A new federal surface transportation bill has been passed that aims to prevent fraud in the transportation industry through the imposition of a higher surety bond.
The new bill will require freight brokers and forwarders to post a $75,000 surety bond before doing business – a move that has been resoundingly welcomed by industry operatives, who have said that it will create a level playing field and assure reputations.
Bob Voltmann, the president and chief executive of the Transportation Intermediaries Association (TIA), said that the surety bond would bolster the honest operatives in the industry, who he said have been give a “black eye” by the actions of “underfunded companies”.
The TIA had initially backed language in the House and Senate bill versions to raise the level of the surety bond to $100,000, but Voltmann said that the $75,000 would still provide a high level of assurance and “is still a significant improvement” on the previous bond level of $10,000.
The raising of the surety bond has not been without its detractors, however. The Association of Independent Property Brokers and Agents voiced strong opposition to raising it from $10,000. The AIPBA claimed that the move would make it more difficult for smaller brokers to operate, although this argument was countered with the face that the $75,000 surety bond is the same as that required of non-vessel operating common carriers.
The bill forbids motor carriers from re-brokering freight without proper broker authority and bond, although customs brokers and air freight forwarders will not be affected by the changes.