18 DC VELOCITY JANUARY 2014 www.dcvelocity.com
newsworthy
The nation’s property brokerage community ended 2013
less populated than when it started.
Nearly 8,200 brokers had their operating licenses revoked
in December after being unable to comply with a congressionally mandated increase in surety bond levels used to
pay claims by truckers for late payment or nonpayment for
services rendered, according to a carrier marketing website.
The number of affected brokers represents about 38 percent
of the nation’s 21,000-member brokerage community.
The data, compiled by My Carrier Resources, a Platte
City, Mo.-based company, came from revocation information on the Federal Motor Carrier Safety Administration’s
(FMCSA) website. FMCSA, a Department of
Transportation (DOT) subagency, regulates brokerage
operations, among other responsibilities.
Under a 2012 law reauthoring the nation’s transportation
funding programs, brokers were required to post a $75,000
surety bond to protect shippers and carriers against a broker’s failure to compensate the carrier for delivering the
shipper’s freight. The language stirred controversy because
it represented a more than sevenfold increase in the $10,000
bond limit that was in place for 30 years.
Smaller, independent brokers strongly opposed the size of
the increase, saying brokers who couldn’t make the upfront
payments or obtain a bank letter of credit attesting to the
funds’ availability would be forced out of business or
become agents of larger brokers. Supporters of the language,
including the Transportation Intermediaries Association
(TIA) and the two largest trucking trade groups, the
American Trucking Associations (ATA) and the Owner-
Operator Independent Drivers Association (OOIDA), called
it a measured response to ensure that a broker protected the
shipper’s and carrier’s financial interests. Truckers had lob-
bied Congress for a bond as high as $500,000.
The new rules took effect Oct. 1, but a 60-day grace period was permitted to allow brokers to adjust to the new limits. FMCSA mailed warning letters to noncompliant brokers starting Nov. 1. The revocation process began Dec. 2
and ran for a little more than two weeks.
DIFFERING OPINIONS ON IMPACT
There is a difference of opinion as to the impact of the mass
revocations. Robert A. Voltmann, president of TIA, said the
revocations have affected operating authorities that were
already stale and long inactive. Many companies have
duplicate operating authorities and used the revocation
process to rationalize how many they should maintain,
according to Voltmann. Some brokers didn’t generate
enough sales during the year to qualify for a bond,
Voltmann said.
Michael J. Curry, who runs the My Carrier Resources
website and has 30 years’ experience as a broker, said that
some of the revocations involved old licenses but that there
is no way to quantify the amount. Curry said the FMCSA
can only cancel operating authorities that are active but
aren’t meeting current licensing requirements.
Curry said he found in his research that the addresses of
many brokers in his database differ from the addresses on file
at DOT. Curry said an undetermined number of brokers may
have moved and let their forwarding instructions expire, thus
being unaware their licenses have been revoked. FMCSA has
not replied to requests for comment.
Curry doesn’t expect more revocations on the mass
scale of early December. Brokers are eligible for reinstatement if they meet the bonding requirements.
James Lamb, president of the Association of
Independent Property Brokers & Agents, said in
mid-December that the mass revocations would
cause widespread business closings and concentrate
more buying leverage in the hands of a relative few
very large brokers. The expanded pricing power will
put downward pressure on rates that truckers can
charge, Lamb said. In addition, the lessening of
competition among brokers will adversely affect
shipper choice and will force shippers to pay more
for broker services in general, he added. Brokers
make money on the spread between what they pay
the carrier and what they charge the shipper.
Lamb accused TIA of pushing for the change so it
can promote its own surety bond payment solution,
a charge TIA has denied. ;
—M.S.
Nearly 40 percent of U.S. brokers have licenses pulled
Hannibal Industries has relocated its Stockton, Calif., warehouse to a new 34,000-square-foot facility that will enable
Hannibal to improve throughput and customer service while
expanding its Quick Ship Program. … Urban Outfitters Inc. has
awarded Vanderlande Industries a design and build contract for
the automated material handling system at its new fulfillment
center in Gap, Pa. The 1 million-square-foot facility will serve
Urban Outfitters’ direct-to-consumer and wholesale channels.
… Supply chain company Exel and Borderfree, a provider of
global e-commerce solutions, have opened a 20,000-square-
foot distribution warehouse in Romulus, Mich. The new warehouse will be used to process international parcels for Canadian
customers. … Invata Intralogistics Inc. has been awarded a contract for the multiphase build-out of a distribution center in
Santiago, Chile, by a global health-care products company.
ground breakers
