Broker numbers fall following bond increase, broker group appealing mandate

| December 06, 2013

truck at dockA 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 down 2,768 brokers not in compliance by Dec. 1 deadline.

On Dec. 3, the Association of Independent Property Brokers & Agents appealed the Federal Motor Carrier Safey Administration final rule in the U.S. Court of Appeals for the 11th Circuit.


Brokers lose court bid to stop Dec. 1 bond increase

A federal court has denied a broker trade association’s motion to halt an increase in the surety bond from $10,000 to $75,000.

 It argues the FMCSA’s rulemaking violated the Administrative Procedure Act. The agency had issued the rule after Congress stipulated brokers must obtain the higher bond by Oct. 1 in last year’s surface transportation reauthorization. The rule allowed an enforcement grace period until Dec. 1, after which the FMCSA promised it would revoke authority of brokers who had not obtained the higher bond.

The association of small-and-mid-sized brokers stated that as of Dec. 5, the agency listed 21,565 active brokers, which it says is 13 percent fewer brokers than last month. Surety bond provider JW Bond Consultants puts puts that number higher. The Pennsylvania-based company estimated about 3,800 broker authorities have been revoked by Dec. 3.

Initially, the AIPBA had asked the court for a temporary stay of the rule, which a three-judge panel for the circuit denied Nov. 26. The agency had stated it did not have discretion regarding the amount because it had been set by Congress. It added federal law does not mandate a notice-and-comment period when agencies publish rules to comply with a statutory change and rulemaking procedure would be impractical or unnecessary.

The Transportation Intermediaries Association, the American Trucking Associations and the Owner-Operator Independent Drivers Association supported the increased bond requirement.

More About:

  • guest

    Guys operating a brokerage from PRISON have limited funds so they were the First to go?? many EX CONVICTS who are OUTSIDE the prison walls have enuff Money from DOPE TRANSPORT to remain in the GAME??? Great News.

  • Dave

    It breaks my heart that more of them haven’t been forced out.

  • Robert A.

    Brokers are hurting trucking anyway…..some of the cheap rates these moron brokers want loads covered for are so cheaply quoted…..I doubt they will be in business long anyway.

  • MrPresidentCFO

    Why would anyone cheer for Congress wiping out an industry? This was nothing but BIG BUSINESS paying off those greedy politicians. So now that only brokers that will be in the game are freight forwarders, etc. The same people on this post CHEERING for this increase will regret this when you ALL have just a few players in the game. Then you REALLY will be complaining about the rates.

  • Robert

    Not true…..small carriers can be direct shippers for the smaller shippers like I have done with my company- eliminating the need for brokers who chop rates.

  • Robert

    If brokers are not setting unfair rates ….why then do they pay less than half for same lane going south. For example-
    1000.00 to go 360 miles from A town Pa to Nashua NH. The same lane back to A town Pa is 650.00…..the same fuel is used-the same tolls- the same weight…..their reason is the market…..well now the market is turning and hopefully a lot of no good brokers are now going to pay the Piper..ha ha ha
    Trucking is backwards……trucks should be setting fair rates and sticking to them….the DOT should be putting the shit trucks down who are taking the cheap rates keeping moron brokers in business.

  • Texas Liberal

    It always amazes me that these concrete cowboys whine and cry about regulations, but then are the first ones to cheer and jump up and down when the government puts regulation on another industry. Hmm. Kinda hypocritical?? Then again, what do you expect from the typical sterring wheel holder that the industry employees these days. We run a small fleet and also did broker, which we shut down and laid 3 people off. When we booked a load with another broker we did our homework, checked credit and references. If a broker was acceptable we did the load if it paid our rate. If the rate was too low, we didn’t do it. Its that simple boys. NO ONE is forcing you to take cheap freight or do biz with crooked brokers except yourselves. ON the broker side, all these cowboys think brokers are making all the money, got news for ya boys. WE TAKE A HUGH GAMBLE too. If a customer goes belly up, we can’t cry to a bonding company to get paid, it’s up to us and our lawyers to try to get paid. We sold our customer book to one of the “mega brokers” and they are posting the same loads we did for about 25% less than the rate we moved them for. Hope all you concrete whiners are happy with putting small brokers out of biz. Happy holidays to all

  • MrPresidentCFO

    And I’ll say this again. Why would you wanted to eliminated an honest, hard working man or woman jobs? Brokers like myself are fair to everyone. I take care of my staff and my drivers. It doesn’t matter weather they are local, owner operators, etc. Everybody gets paid and everybody is happy.

    There are bad small shipping companies just like they are bad brokers. That is in every profession.

    How would you like it if Congress enacted a $100,000,000 bond on shipping companies? You wouldn’t be singing the same song would you?

  • JJMclure

    it gives carriers less competition for small shippers…good for me

  • Robert

    When I need a broker I only deal with mega brokers….I get a list every day of small brokers who stiff honest carriers every day. If rate is to cheap…..I dead head back. I no make money-you no make money!!!

  • Robert

    The way it should work is for a broker to have a list of trucks that are signed up with their brokerage and call the trucking company to see what they can move it for and then call the shipper with the price to move their freight…instead it’s ass backwards .

  • g

    Lynched would be the best for those CROOKS!

  • g

    Yep and I hope they ROT IN HELL!!!!

