Alert, Freight Brokers going away!
The new law “Moving Ahead for Progress in the 21st Century Act’’ or ‘’MAP–21’’ is already generating considerable impact among freight brokers in the United States, Canada and Mexico.
The increase in the surety bond amount for freight brokers from 10 thousand to 75 thousand dollars has generated a considerable decrease in the number of existing brokers. According to the summary report presented by Michael Curry from My Carriers Resources, figures indicate that since its enactment in 2014 the number of authorized applications for freight brokers has seen a reduction of up to 60% compared to the same period in 2013.
We have already seen cases, even when the bond amount increased to 75 thousand dollars, where it is not enough to cover 100% of the claim amounts sought by unpaid carriers. Although this amount seems high, it is hard to believe that this one company has already received claims against their surety bond surpassing this 75 thousand bond amount at the beginning of the year. The surety bond only paid 5% of the total value of all the invoices submitted by the more than ten different companies who received proportionate payment collectively up to the 75 thousand dollars of bond.
We have identified some companies who provide services as freight brokers without being registered before the Department of Transportation and operating without a license and surety bond required by law. It is very important that, before you hire or are hired by a freight broker in the United States, you verify their license and you have obtained their surety bond information, in case you must file a claim for unpaid freight.
Personally, I believe in 2014 there will be many companies who will act as freight brokers with the objective in mind to defraud carriers and shippers, and there will be many others that will cease to operate leaving behind millions of dollars in past due freight bills uncollected by carriers in the United States, Canada and Mexico mainly.
Keeping this situation in mind, it is imperative you take action to reduce your risk. If you must hire a freight broker based in the United States, or if you are a carrier and will accept freight from a freight broker in this country, verify its license and surety bond are valid; and if they reject or fall behind payments, do not let time pass you by, immediately assign your past due accounts to a collections agency at the ready. Suggested time frame would be a maximum of 30 to 60 days past due.
Remember, in collections time can be your best ally or your worst enemy.
Until next time!