Will the Changes to Freight Broker Requirements Impact You?

Brokers and freight forwarders play a valuable role in the transportation industry often acting as the go between for carriers and consumers. They match willing trucks with loads that need hauling and help get goods from one end of the country to the other. Since those doing the shipping are often unaware of the intricacies and difficulties involved in transportation, brokers and freight forwarders save carriers a lot of trouble by helping ensure everything is ready to go. As any busy trucker knows you don’t have time to spend hours on the phone; brokers and freight forwarders deal with the customer so you can focus on driving (and getting there safely).

The FMCSA recently made changes to the requirements for freight brokers. Will these changes have any impact on you?

Freight Brokers Must Hold $75,000 Surety Bond

Beginning Oct. 1, 2013 the amount of bond a freight broker must hold increases to $75,000, up from $10,000. This is a big increase and will primarily impact small and new brokers. Group surety bonds are not currently allowed, but the FMCSA may revise this after evaluation.

Definition of Broker Changed

Another big change is a change in wording redefining broker as a person that arranges the moving of freight for a fee. The new law specifically prohibits motor carriers from brokering loads unless they are registered brokers. If you arrange for loads to be moved, you must register as a broker, even if it’s just a few loads on the side. Enforcement for this provision might take time to develop as it is difficult to determine how many motor carriers also broker loads.

Motor carriers that want to register as brokers should file an OP-1 Form with the FMCSA. Include your US DOT number, but leave the MC number blank. The FMCSA issues a separate MC number for brokering authority.

Actionable Changes You Can Make

The new laws mean changes for the transportation industry. Here are a few changes you might want to make in accordance with the new laws:

  •  Avoid accepting loads from unregistered brokers.
  •  Register with the FMCSA as a broker if you currently broker loads.
  •  Increase your bond amount if you are a registered broker.

How Will These Changes Affect You?

The full results of this change are yet unknown. It may result in less brokering fraud since it will be more difficult to start up a new operation. Bond premiums will be higher and more difficult to obtain. Freight rates may also increase since the new bond requirements will be more expensive, thus pushing up the cost of transportation. This may also lead to less competition and fewer brokers, especially small brokers. With fewer small brokers large brokers may increase profits and decrease payouts to owner operators. Larger bonds will provide more protection for non-payment. Only time will reveal the full impact of these changes on those across the transportation industry. The one thing we do know however is that these changes will make an impact.

While the FMCSA’s recent changes primarily deal with freight brokers, they will have an effect on all involved in transportation. How do you see these changes impacting you?

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