Details were released on Nov. 15 by the Federal Motor Carrier Safety Administration (FMCSA) regarding a recent regulation aimed at ensuring that brokers and freight forwarders maintain adequate funds to compensate carriers. The regulation outlines specific criteria for determining the eligibility of various forms of security. Brokers and freight forwarders whose financial security falls below $75,000 may face suspension of their operating authority.
“This rule will result in benefits to motor carriers,” the FMCSA said.
The initiative addresses concerns about certain brokers withholding payments to motor carriers. The provisions of the regulation are slated to take effect on January 16, 2025, with full implementation a year later. Enacted in 2012, the Moving Ahead for Progress in the 21st Century Act mandated that trust funds or other financial security be restricted to “assets readily available to pay claims.”
The final rule explicitly defines a set of assets considered readily available, requiring them to be liquidated within seven calendar days if necessary. Eligible assets include cash, Treasury bonds, and irrevocable letters of credit issued by a federally insured depository institution. Real estate, stocks, non-Treasury bonds, and other securities are deemed ineligible.
Additionally, the final rule empowers the agency to suspend the operating authority of brokers and freight forwarders if their available financial security drops below $75,000. The rule also calls for the removal of loan and finance companies from the list of authorized BMC-85 trustees.
The rule was published on Nov. 16 in the Federal Register. There will be a 30-day window for concerned parties to submit petitions for reconsideration.
“FMCSA believes that most brokers operate with integrity and uphold the contracts made with motor carriers and shippers,” the agency said. “However, a minority of brokers with unscrupulous business practices can create unnecessary financial hardship for unsuspecting motor carriers.”
Source: Trucking Dive