June 15, 2010

Broker reform bill starts trek toward becoming law
A bill not only targeting reform of the brokering and freight forwarding segments of the trucking industry, but also outlining harsh penalties for those operating outside the legal wire has moved to committee.
Sen. Olympia Snowe, R-ME, and co-sponsor, Sen. Amy Klobuchar, D-MN, introduced the “Motor Carrier Protection Act of 2010,” which is Senate bill 3483, last week. The bill has been referred to the Senate Committee on Commerce, Science, and Transportation.
In introducing the bill, Snowe made her intentions behind the legislation very clear.
“I rise today to introduce legislation that I believe will ensure that our motor vehicle operators, particularly those smallest businesses who rely on only one or two vehicles, are no longer subject to the nefarious practices of unscrupulous logistic companies and brokers,” Snowe said in her remarks on the Senate floor.
She went on to educate her fellow senators on the dark side of the brokering industry and how easy it is to even operate without any authority whatsoever.
“(F)ly-by-night brokers and intermediaries … connect the truck operators with shippers who need goods moved, then defraud the operators of their payments before vanishing in the night, depriving the operator of any legal recourse in an effort to recover their losses,” she explained.
“This legislation will bolster the rather meager framework of regulations now in place to guard against deceitful behavior from the handful of freight forwarders who engage in these criminal practices.”
Snowe’s grasp on the problems facing small-business truckers and reputable brokers can largely be attributed to the involvement of the Owner-Operator Independent Drivers Association and the Transportation Intermediaries Association in helping develop the language of the bill.
Although the two sides have traditionally been polar opposites on the issue of broker reform, the organizations began a dialogue some time ago, laying out positions in a straightforward and candid manner, OOIDA Director of Legislative Affairs Mike Joyce explained.
That allowed Snowe and Klobuchar to write into their proposal specific provisions that are agreeable to both OOIDA and TIA.
Landmark provisions in the bill include:

• An increase in the required bond amount to $100,000, up from the current $10,000 requirement;
• Annual registration with the Federal Motor Carrier Safety Administration and revocation of authority if registration is not kept current;
• Unlimited liability on freight charges for agents who broker or forward freight without the required bond amount or authority.

To read S3483, the “Motor Carrier Protection Act of 2010,” click here.
“If passed, this law would put a stop to a system that allows rogue brokers and scam artists to operate unchecked,” said OOIDA Executive Vice President Todd Spencer. “For too long, bad brokers have gotten away with ripping off truckers.”
– By Jami Jones, senior editor
[email protected]

Hopefully, this bill will not pass. There is no reason to bump the bond up 10 fold. All carriers need to do is run a credit check on anyone whom they plan on doing business. As far as I am concerned they could do away with the bond altogether. It reduces or greatly eliminates competition. There are some good brokers who only have one or two people in the office. This type of legislation could put many of them out of business. Over the years some of the best brokers whom I have done business are small brokers.

One troublesome aspect of this legislation is that the brokers must renew their authority and pay a fee each year. My concern is that if this passes for brokers there is a great likelihood that they will also include carriers. I don't know about everyone else, but I pay enough taxes already. The government stands to make much more on carriers by charging an annual fee for renewal. After all, there are many more carriers than brokers. It is easy to be excited about someone else paying more taxes, but quite another for the tax increase be attributed to you.

GMAN, I have to side with you on this one. It is just a revenue enhancement program for the Government and more regulation to clog up the works. It sounds good to a lot of folks who, on one hand, don't want more regulation on themselves via EOBR's, CSA 2010, etc, but on the other hand want the Government to be their nanny. There are usually a lot of unintended consequences that show up with any legislation.

I've got to much of a Libertarian streak in me. I am always leery whenever Government claims they are going to look out for me. The worse words that any citizen can hear is "we're the government and we are here to help you".

It would be so much better, copperhead, if everyone who owned a truck or ran their authority could do so without thinking that they need the government to lend them a hand to make them successful.

I wonder what these people would say if the government decided that everyone who ran their authority now has to put up a $100,000 bond and pay a fee to renew their authority each year? They could say that it was necessary to protect shippers and brokers from unscrupulous carriers.

I don't know a lot about the brokerage side of this business (yet), but I might agree with the 100k bond, I need some more information. For instance, what is the cost difference between a 10k and a 100k bond per year? (Through a bonding company of coarse) A broker can have a good rating one day and go under the next, from what I've heard anyway, so why not have some more funds available to carriers that the broker owes money to? To me this seems like a good thing.

The annual registration smells like a money grab, plain and simple.

Now this I don't understand, if they don't have the required bond, which means they're crooks then what difference does it make to have unlimited liability? They can't or won't pay it anyway. Maybe I'm missing something though.

I have checked on bonds for brokerage and for doing business with the federal government. I was told in both cases that the bond would be 10% per year for the bond. If the bond was $10,000 then the fee was $1,000. A $100,000 bond would run $10,000 per year. I don't recall any of the bonding companies asking anything about my credit.

You can put up the cash at your bank and use that as collateral for a lesser fee. The real kicker is that you must have a bonding company or bank that is approved by the feds in order to meet their requirement. You cannot just put up the cash bond directly with the government. There was a very extensive list of bonding companies that I checked that was approved by the government. Even if you put up the cash for the bond you still have to pay an annual fee for them to act in your behalf. :roll:

I don't see that this bill will actually help the trucking industry. Most businesses will lose money from bad debts from time to time. It has not been a problem in my business. I have friends who also have their authority and none of them have had a major problem with not being paid by a broker or shipper. If you want to take all the risk out of being in business then you have no business being in business. A major factor in being successful is the willingness to take risks. If you want to live a risk free existence then you don't need to be in business. The only thing this bill will do is generate revenue for the government and limit competition. It will drive a lot of smaller brokers out of the business and prevent others from entering the business. In the long term it will raise the cost of doing business for the carriers.

I am surprised at how anyone could consider this a good piece of legislation. Anything that limits competition is never good. It is like all these rules they keep thrusting upon this industry. When they come up with new rules for us they may state that it is about safety when in reality it is about raising taxes or revenue. If they were concerned about protecting carriers then why should they also put in an annual renewal fee? What does that have to do with protecting carriers? They raise the bond and include an annual renewal fee. :hellno: