By Todd Spencer, OOIDA Executive Vice President
While the issue of changing the broker bond has been misconstrued accidentally by some and on purpose by others, here is the deal. The $10,000 broker bond dates back to before deregulation (before 1980). Its purpose (as it is today) was to make sure a trucker wouldn't be stiffed for payment of freight charges. At that time, there were fewer than 100 brokers in the U.S. Now they number in the tens of thousands. Most are decent to good, but some are little more than thieves who know how to exploit the system.
The problem with the $10,000 limit is that it is the maximum exposure for the bonding company – even if $250,000 is owed against the bond. Even attorney fees come out of the $10,000 so truckers may collect only pennies on the dollar, if that. The most vocal opponents of changing the bonding requirements are those that profit from the current system.
By increasing the bond amount, in addition to other changes, the bond companies will better scrutinize the brokers applying for bonds to assure themselves that the bond won't be abused and that truckers using the broker will be paid.
I suspect that a $100,000 bond can be obtained at a reasonable cost for people that have good credit and pay their bills, including the truckers that haul the loads. In fact, the higher bonds already exist in certain segments of the industry.
For instance, Ocean Transportation Intermediaries are licensed by the Federal Maritime Commission. The freight forwarder bond is $50,000 at an approximate cost of $500 per year. The Non-Vessel Operating Common Carrier Bond is $75,000 at an approximate cost of $750 per year. The Department of Defense, Surface Deployment Distribution Command (SDDC) is the nation's largest shipper. This federal agency requires property brokers licensed by the Federal Motor Carrier Safety Administration that want to do business with DOD to post a $100,000 bond. The cost is $1,200 to $1,500 per year.
If you are a one-truck operator, you are already paying thousands of dollars for insurance for the protection of others as a condition of being in business. There is almost always a cost of doing business – no matter what business you are in. LL