a great one-way rate. Don’t depend on anyone but yourself and keep your mouth shut. Then maybe you will make it. You want to be an owner operator leased to someone. Good luck with that. Unless you want to have several trucks leased somewhere and not pay a decent wage to someone and be as low as the rest of the carriers. Then maybe you will last. Oh maybe 2 years

  • Tommy T

    You live in a dream. Who are you trying to kid. Car haulers have taken the worst hit of all from the brokers. Rates use to be good till you parasites jumped in there with the internet. Give me a break. Then these fools take your crap and I have to read what you just posted.

  • Guest

    l learned early in my driving career brokers are legal crooks, I never use a broker and make out just fine. Adios Brokers :-)

  • bobloblaw

    New rules great for mega brokers-carriers, bad for small trucking.

  • lonewolf40

    Why LIE two loads everything the same.(time, PU, Delivery, weight, size), payed 700.00 and 1100.0. why so much difference even know the other O/O and he was mad. He called he Broker (same one I go te load from) and he said that he was loosing money at 700.00. Talked at the shipper and we booked the loads at almost the same time, and same person….. ???????????? and WHO is getting ripped off??????????????

  • g

    Great those jack Ass brokers finally got what they deserve..a Kick in the ass OUT of trucking…they generally are CROOKS, Gypsies, and WILL hire illegal alien truckers.
    Good Bye you ANUSES.

  • g

    The last thing we NEED is illegal alien “truckers” working for NON PAYING fly by night “broker/logistics” companies…Good Riddence to these SCUMBAGS!!!

  • g

    Those little “logistics” dumps are flying UNDER the radar..they hire illegal ALIEN “truckers” get them theHELL out of here….Large brokers have MORE to Risk and WILL be high profile AND inspected for CRIMINAL OFFENSES which those Ex Convict brokers are so Fond of committing. Every one of them is a lying thieving CROOK.

  • Steve

    Just like cargo insurance, no broker should owe more freight bills than he is bonded for. Common sense.

  • William McKelvie

    SAYS WHO JOHN SCOTT??? Just because YOU are willing to sell yourself short and compromise YOUR operation or services does not mean ALL of us do that! Thank you very much! And if that is what you ARE doing, you are dealing with the wrong people, the wrong brokers. Or are you one of those who is hauling loads that are TRIPLE or QUADRUPLE brokered before you get it? As I told someone who came into the US TRUCK DRIVERS and FREINDS group yesterday and started the help me stuff, might be time to weigh options. If when you run, you are making less than a company driver, what is the point?

  • William McKelvie

    Brand new truck, better add some more $$$ to that figure. That is unless you are using an Obama subsidy?

  • William McKelvie

    Want to switch jobs for a day? Nah, make it a couple of hours. You push paper and talk to customers. Can you even get through a proper pre-trip, much less drive 11 hours through all kinds of immediately changing weather and temps after securing and tarping a full 51 foot long 10 foot tall load? Or even not one that long? Why not instead of starting this battle, why not show the respect for the owners and drivers that you have? Surely you cannot do your job without any of us right? The old days we went direct to the customer. Now, the majority of them only want to deal with brokers. But somehow the very brokers that they only want to deal with, have problems getting the trucks to them now?? Hmmmm, something does not add up here!

  • Kevin J. Reidy

    “BE GRATEFUL FOR WHAT YOU HAVE and stop complaining about driving. If you don’t like it then get out of the business.”
    You don’t even understand the difference between Gross and Net income, ROI, and most likely how to even add.
    You need to take your own advice and get a real job. If the one you chose does not renumerate you sufficiently, find yourself another 9 to 5 office job, or, work harder at growing your business model.
    I’d love to see you on the top of an auto rack in -10 weather blowing a gale in the dead of night.

  • GetThatFreight

    Winners Win

  • John Scott

    You unfortunately are ignoring the realities around you of big business winning. I am not saying I like it. But I realize its happening. Almost every big trucking company is either in a broker union with a group or they broker themselves. Pushing the little guy out. But its because customers (shippers) are looking for cheaper freight rates.

  • Sasha Renfrow

    I have perfect credit Robert and have been in this game 15 years supporting me and my son without government assistance and I always pay my drivers but this bond increase hurts people like me who pay good rates on the same day driver faxes in invoice. So your theory sir is incorrect!

