XTC Logistics Inc.

Jim L said:
I think the best bet would be that the bond holder and the broker should have an exposure equal to 1/4 of last the 12 month sales of the broker. This levels the playing field so that smaller brokerages have smaller bond amounts and larger brokers have higher. It would be up to the bond holder to decide the appropriate charge to ensure that their risk is appropriate and audit it to ensure it is 1/4 of previous 12 month sales. This can be managed by a mix of BMC84 and BMC85 vehicles. In the event that claims exceed the exposure amount both the broker and the bond holder should be accountable to the data audit by the FMCSA.

Just thinking out loud here.
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Shhh this makes too much sense which makes it illegal.
 
loaders said:
Interesting concept, however it isn’t the amount of sales the broker has that should determine the size of the bond, it should be the amount of accounts payable to carriers. What we should be looking at is the amount of exposure in the event of a business failure. That exposure should be limited to the amounts owing to carriers who performed the service. I do agree that a larger broker, who obviously has more exposure, should carry a larger surety bond than a small broker who has less. I doubt any government agency would agree to take on such a responsibility.
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Yes, the true exposure is the sum of the outstanding payables but the total brokerage sales and the brokerage payable should be a fairly consistent ratio that the bond holder may utilize to exact their fees for the exposure. The bond holder usually asks for financials to identify their fees and risk - they are in the best position to ensure that the broker is not going to walk.

The recent changes which force the bond holder to report to the FMCSA should the BMC85 dips below the minimum is a welcome change. I have had to make a claim recently and it was resolved 10 minutes after the claim was submitted. Impressive to say the least. The only problem with this is the lag time between the invoice date and the complaint date. Most claims are not submitted until well after 60 days which by that time this model doesn't help much if the broker is going to walk.

In the case of XTC only 13% was paid out to those who made a claim. This means that there was 577K in reported claims for the 75K bond. While 13% is better than what you will get with a claim in a bankruptcy proceeding it shows how offside the broker bond requirement is. If XTC was required to hold a 600K bond the bond holder would hold the directors of XTC accountable in some manner, usually a personal guarantee or other non-company lien on an asset, otherwise the cost to maintain 600k bond would be expensive.

Once again - just spitballin'
 
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Did anyone try to collect payment directly from pepsico and was successful. I know that there bond paid everyone around 13% off its total amount but that's nothing.
 
TML416 said:
Did anyone try to collect payment directly from pepsico and was successful. I know that there bond paid everyone around 13% off its total amount but that's nothing.
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Technically a claim can be made for the other 87% directly to the beneficial freight owner. under the BOL Act. I would assume the beneficial freight owner is Pepsico and one should be able to be determine this from a BOL. The carrier is still not made whole for the carriage contract and other avenues for resolution were not successful in making the full payment. If there is still a lot outstanding it may be worth a shot for a carrier to make a claim legal against Pepsico but you can be sure that Pepsico has lawyers to trudge this through the mud for a while and increase your legal fees.
 
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