Another take on broker bond increase: TIA says impact on brokers, industry will be minimal

| December 11, 2013

dockThe number of brokers in the Federal Motor Carrier Safety Administration’s database has seen quite a hit since Dec. 1 — falling by more than 7,500 brokers — and some are pointing to the Dec. 1 effective compliance date for the required surety bond increase as the reason.

The dropping numbers, however, may not tell the whole story, said Chris Burroughs, who’s with the government affairs staff of the Transportation Intermediaries Association, a broker trade group.

Related

Beefing Up the Bond

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

While many of those brokers may have had their licenses revoked for not complying with the new $75,000 bond minimum, the fact the numbers are so high could be more due to an outdated database rather than an overall inability of brokers to comply, Burroughs said. ”We feel like there were a lot of people out there who had active authority but weren’t actively doing business and hadn’t been for some time,” he said. “The database had a lot of scrubbing to do.” 

TIA, along with the Owner-Operator Independent Drivers Association and the American Trucking Associations, supported the increase, which was included in the MAP-21 highway funding act passed last year.

The increase to $75,000, Burroughs said, was something TIA, OOIDA and ATA sat down to work out, finding a compromise that worked for all three groups.

Even though the broker numbers are falling, he said, TIA “absolutely still support(s)” the increase, and the impact to the brokerage industry and the trucking industry will be “minimal, if nothing at all.”

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 ...

As reported previously by Overdrive, OOIDA supported the increase as a way to ensure truckers are paid for loads hauled, as the previous $10,000 minimum often times wasn’t enough to make up for over-extended brokers. 

James Lamb, president of the Association of Independent Property Brokers & Agents, has said the bond increase has pushed 35 percent of brokers out of service and will continue to force smaller brokers out, which could leave only larger brokers in the industry.

Lamb’s group is also still fighting the increase in court. 

Burroughs, however, said the increase doesn’t create a big brokers vs. small brokers issue, but rather a “funded vs. under-funded” issue. The impact on TIA’s membership, he said, has been minimal.

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.

More About:

,
  • Guest

    The bond should be increased more and there should be a barrier to entry so we get more stable, legitimate brokers rather than fly-by-nights. Aside from ripping off drivers, a company that has to have a more reasonable bond that can realistically cover claims against the bond, it should result in attracting more brokers who understand the costs of trucking and thus can better price freight. The cost of pretty much everything in trucking (equipment, maintenance, tolls, taxes/fees, etc.) is going up and we need responsible steps to bring rates up, too.

  • Brenda Van Wagoner

    see how that works when you are offered .50 per mile from CH Robins, JB Hunt or some of the other “big guys”
    and top that when you or your driver does not notify or submit PPW as required – so sorry – NO PAY…

  • Webb Kline

    “Should result” and “will result” are miles apart. I hope that I am wrong, but I have a hard time seeing this as anything but another nail in the coffin of small business trucking. We’re being duped. My little brokers look out for me and are able to justify better rates for our company than Big trucking is. They’re selling service, whereas the big guys are selling cheap. This is another step toward monopolizing the industry, I am afraid. I think it will have an opposite effect from what they are telling us. Again, I hope I am wrong.

  • Virgin Pacific.Inc

    Honestly I really don’t understand how you guys can do it for as little as you get paid.
    I never taker a load under $2.15 a mile Canada and US. But then I Only haul into the US and out from the us an that pay us way more. If I had to haul for what they pay US small operators I would have quit long time ago. I know your operating cost is less but not that much less. After all expenses I keep about 0.50cents on the low end to $1.00 on the very high end per mile.Average about $0.65 a mile NET for me.Now with the new hours rule for you guys that makes it very difficult. Keep up the good work, keep on fighting.

  • Richard Wilson

    If truckers have to go through a new entrant inspection then Brokers should too. what expense do they have a phone and a fax is all and most are not even registered!Brokers have no expense but a phone and fax, hell yea they ought to have to pay something, we have to pay for a truck, fuel, taxes, insurance and then at the mercy of a guy or gal in a house with a phone, responsibility and guarantee payment is not to much to ask for. We do the work we should have some type of guarantee to be paid, $75,000 no how about a million the monthly charges would be a a level of fairness for all of our expenses compared to theirs, and if they had to bond out they would be alot quicker making payment to protect their investment. They should be held accountable and make a truth in payment, and not skim money off the top!

