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So, will the bond info show up on www.safersys.org when doing a check on a broker before accepting freight? Or is there another FMCSA site to refer to?
Compliance with US Rules for Load Brokers
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- Start date
30
Before reading the rest of my post, please remember that I have the utmost respect for all board and members (we have been long standing members) of the NTBA, I do believe strongly in following the advice of what I consider to be veterans of the industry as they are among the few that are both ethical and successful simultaneously in this industry.
I do believe however that Dave Krueger's interpretation does leave room for the other side of the argument. At this time everything discussed has yet to be subjected to the courts on either side of the border and that is all that really matters isn't it?
I'm presenting a differing side of this argument to spur further discussion, also, I find the 'facts' a little vague:
It was a great evening and this event was well attended. Let's be clear; David (who is a transportation lawyer at a US law firm) advised that his presentation was "his firms interpretation" of the legislation for a reason... What if their interpretation is wrong? Would he be liable to all the brokers who went out the next day and bought a bond that they really didn't need when it was discovered that they were misled? Would the NTBA be liable?
Edited clips of the legislation point certainly that the intent of MAP-21 is partially to protect carriers from unethical entities but also to help differentiate between what is classified as a 'carrier' activity and what activities are classified as 'broker' ones.
Numerous times David mentioned that the FMSCA is not really policing now (several months after enactment) nor will they be able to in the near future as they just don't have the resources (and I'm talking about their 'real' concerns, the US companies that they have direct access too) with regards to any or all of the provisions contained in MAP-21. He dodged the question when asked what success the FMCSA would have when attempting to collect from a solely Canadian company (the example of an Ontario based broker was used). Also vague - is the fine $10 000 for acting as a broker without surety or $10 000 'per shipment'. No one knows. If it's per shipment, should I expect my $40 million fine due to the business we've done since December 1st, 2013?
Lets get to the short version of what I think/hope we can all agree on:
We will not know until at least one case goes through the court system and is either successful or fails before we know the answer to the golden question: does a Canadian domiciled broker who contracts carriers for cross border business into or out of the USA 'need' to have the $75K surety bond?
Do we all believe it's in the best interest of the carrier? yes.
Do we all believe it's in the best interest of our customers? yes.
Should it weed out unethical providers? yes.
If there was 100% compliance, would it increase the perspective that the industry that we all breathe and bleed is a good, solid industry and increase interest, encourage more people to want to join, be successful and to treat others professionally? yes!!
Does it make sense as an owner of a 3pl (exclusively) business to register with FMCSA as a broker and hold the $75 Surety Bond? Yes - even if only to limit the company's liability in a case of third party injury (we all know about the CH case).
Is the Surety bond 'required' worldwide - for any company that could broker even a single skid into US soil? The answer is still vague I think. We all think of 'us' where we are located, where our business is registered. What about a small brokerage that operates solely for 'local shipments' in country x (pick any around the world that is not just a hop skip and jump north of the border), then their local customer asks them to broker a single shipment direct to their customer in the US. Must they register with FMCSA and carry the bond ? How would they ever know it's required? What if they didn't comply? Would it be enforced?
Do I need to ask every carrier I work with to provide me their 'broker surety bond' information in case they need to interline some or ALL of the order that I gave them? Based on varied interpretations a carrier may or may not be acting as a broker when interlining depending on distance, state lines, country boundaries or of course not at all so long as they physically touch the freight at some point in the run. Sounds vague to me. I won't be asking for carriers 'broker bonds' at this time... I don't expect that any of them should have it until it becomes more clear that they 'need' to have it.
Have a safe and Happy Easter to all (remember to enjoy the family time, it's why we work so hard the rest of the time).
Keep well,
Mike
Please keep in mind I'm simply presenting another side to the discussion. My advice to my employer and to all 3PL's will be that it is in the best interest of the company to comply even if we do not know for sure that this is 'mandatory' for non US domiciled companies nor if it can ever be enforced (in the short term).
I do believe however that Dave Krueger's interpretation does leave room for the other side of the argument. At this time everything discussed has yet to be subjected to the courts on either side of the border and that is all that really matters isn't it?
I'm presenting a differing side of this argument to spur further discussion, also, I find the 'facts' a little vague:
It was a great evening and this event was well attended. Let's be clear; David (who is a transportation lawyer at a US law firm) advised that his presentation was "his firms interpretation" of the legislation for a reason... What if their interpretation is wrong? Would he be liable to all the brokers who went out the next day and bought a bond that they really didn't need when it was discovered that they were misled? Would the NTBA be liable?
Edited clips of the legislation point certainly that the intent of MAP-21 is partially to protect carriers from unethical entities but also to help differentiate between what is classified as a 'carrier' activity and what activities are classified as 'broker' ones.
