Broker groups disagree about bond proposals

Jill Dunn | March 27, 2012

The Association of Independent Property Brokers and Agents has “declared war” on the Transportation Intermediaries Association for legislation AIPBA maintains will shut down most brokers.

AIPBA President James Lamb said if the TIA-backed measure becomes law, the tenfold broker bond increase to $100,000 would likely put 17,000 of the existing 20,000 brokers out of business. AIPBA comprises 132 independent property broker agents and TIA represents 1,200 transportation intermediaries.

Lamb said he issued the March 26 declaration after reading a recently published story where TIA President Robert A. Voltmann was quoted as stating those campaigning against the hike were using deceptive arguments to spread fear.

The bond increase is contained in the long-term transportation appropriations bills Congress is considering before the temporary funding bill expires March 31. The Senate voted 74-22 to approve S.1813 on March 14, while the House version, H.R. 7, made little progress after the House Transportation committee reported the bill Feb. 13.

The Owner-Operator Independent Drivers Association and the American Trucking Associations support the hike.

Lamb said if is passed, “bonding companies will require $100,000 cash collateral due to tenfold increase in their risk exposure, not just a $5,000 annual bond premium.” Surviving brokers then would charge shippers more because of lack of competition and ultimately freight rates would be lower for truckers.

If there is an increase in the bond requirement, unchanged since the mid-1980s, AIPBA proposes increasing it to $25,000, Lamb said.

TIA said it worked with OOIDA and ATA on proposals after major transportation associations demanded the change, with some wanting escrow accounts and a bond of $500,000. It compromised with a $100,000 bond to prevent escrow accounts and the public disclosure of broker margins.

Since then, the legislation has been introduced three times as stand-alone bill. The most recent was last June as the Fighting Fraud in Transportation Act, or H.R. 2357, which was referred to committee with 13 co-sponsors.

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