Drastic Increase in Auto Transport Broker Bond: Good or Bad?

An amendment to the new highway bill, recently signed into law, dramatically increases in the freight broker bond requirement. The new bill was recently signed into effect by President Obama, after years of discussion by both parties.

In the end both parties agreed to not only continue the bond insurance that protects carriers who do business with brokers, but also increase it. The change is highly supported by three separate trucking organizations, who rarely agree, and will increase the bond requirement from $10,000 to $75,000.

What does this mean for brokers?

The effects the changes will have on brokers are yet to be seen. Many in the industry are predicting a decrease in the number of freight brokers. Currently there are approximately 20,300 brokers.

With the increased cost of the bond and the likely requirement by insurance carriers that the bonded broker have liquid assets equal to or greater than the $75,000 bond, many brokers will not be able to afford the new bond price. Some brokers might call the bond increase bad because they say only the wealthy will survive.

Cleaning Up the Industry

The increased cost of doing business could clean up the industry. The auto shipping industry has a reputation for being unethical and “shady.” There are many stories that are told about the broker that cheated a carrier out of final payment and then just disappeared.

Today the bond is $10,000, so when a broker takes off with $50,000 in unpaid debt to carriers, he/she profited $40,000. When the bond is increased, $75,000 of these frauds’ liquid assets will be seized. It generally takes about 1-2 months for bond companies to realize a broker is fraud, and usually by that time the broker is planning their escape route.

Our Reputation & Services

Autos In Transit is a company founded on reliability and reputation. Some experts predict that the honest, smaller, and hard-working brokers will be the ones that lose when the bond hike goes into effect. We feel the bond increase will help weed out the bad brokers that low-ball clients, drivers, and themselves.

We offer instant rates through our calculator and personalized services from experienced brokers. Our years of experience can help ensure you ask the right questions and get reviews on what to watch out for when shipping your car.

Call us today to speak to one of our trusted brokers. (800) 595-2062