Numerous times David mentioned that the FMSCA is not really policing now (several months after enactment) nor will they be able to in the near future as they just don't have the resources (and I'm talking about their 'real' concerns, the US companies that they have direct access too) with regards to any or all of the provisions contained in MAP-21. He dodged the question when asked what success the FMCSA would have when attempting to collect from a solely Canadian company (the example of an Ontario based broker was used). Also vague - is the fine $10 000 for acting as a broker without surety or $10 000 'per shipment'. No one knows. If it's per shipment, should I expect my $40 million fine due to the business we've done since December 1st, 2013?
Lets get to the short version of what I think/hope we can all agree on:
We will not know until at least one case goes through the court system and is either successful or fails before we know the answer to the golden question: does a Canadian domiciled broker who contracts carriers for cross border business into or out of the USA 'need' to have the $75K surety bond?
Do we all believe it's in the best interest of the carrier? yes.
Do we all believe it's in the best interest of our customers? yes.
Should it weed out unethical providers? yes.
If there was 100% compliance, would it increase the perspective that the industry that we all breathe and bleed is a good, solid industry and increase interest, encourage more people to want to join, be successful and to treat others professionally? yes!!
Does it make sense as an owner of a 3pl (exclusively) business to register with FMCSA as a broker and hold the $75 Surety Bond? Yes - even if only to limit the company's liability in a case of third party injury (we all know about the CH case).
Is the Surety bond 'required' worldwide - for any company that could broker even a single skid into US soil? The answer is still vague I think. We all think of 'us' where we are located, where our business is registered. What about a small brokerage that operates solely for 'local shipments' in country x (pick any around the world that is not just a hop skip and jump north of the border), then their local customer asks them to broker a single shipment direct to their customer in the US. Must they register with FMCSA and carry the bond ? How would they ever know it's required? What if they didn't comply? Would it be enforced?
Do I need to ask every carrier I work with to provide me their 'broker surety bond' information in case they need to interline some or ALL of the order that I gave them? Based on varied interpretations a carrier may or may not be acting as a broker when interlining depending on distance, state lines, country boundaries or of course not at all so long as they physically touch the freight at some point in the run. Sounds vague to me. I won't be asking for carriers 'broker bonds' at this time... I don't expect that any of them should have it until it becomes more clear that they 'need' to have it.
Have a safe and Happy Easter to all (remember to enjoy the family time, it's why we work so hard the rest of the time).
Keep well,
Mike
Please keep in mind I'm simply presenting another side to the discussion. My advice to my employer and to all 3PL's will be that it is in the best interest of the company to comply even if we do not know for sure that this is 'mandatory' for non US domiciled companies nor if it can ever be enforced (in the short term).
30
A well written and thoughtful post Mike Jr. I do find it interesting (and not just from your post) that whenever this topic is discussed, the focus is always on the new 75K bond. Yes, it is a dramatic increase from the previous 10K, and definitely costs considerably more to obtain and to qualify for. However, the question that all brokers should be asking is, "if I want to arrange for transportation that I know will cross the Canadian/US border, should I be licensed with FMCSA and conduct my business legally?" If the answer is yes (as I think any responsible broker would agree), then obtaining the 75K bond becomes part of that decision, as it is required as part of the license. I agree, that until there have been some decisions rendered by US courts, there will always be some ambiguity in how the new regulations are interpreted. I don't think that we should get hung-up on carriers that interline some of their freight. We know that they are not the "double brokers" we all love to hate and that should be driven out of business. Personally, I like to conduct my business legally and in compliance with every law and regulation that I am aware of, it really helps me sleep at night and I never have to tap dance around a question from a customer about my firm's status. In closing, thank you for your kind words regarding the NTBA. Like yourself, we are long standing members and I am proud to be a long serving director. If for no other reason, joining a trade association like ours demonstrates your commitment to the betterment of our industry.
I am looking for an insurance company that is not going to "gouge" you on the rate to supply the bond in question? I have seen members post they are paying as low as $400 for a bond (higher than required), however, I have been unable to find an insurance company that is that cost effective. Can any one recommend or know of one?
Thanks!
Thanks!
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kate2387, I doubt if you will find an insurance company that will underwrite the 75K bond for such a low premium. That number of $400.00 reflects the cost of the old 10K bond. It is our experience that the annual premium will be more like $3000.00 per year. You should start your search with whoever is providing you with insurance presently, as they already know something about you and your company. Be prepared to submit company financial information and perhaps personal financial info as well. St. Clair Insurance Brokers in London, ON handles ours. Their number is 866 308 9307.
20
I've been going through our customer list and so many brokers do not have an MC# and broker bond. Some are long-term customers that we have never had problems with. I'm interested in hearing from all of you about how you are handling this situation. Has your company policy changed regarding brokers without MC numbers and broker bonds? Are you letting your "good" customers slide?
At this point, not even all of the members of the NTBA have their U.S. operating authorities (including the 75K bond) but they all will, as a condition of membership, by the end of the year.