  • Richard Wilson

    Webb, unfortunately i am a victim of “small strip mall brokers” We as truckers are held accountable small or large, Brokers used to be honest and ran off of reputation alone, we knew who were the good ones and who were, well lets just day “crooks”! Unfortunately the employees of those good company’s went out knowing that there was no accountability and guaranteed the shippers cheaper rates, and they got the work, eventually they quit paying and shut down to open again under another name. I hope you have a local good broker you deal with but I have a problem with getting a load offer at 1 pm and its 300 cheaper than if they cant find a truck at 5 pm and then have no plans on paying anyway! the secret costs that you were not told, the holding payment over lost “Original” signed bills etc, its about time since we as truckers are now “ACCOUNTABLE “for all of our actions why brokers should be for thiers!

  • Ai Pba

    I will be talking about the 40% broker shut down on Friday on XM Road Dog at 2pm eastern to rebut TIA.

    James Lamb
    AIPBA President

  • Kwamie

    I am a victim of a small broker, so because of that i feel no pity for them. Matter of fact I think the bond should be $100,000

  • John Lenhardt

    i say goof riddens to you if you dont have the money to pay the bond chances are you were undercutting the other guys to steal the freight and paying worthless rates anyway sorry but you dont have the money to run your buisness you have to adjust

  • John Lenhardt

    i run as a contract carrier for ch robinson they pay junk to the carriers that are worth junk truth is they reward the drivers that do their job and do it correctly day in and day out for them so to those getting junk pay its your own fault you want the money work through the hard to get to the easy

  • Steve

    I got my money stolen by a broker as well. Any broker should not be able to owe more freight bills than he has a bond for. Accountability. We have to insure. So should they.

  • wyotrucker

    I’ve been screwed by 11 brokers so far who knew they were going out of business, so they booked as much business as possible and had the customers prepay and then closed their doors as soon as the last order was dispatched, only to open their doors again under another name because the bond was so cheap. I’ve filed complaints after complaints to no avail.
    When my daughter got killed in an auto accident, I had to come up with $10k for the funeral expenses. One broker out of Pittsburgh owed me $12k. When I contacted them and let them know I was in a bind, they assured me they would overnight me a check. I never got it and they NEVER answered their phone again. I HAD TO BORROW MONEY FROM STRANGERS TO PAY FOR MY DAUGHTERS BURIAL! ALL BECAUSE OF THE PEOPLE YOU REPRESENT!
    If you would ever take the time to clean up your house, maybe the rest of us would have some compassion. Until then, I will continue to lobby my representatives to raise the bond to $150,000.

  • cameron sense

    Richard – That is like comparing the farmer to the grocer. Of course the expenses are different.

  • Tim Johnson

    What? You’re not making any sense. According to your “logic” then, since the U.S. Government is spending trillions and trillions of dollars, this just goes to prove that the America Public is out of touch with the government. Say WHAT???!! I dare you to make another post, but this time, try to include a minimum of one, single logical conclusion.

  • Jon McLaughlin

    Along with the bond issue they should have put in a Truth in Brokerage Clause. That being, when a company or O/O asks for more money on a load, that the broker has to open his books and if requested send a copy of his contract with the shipper to us to view. Halt Brokers from pocketing the Fuel Surcharge and also pay out 75% of what they have charged the shipper on the Line Haul. Would that put them in the Poor House? Hell no, it would just prevent them from buying a new Beamer every year, and they would still live very comfortably. Also a law to keep them from double brokering a load as a way to “skim” extra profit from the same load. Only allowing the load to be double brokered once and the original broker could only keep 1% of the original fees charged for the load. Maybe then we would finally get the pay raise that is 20 years overdue.

  • jet1968

    Having less brokers is not the answer. The biggest problem with bad brokers is the government does nothing to them. Most of the time a “bad broker” is basically someone committing fraud and they need to be charged that way. Same as with the Pilot truck stop. When someone purposely steals money from someone else thru deception that is fraud. If a broker has a 10,000 dollar bond and they sell out 110,000 dollars worth of freight they are basically stealing 100,000 and it only costing them their 10,000 bond.
    Due diligence is your best practice.
    1. Check out a broker before you use them.
    2. Make them pay something up front.
    3.When you pick up the load look to see who is stated as carrier on the bol. If it is not the broker or you more then likely it is getting double brokered.
    3.Have the driver ask the shipper who they have as the broker.
    4. Ask for several references and CALL THEM!
    5.Check their credit scores! What is their MC number?
    6. Do they do advances.
    7. Does the pay on the load sound too good to be true?
    8. If you do get cheated take them to court DO NOT Write it off.
    9. Check with Better Business Bureau. Also Report fraudulent brokers.
    ****** Do not book a load just to be booking it, make money at it!!!!**************
    Cutting the herd will only hurt the small carriers in the long run. Another way to help push the small carriers out. Wake up people!!!! Try looking past the end of your noses.

