Tuesday, October 1, 2013

Freight Forwarding Agents and Cargo Brokers Beware FMCSA New Bond Rules

(But Youngsters Have the Chance of a Trip Overseas)
Shipping News Feature

US – The Transportation Intermediaries Association (TIA), is the United States member of the International Federation of Freight Forwarder Associations (FIATA) and represents third party logistics (3PL) companies in North America. With the new regulations governing the actions of freight forwarding companies coming into force this month, the organisation has been offering bond services to forwarders who, as yet, are unprepared for the stricter regulations.

In essence all freight forwarders and brokers have to have a $75,000 bond in place instead of the old $10,000 requirement. Despite a 60 grace period, any operator who has failed to implement the new requirements by today can in essence simply be shut down. The Federal Motor Carrier Safety Administration (FMCSA) requirement might mean the death knell for smaller companies who try to avoid the law or cannot comply with the necessary financial requirements to provide a bond.

The FMCSA rarely make idle threats, since the beginning of 2013, FMCSA has issued out-of-service orders to a total of 10 trucking companies and 25 bus companies. The agency has also declared seven commercial driver's licence holders as imminent hazards, blocking them from operating in interstate commerce. Just last week the agency closed the doors on Laredo, Texas based Redco Trucking for safety and out of hours infringements, ordering the company and its 112 strong vehicle fleet to cease trading.

Any forwarder or broker who had a $10,000 dollar bond in place will have had it repealed by today (1 October) and should have been notified of the fact by its bond supplier, bonds can be obtained more freely than hitherto as the need to post collateral for agents who cannot comply with financial guidelines has recently been dispensed with. The TIA is offering bond advice to members and there are numerous surety bond companies prepared to offer the service.

The FMCSA says it recognises that there may be confusion during the 60 day bedding in period, particularly with regards to road haulage operators who, acting as unrecognised brokers, occasionally sub contract, or broker loads, through operational necessity. The agency says it will use complaints against companies acting in this way to ‘to ascertain the extent of the unlicenced broker population subset within the motor carrier industry’ and develop its enforcement programme using the information collated from this.

The FMCSA also says any haulier acting as an unlicenced broker may well find itself prosecuted in a private civil action and the advice to road haulage operators is to not accept any work from unlicenced operators, either brokers, or freight forwarders, as they should be considered financially unreliable.

On a more positive note the TIA, as part of its FIATA operations and in conjunction with the TT Club is looking for the 2014 Young International Freight Forwarder of the Year (YIFFY). Anyone working in the industry full time for at least two years and who is under 30 years old is eligible and the TIA has to select its nominee for the prestigious international prize in the New Year so submissions must be in by 15 January 2014. Applicants can apply via the TIA website HERE.

Each of FIATA’s National Associations is entitled to put forward one candidate only making competition for the prestigious award extremely fierce. The entrants must submit one import and one export topic specifically relevant to their home market. The 2014 Topic requires the candidate to select one key commodity or cargo for each, both inbound and outbound freight. Winners can look forward to two weeks formal training, one academic week in London followed by a week’s practical experience in London, Hong Kong or New Jersey.

Photo: For those who can’t afford a Surety Bond try this – a Kenworth T800 logging truck model in LEGO!