The Federal Motor Carrier Safety Administration recently issued a final rule intended to ensure brokers have enough money to compensate carriers.
Brokers and freight forwarders must maintain at least $75,000 in readily available assets for financial security. This is in case a carrier claims that it has not received payment for services rendered. If a broker or freight forwarder's available financial security falls below $75,000 and is not replenished within seven days after notice, FMCSA will suspend its operating authority.
A trust fund, federally insured letter of credit, or treasury bond may be used if it can be liquidated within seven days. If the broker or freight forwarder cures the default, and the surety company or financial institution reinstates the bond or trust or issues a new one, FMCSA will lift the suspension.
Financial institutions and surety providers acting as broker trustees must notify FMCSA within two business days if the security falls below $75,000 or determines that it will inevitably be due to submitted claims. After receiving notice, FMCSA will publish a notice of failure in its register. If a trust company does not notice, it can seek penalties.
Trust companies must notify FMCSA to improve enforcement, as the agency cannot always know which brokers maintain less than the necessary funds.
"That's the ultimate question when it comes to this industry, in its entirety, is enforcement issues," David Heller, SVP of safety and government affairs at the Truckload Carriers Association, told FleetOwner about FMCSA's January proposal. "And there's certainly not enough people to enforce some of the rules and regs in the trucking industry."
Read more at FleetOwner.com, a Bulk Transporter affiliate.