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Freight to double by 2020: broker reform needed now

By Sen. Olympia Snowe
Special guest editorial

 

Thanks in large part to trucking professionals in my home state as well as to my position on both the Senate Committee on Small Business and Entrepreneurship and the Senate Commerce Committee, the paramount role of small-business truckers in moving the goods and commerce that support our nation’s economy is readily apparent.

Often, freight brokers and transportation intermediaries work hand-in-glove as they connect companies looking to ship freight with the motor carriers willing and able to move that freight.

The roles of truckers and brokers will become even more significant to our nation in the near future. The U.S. DOT’s Bureau of Transportation Statistics has indicated that by the year 2020 freight volumes will double in the United States.

That is why, along with Sen. Amy Klobuchar, D-MN, I introduced S3483, “The Motor Carrier Protection Act of 2010.”

This legislation will ensure that trucking companies, particularly owner-operators and small fleet carriers, are no longer vulnerable to the fraudulent practices of bad actors in the freight brokering business.

For too long small-business truckers, particularly those individuals who not only perform the back-breaking work of transporting freight across the country but also run their own businesses, have fallen victim to fly-by-night brokers and intermediaries. Many times they defraud truckers of their compensation before vanishing in the night, leaving the truckers little chance of recovering their losses.

How can they do this? Shouldn’t these actions be criminal? Unfortunately, the current regulations are long outdated. Beyond a prospective broker being required to secure a $10,000 bond, there is little in the way of registration requirements or government oversight that currently exists. It is far too easy for a broker to obtain an operating authority, begin arranging freight movements and in less than a month rake in revenues far in excess of that $10,000 bond.

Such a situation allows these enterprises to vanish into the night, losing their bond but more than making up for it in revenues pilfered from hard-working truckers – men and women who have taken on the expense and burden of delivering freight, but are then left with nothing to show for their efforts and with little hope of recouping their losses.

One outrageous, but unfortunately not uncommon, example of this happened in Georgia where one group of individuals operated 12 different freight broker companies during a three-year period. They continuously evaded law enforcement and the truckers they defrauded by changing the name and location of their business – while never paying the truck operators who actually moved the freight they arranged.

In the end, this racketeering enterprise collected more than $500,000 that rightfully belonged to truckers. In fact, it was the diligent efforts of Georgia law enforcement that broke up this operation, not the FMCSA, which has the responsibility of preventing this sort of fraud.

The Motor Carrier Protection Act will bolster the rather meager and outdated framework of regulations now in place to guard against deceitful behavior from the handful of bad brokers who engage in these criminal practices.

S3483 will elevate the broker surety bond requirement from the current $10,000 level where it was set in 1977 to $100,000, a more reasonable amount reflecting the reality of today’s shipping environment. S3483 will also raise the requirements for becoming a licensed broker as well as provide the FMCSA with the opportunity to collect licensing fees from brokers, intermediaries and freight forwarders that will be dedicated towards increasing the agency’s oversight and enforcement capabilities related to brokers.

With these and other improvements to existing regulation that will be brought about by S3483, commercial motor vehicle operators will no longer wonder if they will receive payment for a job well done.

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Along with OOIDA and other trucking industry representatives, Sen. Klobuchar and I are asking our colleagues in the Senate to support S3483. LL


Editor’s note: Sen. Olympia Snowe, R-ME, is serving her third term in the U.S. Senate.

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