  • g

    Yep…the TRUCKERS should be getting PAID..the stinking broker should get Minimum Wage……

  • g

    YES….brokers should be Tarred and Feathered…theyhave DESTROYED trucking..they are LYING THIEVING CROOKS.

  • g

    EXACTLY…No middleman STEALING at all..they are UNNECESSARY. Parasites is all they are..clinging to the BUTT of humanity.

  • g

    Instead its a cat and mouse game and the Broker is actually UNNECESSARY today with the technology the trucker has…there is no NEED for a middleman.

  • g

    The broker is just an extra HAND reaching into the trucker’s portion of the freight Hauling Money….why fill HIS hand?? For doing WHAT???

  • g

    Crooks Crooks and More Thieving Crooks!!!!!

  • MrPresidentCFO

    @ Robert and that is how I run my business. I have no darn time for games. We have 25 dedicated owner operators that we keep quite busy. We will add another 25 in 2014. We don’t play the mouse and cat games. Who has the time? And if that is what some brokers are doing, is it not their choice? Is that not what some truckers do? They will never take a load that is not profitable.

  • MrPresidentCFO

    Because if it wasn’t for the good brokers out there, you would not know about that load. Not all loads are posted on various Loan Boards. The GOOD brokers have developed relationships with their clients (shipping companies) on the years and those shipments go directly to the Broker. As I have say on this post, I take care of my staff and drivers before I take care of myself. They are the life line of my business. Any brokers that doesn’t do the same and keeps all of the profits for himself – well, that is up for debate. I just know how I treat my people and that is all that counts. And Congress is trying to stamps us out of business. We go beyond the call of duty for our clients and drivers. I’ve watched other Brokers do the opposite and they get away with it.

  • Sandy Botts

    As a small carrier I’m glad to see the bond increase. We had a dedicated run with a small broker and the shipper closed the doors. The broker had $10,000 Bond and thats what they owed us. The problem was they also owed a lot of other carriers as well. What people don’t realize (if you haven’t had to put a claim on a brokers) is The $10,000 (Bond amount) is the max paid out. If the broker owes 10 carriers that $10k is split among all that put in a claim, they don’t each get $10,000, if they get anything at all, as in our case. So even $250,000 bond don’t go very far. The best would be to change so that the Bond amount is for each claim then the carriers would be protected.

  • Tommy T

    After 45 years got out of it 2 years ago. No money in this industry since they de regulated it. You could build up your own clients. Have more then you could handle. I would farm it out for zero brokerage just to service the customer. They would turn around to back door you at a cheaper rate. Telling them. “It don’t take much for us to live. We will do it cheaper” Miserable folks in this Business today. It was an industry where the Dad Grand Dad and kids would grow up in it. Not today. Some of these companies with a 300% turnover rate and HAPPY it is 125% now. Go figure.

  • 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!

  • Ricky the Broker

    There’s no law that requires shippers to use brokers. Likewise, there’s no law that requires carriers to work with brokers. So why do brokers exist then?

  • Ricky the Broker

    Brokers are asset based too. My brain is my asset. Carriers don’t need brokers, but you’d never guess that from the number of carriers who call me every day looking for loads. Shippers don’t need brokers, but here again, I can hardly keep up with the orders I get every day. I’m a simple one man operation. I like working by myself and really don’t want to add employees, but I think I might have to just so that I can deal with all of these carriers and shippers who call in every day! As it is I’m working 14 hour days and weekends just to keep up! Phew, I’m sure glad the legions of carriers who hate brokers aren’t calling me too! Then my phones would be totally plugged up! Forget about skin in the game, if you want to make money as a carrier, or broker, or at anything for that matter, you need BRAINS in the game!

  • Ricky the Broker

    OK, the answer to the above brain teaser “Why do brokers exist then?” is THE MARKET. I know I know… who would have thought?

  • Ricky the Broker

    OK, on to the bond. I’m in full compliance and have no issues with it. It’s the law, and the bond is the cost of doing business. Furthermore, the higher bond cuts out a lot of competition, all those brokers who can’t or don’t want to comply allow me to improve my own margins. With fewer broker competitors the market allows me to charge more and pay less, thus far my own margins have improved by 5% since June. I pay $1000.00 more per year for the 75K bond than I did for the 10K bond. A thousand bucks is a very small price to pay for putting 30% of my competitors out of business, thereby allowing me to crank up my own margins. Apparently the dumbasses who pushed the higher bond never thought of that. But thank you!

  • Ricky the Broker

    One last comment and I’ll call it a day. If you’re in business you should be checking out the people you do business with. For example, when a new shipper calls me with a load to move I will check his credit and keep him on a very short leash until I’m comfortable that’s he’s on the up and up. And so it should be with carriers. There’s no bond to protect me in the event that the shipper doesn’t pay me. Boohoo. Furthermore, there’s no bond to protect me when a carrier fails to meet his commitment. I might advocate a performance bond, but I’d rather due my own due diligence and deal with the other guy as man to man. As I’ve stated above, the cost of the bond is really ZERO to me as I pass that cost on to the shippers and the carriers.

  • Pingback: Broker group continues push against bond increase, files for exemption for all brokers strives to maintain an open forum for reader opinions. Click here to read our comment policy.