Opinion: Higher Bonds Still Not the Answer


6/18/2012 7:00:00 AM
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By Daniel Larson

President and Chief Operating Officer

Pacific Financial Association Inc.

This Opinion piece appears in the June 18 print edition of Transport Topics. Click here to subscribe today.

The controversial proposal to increase the surety requirement for licensed transportation brokers from $10,000 to $100,000 that failed as stand-alone legislation in 2010 and 2011 is now included in the Senate transportation “infrastructure� bill scheduled for consideration by a House-Senate conference committee.

As Robert Voltmann, president of the Transportation Intermediaries Association, said in a Transport Topics “Opinion� column eight years ago, “Higher bonds are not the answer� (TTNews.com, 5-13-2004).

Since that 2004 article, TIA has reversed its position completely, to the extent that in the March 26 edition of this newspaper, Voltmann said requiring “higher bonds� for transportation brokers in “[t]he Senate bill is our exact language, and we fully support it� (3-26, p. 29).

Our firm, Pacific Financial Association, maintains Federal Motor Carrier Safety Administration BMC-85 (Property Broker or Household Goods Broker Trust Fund Agreements). We provide surety instruments on behalf of almost 5,000 licensed transportation brokers — approximately 25% of the entire industry. That means we are in a unique position to comment on two key issues with the legislation:

• The proposed increase in surety requirements would eliminate at least 75% of the transportation broker industry.

• There is no justification for this 1,000% increase.

With respect to the first key issue, whether many brokers would be eliminated, PFA’s research to that effect is based on communications with our own broker clients and is fully consistent with TIA’s own online poll taken in 2010.

The results of TIA’s survey indicated that 79% of that association’s own membership was opposed to any such $100,000 bonds. It appears that, since 2004, TIA has become more concerned with the anti-competitive interests of a few larger brokers rather than the vast majority of its members.

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