FMCSA issues financial requirements for broker and freight forwarder registration
September 09, 2013
Last week, the Federal Motor Carrier Safety Administration (FMCSA) said in a Federal Register notice that guidelines based on the national transportation bill—Moving Ahead for Progress in the 21st Century (MAP-21)—regarding FMCSA jurisdiction for anyone acting as a broker or freight forwarder are set to take effect on October 1.
According to the Federal Register notice, these changes amend the financial security requirements applying to property brokers and freight forwarders operating under FMCSA jurisdiction, with some of the changes requiring motor carriers to register as brokers if they also perform brokerage operations.
One of the key components of the FMCSA’s mandates is that freight forwarders and brokers involved in interstate commerce—and subject to FMCSA jurisdiction—are required to register with the FMCSA.
“Freight forwarders that perform both freight forwarder services and motor carrier services (beyond the scope of their freight forwarding operations) must register both as freight forwarders and as motor carriers,” FMSCA said in the notice. “Additionally…MAP-21 requires motor carriers that broker loads, even occasionally, to register both as motor carriers and as brokers.”
And any entity providing brokerage services is required to register for brokerage authority by October 1, with FMCSA continuing to allow motor carriers to interline as long as the originating carrier picks up and transports the load as part of a single continuous transportation movement under its own operating authority or the authority of the originating motor carrier.
Another key component of these changes has to do with financial security requirements.
Effective October 1, all FMCSA regulated brokers and freight forwarders must obtain and file with the FMCSA a surety bond or trust fund in the amount of $75,000, with group surety bonds or trust funds not applicable. But the FMCSA said it is currently considering the enforcement implications of group sureties as well as the effect on small entities and new entrants.
For companies that have both broker and freight forwarder authority, FMCSA said that one $75,000 bond or trust is sufficient as long as the legal entity holding the authorities is the same.
And companies that provide broker or freight forwarder services, including motor carriers, are required to obtain the appropriate operating authorities and are required to meet the new minimum financial responsibility requirements as of October 1.
The FMCSA said it will provide a 60-day phase-in period, effective October 1 to allow the industry to complete all necessary filings, with FMCSA mailing notifications on November 1 to brokers and freight forwarders that have not met the $75,000 minimum financial security requirement, adding it will provide 30 days of advance notice before revoking the freight forwarder and broker operating authority registrations.
At the end of its Federal Register notice, the FMCSA said that it “strongly encourages all motor carriers not to accept loads from, unregistered brokers or freight forwarders, as these entities might not have the financial security mandated by MAP-21,” with motor carriers brokering loads without properly registering with FMCSA as brokers possibly subject to private civil actions.
Bob Voltmann, president of the Transportation Intermediaries Association (TIA) said in a statement that these actions taken by the FMCSA will not only ensure a fairer marketplace for all licensed entities operating in the supply chain, but have a significant impact on combating fraud in the marketplace.”
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