Capitalism Saves Small Freight Broker Businesses Bullied By Lobbyists As Stated By AIPBA
Pipersville, PA (PRWEB) July 23, 2013 -- Small freight brokers and entrepreneurs thinking about starting a new freight broker business of their own have been in panic mode since the signing of the Moving Ahead for Progress in the 21st Century Act. To them, the bill meant financial Armageddon for their business.
The bill included an increase to a Federal surety bond or trust requirement by 750%, or three times the original enactment amount of $10,000 if adjusted for inflation.
The bill had support on both sides of the aisle and was supported by both the Owner-Operator Independent Drivers Association (OOIDA) and the Transportation Intermediaries Association (TIA).
Due to common claims against the bond, the surety industry generally views freight brokers as a hazardous line of business. The risk is too much for most surety companies, leaving few bonding companies willing to back the brokers.
The new $75K requirement is being quoted by the surety industry, but until last week, new and small brokers were not qualifying for approval. In the event they did qualify, the terms were less than attractive or affordable with collateral requirements larger than the previous bond amount tied with high annual premiums.
The Association of Independent Property Brokers & Agents (AIPBA) filed a Federal lawsuit in protest to the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141) commonly referred to as "MAP-21" (Case 5:13-cv-00342-WTH-PRL) stating that the bond requirement increase is more about lobbyists attempting to push out small business out of the industry than a need to reduce fraud.
The intent of the bill’s backers may be disputed, but with most brokers unable to fulfill the new higher requirement, the effects of it on small and new freight brokers were devastating.
In the 11th hour, it is not democracy coming to the rescue, but capitalism. JW Surety Bonds, the largest volume U.S. surety bond agency partnered with a major bonding company willing to write the bond without collateral for any sized freight broker business.
Michael Weisbrot, Vice-President of Operations stated, “The program was created with new and small freight brokers in mind. It pools together large groups of brokers, making it attractive to the bonding company. This is the first real solution to a large gap in the marketplace; affordable rates and no collateral are what the majority of freight brokers needed to stay in business.”
He went on to say, "If the intent of bill was to limit competition as the AIPBA suggests, they failed. You can’t always count on democracy to work, but you can always bet on capitalism."
Rick Bredow, JW Surety Bonds, http://www.jwsuretybonds.com, +1 215-766-1990, [email protected]
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