  • Daniel Kupke

    I agree with you and this is exactly the point I have been trying to make all along ?? Also if a driver use’s a company to pay him with no recourse ahead of time instead of waiting 30 to 90 days for the broker then he has his money for a few dollars that he paid the non recourse company ect ect ?? Cheap worry free insurance to make sure you are paid ?? When I am dealing with a broker that I don’t know I “”ALLWAYS”" get half of the $$ up front n then have a non-recourse company waiting to pay me on the other end !!?? Other-wise it doesn’t go on the trailer ??!!

  • patricia the dispatcher

    This hike will just help get rid of the fraudsters out there. It should be done in Canada also.

  • Ai Pba

    MAP-21 INDUSTRY CRISIS UPDATE: 72% of FMCSA-Regulated Surface Freight Forwarders REVOKED so far since Dec 1st due to MAP-21′s $75,000 bond

    We have lost almost 10,000 transportation intermediaries so far since Dec 1st due to MAP-21′s $75,000 bond; Over 41% of FMCSA regulated intermediary industry has been revoked…

    Here is the Breakdown by Type of Intermediary:

    PROPERTY BROKERS
    Total No. of Property Brokers Revoked since Dec 1st: 8,196
    Total Property Broker Census as of Oct 1st:

    21,565
    Percentage of Brokers Revoked:

    38%

    FREIGHT FORWARDERS
    Total No. of Freight Forwarders Revoked since Dec 1st: 1,583
    Total Freight Forwarders Census as of Oct 1st:

    2,212
    Percentage of Freight Forwarders Revoked:

    72%

    ALL FMCSA REGULATED INTERMEDIARIES
    Total No. of Intermediaries Revoked since Dec 1st:

    9,779
    Total Intermediaries Census as of Oct 1st:

    23,777
    Percentage of Intermediaries Revoked:

    41%

  • Ken Nilsen

    I have done work for CH and been paid well and on time. They do a very good job.

  • Ricky the Broker

    Frankly, I LOVE the bond increase. Sure my bond costs about a thousand bucks more a year now, but show me where else I can pay so little to get rid of 35% of my competition! My margins are WAY up since I got my bond amount increased in 2011. Less competition means I can now charge more to shippers and pay less to the carriers as they too have fewer choices. The way I see it, anything that kills off a competitor is a good thing! And the 75K bond has done that.

  • david

    as I see it to bond your self at 75000.oo its still cheaper than the cost of owning/operating 1 truck.
    I feel this is still to cheap being most brokers take most of if not all of the profit off the top before booking a truck and there biggest expense is there phone bill.
    I figured most loads were cut by 30% at an average so I added 20% on to what the broker would pay and send the rate direct to the shipper and explain we gave you a better rate we cut out the broker and we deal with each other no middle man so you get better service and on time delivery. picked up a lot of work this way and figured brokers don’t care about the trucker or his livelihood so why should I care about him. sorry that’s the price of doing business!!!!!!!!!!!!

  • Fred

    Hey Jon, if you don’t like the rate, don’t haul the load, no one is forcing you to, if you do elect to pull the load do your homework, check references, pull a credit report! know who your doing business with! regardless of the smoke OOIDAA blows up your ass about how YOUR the poor picked on bitch whipped o/o whose being taken advantage off by everyone, including your elderly gray haired mother! they have you believing its everybody’s fault but yours that you just got burned…… again, quit your bitching and do all your job,(the credit ck)there’s more to loading the load instead of blaming everyone else because you got burned on a load

  • Jon McLaughlin

    I have worked on both sides of the aisle, as a driver and as an agent/ dispatcher for a broker. I know that up to 50% of the load money is withheld from the load. Sorry if I offended you and your goal to a new beamer every year. I do check TIA reports and also check with the companies factoring company before I commit to a load. But not always does that stop and unscrupulous broker from ripping off a company or O/O. A suspension of a brokers authority should be posted immediately, not up to 30 days later, when it is too late. Fortunately there are “no recourse” factoring companies out there. And just for you, I am going to lobby my legislators for a full disclosure law for bitch boy brokers like you that want to skim all the cream off the top.

  • William McKelvie

    Pay attention now, if the FEDS were doing their jobs properly, there would no 30 days later for these crooks.

