I have long been a proponent of the $10,000 surety bond limit for regulated transportation brokers. My conviction was that the market-place could and would police itself. Market-place economics with less government involvement. That was my motto!
Well, I was dead wrong. My friends at the Owner Operators Independent Drivers Association have long argued for a much higher surety bond, $100,000 plus. OOIDA believes that a brokerage company should have at minimum the same investment as the start-up cost of an owner-operator. I agree with them now and here is my thinking:
The transportation industry is not totally deregulated. Carriers and brokers need authority issued by the FMCSA in order to operate. Authority is easy to get. But unfortunately ethics, business sense and working capital are not part of the requirements.
As a result we are getting a number of transportation brokers who simply should not be in the industry. To say the least many are undercapitalized. As a result, they are unable to pay freight bills efficiently so that motor carriers can cover their weekly fuel, payroll and maintenance expense. Carriers should not have to float transportation brokers. It should be the other way around. Brokers don’t transport freight. Motor carriers do. For the sake of commerce, the rules need to be slanted for the survival of the motor carrier.
A higher surety bond would require a minimum of fiscal responsibility for all transportation brokers. It should be $100,000 and indexed to go up at least 5% per year.
Let’s take it one step further. Transportation brokers should be required to pay interstate freight bills in 21 days or less. Remember, most carriers’ expenses are payable within 7 days.
It’s time to beef-up the minimum federal requirements for transportation brokers.
Current requirements only serve to protect the crooked operators, while the legitimate brokers are left holding the bag. The laws regarding this issue are silly, outdated and irresponsible. Let’s change them so they will actually do some good. Or let’s get government out of the picture. Either way, we will know where we stand.
–Bill Ryan, President of RTS Credit
Posted by rtscredit 
