Letters: Broker Bonds, Skinner and LaHood

These Letters to the Editor appear in the June 7 print edition of Transport Topics. Click here to subscribe today.

Broker Bonds

Reading the “Opinion” column for May 24 — “Congress Should Tread Lightly With Brokers — on how hard it would be for the smaller freight brokers to exist with a higher bond, my heart goes out to them (p. 7; click here for previous Opinion piece). However, my sympathies run with the trucking companies that use these brokers, small or large.

Everyone seems to say that it’s OK to have the broker default on payment with no recourse for the freight company to collect its money because the brokerage has closed its doors and run away with all the cash.

With a higher bond, all the carriers could collect on the defaulting brokers. The fact that their rates would increase — boo-hoo. When my insurance rates go up because someone else has an accident, there is no sympathy.

Here is another thing to look at: If the premiums are too high for the $300,000 policies, maybe, just may-be, the insurance companies should be investigated for gouging.

Having insurance companies protected is one thing, and even protecting the brokers (as honest as they are) is another thing, but protecting the people who do the work would be a benefit.

Dave Patraschuk

President

Patraschuk Trucking Ltd.

Creston, British Columbia

We’ve been in the brokerage business for 19 years. I plan on sticking around for a long time. I know that if it wasn’t for the low $10,000 bond at the time, we never would have been able to start our business.

When we were new at this, we actually had to come up with $10,000, put it into a CD at the bank and then come up with a few hundred dollars a year to rewrite the bond. A lot of good people would be shut out if they had to put up $100,000 or more to start a brokerage.

I understand that some companies go out of business, and there is always, in any profession, a person who intends to scam people. But if someone has intentions of scamming, they are going to find a way to scam you, regardless of the size of the bond.

There is another side of this bond issue I think the trucking companies are not seeing: Do you require your shippers to have a bond?

A lot of shippers go out of business or don’t pay their bills, but nobody ever complains about that. You can’t tell me you’ve never been burned by a shipper.

The problem does not lie in regulating brokers and truckers to death, it lies in everyone doing their due diligence in checking out brokers’ and shippers’ credit and payment experience and taking personal responsibility for their company’s credit procedures.

I hear of carriers taking loads for money that seems too good to be true. If it sounds like really good money, there is a chance that you may never get paid on that load. Make sure you are working with reputable, long-standing companies.

Doug Russell

Sales Manager

Atran Freight Services

Brighton, Mich.

In reply to James Lamb’s “Opinion” concerning the increase of bonds for property brokers, I feel that it is dead wrong.

In today’s trucking industry, rates for a single load can — and, for me, generally far exceed — the $10,000 bond now required. Even two cross-country loads for a dry van can exceed the present bond required.

If a broker is not paid for a couple of loads by the shipper they found and supposedly checked credit on, many of these “mom and pop” brokers do not have the resources to pay the carrier.

Brokers for years have gotten behind in paying their carriers and have gone out of business, leaving many carriers big and small with little or no settlement from their bonding company.

When a carrier enters into a contract with a broker, that contract is binding and requires the broker to pay the carrier, regardless of whether or not the broker collects the freight charges from the shipper. Too often when the brokerage is not paid, the broker files for bankruptcy and the carrier loses because there was an insufficient bond to cover freight charges due the carrier.

Also too often when I have called brokers seeking payment for freight charges that were overdue, I get the same story from the brokers: “We have not been paid by the shipper, and we will send you a check when we’re paid.”

Litigation to recover freight charges due from a broker are very expensive, while it is very inexpensive for a broker to file for Chapter 7.

The reason property brokers’ bonds cost a lot more than investigators’ bonds is because there is a considerably higher risk for property brokers.

If small “mom and pop” brokers or any other type wish to maintain a limited, excessively low bond, they should be restricted to the total amount of freight charges they can accumulate.

It has been said for many years that the easiest way to steal is to become a truck broker; too many times that is exactly what has happened. Just as bad truckers have hurt the trucking industry, bad brokers have hurt brokerages. Carriers need assurances that they will be paid for their services.

Richard Marsh

President

SpecializedCarrier.Com Inc.

Pahrump, Nev.

Skinner and LaHood

This is about your story, “Former DOT Chief Skinner Defends LaHood,” wherein former Transportation Secretary Samuel Skinner defended current DOT Secretary Ray LaHood by saying recent pushes to promote rail and other modes of transportation at the expense of trucking likely were foisted upon him by the White House (TTNews.com, 5-11 Government News section; click here for story). But how do you know LaHood is not culpable? How do you test your assumptions?

Just because Ray LaHood has an “R” after his name does not make him pro-business or pro-trucking.

“The priorities are being driven out of the White House, and that’s not a reflection on Ray LaHood,” Skinner said.

Really? Last time I checked, LaHood was in the Cabinet — and that’s the White House.

According to Skinner, the current secretary is a “logical person and a good thinker.” That may be, but he’s still getting rolled.

LaHood has been under fire from trucking industry officials for recent statements in which he appears to favor marginalizing trucking and putting more freight on railroads or other modes of transportation such as barges or ships — and don’t forget bicycles.

Once again, that’s specious reporting; LaHood doesn’t “appear to favor,” he does favor. Call it what it is.

I’ll never understand why the trucking executives and leadership who are supposed to be so smart continue to kowtow to Washington. And don’t say that they have to do it. This administration and its beloved regulatory agencies would like nothing better than for the trucking industry to go away and not thrive with one exception: They’d want union freight companies to remain.

Gary Chambers

Waxhaw, N.C.