Fleet Management

FMCSA Revokes Around 2,000 Freight Broker Licenses

December 06, 2013

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UPDATED -- Nearly 10% of the nation’s freight brokers no longer have their licenses following new federal regulations that took effect requiring a higher bonding amount, while another source says the number is even higher.

Some 2,000 brokers have been affected, according to DC Velocity, after the Federal Motor Carrier Safety Administration began the broker license revocation process just after the start of December. It is unclear how many brokers voluntarily surrendered their licenses versus how many had their authority revoked.

The number is even higher, according to one of the nation's largest surety bond sellers, JW Surety Bonds. In the first three days, about 3,800 broker authorities have been revoked.

"It is expected the number of authority revocations will only increase, as some industry professionals estimate that about half of the 21,000 plus freight brokers within the U.S. are still not $75,000 compliant," the company said on its webiste.

Legislation passed last year by Congress and signed into law, requires brokers to post a $75,000 surety bond to guarantee payment to motor carriers if the broker fails to make good. The previous bond amount had been $10,000.

According to one estimate there are more than 21,000 freight brokers in the U.S..

Enforcement of the higher broker bond amount took effect the first of October, but enforcement didn’t start until the first of December. A group of brokers opposed to the hike, The Association of Independent Property Brokers & Agents, lost a last minute court challenge to delay enforcement.  

Those in favor of the higher bonding amount include another broker group, the Transportation Intermediaries Association, along with the trucking groups the Owner-Operator Independent Drivers Association and the American Trucking Associations.

More details are available from DC Velocity

Update adds information from JW Surety.

Comments

  1. 1. Kevin J. Reidy [ December 09, 2013 @ 06:31AM ]

    This was a badly-written law.

    It punished the good smaller brokerage firms right along with the fly-by-night cheaters. I

    Instead of government doing its job under the previous regulations and coming down on the thieves and cheats, they decided it was easier to run all of the smaller brokerage firms out of business instead, which included many small trucking companies brokering out excess freight.

    The end result is the bigger brokers can now exert even more influence over freight rates in this country as they had legislation enacted that picks and chooses who gets to do business...and the only time I ever got screwed out of money was by the biggest brokerage firm in this country, not one of the little guys.

  2. 2. Tim [ December 12, 2013 @ 09:39PM ]

    Cry me a river. I'm not one of those small carriers who hates brokers. I, in fact, have had good experiences with over 200 in the recent years. I wasn't a big advocate for this new regulation; but I just can't understand how a $75k bond requirement would put a broker out of business.

    We were toying with the idea of adding broker authority last year to better service an account, and found that a $75k bond would have only set us back about $4k a year, or about what it costs us to put license plates on two tractors. If you aren't successful enough to handle an extra $3k a year in fees, then perhaps another line of work would be a better choice.

  3. 3. Malik [ December 18, 2013 @ 08:42AM ]

    After reading both of you guys comments, really help putting the article in perspective. many truck drivers where put out of business by freight brokers I as well can't understand how $75k can put a broker out of business when we/they all knew his was coming down the pike

    Since the Gov wants to be involved why not go step further. set up a minimal amount that must be paid even a gas station owner can't charge what ever he wants. But it seems as if a broker can and as we know some trucks will except anything even if it's a loss to run that load

  4. 4. JAMES LAMB [ December 19, 2013 @ 07:39PM ]

    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.

  5. 5. Rich dougherty [ April 08, 2014 @ 10:11AM ]

    pretty simple or oil and insurance control our government if an insurance company wants to that happened the governmental make it happen if Big Oil wants it to happen governmental make it happen and we all pay for it

 

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