Carriers that have the $75K broker bond

Rob

Rob

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Jul 29, 2009
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As not to get another thread way off track, (Gunther Thread) Are there any carriers that just broker there excess freight who also have the $75k broker bond in effect?

I am not asking about the carriers that also have large brokerage houses like say an All Connect\Shuttle Express scenario.
 
From what I get from a new law the Carrier permit and Broker permit will have to be under two seperate entitites as to seperate who does what.

So sometime in the next decade carriers will no longer be able to have their broker permit mixed in with their carrier permit.

This should stop carriers from getting a $75K bond and re-brokering freight under the same name and permit.

permit = authority = mc, etc

*EDIT, New law in the USA
 
Shawn you are correct we will have a separate MC # for brokering. Originally we did not bother because we really did not broker that much freight but a couple of new contracts and that has all changed so we decided to do it right.
 
Congrats to you lowmiler88 on electing to do things the right way!
 
If you're going to broker anything, you need to have the $75K bond if it's cross-border freight. The law is not the same for Canadian domestic freight, but that said if one wants to look legitimate, then they get it.

At the last place where I was, we had our MC with 2 suffixes ... one for carrier and one for broker though it was the same number. They were actually one of the companies that lobbied for the increased bond in the first place, and they originally wanted it to be for a higher amount. And while brokerage is a big part of their Canadian business, it was much less so in the USA.

The company I was at before that I know was also lobbying, and even 10 years ago they put up a $300K bond as a measure of good faith even though the law only called for $10K.

It's all a matter of how serious one wants to get as a player in the industry. And being backed by big capital doesn't hurt I suppose.
 
Over the years there has been some change in FMCSA rules, today as Carrier can only get, Contract, Common and Freight Forwarder using the same corporate name. We got on board 3 years ago by adding the Freight Forwarder Licence with $75,000 bond. We now have a FF # as well as CC # . If you want a brokerage licence you need to set up a separate company.
 
bubba you do not need to set up a separate company they give you a different MC# so the company will have 2 numbers now.
 
Good morning all, Just wondering if it is illegal for a US Broker to broker a load out of Ontario without having a "Carrier Trust Account" Set up ?
 
It has been my understanding that the broker would have to be domiciled in Ontario for the Trust Account provisions of the Highway Traffic Act to be applicable. Perhaps Scam Chaser could shed some light on this question? Just to be clear, the Trust Account is supposed to be a separate bank account maintained by the broker. It holds the funds paid to him that are in turn, payable to the carriers who performed the work. Any mark-up or commission earned by the broker for his transactions would be held elsewhere, such as an operating account. As you can imagine, this is a very cumbersome method for operating one's business. The only other industries that I know of that require a trust fund, are law firms and real estate agencies. One of many negative aspects of the Trust Account is that funds payable to the carrier are to be paid only from the Trust Account. If the customer has not paid the broker, meaning the funds have not been deposited to the trust account by the time the carrier's invoice is due, technically there are no funds available for the carrier. For this reason and because of the difficulties in maintaining different accounts for your business, is probably why the majority of brokers don't maintain a Trust Account. The few that do, such as my firm, have usually been in business for a long enough time to establish a certain degree of liquidity and as such, pay their carrier partners in 30 days regardless of the payment patterns of their customers.
 
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It's really that you need to have one or the other I believe. But so much freight is controlled in the US anyway (even though it may be outbound from Canada) that US brokers can do it. The FMCSA bond would have much more credence anyway. The whole way it is set up is for the insurance companies to police the industry. It's one of the few things governments have done to regulate private businesses which is smart.
 
We maintain a trust account and keep a balance in excess of what carriers are owed . The US 75 K bond for Freight brokers is something we are in process of as there has been talk of a grey area ? We do not do any interstate and have in excess all insurance requirements for the freight forwarders authority. We have filed out form op-1(ff) but are not sure where to go from there . The 75K bond , is that US funds ? That's 100K cnd depending on exchange rate daily. Who would I contact to set up a bond in Canada ? can it be a Canadian co hold Bond. ? To be legal in ON we have to maintain a trust account, and now have a 75K bond set up ? What if I maintain my Trust account and have it renamed as a carrier trust account / FMCSA as beneficiaries with a 75K guaranteed balance ?
 
Many Canadian brokers don't have the bond or US license. It isn't rigorously enforced, and the value of having a US bond when you're a Canadian broker who uses only Canadian carriers is questionable. Nevertheless its the law of the land in the US. Personally I think the bond is a good thing in that it creates a bit of a barrier to entry in this business.
 
You cannot obtain a property broker's license in the US by FMCSA without having a 75KUS surety bond in place. The Ontario Trust Account provisions in the HTA have no bearing or relationship to the US property brokers license. There is no grey area regarding the surety bond. If you want a brokers license, you must have the surety bond, or, put up 75K in a trust account specifically designed to replace the surety bond. It is my understanding that this option is more difficult and also takes 75K out of your business through a lien or bank note. The surety bond can be arranged through your Canadian insurance agent, and it costs approx. 3KCdn. per year. You will have to submit your company's financial records for the insurance company to determine their level of risk. The Guarantee Company of North America in Woodstock handles ours. Contact your insurance provider for further info.
 
If you're doing business with anyone in the US, they're likely to ask for this bond unless you are dealing on a low level with someone who doesn't know better. You better believe that any prospects in the US that you have a shot with are checking you out, and part of what they are doing is looking up your credentials online to make sure it jives with whatever claim you are making to them. So the $75K bond really is a must unless all of your business is Canada domestic. The surety isn't hard to get or that expensive if you have the capitalization to stand behind the bond. If you don't then your premiums will reflect it assuming any underwriter will take you.
 
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