What is a Transportation Brokers Bond and Why You Should Know
All transportation brokers are required to have a bond of $75,000 if they do business between Canada and the US or within the US. This is an FMCSA requirement listed in the Federal Register. Previously, only a $10,000 bond was required. Many applaud this increase as a step forward in shipper and carrier financial security when dealing with a third party transportation broker.
What is a transportation bond?
A transportation bond is in place to cover payments to carriers should the third party transportation broker fail to pay. Originally, only a $10,000 bond was required as part of the licensing of transportation brokers. However, a few years back it became a real problem where a transportation broker would go bankrupt and leave many carriers unpaid. This caused a legal mess when it occurred because in many cases, the carriers went looking for payment from the shippers. To help ensure the financial stability of transportation brokers and also offer greater coverage for carriers, the FMCSA increased the bond to $75,000. This level of security is quite onerous for many small transportation brokers and many fail to meet the requirements to obtain it.
Why is a broker bond important to you?
If you’re employing a transportation broker to move your shipments you will have a greater level of security because your transportation broker has a $75,000 bond. You can feel reasonably assured that the company you are dealing with meets a certain level of financial security in order to qualify for the bond. Plus, in the worst case scenario of your transportation broker going out of business, there are insured funds there to cover potential liabilities.
Did you know DSN Chemical Transportation has a $250,000 bond?
Here at DSN Chemical Transportation we like to take safety and security one step further. DSN has qualified financially for a much higher bond amount and has chosen to bear the extra expense of maintaining a $250,000 bond. To qualify for such a bond value it demonstrates the financial strength of DSN Chemical Transportation and a long history of meeting their financial obligations. Just one more thing DSN does to help our clients rest easy.
If you have an questions about broker bonds or have a shipment you need to get moving. DSN is here to help. Contact us today.