The overlapping renewal period for more than 10,000 brokers is related to the freight broker bond increase from $10,000 to $75,000 that took place in October 2013. By the extended deadline in December of the same year, a large part of the industry had to comply with the new bond requirement by obtaining or upgrading to the higher bond amount.
These specific industry dynamics are something to consider, as renewing your freight broker bond in time is crucial for your business. This is the only way to stay compliant with licensing requirements and avoid your operating authority getting revoked.
Read on for an overview of the legislative setting set forth by the Federal Motor Carrier Safety Administration (FMCSA) in 2016, as well as a detailed explanation of why it’s important to renew your bond early.
What’s new in the FMCSA rules this year
Since the major changes introduced in the freight industry with the MAP-21, there haven’t been any major legislative shifts. However, there are administrative improvements that are taking place in the last few years.
The FMCSA launched the Unified Registration System (URS) in 2015 with the aim to ease the registration process for the whole field. Instead of issuing separately USDOT, FF and MC numbers, the URS replaces all with a single registration option. In this way, the process will be streamlined for the FMCSA and businesses will have an easier time getting registered.
Since December 2015, all new registrations are conducted via the URS. This was the first phase of the project, which has already been completed. FMCSA had planned to enact the second phase in September 2016, so that all existing registrations are transferred to the new system.
However, it recently announced that the second phase will be postponed for January 2017 because of the high volume of data that needs to be transferred to the new URS. Rumors of higher licensing fees have been in the air for a while as well, but the freight broker bond requirement would not be changed.
For brokers who are already in business, this means you need to refer to the old licensing process for all renewal needs. It’s also a good idea to keep tabs on the developments that the FMCSA will introduce in the following months.
The freight industry keeps growing in 2016
After a turbulent 2013, thousands of freight brokers left the business because of the new bonding requirements. Some 7,500 brokers fell out by the spring of 2014.
Ever since this first shock, however, the industry has not only returned to normal, but is steadily growing. By mid-2015, there were already 15,000 licensed brokers, an increase of 2,000 from the sharp drop in the beginning of 2014.
The positive trend continues and as of mid-2016; there are more than 16,600 freight brokers in operation. Between 200 and 300 new brokers enter the field every month.
While the legislative changes were traumatic, there is a considerable benefit for the trade. The stricter requirements keep fraudulent practices out of the business and have helped raise the overall quality of services.
Why renewing on time is paramount for your business
In order to keep your FMCSA license, you need to renew your freight broker bond at least 30 days before it expires. The reason is that this is the time when surety providers are required to send out a cancellation notice to the FMCSA in case the bond would not be renewed.
It’s certainly a good idea, however, to take care of the renewal earlier, preferably between 60 and 90 days before your bond expiration date.
As the numbers show, freight brokerage is an attractive business opportunity for many today. Larger numbers of brokers mean that the surety bond renewal process can take longer and get more complicated.
Additionally, on the administrative side, it’s worth keeping in mind the renewal period for thousands of brokers falls exactly around the same months because of the 2013 legislative changes. This can turn problematic for your bond renewal, as thousands of people would be undergoing the procedure in the same time, which can cause delays in the bonding.
Failing to renew your bond in time comes with a number of complications. Without an active bond, you cannot keep your license, which means you need to stop brokering. Afterwards, you need to either apply for a new license from scratch or undergo a complicated procedure to reverse the revocation of your old one. In any case, missing the bond renewal deadline is something to be avoided.
Starting the renewal on time gives you the opportunity to ensure you can save on your freight broker bond premium by tidying up your finances and selecting your bond provider. You won’t be pressured to get bonded at any price in the last moment, so instead you would be able to choose carefully.
The freight broker bond renewal period does not need to be a stressful experience for your brokerage. Instead of waiting until the last minute, starting the process well in advance will give you peace of mind. You would be able to avoid renewal delays caused by the growing number of freight brokers and the coincidence of renewal deadlines around the autumn months. Ultimately, this would help you keep your license active and stay in business.
Source: Bryant Surety Bonds
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