Freight broker bond

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A freight broker bond is something freight brokers and freight forwarders in the United States must obtain in order to get or renew their license.

Contents

In the United States, freight broker surety bonds are required by the Federal Motor Carrier Safety Administration (FMCSA) to move property such as household goods or freight and motor cargo (vehicles). Their role is to guarantee that freight brokers and auto transport brokers will operate according to their agreements with shippers and motor carriers. If a freight broker or auto transport broker does not comply with their contract, the carrier or the shipper may file a claim.

The three parties to the agreement are:

A freight broker bond is also known as a BMC-84 surety bond, trucking surety bond, transportation broker surety bond, or property broker bond. FMCSA uses the term "property broker" instead of freight broker.

History

This first freight broker bond requirement took into effect in the 1930. In the 1970s the bond amount was increased to $10,000 and wasn't changed until June 29, 2012 when the Congress passed the Moving Ahead for Progress in the 21st Century Act (MAP-21).

The two main changes that came with the MAP-21 were:

The freight broker bond increase took effect on October 1, 2013. Many freight brokers were against this change because they expected they wouldn't be able to meet the new requirement: it was a 7-fold increase, moreover the previous price was set constant for about 40 years. According to FMCSA there had been too many cases where shippers and carriers had been delayed (or entirely denied) payment so the bond increase was necessary.

One of the strongest objections to the changes came from the Association of Independent Property Brokers & Agents (AIBPA). They claimed that this would create a loss of 8,200 freight brokerages, tens of thousands of jobs.[ citation needed ]

Kevin Reid, who was CEO of The National Association for Minority Truckers [3] (NAfMT) also came fourth to object. Saying it was an "unreasonable barrier to entry for would-be entrepreneurs." Regardless of these objections and enraged freight brokers, the provisions had passed into law.[ citation needed ]

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A freight broker, in freight transport (cargo), over land in the United States by truck is often used as part of the logistics. This may be part of an overall shipbroking using a cargo broker, a freight forwarder, third party logistics broker (3PL), and even a fourth-party broker, when outsourcing is needed for freight transportation. The brokering can be single mode or by multimodal transportation and can use specialized brokers on a permanent basis or as needed to ensure timely traffic management.

References

  1. "Moving Ahead for Progress in the 21st Century Act" (PDF). Retrieved 8 April 2018.
  2. "Broker Registration". Federal Motor Carrier Safety Administration. 18 March 2014. Retrieved 8 April 2018.
  3. "National Association for Minority Truckers | Helping Truckers Succeed!". 2013-11-09. Archived from the original on 2013-11-09. Retrieved 2016-07-13.CS1 maint: BOT: original-url status unknown (link)