Wednesday, June 23, 2010

Proposed Freight Broker Regulations

Please see below for FMCSA news transmitted from Rick Gobbell, our Transportation Safety Consultant.
Hank Seaton
HEADLINE: Senate Bill Targets Broker Fraud; Independent truckers, brokerage industry back bill raising bond requirement
Byline: Thomas Gallagher
A bipartisan Senate bill aimed at defending businesses from fraudulent freight brokering schemes is being backed by independent truckers and freight brokers.
The Motor Carrier Protection Act of 2010 would help the Department of Transportation crack down on fraud affecting both groups, industry officials said.
The law would prevent “bad brokers” from not paying truckers, said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association.
It would also prevent carriers from brokering freight without the proper authority, said Robert Voltmann, president and CEO of the Transportation Intermediaries Association.
Significantly, the bill would raise the federally mandated broker bond from $10,000 to $100,000 and establish significant penalties for violations of broker regulations.
Sen. Olympia Snowe, R-Maine, and Sen. Amy Kobuchar, D-Minn., introduced the bill last week. TIA and OOIDA are working to get similar legislation in the House.
“This isn’t about re-regulating brokers and carriers, it’s about fighting creeps, about fighting fraud,” said Voltmann, who says brokerage scams are increasing.
Beyond raising the broker bond, the bill would establish strict guidelines for companies that provide brokers with surety bonds and on how they administer bonds.
Trucking companies would be required to have a broker or freight forwarder license and bond in addition to their motor carrier operating authority to broker freight.
Brokers and freight forwarders would have to renew their operating authority annually with the DOT’s Federal Motor Carrier Safety Administration.
Revenue from operating authority fees would help FMCSA enforce the rules.
6. DC Velocity (logistics publication); Wednesday, June 16, 2010
HEADLINE: Senate bill takes aim at alleged abuses by freight brokers; Measure would tighten government oversight over intermediaries, raise penalties for regulatory violations
Byline: Mark B. Solomon
Legislation was introduced in the Senate on June 15 to crack down on allegedly fraudulent behavior by truck brokers and other intermediaries against smaller trucking concerns, notably one-person owner-operators.
The bill, the Motor Carrier Protection Act of 2010, was introduced by Sens. Olympia J. Snowe (R-Maine) and Amy Klobuchar (D-Minn.). The legislation would make it more expensive for brokers, freight forwarders, and other intermediaries to operate, and would deal harshly with third-parties engaging in illegal practices.
The bill increases the bond placed by brokers to $100,000 from $10,000 and for the first time, imposes bonding requirements on freight forwarders. The legislation also sets stricter government requirements for entities seeking broker and forwarder authority, and levies tough penalties—such as unlimited liability for freight charges—for such violations as conducting brokerage activities without a bond or license.
In addition, brokers and forwarders would be required to renew their operating authority on an annual basis and would lose their authority if they failed to do so. The bill also sets strict regulations on bond companies and the way bonds are administered. It also requires truckers to have a brokers or forwarders license or bond before they can tender freight to another carrier for compensation. In a statement, the senators said the bill provides smaller trucking firms with the tools to retaliate against corrupt practices by brokers. Currently, these companies have little or no legal recourse to fraudulent actions by intermediaries, the lawmakers said.
"All too often, motor vehicle operators fall victim to the deceitful behavior of fly-by-night brokers and freight forwarders who engage in preposterous criminal activities, such as financial fraud," said Sen. Snowe, a member of the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, which has jurisdiction over the legislation.
"Many truckers are small, independent businesses that fraudulent freight forwarders and corrupt brokers too often easily prey upon," said Sen. Klobuchar. "This legislation ensures trucking operators have the tools and protections necessary to prevent fraud, and also modernizes and strengthens federal oversight of this industry."
Perhaps the biggest problem for smaller truckers is not getting paid in a timely manner for freight they receive from brokers, or in some cases not being paid at all. Over the last five years, about one-quarter of all owner-operators have had trouble collecting payments from brokers or other intermediaries, according to a survey by the Owner-Operator Independent Drivers Association (OOIDA), the trade group representing owner-operators.
"People grossly misrepresent [themselves], and sometimes they are selling nothing but hot air. We all pay a price for that. Truckers pay up front, and it has cost too many their livelihoods and their businesses," said Todd Spencer, executive vice president of OOIDA.
Officials of the Transportation Intermediaries Association, which represents many of the nation's intermediaries, were unavailable for comment at press time.
7.; Wednesday, June 16, 2010
HEADLINE: Bill would increase broker scrutiny
Byline: Jill Dunn
Sen. Olympia Snowe has introduced a bill that would strengthen regulatory oversight of brokers and freight forwarders.
On June 14, the Maine Republican introduced S. 3483, the Motor Carrier Protection Act of 2010, which was referred to the Committee on Commerce, Science, and Transportation with one co-sponsor.
The Owner-Operator Independent Drivers Association and the Transportation Intermediaries Association contributed to the bill. When introducing the bill, Snowe said little federal oversight is currently provided, other than requiring brokers to pay a $10,000 bond.
“According to trucking experts, a broker can rake in revenues far in excess of that $10,000 upfront payment in less than a month, allowing them to disappear in the night, losing their bond but more than making up for it in revenues stolen from hard-working truck operators who are left with nothing to show for their delivery, and no way to recoup those losses,” she said.
One group operated 12 freight broker companies over a three-year period in Georgia, defrauding truckers and evading law enforcement by continually changing business names and locations. The bill increases bond to $100,000 and applies the bonding requirement to freight forwarders.
The bill also:
• Ups requirements for entities seeking broker/forwarder authority.
• Establishes strict penalties for violations, including unlimited liability for freight charges for brokerage activities without a license or bond.
• Authorizes private damages remedies against companies that violate Federal Motor Carrier Safety Administration regulations.
• Implements an annual registration requirement to renew broker/forwarder operating authority and generate revenue for FMCSA enforcement.
• Establishes strict regulations on bond providers and how bonds are administered.
• Requires separate registration numbers per authority and whatever authority used in a transaction must be in writing.

Thursday, June 17, 2010

Increased Regulations Proposed for Carriers Forwarders and Brokers

A recent Senate Bill (June 14, 2010) sponsored by Senators Snowe and Klobuchar, S. 3483, which has been referred to the Committee on Commerce, Science and Transportation proposes major new regulatory provisions including:
  1. An annual registration fee
  2. New distinctive registration numbers for motor carriers, forwarders, and brokers
  3. New eligibility entry requirements for forwarders and brokers including demonstration of qualified experience and character
  4. New financial security measures for brokers and freight forwarders to pay claims in the amount of $100,000
  5. Penalties for unlawful brokerage activities.
See proposed bill below.

John Husk