Opinion: It’s Not Too Late to Fight the Broker Bond

By James Lamb

President

Association of Independent Property Brokers & Agents

This Opinion piece appears in the May 20 print edition of Transport Topics. Click here to subscribe today.

As the United States and its trucking industry struggle to recover from what’s been dubbed the Great Recession, the new transportation bill — MAP-21, the Moving Ahead for Progress in the 21st Century Act — isn’t helping. If my own predictions are correct, the results will include:

• Thousands of businesses closing within the year.

• The loss of tens of thousands of transportation intermediary jobs.

• Shippers paying big brokerages more for transportation.

• Big brokerages paying owner-operators and carriers less to do the transporting.

• Americans being dealt a drastic rise in consumer prices because of the greed of the mega-brokerages that will control the industry from now on.

In today’s America, money wins out over sound judgment, and politics are used by powerful lobbies to secure laws and regulations favorable to them and their interests.

Take, for example, the $75,000 property broker bond, commonly referred to as the “freight broker” bond.

The Transportation Intermediaries Association, a trade group, wrote the provisions in MAP-21, which raises the property-broker bond from $10,000 to an astonishing $75,000 as of Oct. 1, 2013.

TIA first sought a $100,000 broker bond by introducing stand-alone legislation in both houses of Congress to that effect. However, a competing trade group for small and midsize brokers I founded in 2010 — the Association of Independent Property Brokers & Agents — managed, with help from other groups, to stop the TIA measure for two years. The bond amount ultimately was dropped to $75,000 via a Senate-House conference committee, even after the proposed $100,000 version already had passed the Senate.

Not wanting to be unfair toward the Owner-Operator Independent Drivers Association and owner-operators, we argued that U.S. policy on property broker bonds should follow the just and conventional wisdom of the experts in transportation regulation, namely the administrative rulemakers at the Department of Transportation, who have the technical expertise needed to properly make these decisions.

During its recent rulemaking on household goods broker bonds, DOT released its opinion that any bond amount exceeding $25,000 (to merely adjust the current $10,000 bond set in the late 1970s for inflation) would have anti-competitive effects and do more harm than good.

We also noted that the states of Virginia and Florida, which regulate intrastate brokers, also maintain a $25,000 broker bond requirement.

But in today’s America, public policy is for sale, and the current leaders of Congress act like shepherds steering the flock in a general direction they have decided to go and encouraging the rest of the body not to worry about what’s actually in major legislation — just follow.

In this instance, TIA — unhappy with the DOT’s position not to impose higher bonds — sought to overrule the agency’s decision and convinced Sen. Harry Reid (D-Nev.) to introduce their previously rejected bill as an amendment to the Highway Bill. Without affording the people’s representatives the notice required by Senate rules, the more than 600 pages of the highway bill were rubber-stamped by the majority.

However, some members of Congress believe the House and Senate should actually read the bills they pass. We agree.

The present challenge is to help Congress understand what they’ve done and its effect on Americans and on the trucking industry before this law and its rules take effect in October.

TIA seems to think its method of pushing the bill through was honorable and praiseworthy. Notwithstanding what I think is its failure to perform its fiduciary duty to protect the rights and interests of all its dues-paying brokers, I believe the group has done a disservice to the country and the industry. I also believe many members of our industry agree with me, even some larger brokers who have recently started to come forward and remind the industry that they themselves would not have the businesses they have today if a chilling obstacle such as this new $75,000 bond had been placed on them decades ago when they were would-be entrepreneurs.

I am asking that everyone in the transportation industry — especially those most likely to be adversely affected by this unjust law, such as brokers and owner-operators who will no longer be able to broker out excess loads under their brokers’ licenses — stand with my organization and demand change. You can begin by joining our coalition and demanding an immediate repeal of the anti-competitive $75,000 broker bond.

The Association of Independent Property Brokers & Agents is a not-for-profit organization based in Houston that promotes the common business interests of freight brokers.