  • Sasha Renfrow

    I have perfect credit John and have been in this game 15 years supporting me and my son without government assistance and I always pay my drivers but this bond increase hurts people like me who pay good rates on the same day driver faxes in invoice. So your theory sir is incorrect!

  • beardy

    we just need to cut out the middle “men”

  • William McKelvie

    I’m not ignoring anything thanks. You want to justify cutting your own throat, that’s your problem, not mine. The rates are there, you just have to work for them a bit harder than just letting them pull your finger.

  • Bryan

    parejam, you are completely off with your first comment. If i make 5000 per week then i barely covered expenses that week, and trust me its all i can do to make that much per week, everyweek. Then if i ever go home im not making anything but my expenses keep coming. And i dont know any freight truck running for 10000 per week. That would be nice!

  • Jimmy the Greek

    Yes Like C H robber son

  • Jimmy the Greek

    Not really I run short hauls gulf cost states and don’t use brokers , i only pull loads for company’s i know that pay in around two weeks ,and i don’t use factor people ether , pay cash for all fuel , and get a really high rate , however i do some time sit up to a week sometimes at home , the load i just hauled got home last light was Houston TX to corpus christi TX , It was to the truck 1600.00 down 60 hrs my trailer drooped in the refinery at 35.00 per hr , and 600.00 to bring the empty tanks back , they pumped out of my van blending as they loaded a tanker ship , i do this kind of runs all the time my tractor and dry van are 1998 models nothing to look at , i owned the tractor 11 years its a old fleet tractor that i payed 25,000.00 for last year i payed a little over 18,000.00 to the blood suckers ( IRS ) so there is money out here if you know how to find it .

  • Jimmy the Greek

    You spent what ? i can get you good used tractors for 20,000 to 40,000, all day long the last 25,000 tractor i got was 11 years ago and i am still driving it passing roadside insp. hauling haz-mat 80% ov the time it’s white with a teal green nose clip LOL dull paint and all .

  • Jimmy the Greek

    Tommy is telling the truth ! i never hauled them , however i have friends that still do ,to many fool got into it and screwed it up

  • Jimmy the Greek

    WE have a lot of that here in Texas !

  • Jimmy the Greek

    That is 1000% right , i well tell you what i do however good luck trying to find the people i do it for , we are tight nit group that cover each others asses when things get crazy , and never tell what we see .

  • John Scott

    If the rates were there as you say for everyone. We would not have the shrinking pool of owner operators who are truly independent and not working for a fleet. You seem to be defending yourself then anything else? I have yet to see any deregulated industry that did not see the demise of small business.

  • William McKelvie

    They are not that way for everyone, I did not say they were did I? Nope. The rates are respective to what folks are willing to run them, right? So, if you take the SAME load from the same place that I do, and your load pays you 1.50 and mine pays me 2.25 whose fault is that? Not mine.

  • William McKelvie

    And Don, let’s be honest here shall we. There is really only one reason that we are seeing an increase in the lease purchase owners at these fleets. Just a new spit shineola put on an old truck, and the newbies tell us old hands we are wrong, yet we have seen the multitudes of failures already at the hands of these fleecing big companies with the lease purchase deals.

  • Robert

    I for one am happy with the new ruling I was loosing up to 20,000 to 30,000 a year on brokers who refused to pay there bills even when they were paid now if we could just some criminal charges on those who continue to cheat the O/O and others who do the work for them

  • Jeanne

    The larger the bond the better! In the auto transport industry we have so many “fly by night” brokers and we have even been burned by long time companies that just hit hard times. By the time you wait the required 30 days, the bond has been spent and companies either get pennies on the dollar or nothing at all. As for freight prices? It seems our “new age truckers” motto is “If I don’t move it, someone else will”. They don’t realize if we all refuse lowball prices and brokers can’t get product moved, they will have to offer a fair rate. We are making less now than we did 10 years ago, even though our costs have increased. Just Say NO to Cheap Freight!

  • TruckerJohn

    “……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. ” Maybe that’s because, like me, they didn’t renew their membership because of this. I didn’t renew my membership because I knew the increase was going to put my expenses over my income.

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