Bond Fallout Could Mean One-Third Fewer Brokers in 2014

The FMCSA has revoked the operating authority of 8,180 brokers since Dec. 2, the date the federal agency began revoking authority from brokers without a $75,000 bond. That’s a whopping 38 percent of the 21,700 brokers that had operating authority at the beginning of the month.

The story is different at DAT. Even though the vast majority of brokers on the DAT network are small businesses, only a few have had their authority revoked and many of these will continue to operate as carriers without a brokerage. And despite the new bond requirement, load posting volume on DAT load boards is at an all-time high for this season (see graphic below). I believe this speaks to the general high caliber of the companies doing business in the DAT network.

While the percentage of brokers losing authority is certainly high, the impact on the industry is likely to be less significant. It’s long been clear that a sizable chunk of brokers registered with the FMCSA were what you might call “casual” brokers. These are companies for whom brokerage was never a major source of income. The amount of freight moved by these brokers was only a small percentage of the overall freight moved nationwide each year. That said, it is regrettable that such a large number of small brokerages are leaving the industry and we hope they will come back reasonably soon.

Bond for DAT customers still available
For our broker customers who have yet to obtain a $75,000 bond, our customer support representatives have been calling to remind them that they need to maintain their operating authority in order to continue posting loads on our load boards. If you are still in the market for $75,000 bond, please consider the DAT Broker Bond that is available for DAT customers only.

New brokers added
At the same time that the industry is losing some brokers, new brokers are being added. Since Jan. 1 of this year, the FMCSA added about 2,000 brokers. Many of those are carriers who occasionally broker freight. MAP-21 requires that they, too, have freight broker operating authority and possess a $75,000 bond. The number of authorized brokerages in the U.S. peaked in March 2013 at a little shy of 22,000, but we are likely to end the year with fewer than 14,000.

Despite the $75,000 bond requirement, load postings on DAT load boards remain at an all-time high for the season.

“Closed” image via Flickr