Brokerage bonds?

The short answer is from a commercial bonding company. Some have stopped offering Freight Broker Bonds (ICC, BMC-85) or drastically increased their rates over the past few years because there have been a lot of defaults.

You may need to go into the high risk pool if you are just starting out, but all bonding companies consider Freight Broker Bonds to be high risk. Don't be surprised if you need 100% collateral.

 

Because there are "Brokers" who rip-off carriers...as it not paying for the load.

I have had to take legal action against two brokers......Too bad these two leave a "black mark".....most brokers are honest.

 

I don't get payed by shippers in most cases.....
I have one who if I have an invoice ready when I drop the load...they pay right there minus 3% for "Quick Pay"....They are both the shipper and receiver....works out real nice....

 

Shippers usually have seizable assets in a judgement. With most brokers all you can seize is a cell phone, fax machine, computer and their mother's basement.

Mortgage brokers, auto dealers and other brokers have to have bonds in order to operate in most states. Its part of the nature of being a broker in any industry. Transportation shouldn't be any different.

I wouldn't complain too much about having to get a measly $10,000 bond. IMHO brokers should have to carry 3-6 months average revenue in reserves, or $100,000 surety bond, whichever is more. The bar for becoming a broker is far too low, not too high. I know my opinions aren't going to make us best friends, but try being an independent O/O for a while and see how your opinion changes. $10,000 in revenue is about 3-4 hours work for a good broker.

 

And some of these shippers are going to not pay you as a broker, but you still have to pay your carrier, even if you don't get paid. You will have to pay your carriers invoices before you receive payment for your invoices from your shippers. As a broker, you are a short term bank and you are the one who is guaranteeing payment for the load, even if you don't get paid. "My shipper didn't pay me for this load, so I can't pay you" is not an excuse that works for a broker. In a nutshell, that's why you need a surety bond.

Freight brokerage is a high risk/ high reward line of work. You may want to take a long time to really contemplate the downsides of being a broker before you decide that you want to do it. It's not really something that you can just step into and do unless you have a lot of freight sales experience. The nice thing is that you don't have a lot of overhead, but in exchange for that, you are assuming almost all of the financial risk of the transaction.

Many brokers stiff carriers because they don't know what they are doing, or they don't get paid by their shippers, not because they are crooked. But there are plenty that are crooked, too.

 

I'm having a problem right now. Hauled the load, delivered it, did my end of the job perfectly. The broker closed their doors the day after I delivered the load. I filed on the bond, called the place I delivered the load to and they were already aware of the situation. They said they have to pay the broker since that was who they contracted with. I told them it looks like fraud to me, they already knew they were going to screw me before I ever loaded the stuff up. All I got back was give them a chance to pay. Meanwhile the bond claims far exceed the bond. I will be lucky to get .10 on the dollar if that. The shipper should have paid me my part direct and I don't care about the brokers cut, I just wanted what I agreed to haul the load for. The regs need to be changed to keep some of the flakes out of the business.
I know better but it was a Friday afternoon It was hot and I wanted to get out of Reno. If I had to run my truck to keep the A/C on, I wanted to be movin'