Ready – Set – Bond! The 75k Freight Broker Surety Bond

75K Freight Broker Surety Bond – Does MAP-21 Apply to Your Freight Broker Business?

MAP-21 (short for “Moving Ahead for Progress in the 21st Century”) was a transportation bill signed into law by Obama in 2013 with several provisions, including a drastic increase in the surety bond amount freight brokers must obtain to keep doing business. Find out whether MAP-21 applies to your freight broker business and how to obtain the $75 thousand dollar surety bond you need.

Building on many of the highway, transit, bike and pedestrian policies established in 1991, a new transportation bill was signed into law on July 6, 2013, MAP-21 – or Moving Ahead for Progress in the 21st Century – in order to:

• Strengthen US highways
• Establish a performance based program
• Create jobs and support economic growth
• Support the DOT (Department of Transportation) safety agenda
• Streamline federal highway transportation programs, and
• Accelerate project delivery and promote innovation

One provision of the new bill mandates an increase in the dollar amount of the surety bond freight brokers must obtain and file with the FMCSA* in order to get a freight broker’s license.

Previously, freight brokers had to file a $10,000 surety bond; under the new bill, they have to obtain and file a $75,000 surety bond with the FMCSA. Brokers who failed to do so before the Oct. 2013 deadline were to have their bonds cancelled; if they didn’t – or couldn’t – secure a surety bond meeting the $75k requirement within 30 days of cancellation, they would no longer be able to broker freight loads.

75K Freight Broker Surety Bonds Now Required Per MAP-21 Passed in 2013

It will be far more difficult – especially for small freight brokers – to obtain a $75,000 surety bond than the previous $10,000 bond required before July 2013, and few would argue that this could represent a serious hurdle for some companies.

What was behind the sizable increase in surety bonds for freight brokers?

The drastic increase from $10k to $75k surety bond requirement was enacted to prevent fraud. Specifically, it was intended to protect motor carriers from non-payment, delayed payments or other fraudulent acts by freight brokers by placing a larger barrier to entry.

While larger companies should not experience undue problems obtaining the new $75,000 surety bonds, smaller freight brokers may experience significant difficulty finding ways to qualify for the larger surety bonds.

What is a freight broker surety bond?

Freight brokers must obtain and file surety bonds (also referred to as freight broker bonds, BMC84 bonds, ICC Bonds, Map-21 Bonds, or transportation broker bonds) in order to do business as a transportation broker. The bonds, required by the FMCSA, serve to guarantee that freight brokers will carry out their responsibilities to both the freight shipment owner/s and the carrier. Qualification is based on the freight broker’s financial position, including credit history, reputation and financial assets – which is why the new mandate may represent a serious hurdle for smaller freight brokers, or even drive some of them out of the marketplace.

Who was impacted by the surety bond increase in MAP-21?

According to dat.com (Dial-a-Truck load finder service), those required to obtain the $75k surety bonds by October 1, 2013 in order to do business were freight brokers, including carriers that broker loads and, for the first time, freight forwarders. Plus, if a company has both broker and freight forwarding authority, they are required to post two $75,000 surety bonds – not just one.

By now, surety bond providers are not only well-aware of the provisions of MAP-21 but many have probably already begun to outline how small freight brokering companies can position their businesses financially in order to qualify for the new bonds.

If you have not done so already, you should contact your surety bond provider to discuss the new provision and how it affects your business. You may also need to apply to your bank for a new letter of credit, or you may need to consult either your bank or accountant in order to ensure that you have the resources and assets needed in order to qualify.

*FMCSA, or Federal Motor Carrier Safety Administration

RELATED ARTICLES:
Freight Broker Bond Increases to $75k October 1, 2013 (www.jwsuretybonds.com)
Brokers Get Ready for New $75K Bond (www.dat.com)

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