Nearly 10 percent of the nation's freight brokers no longer have their licenses following new federal regulations that required a higher bonding amount, industry newsletter Truckinginfo reported.
Under provisions of a federal highway funding reauthorization bill enacted this summer, the surety bond for freight brokers was increased to $75,000, up from the $10,000 that it had been since the 1970s.
Estimates of the number of broker license revocations range from 2,000 to approximately 3,800; one surety bond company said that as many as half of U.S. freight brokers may still not be compliant with the higher bond amount. The total number of freight brokers in the United States is estimated at more than 21,000.
The law change has pitted small independent brokers represented by the Association of Independent Property Brokers & Agents against the Transportation Intermediaries Association, the Owner-Operators Independent Drivers Association and the American Trucking Association, which advocated the bonding increase.
"I think it was an effort to weed some of the bad players out," said Jimmy DeMatteis, president of Des Moines Truck Brokers and a member of the Transportation Intermediaries Association board of directors. DeMatteis said his company has voluntarily maintained a $250,000 bond for the past several years. "I'm not hearing other brokers complain about the increase," he said.
The $10,000 bond level had not provided very much security to carriers when that amount can represent just one day's business, he said.
No estimates were available of the number of any license revocations in Iowa.
The Association of Independent Property Brokers & Agents had sought to limit the increase to a $25,000 surety bond; carriers were seeking to increase the bond requirement to at least $100,000. A federal appeals court in Atlanta recently denied a request by AIPBA for a temporary stay in the increased bond requirement.
According to one of the nation's largest surety bond sellers, JW Surety Bonds, about 3,800 nationwide licenses have been revoked and that number could go much higher. TruckingInfo reported
"It is expected the number of authority revocations will only increase, as some industry professionals estimate that about half of the 21,000-plus freight brokers within the U.S. are still not $75,000 compliant," the company said on its website.