A good customer is still a good customer however, and I would suggest that you should carry on business with them for now (as we do) but ask them when they will become "legal" to broker US shipments.
Don't hesitate to refer them to the NTBA for help if they need it.
Larry
A good customer is still a good customer however, and I would suggest that you should carry on business with them for now (as we do) but ask them when they will become "legal" to broker US shipments.
Don't hesitate to refer them to the NTBA for help if they need it.
Larry
I understand the "good customer" relationship, but no MC# and No Bond puts that company at a distinct advantage to others that DO follow the rules and have paid for the requirements. It is still illegal and if we all want to play by the same rules then we must ensure that we do business with those that do too.
20
I have done a lot of research on this bond myself and prior to getting the bond, my thoughts where that how can a U.S. agency govern a Canadian business, using Canadian trucking companies, getting paid by Canadian businesses be controlled by a U.S. agency? The only answer I really got to that is you are running the freight in and out of the US of A and once in their territory, it is legit for them to do so. I still don't completely agree but I do see the value in the bond as I believe it will weed out some of the laggards out there that simply start a brokerage firm because they know how to post things on load link but know nothing about limits of liabilities, the bill of lading act, etc. Or even worse, the ones that start up to simply scam the good working people in this industry.
Another option for brokers that have issues getting the bond is to team up with a broker who does. I would be interested in discussing this with any of the brokers out there who would consider this avenue.
Good luck to all!
Another option for brokers that have issues getting the bond is to team up with a broker who does. I would be interested in discussing this with any of the brokers out there who would consider this avenue.
Good luck to all!
30
Blondie, the requirement to register with FMCSA (prior to that the ICC) has been around for years. Not only does the US government "recognize" it, they "invented" it! Arranging for the transportation of freight to be hauled by another party, either into or out of the US, has always required a Property Brokers License. For many years the required surety bond was 10K. As we all know, the surety bond amount is now 75K. As TransAction stated, this new limit (really the costs and trouble to obtain one) will weed out some of the less serious and less professional members of our industry. As for the NTBA requiring it's members to operate within the law, regardless if one agrees with the law or not, of course they should. Again, it really boils down to this question....are you in this business as a professional, or as an amateur, "fly by night" operator?
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been poking around the net can't seem to find anything anywheres that says canadian companies need this by any governemt canada or US. there is this which says freight brokers in the united states but thats it.
http://en.wikipedia.org/wiki/Freight_broker_bond
http://en.wikipedia.org/wiki/Freight_broker_bond
if you want to broker freight that touches US soil you must have a surety bond and an MC as a broker.
in the years to come the US government will be issuing $10,000 fines to those who broker without the authority.
the bond also makes it easier to get customers & carriers to do business with your firm.
in the years to come the US government will be issuing $10,000 fines to those who broker without the authority.
the bond also makes it easier to get customers & carriers to do business with your firm.
30
Last April, the National Transportation Brokers Association, contracted the services of a US transportation lawyer to review the question of Canadian brokers compliance with FMCSA regulations. His findings were presented at an association dinner meeting shortly after. Freightfwd, if you are an NTBA member (and if your not...you should be), you can find a summary of the lawyers conclusions on the NTBA website in the members only section. His findings indicated that yes, Canadian based brokers, or carriers, who were involved in arranging freight movements either to or from the US, are required to be registered with FMCSA, and part of that registration includes maintaining a 75K surety bond. Although I'm sure Wikipedia offers some information regarding this subject, I would tend to place my trust in a more official website, such as that of FMCSA.
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I'm with you G Roch, it's a great sales tool here (in Canada) to put yourselves above the competition, increase the image if the industry and build confidence with all of your suppliers.
That being said, freightfwd is implying they haven't found any legislation that indicates Canadian companies must have this. There's plenty of associations, companies and such who agree it's a good idea, but legally required is another question all together. It's one of those things where if it's repeated enough people believe it to be true.
It's like the Canadian government requiring daytime running lights on vehicles. American cars come in (for short term visits to Canada) and don't get fined because they have no daytime running lights, why? Because the vehicle is registered outside the jurisdiction. Imagine enforcing all vehicles entering Canada have daytime conversion done before entry. I'd open a garage near the border!
Happy Friday!
Mike
That being said, freightfwd is implying they haven't found any legislation that indicates Canadian companies must have this. There's plenty of associations, companies and such who agree it's a good idea, but legally required is another question all together. It's one of those things where if it's repeated enough people believe it to be true.
It's like the Canadian government requiring daytime running lights on vehicles. American cars come in (for short term visits to Canada) and don't get fined because they have no daytime running lights, why? Because the vehicle is registered outside the jurisdiction. Imagine enforcing all vehicles entering Canada have daytime conversion done before entry. I'd open a garage near the border!
Happy Friday!
Mike