FMCSA Considers Upping Broker Finance Requirements
The Federal Motor Carrier Safety Administration is considering increasing the amount of readily-available assets (mostly cash) that a broker must have on hand to pay fleets who have completed deliveries for them, as written on a proposal in the Federal Register.
Details
The way things are now, a broker is required to keep $75,000 in current assets to pay for deliveries as they happen. If a broker finds itself with less than $75,000, the FMCSA has the power to suspend their ability to do business until they are once again above the threshold. Under the Moving Ahead for Progress in the 21st Century Act (MAP-21), signed under President Obama, says that the funds can be secured in either a trust fund or surety bond.
For a variety of reasons, including inflation, the FMCSA is considering raising the requirement, though has not yet specified what that new number would be.
The FMCSA estimates that in 2022 1.3% of brokers had to dip into their surety bond or trust fund in order to make payments. Of those 1.3%, 17% of them involved claims exceeding $75,000. The FMCSA is hoping to mitigate those fringe cases, because while it may only happen 0.02% of the time, that small number of fleets is going to be rightfully angry.
FMCSA writes in the Federal Register that it “believes that most brokers operate with integrity and uphold the contracts made with motor carriers and shippers. However, a minority of brokers with unscrupulous business practices can create unnecessary financial hardship for unsuspecting motor carriers.”
Response from Stakeholders
The Owner-Operators Independent Drivers Association (OOIDA) is generally in favor of the increase in requirements, though cites the lack of enforcement of the original $75,000 rule as a bigger problem. OOIDA director of federal relations Jay Grimes writes, “Unfortunately, the MAP-21 broker bond provisions have not really been enforced and motor carriers are still being denied rightful claims or, in many cases, only getting a small percentage of what they’re owed.”
Drivers commenting through the Federal Register have had mixed opinions, with some saying it does not go far enough. One comment by John Hopwood reads, “This is a good first step, it does not go far enough. What the next step should be is to have the original dollar amount printed on the bill of [lading], so that the driver can see how much was originally paid to transport the load, that way brokers can not take excessive amounts from the loads.”
Let us know your opinion on the potential increase in financial security for brokers, and more importantly, make sure that your voice is heard in the Federal Register so the FMCSA can make changes as needed. The window for comments ends March 6th, 2023.
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