You've probably heard a lot about the new $75K bond requirement that goes into effect October 1, but if you think it only applies to brokers you may be in for a rude awakening.
If you're a carrier who brokers or sub-contracts freight and you want to post loads, you'll need a bond. If that doesn't apply to you, the requirement will still impact the industry and carriers may have concerns about how to go about vetting their load providers in the coming months.
With that in mind, here are the top five things carriers should know about the broker bond:
- Will Non-Compliant Brokers Still Be Able to Post Loads? To ensure the integrity of the marketplace, it has always been DAT’s policy that brokers must have operating authority from the FMCSA in order to post loads and that policy remains with the new requirements. If a broker loses their operating authority, they’ll lose their ability to post loads on DAT Load Boards.
- Can I Accept Loads from Non-Compliant Brokers? Since non-compliant brokers can’t post loads on DAT Load Boards, the likelihood of this happening is slim. Also, keep in mind that DAT is the only load board that guarantees payment through its DAT Assurance program.
However, if you’re worried about the viability of a broker as the October 1 deadline approaches, you can also keep an eye on credit scores and days-to-pay. If both are going south, that may be a red flag.
In the unlikely event you end up with a load from a broker whose authority is subsequently revoked, your payment would still be backed under the broker’s $10,000 bond.
- Do I Need a Bond? If you only operate as a carrier, the answer is a simple ‘no’. It becomes a ‘yes’ if you plan to broker freight, even if it’s just sub-contracting. Unless you transport the freight on your own equipment and under your own authority and insurance for at least part of the trip, the FMCSA considers your activity to be brokerage. Under the new requirements carriers who occasionally broker freight must obtain broker operating authority. If that’s the case, you would need a $75,000 bond as a prerequisite to obtain your authority with the FMCSA.
- How Do I Get a Bond? There are a number of reputable companies that provide a $75,000 bond, including our new preferred solutions provider Integro Insurance Brokers. For those who qualify, Integro is offering a competitive premium starting at $3,000.
Integro's bond for DAT customers carries an "A" (excellent) rating by the insurance rating agency A.M. Best and there are no program initiation fees or requirements for collateral. This is simply a way DAT can keep its customers compliant while offering an A-rated bond with minimal documentation required. For more information, visit DAT.com/bonds.
- What is the Timeline?
- October 1, 2013: 60-day phase in period begins to allow industry to complete all necessary filings.
- November 1, 2013: FMCSA mails notifications to all brokers and freight forwarders that have not met the $75,000 financial security requirement.
- The FMCSA will provide 30 days advance notice before revoking operating authority.
As far as FMCSA enforcement for carriers who also broker loads goes, the agency says it “is unable to determine at this time how many motor carriers may be engaged in some brokering activities, making implementation of a comprehensive enforcement program difficult.” Recognizing this, the agency will be accepting complaints about unregistered brokerage activities of carriers through its National Consumer Complaint Database. Using this information, the FMCSA will be developing a comprehensive enforcement program.
As has always been the case, though, whether you’re a broker, carrier or both, to post loads on DAT Load Boards, you must have broker authority.