Bonding with my readers

Bonding with my readers

Q: I can’t let your column “Brave new world of brokering” go. It was about as anti-American as it gets.

This country was founded on American ingenuity, innovation and entrepreneurs building something from nothing. I can name you many businesses that were started in somebody’s garage. Every week, our “weekend warriors” hit the pavement. Some sell real estate part time on the side. Others don military uniforms and protect our freedoms.

If it’s OK for them, why not for some trucker’s wife trying to keep her husband’s rig loaded and earn additional revenue by outsourcing freight to another carrier under her broker’s license? Who is anyone in this country to deprive her of that right? What happened to “life, liberty and the pursuit of happiness?” Good grief!

Your praise of the $75,000 broker bond requirement because “(i)t helps keep amateurs such as (your correspondent) out of the motor carrier brokerage business” is reprehensible. That type of thinking not only violates human decency, but American transportation law.

 

Q: I just finished your Q&A article in the Aug 18 issue. I agree with the very good points you make about the new $75,000 surety bond. In addition to raising the bar for entry into the freight broker field, it has hastened the departure of poorly managed brokers.

It appears to us that the brokers who have lamented the increase are those who should not be in the business. The inability or unwillingness to secure the new $75,000 surety bond is usually a symptom of other more serious business deficiencies.

 

Q: I appreciate your response in the Aug. 18 issue, but there is a clarification that should be made relative to your comment that lawyers likely will gain most from bond payouts. Part 49 U.S.C. Section 13906 sets forth the process for payment of claims against bonds/trust funds for brokers and freight forwarders. Section 13906(b)(2)(A) sets forth the criteria of when a claim against a broker’s bond or trust fund should be allowed. Among other things, Section 13906(b)(8) provides that the amount of the bond cannot be reduced by deducting attorney’s fees and administrative costs. This will go a long way toward making sure the proceeds are preserved for claimants.

Keep up your good work!

 

A: Well, I said at the beginning of my Aug. 18 response that I thought I’d be stepping on some toes, but I guess I underestimated the severity of my tread. I certainly never expected to be accused of being anti-American. I mean, shades of the Communist witch hunts of the early 1950s!

I’m very sympathetic to my first correspondent’s hypothetical trucker’s wife who’s trying to augment her husband’s income by brokering his excess loads, but I’d a lot prefer that she did it with proper qualifications. My questioner back then had another full-time business and was simply lamenting that he couldn’t go into motor carrier brokering as a sideline without putting any real effort into it. It’s people like that who I think are best excluded from the industry. Unlike that correspondent’s other examples of  “weekend warriors,” who require licensure and/or training, I don’t regard casual, unmonitored and unsecured brokerage as a legiti-mate way of picking up a few extra bucks.

I might ask my first correspondent if he would be equally happy if his trucker’s wife chose her money-earning hobby to be in the medical field. For myself, I’d much prefer not to have my appendix removed by one of his “weekend warriors.” By the same token, I’d rather have my loads brokered by somebody who accepts the responsibilities and the financial duties imposed on regulated brokers.

And, as my second correspondent seems to be saying, I apparently am not alone in this view. Although I must acknowledge that this correspondent appears to come at this from a somewhat biased perspective, being himself a broker and therefore not eager to encourage competition.

I thank my third correspondent for pointing out some of the details of the new law that I had overlooked. Certainly, the provision he cites should help to keep down the legal bite that can be taken out of the bond amount. The lawyers will still get a big chunk, since Section 13906(b)(3)(C) provides that claimants’ legal costs may properly be added to their claims. Thus, the $75,000 is going to be depleted a lot quicker than if it were only payable for actual claims. Because the bond is pretty minimal by comparison with the debts an insolvent broker is likely to leave behind, that still means a lot of claimants are going to go unpaid.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.