New $75,000 bond?

Because Bill, some of us have been burnt a couple of times by brokers that after calling their bond company only to find it's already been dispersed out, and yes, I am talking about brokers that had NO previous problems.

I STILL have a file full of no pay going out of business brokers from the meltdown in 2008. Besides, I don't see any brokers backing me on having to buy new equipment for California?

Bill, I used to broker, BUT mostly my own stuff, along with some O/O the bond was NEVER an issue, if I called my bank at 9am on Monday morning I could have a bank letter of guarantee for 75,000 in about a hour, NO COST TO ME.

If you have great credit and a good relationship with your bank, I would be asking them some questions, NOW to be honest, I don't bank at some nationwide conglomerate, we use a local hometown bank that only has three branches, it makes a big difference.

Stan

 

Again you are not accurate. In a previous career I carried a 250k performance bond and only paid a 10 percent premium. A bond is considered a type of insurance. And nooooo I didn't have 250k in the bank, under a mattress or in a coffee can in the back yard..... Oh also just paid 7500 premium for our 75k broker bond and didn't need to put our first born child up for collateral or go thru an atomic missile presidential fbi background check either.

 

Your bond may be different than mine, but in my business, if you don't have enough net worth to cover the bond, you don't get one. My 50k bond is $450.00 for three years. I think that is a bargin. One business close by went out owing hundreds of thousands to all types of people, yet their bond was only 50k, so a lot of people got shafted.

You say your bond is as you say, I don't doubt you. My bond requires me to have a net worth of the amount of the bond. I just figured all bonds were that way, as that is what is told to me in my continuing education classes I have to take every year, but they are specific classes to my industry. I have never held a brokers bond. If you have, I defer to your knowledge and experience.

 

This is the deal my $10,000 bond is paid in full. For the new bond i would need to put up $65,000 in cash to keep going if i choose to get a line of credit the bank still wants the $65,000 to put in a CD and they charge you for this than on top of that your bond company charges $1,500 a year for you having a line of credit.

If you want to just pay a yearly fee to keep your bond they charge $3,500 a year or $995 a Quarter. So unless you pay the $75,000 in full it will cost you to stay in buisness........

 

$10,000 to $75,000 .... that is a 750% jump.

I am thinking it might have something to do with new brokers that have no idea what they are doing. A deterrent for new brokers.

see the thread

[h=1]Thread: How do you get drivers to move loads?[/h]
There are many "freight broker training" and " freight broker courses" out there, promising the student the opportunity to make hundreds of thousands of dollars a year. Unfortunately, many people that have no background in logistics or trucking are jumping into the transportation industry hoping to get their cut of the "easy money" (as hyped by the course and training instructors).

 

No this has nothing to do with the new brokers. This has to deal with carriers getting the shaft by no paying brokers. Let's think about this for a second.

Broker has 100 loads through the country okay and this is an example keep that in mind. All these loads are booked. Let's say the total amount of the loads booked totals 100,000. That seems reasonable 1000/load right wrong. Let's say he has a flatbed load going from Florida to Washington its a hot load needs to get there quick pays a team 12k to deliver this load and doesn't pay them. He doesn't even have enough bond to cover this load in full so the carrier can get paid.

Now then let's also say he had a 3 loads that were little short rinkedy dink cross town loads moved for $100 he never paid on those loads either. These were moved 3 days after the Florida load. These 3 carriers decide to file on the born to get paid but...oh no the bond has been used up. There are now 4 carriers who have no not been paid in full because the bond amount wasn't high enough.

It isn't uncommon for a 10k bond to be used in 1 or 2 cross country loads if those don't get paid everybody else is screwed that did not receive payment! See why it needs to be higher? As another poster stated as a carrier we have to comply with the emissions crap in California, all the his, carry 1,000,000 in insursnce, and 100k in cargo, comply with the HOS etc we have to maintain a truck, trailer, etc. What does a broker need? Computer cell phone fax machine a bond and authority.

