$100,000 Broker Bond

I just read in Landline electronic media that there is a part of the bill that will require brokers to post a $100,000 bond instead of the current $10,000 bond. OOIDA has been pushing this for some time due to the encouragement of some members. In my opinion I see no need for increasing the broker bond. In fact, we could get rid of the bond requirement altogether and it would not likely affect my business. I have been greatly disappointed at how aggressively OOIDA has pushed this legislation forward. Apparently, it has passed the senate and will now need to pass the scrutiny of the house.

This increase is a very bad idea. It will limit competition and raise the entry to the point where there will only be the larger brokers. Those who seem to want the government to do their jobs need to take responsibility for their business. There are many who will take any load offered by any broker without any thought of checking their credit. When you extend credit it is your responsibility to check references and credit before extending any line of credit. When you do business with a shipper or broker and bill them you are extending them credit. How many people will be given a credit card without passing muster with a credit check? Yet, many owner operators and independents will take a load from a broker without any thought of checking credit. When they don't get paid, they then cry to the government to come in and save them.

Perhaps the brokers will now want anyone seeking motor carrier authority to now post a performance bond or pay an annual fee to renew their authority. This would put many out of business.

I really don't understand why some would invite more government intervention into their business. It doesn't make any sense. Perhaps those who feel the need to raise the bond should find something else to do that would require them to take less responsibility. More government is NOT the answer.

 

I believe that it was about a year ago that I spoke with OOIDA about their support of this legislation. According to what I was told, there have been a lot of members who have not been paid by some brokers. I have not had the collection problems that those who complained have had with bad brokers. I never take a load from a new broker without checking them out. If their credit is questionable I will either get my money upfront or COD with a comcheck before the truck is unloaded. I rarely do COD since I prefer to not have the hassle. I have been in business for many years. I have only had to write off about $1,200 about 14 years ago. I should not really even count that since it was more of a misunderstanding than the broker trying to beat me out of money.

I see no reason why anyone in this business should have a major collection problem as long as they check out those with whom they do business and don't have any claims.

I have made my opposition to this legislation to OOIDA and will continue to stay in touch with my congressional representatives. This is bad legislation.

 

I checked on a surety bond last year. I was told that the cost would be 10% of the bond and that I would need to pledge assets that would equal the bond in order to get them to underwrite the bond. When you get a surety bond the cost of the bond is an annual cost. In other words, each year you will need to come up with $10,000 for the $100,000 bond. If you stay on top of your receivables you don't need to have a bond. I know a smaller broker that I used to do a lot of business with who would sit down and write me a check for my loads as soon as I gave him the BOL. If I mailed them to him he would mail me back a check the same or no later than the next day.

The initial article that I read required brokers to renew their authority every 5 years. When I checked the OOIDA website it stated annually for brokers and freight forwarders. How many of you who run your authority would want to pay an annual fee to renew your motor carrier authority? What goes around comes around. What if they also decided to require a performance bond? How many small carriers would have to go out of business. The feds stand to make a lot of money from these fees. The big brokers will be the beneficiaries. I can't believe that OOIDA would support such a bill as this.