The FMCSA has announced that effective October 1, new guidelines for freight brokers and forwarders will take effect.
Under the new guidelines, entities providing brokerage and freight forwarding services will be required to register for brokerage authority, if they have not already done so. In addition, brokers will now be required to post a $75,000 surety bond or trust fund to ensure payment to carriers receiving the load if the broker fails to pay.
Though the rule is scheduled to take effect October 1, the agency is allowing a 2-month grace period. Those who are not in compliance by November 1, will receive a warning letter from the FMCSA. If a broker or freight forwarder has not secured the $75,000 bond, the FMCSA will remove their operating authority.
If a broker fails to secure the bond but still continues to operate, they could be fined as much as $10,000. Under the new law, a driver can no longer “double broker” or take possession of freight from another driver or a broker. “A trucker also cannot broker freight without a brokerage license, and the brokerage authority must be completely separate from the trucking operation. The trucker showing up at a shipper’s dock must be the same carrier whose name appears on the bill of lading. If not, a shipper must create a new bill with the new trucker’s name and identification number and pay just the new carrier. Truckers can accept cargo only with their own equipment,” the FMCSA states.
According to the FMCSA’s Federal Register, group surety bonds or trust funds will NOT satisfy the FMCSA’s requirements. “At this time, FMCSA is considering the enforcement implications of group sureties as well as the effect on small entities and new entrants. FMCSA is committed to reexamining this issue as part of its enforcement phase-in plan described under section C, FMCSA Implementation and Enforcement Timelines,” the FMCSA stated.
Even if a surety bonding company or trustee previously filed the necessary forms, they still need to file a new one reflecting the new $75,000 minimum. If your broker has both broker and freight forwarding authority, one $75,000 bond is sufficient “as long as the legal entity holding the authorities is the same,” however, “Your company will need to file separate BMC–84/BMC–85 forms for the broker and freight forwarder operations.The underlying bond or trust fund can be the same for both operations.
If your broker and freight forwarder operations are conducted under separate but affiliated companies, each entity must have a separate bond or trust fund.” Bokers and freight forwarders must use a surety bond company that has been approved by the U.S. Treasury Department.
A list of certified surety bond companies can be found here: http://fms.treas.gov/c570/ index.html.
FMCSA will establish an enforcement program to identify and, if necessary, punish violators. In the meantime, it advises that complaints of unregistered brokerage activities of motor carriers be filed through the National Consumer Compliant Database.