Don’t throw the broker out with the bathwater
Hiking the bond requirement won’t fix industry’s ills
Q We are a small carrier who occasionally hires other companies to transport our hometown shipper’s freight when its need for service spikes beyond our capacity. I understand the Transportation Intermediaries Association and the Owner-Operator Independent Drivers Association are supporting legislation that would require carriers and brokers to post a $100,000 surety bond if they hire and pay other carriers to transport freight. We need the flexibility to subcontract freight, but cannot afford the bond. Is increasing the bond on everybody the only way to address the problem of unpaid freight charges?
A The problem of crooked and/or undercapitalized middlemen is systemic. Carriers are not paid their freight charges because scam artists can play the system, collect money from shippers or lead brokers and abscond with the proceeds, stiffing the carriers they hire. Also, the industry is replete with middlemen who do not segregate freight charges into a constructive trust for benefit of the carrier and end up spending or pledging as their receivables monies that don’t belong to them.
This is not a new problem, and it is not the first time Congress has been asked to look at the issue. But the problem has festered as typically small carriers cheated out of their freight charges have sued shippers and have been dragged into protracted bankruptcies to prove their ultimate right of payment against the shipper and/or the broker’s secured creditor.
