RE: Freight Brokers Bond Legislation
An Opinion by Timothy Brady
I agree there is a need to improve the way in which freight brokers are regulated and I agree with the majority of the bill proposed in the Senate with the exception of one area: The ‘one size fits all’ surety bond amount. While I agree the current $10,000 bond is too low, the across-the-board increase to $100,000 is not equitable to smaller brokers. It provides a competitive edge to large brokers, thus creating an environment where the large brokers will be able to reduce even further the hauling rates paid to carriers, especially single-pony operators and small carriers with fewer than ten trucks who depend on brokers for a large portion of their freight.

I propose a graduated bond equal to 6 months of total billed hauling fees and related revenue produced by a broker. If a freight broker booked and arranged for $50,000 in scheduled freight in six months, his bond would be $50,000 with a minimum of 10% of it  in cash held in the bond. If he did $1,000,000 in six months the bond would be capped at $500,000 with $50,000 held as a cash bond. The cost of a $100,000 bond for a small broker only booking, say, $20,000 in a quarter would be prohibitive, putting a lot of legitimate brokers out of business.

The theory of the purpose of locks is to keep honest people honest; the same applies to surety bonds. There is no reason to place undue burden on legal, honest, small brokers. Most carriers are cheated because they didn't do their homework in checking out a broker. Increasing the bond amount to an unaffordable level isn’t what will solve the scam problem if the increase puts legal, honest brokers out of business. Don’t put a bunch of good, hard-working, honest small brokers out of business by making the bond unreasonable compared to the revenue they produce. If this bill is passed as it stands, it will place an undue financial burden on many OOIDA members by reducing the already low hauling rates they receive. Be careful what you pray for; you just might get it! 

Tim Brady
OOIDA Life Member