Network FOB - Two Harbors, MN

I have to disagree AR@DRC. Having taken the time, and the expense to get a surety bond shows that a broker understands and plays by the rules. As we all know, there are no guarantees in life or business, except maybe death and taxes. If all businesses had an iron clad guarantee that no matter what, everyone would get paid, there would never be a bankruptcy or failure. A nice world to be sure, but not the real one we all find ourselves in. A surety bond was never meant to replace "due diligence " when deciding to extend credit to any entity. A watchful eye on one's receivables is the best protection you can get.
 
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The purpose of the bond was to deter people from opening up with no capital and running away. Network FOB was capitalized but what exactly happened to cause their demise is anyone's guess. It's still up to all of us who extend credit to make sure the risk is worth the reward though ... whether it's a broker or actual customer, doesn't matter.
 
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loaders said:
Having taken the time, and the expense to get a surety bond shows that a broker understands and plays by the rules.
Click to expand...

Network FOB had the bond - they didn't play by the rules and subsequently went under. Having the bond or not having it certainly isn't a factor for me when extending credit to a new account. Network FOB is a perfect example of that bond being absolutely useless when it came to non payment and recourse. 1600+ companies in line now to get a piece of that $75K surety bond - which made them look "reputable" in the industry because they had one.

Sorry loaders - I know you're a big fan of this bond. But I'll never jump on that bandwagon. It just doesn't carry its worth in weight in my opinion. We deal with plenty of great brokers that don't have the bond. As you said - due diligence is the key when credit is involved.
 
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The bond is a legal requirement for brokers who deal with trucking loads to/from/within the United States. If your broker doesn't have a bond then he/she is unlicensed and operating ILLEGALLY unless they're limiting themselves to other modes like rail and/or they're not dealing with the US. A great way to minimize problems.. a good starting point at least.. is to deal only with people who are operating in accordance with the law. At a very minimum that shows that they are serious enough about their business to at least operate legally. Now, are all licenced brokers good brokers? Of course not.. some are bad and some go out of business for other reasons, taking carriers and others along with them. But a good place to start is to at least limit yourself to people who are meeting the legal business requirements.
 
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You are certainly entitled to your opinion AR@DRC, and you are also free to deal with both registered, legally operating freight brokers, and those that thumb their noses at current legislation and operate outside the law. Personally, I prefer to deal only with partners that comply with the law, whether or not I agree with the law. It is just one less thing to worry about.
 
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Exactly. The same reasoning applies to selecting carriers we want to deal with. Do they have insurance, proper authorities, WSIB coverage, etc., etc.? I'm sure there are some great carriers out there that run illegally, but I sure don't want to do business with them. I like my partners to be legitimate.
 
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ah... quite a lively discussion...

I have to say, a bond means absolutely jack sheet to me... and this experience only serves to solidify that opinion...

For this kind of system to work, the bond amount needs to be adjusted depending on the volume of work being done.

Network FOB was able to screw more than 1600 carriers out of $5-million with their piddly little $75,000 bond... obviously this is not sufficient protection...
 
The bond is not meant to be an ironclad "nothing will ever happen to you because we're bonded". It's just one more tool to ensure that the business has at least that amount of protection. No bond at all would likely mean alot more brokers running around.. and alot more chance of carriers getting stiffed. The bond is just a starting point. You didn't get stiffed because the broker had a bond.. and chances are you'd get stiffed more often if there were no bond requirement. Some brokers have no bond beucase they can't get one.. do you really want to do business with someone who can't acquire a 75K bond? I empathize with you though, I know what it feels like to be stiffed... only difference is that in my case the "stiffers" are shippers who own factories, warehouses, and extensive property..somehow that doesn't make me feel any better though.
 
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Just because members here (anonymous ones) indicate that something is the law doesn't make it so. I suppose if you read something enough times you may believe it to be true. If you question anything you read here, especially things I say or anywhere else for that matter - please do your due diligence and speak to a transportation lawyer in the country and province/state you operate to verify federal and provincial or state regulations.
I understand the following and have yet to find empirically otherwise: Currently in Ontario Canada only a trust account is required to run a 3PL operation. People can say otherwise all they like and point to laws in other countries all they like, but the legislation here in Ontario Canada for a business who has only offices here in Ontario Canada remains untouched for years.
I know this is off topic, just remember not everything you read on the internet is true!! :)

*drops mic
Happy Friday!
Mike out.
 
OK, let's make the freight brokerage industry, the only industry around that has to guarantee their payables, regardless of the amount. That would sure make it easy to do business with them. Carriers wouldn't have to check them out before accepting a load. No need for Creditel or Dun and Bradstreet reports. Wow, what a great idea! Why would carriers want to have any direct customers of their own? Way too risky, they might go broke. All the freight would flow through these no risk brokers. Carriers wouldn't need sales people, think of the money they'd save. God damn, the more I write this, the more I like the idea, regardless of how far fetched it is. All I have to do is get the insurance companies on board and we'll be in business! Once I get this set up, I'm going to work on a no risk, no loss way for going to a casino without fear of losing any money!
 
Mike, that's true. But if your Ontario based brokerage does business in the United States then it must conform to American laws, one of which requires brokers to be bonded and licenced in order to broker interstate loads. check it out..Please don't take my word for it.. Just call the FMCSA and ask them. Believe it or not, they will tell you that a Canadian broker does not get a pass on their laws.
 
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Mike Jr. I believe you were present at an NTBA dinner meeting shortly after the new surety bond regulations were introduced. This was the meeting that featured a US lawyer from Cleveland, well versed in transportation who definitely confirmed that regardless of where your firm was based, if you offered or performed the function of a freight broker with shipments going to or coming from the US, you have to be registered and maintain the surety bond. It is not a situation of saying something over and over again in the hope of making it true. Perhaps there are those however that think if they deny, deny, deny something, it will somehow go away. A broker can move all the freight they like within Canada, with nothing required. Yes, a broker in Ontario must have a trust account, though virtually none do. The FMCSA website is the best source of definitions and requirements for this discussion. I encourage you to visit it.
 
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All I'm saying is, people should do their due diligence and speak to a qualified transportation lawyer (in their home country/province) rather than taking someone's word for it here. I've yet to read legislation that requires brokers outside the US to hold the bond (we all know $75K is a drop in the bucket). I'm talking about specifically spelling out that foreign entities, with no US office must adhere to local laws. You can't chew gum in Singapore, but you sure as hell can chew gum here. The point is that Singapore has zero jurisdiction here.

I'm off topic for the thread so I'll just leave it at that.
Mike
 
outside north american maybe @MikeJr but if you're in Canada yeah you should work with the US laws, or else you could be held fully personally liable for a bunch of things... outside N.A. would be hart to get sued but within N.A. it's an easier case
 
The whole point is if you do business with American customers, they'll expect you to play by their rules. It's no different than it is for a carrier running its operation. If it runs in more than one jurisdiction with conflicting laws, the law that is the 'go-to' is the one that is more strict.

And .... there are many industries that require trust accounts to protect the end users.
 
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