If you are a freight forwarder or broker in the United States or plan to become one you might have heard there are changes on the horizon coming from the Federal Motor Carrier Safety Administration (FMCSA). As part of Moving Ahead for Progress in the 21st Century Act or MAP-21 the FMCSA is moving ahead with its planned increase of financial security requirements. Starting October 1, 2013 the financial security requirement goes from $10,000 to $75,000.
How will this play out? The FMCSA recently issued guidance on this matter to help clear up some confusion. The guidance made it clear that starting October 1, 2013 all freight forwarders and brokers must start to comply with the increased financial security requirements. This means all brokers and freight forwarders must file new BMC-84 or BMC-85 forms reflecting the new $75K freight broker financial security requirement.
Does questions about the new $75K freight broker financial security requirement make you feel like your about to fail?
Enforcement Timeline
Here is where it gets murky, the same guidance under FMCSA Implementation and Enforcement Timelines indicates that there is actually a phase in period for enforcement. It goes like this:
The FMCSA will give a 60 day phase in period starting October 1, 2013, this is to allow the industry to file all required paperwork.
Starting November 1, 2013 the FMCSA will start mailing notifications to freight forwarders and brokers who have not met the new $75K freight broker financial security requirement. The FMCSA will give registered freight forwarders and brokers who have not met the new $75K freight broker financial security requirement 30 days notice before revoking their authority for non compliance.
Unanswered questions and confusion
Some have posed the question, what if you can’t secure new $75K freight broker financial security requirement until sometime after October 1, let’s pick a date, how about October 22 or November 22, will they be in compliance? Do they have to backdate the BMC-84 or BMC-85 to October 1? The FMCSA guidance does not clarify that, nor has anyone been able to accurately answer these questions. The Association of Independent Property Brokers & Agents (AIPBA) has issued a public statement stating they have formally asked for clarification but has not had anyone address the answers yet.
Group plans not acceptable
The guidance also addressed the issue on what types of bonds or trust funds are compliant with the new changes. Currently the FMCSA will accept a surety bond or trust fund agreement. Group surety bonds or trust funds will not satisfy the new $75K freight broker financial security requirement. With this new information providers of surety bonds and trust accounts are revamping pricing policies.
Court case pending
The AIPBA are also reminding the public that there is a federal court case pending that could nullify the new $75K freight broker financial security requirement if successful.
Final words
Freight forwards and brokers should not delay in making sure they have secured the new $75K freight broker financial security requirement. Speaking with several surety companies and industry reps no one is 100% sure what the outcome of the court case will be, what is sure is that there will be a huge influx of filing paperwork within the next couple of weeks, this will bring about delays. Don’t forget for some there maybe new criteria for qualifications to meet. Better start the process now so you’re not left out in the cold later.
You may not be happy but at least your more informed
While the FMCSA acknowledges that there are a number of motor carriers out there that do broker loads and are not registered, they just don’t know how many exist. These carriers are being warned that the FMCSA is currently collecting data to create an enforcement program. The FMCSA does warn that any broker or freight forwarder who knowingly engages in interstate brokerage or freight forwarding operations without the required operating authority is liable to the United States for a civil penalty not to exceed $10,000 and a broker of household goods (HHG) who engages in interstate operations without the required operating authority is liable to the United States for a civil penalty of not less than $25,000 for each violation.
To read the full FMCSA guidance document click here
Do you need to register? Have questions, contact us and well help you out.
photo credit: slworking2 via photopin cc
photo credit: Ahmad Nawawi via photopin cc
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