Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/85437
Beefi ng up the bond Detractors object to the cost of higher bonds, roughly $3,000 to $5,000 more for a financially secure operation per year to secure $100,000 coverage. They believe it would kill some legitimate small brokerages. The bond hike would go much further than compensating for inflation – $10,000 in 1980 dollars is roughly $26,000 today. "Every day we hear from truckers who have been cheated by bad brokers out of compensation for hauling a load," OOIDA says in a policy paper. "Often when we file a claim against a broker's surety bond, $150,000 or more of claims have already been filed against the $10,000 bond." Claims filed in excess of the minimum bond amount are often never paid. Today's broker regulatory system "was created when there was an Interstate Commerce Commission and there were fewer than 100 brokers in the country," says OOIDA Executive Vice President Todd Spencer. "Deregulation opened the door for anyone to do anything they chose to in trucking, and the lack of any real effective oversight of brokers has created an opportunity that many have taken full advantage of to exploit the system to short truckers." All too commonly, he adds, brokers offer shippers and truckers "too-good-to-be-true rates" with no intention to pay. He asks, "Is it unreasonable to expect a service provider – a regulated, authorized entity in the motor carrier industry – to have at least the financial security to ensure $100,000 worth of payments to motor carriers?" Despite the harmony suggested by the bond-increase measure's mutual support from OOIDA and TIA – the nation's most prominent broker association – debate on the issue hasn't exactly been warm and fuzzy. A group representing small brokers, the Association of Independent Property Brokers and Agents, believes $100,000 is too high. Its "Open Letter to OOIDA," published on the association's website after the introduction of H.R. 2357 last year, pleads with OOIDA members to consider the plight of small brokers. "If the bond were to be drastically increased as proposed," the letter reads, "small and mid-sized property brokers would not be able to afford the premium and/or the cash collateral requirements that would be imposed by surety companies. As a result, thousands of small business owners … would be forced out of business." AIPBA has around 130 members. It formed after the first such bond increase was proposed, with the support of TIA, in the Senate in 2010. AIPBA's leader, former New York DOT investigator and independent broker trainer James Lamb, says a $10,000 bond can be purchased for $350 to $550 yearly. At that same rate, a $100,000 bond would cost $3,500 to $5,500. However, for small brokerages, it doesn't make sense for surety companies to guarantee $100,000 when there isn't enough collateral to back that up, he says. Instead, surety (Continued on Page 56) 24 OVERDRIVE JUNE 2012 How to spot bad brokers Owner-operators can do a lot to prevent getting stiffed by a bad broker on a load. Absent a personal referral, do your research on any freight middleman you've never worked with. Long-operating credit-rating services such as RED BOOK (redbooktrucking.com, $150 annually, $25 monthly) and RTS CREDIT (rtscredit.com, (800) 506-7438 for pricing after five-credit-report free trial) offer a wealth of information on registered brokers. RTS' daily credit alert e-mails make note, likewise, of any significant credit-rating downgrade. Likewise, premium memberships with load matching services like those of INTERNET TRUCKSTOP (truckstop.com) and Transcore's TRUCKERSEDGE (truckersedge.net) both offer users days-to-pay credit scoring on brokers who utilize their boards. GETLOADED.COM offers the credit-scoring services of TRANSCREDIT (transcredit.com, also available as a stand- alone service) in its $29.99 monthly package. New tool in the anti-fraud arsenal Broker Dan Metully, of TFI Logistics in Stevensville, Mont., has launched an online tool that he hopes will enable owner-operators, carriers and other parties to self-police the freight world. TransportWatch.com allows users to market their services as well as post alerts on bad actors — whether brokers, carriers or shippers — they've dealt with. "We may not be able to get anybody's money out to him," Metually says, "but we might be able to save the next guy, and then the next guy provides some information about somebody else he has dealt with, and maybe that information will save you." OOIDA Executive Vice President Todd Spencer is skeptical. The service "looks to me like we'll tell him who the bank robbers are so he'll let the banks know and they can lock the door when they see" the bank robbers coming. Instead, the bond increase would do more to "close the door ... to begin with," he says. One proposed new regulation would help ensure prompt payment to owner-operators who utilize brokers.