What I find absolutely amazing is how for a long time brokers used to think truck drivers were just whining when we had to maintain high insurance comply with HOS rules, fix trucks, etc. Broker bond goes up and no no no this isn't right! Its about time they seen what we go through fighting with the FMCSA! As far as I'm concerned 75k is still low when it comes to companies like TQL, SUNTECK, the mega brokers ya know. Personally I still believe in at least a 500k broker bond.

There is a simple solution to getting rid of the bond though. Only loser is the shipper. My solution COD for the carrier! Simple solution. We are expected to give a broker NET 30 as carriers. With the option of quick pay for an extra percentage. Complete crap. I say this because brokers can put shippers on net 30 and collect interest on what they are supposed to pay the carrier.

I have read broker carrier agreements where it flat stated on shipments that are collect carrier must mail check to broker. Okay and 5 days later I WANT MY MONEY!!! but that's not how it works. You got paid for the load why are you with holding my money? All you did was set the load up I hauled it, I got it there on time, I dealt with the shipper and the receiver, I was the one that left my family, slept at a truck stop in the heat. Can you see where we as carriers are coming from? This was a needed regulation. I realize smaller brokerage firms may go out of business, but I have been screwed by small firms as well. Thin the heard a little bit. Small mom and pop trucking companies have been struggling and going under for years, maybe its time some brokers go under as well. I don't think brokers shed tears when we go out of business as carriers, I won't shed a tear over a broker going under.

 

You are correct in your assertion that brokers don't shed a tear when small trucking companies go out of business, nor would I be all that concerned if brokerages exit the business. However, the larger picture that is taking place is the fact that so many owner operators seem to desire hand holding from a government that is now requiring a larger bond but resent it when they change HOS and reset rules?

Ultimately it seems that many of you want to pick and choose what rules you get. The larger issue that comes into play, and many of you can attest to this, is that our government often does NOT really know what is best for us or our industry and really only serves to muddy the waters.

Do you not think that even with the larger bond the potential exists for trucks to be left unpaid? One person used the example of a brokerage moving 100 loads daily at 1000 dollars per, in this example alone they would be moving 500000 dollars worth of freight weekly, seriously what good is the larger bond? Most of the time its 30 days to pay anyways so unless the broker goes under at exactly the right timeframe for your specific invoice you are going to be out of luck anyways. How hard is that to see?

Ultimately, this industry,(or at least some on this forum) seek protection in a manner not afforded to most other businesses or industries. You seek the freedom of being an owner operator yet don't want to assume the risk? How can this be?

Perhaps, I am oversimplifying all this but one must ALWAYS plan to not get paid on a percentage of invoices, whether in trucking, retail, wholesale, agriculture, etc. It's simply a fact of life, not everyone will pay their bills.

And finally, if brokering is so darn cheap, lucrative and easy to get into, why in God's name do you not sell your truck(s) and become a broker?

 

Big Jay, wish I could give you more than one "Thanks" on this post.

This bond increase was sold based on fraud protection and NOT credit protection. All the descriptions of why it will help are not even the reason OOIDA and TIA pushed for this.

But, both orgs nailed it when they took the position that the people that this would hurt the worst (the independent O/O) wouldn't understand the difference and cheer for this based on credit protection.

It was argued that credit protection is not needed. Credit defaults in our industry are less than most other industries but the issue is with fraud. But what they failed to mention that most fraud in our business is conducted by people that do not even have a valid authority let alone a bond. Brilliant.

And why they don't want it to be based on credit protection (besides the fact that they could never get that passed) is that then a company like the Hub Group that does $800 million a year (or $2.2 million a day) would have to increase their $250k bond to something that doesn't get used up by the first cup of coffee in the morning.

 

This and a lot of stuff happening after October 2013 because of this administration. Obamacare goes into full force, those new EPA laws hit Trucking Firms let alone the Independent owner. Yes, a stellar month indeed.

 

Finally brokers have a little overhead besides a phone and fax line with a few bills for paper and pens, lol.