Freight Broker Bond requirements were put in place in the 1930’s by the Federal Motor Carrier Safety Administration (FMCSA) to act as insurance for the carrier payment in the event that they are not paid by the freight broker. In the 1970s the bond requirement amount was set to $10,000. This wasn’t changed until June 29, 2012 when Congress Passed the Moving Ahead for Progress in the 21st Century Act (MAP-21). There were two main changes that came from this act:
1. The freight broker bond requirement amount increased from $10,000 to $75,000
2. Freight forwarders were also required to meet the $75,000 bond
The reason for the increase, according to the FMCSA, was that there had been too many cases in which shippers and carriers had been delayed (or entirely denied) payment so the bond increase was necessary in order to ensure payment of services rendered.
This increase led to a large public outcry. Small to mid-sized freight brokers were afraid they would lose their business or be forced to join a larger operation and filed complaints and even lawsuits. However, that did not lead to a reduction in the price of the bond but companies were offered a grace period of two months to acquire the bond. The law went into effect October 1, 2012, freight brokers and forwarders had until December 1, 2012 to decide whether they wanted to renew their license and come up with the additional money. Brokers who failed to come up with the bond requirement would be forced to cease all operations.
Close to 40% of all freight brokers were forced to close leaving shippers scrambling to find reliable vendors.