  • Dave

    There used to be rules for freight brokers in Canada and then they did away with all of it during deregulation. They are truly bottom feeders up here.

  • James P. Lamb

    DISPELLING THE MYTH THAT THESE WERE REALLY BROKERS WHO WERE ALREADY INACTIVE & OUT OF BUSINESS… Some articles published by trucking media lead the industry to believe that the 8200 brokers revoked in December are due to an “outdated database” or some kind of purging of companies that were already out of business or inactive. This is incorrect. It appears that TIA is the source that is disseminating this misinformation to mitigate the damage we believe it has done to the industry. I have read how “TIA ‘absolutely still support(s)’ the increase, and the impact to the brokerage industry and the trucking industry will be ‘minimal, if nothing at all.’” The truth is each and every one of the 8,200 brokers shut down had active authority, which means they were paying significant money to keep their original bond in place and their broker’s license active so they could conduct business. This just goes to prove that the TIA is out of touch with the brokerage industry. Just look at the 1,900 brokers that have signed our petition http://www.petitiononline.com/100KBOND/petition.html.

    As for ‘funded’ versus alleged ‘underfunded’ brokers, factoring companies fund most small brokers so we believe Burroughs and TIA know very well there is really no such thing as a significant cohort of “underfunded brokers.” TIA simply targets small brokers as opposed to the big brokers that pay TIA $14,400 per year in dues. We find it amazing that TIA considers 8,200 brokers shut down (so far) as “minimal” to “nothing at all”. We believe the DOJ which has stated our antitrust complaint against certain trade groups is currently “under review” will teach TIA a lesson on America’s Antitrust laws.

    CONTEXT OF REVOCATIONS: A review of the FMCSA Daily Register for the past 52 weeks would 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, 8,200 brokers killed off all in a 10 day period is very significant.

  • mkmac

    It needs to be done in Canada,All you need is a stolen cell phone and you in business, I wont use a Canadian broker unless he I licenced in the states,with a bond…………..

  • mkmac

    What, ask questions,Due diligence,Check them out,I’m a truck driver not a rocket scientist, I can do any thing else, Now you want me to use my brain. Dam I should have paid More attention in school………

  • mkmac

    I had one broker tell me they laugh at how much they get truckers to accept, cause they just accept the price as gospel, and don’t even try to get more money from them…………

  • Jerry

    The Shipper is interested in What their legal Representative, The Broker charges to Trucker to haul their freight. Im reminded of the CH Robinson civil case not long ago, the broker CH Robinson turned down higher Truck freight rates, to later find ‘el cheapo trucker, whom while hauling their freight later was involved in a fatal accident, cause due to poor truck maintenance. In this case the Broker, (deep pockets) paid Millions to the plaintiffs. However, im curious if a small broker, (small pockets) could give this type of reassurance to that same shipper, by playing a waiting game to wait n see if you can find el’ cheapo trucker.

  • Jerry

    Delusional; The Government wants Truckers to increase their ability to pay tax. i.e. decrease truckers taxable revenue by increased write offs mixed by not paying freight charges. Total cost to buy the Bond is less than my freight charges. During the time, my truck is working the load for half a week. How many loads did you Broker in a single day? Baseless

  • Ai Pba

    AIPBA’s Application for Exemption for all brokers and forwarders is being considered by FMCSA:

    http://aipba.vpweb.com/upload/FaxComment.pdf

  • Brett A. E. Sullivan

    Each and every one of 8,200! I call BS there is no way you can know or justify that fictitious statement. Wait….. did you call all of the individuals and ask them personally if they were still in business? Move your lobbyist paid spin elsewhere Mr Lamb.

  • Brett A. E. Sullivan

    A fool and his money are easily parted. The truth is is you stick to your morals and refuse to carry loads at silly prices the brokers will have to increase the price. As you can see from Mr smug Ricky the broker above this is the broker attitude and I have no qualms at laughing in his face and moving on to a real broker that pays a real load price. what he does not realize that with all the shabby brokers going all the shabby truckers will be going also (especially in CA) so Mr smug will have less truckers to choose from and those will be professionals that pay there taxes and have insurance and will charge accordingly These brokers will have to adapt or die and they will find that out soon enough. I for one have only been ripped off for 1 load in the last six months compared to 4 times last year so it works. I am glad to see all of these FL based auto brokers going to the wall. make the bond the same price as a new rig i say. see how they like it.

OverdriveOnline.com strives to maintain an open forum for reader opinions. Click here to read our comment policy.