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Business Freight Brokers

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.