Freight broker bond
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A freight broker bond must be obtained by
freight broker A freight broker is an intermediary An intermediary (or go-between) is a third-party beneficiary, third party that offers intermediation services between two parties, which involves conveying messages between principals in a dispute, preventing ...
s and
freight forwarder A freight forwarder, or forwarding agent, is a person or company who, for a fee organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.
s in the
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in order to obtain or renew their
license A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit). A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
. In the United States, freight broker
surety In finance, a surety , surety bond or guaranty involves a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. Usually, a surety bond or surety is a promise by a surety or guarantor to pay ...
bonds are required by the
Federal Motor Carrier Safety Administration The Federal Motor Carrier Safety Administration (FMCSA) is an agency in the United States Department of Transportation that regulates the trucking industry in the United States The trucking industry serves the American economy by transporting l ...
(FMCSA) to move property such as
household goods Household goods are goods and products used within household A household consists of two or more persons who live in the same dwelling. It may be of a single family or another type of person group. The household is the basic unit of analysis ...
or freight and motor cargo (
vehicle A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor vehicles (motorcycles, cars, trucks, buses, mobility scooters for disabled people), railed vehicles (trains, trams), watercr ...
s). Their role is to guarantee that freight brokers and
auto transport broker An auto transport broker is a type of cargo broker that specializes in the shipping and transportation of vehicles. Most vehicles shipped in the U.S. are cars and trucks, but many brokers handle boats, RVs, motorcycles and other types of vehicles ...
s will operate according to their agreements with shippers and motor carriers. If a freight broker or auto transport broker does not comply with their contract, the carrier or the shipper may file a claim. The three parties to the agreement are: * Principal: the freight broker / auto transport broker * Obligee: the party requiring the bond (FMCSA) * Surety: the surety company A freight broker bond is also known as a BMC-84 surety bond, trucking surety bond, transportation broker surety bond, or property broker bond. FMCSA uses the term "property broker" instead of freight broker.


History

The first freight broker bond requirement came into effect in the 1930. In the 1970s, the bond amount was increased to $10,000 and was not changed until June 29, 2012, when
Congress A congress is a formal meeting of the Representative democracy, representatives of different countries, constituent states, organizations, trade unions, political party, political parties, or other groups. The term originated in Late Middle Eng ...
passed the ''
Moving Ahead for Progress in the 21st Century Act The Moving Ahead for Progress in the 21st Century Act (MAP-21) is a funding and authorization bill to govern United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a cou ...
'' (MAP-21). The two main changes that came with the MAP-21 were: * the freight broker bond increased from $10,000 to $75,000 * freight forwarders must also meet the $75k requirement The freight broker bond increase took effect on October 1, 2013. Many freight brokers were against this change because they expected they would not be able to meet the new requirement. It was a 7-fold increase and the previous price had not changed for about 40 years. According to FMCSA, there had been too many cases where shippers and carriers had been delayed (or entirely denied) payment so the bond increase was necessary. One of the strongest objections to the changes came from the Association of Independent Property Brokers & Agents (AIBPA). It claimed that this would create a loss of 8,200 freight brokerages and tens of thousands of jobs. Kevin Reid, who was
CEO A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especial ...
of The National Association for Minority Truckers, also objected, saying it was an "unreasonable barrier to entry for would-be entrepreneurs". Despite these objections, the provisions were passed into law.


References

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External links


Freight Broker Registration - FMCSA
Trucking industry in the United States Sureties Freight transport